Accounting Chapter 6 Study Guide – Flashcards
Unlock all answers in this set
Unlock answersquestion
Accrual basis of accounting
answer
Reporting income when it is earned and expenses when they are incurred.
question
Adjustments
answer
Changes recorded on a work sheet to update general ledger accounts at the end of a fiscal period.
question
Net income
answer
The difference between total revenue and total expenses when total revenue is greater.
question
Fiscal period
answer
The length of time for which a business summarizes financial information and reports its financial performance.
question
Cash basis of accounting
answer
Reporting income when the cash is received and expenses when the cash is paid.
question
Work sheet
answer
A columnar accounting form used to summarize the general ledger information needed to prepare financial statements.
question
Adjusting entries
answer
Journal entries recorded to update general ledger accounts at the end of a fiscal period.
question
Prepaid expense
answer
Cash paid for an expense in one fiscal period that is not used until a later period.
question
Income statement
answer
A financial statement showing the revenue and expenses for a fiscal period.
question
Net loss
answer
The difference between total revenue and total expenses when total expenses are greater.
question
Balance sheet
answer
A financial statement that reports the value of a business's assets, liabilities, and owner's equity on a specific date.
question
Trial balance
answer
A proof of the equality of debits and credits in a general ledger.
question
Fiscal year
answer
A fiscal period consisting of 12 consecutive months.
