Accounting Chapter 6
Terms in this set (36)
See fiscal period.
Accrual basis of accounting
Reporting income when earned and expenses when incurred.
Adjusted trial balance
A trial balance prepared after adjusting entries are posted.
Journal entries recorded to update general ledger accounts at the end of a fiscal period.
Changes recorded on a work sheet to update general ledger accounts at the end of a fiscal period.
A financial statement that reports assets, liabilities, and owner's equity on a specific date.
Cash basis of accounting
Reporting income when the cash is received and expenses when the cash is paid.
Certified public accountant (CPA)
An accountant who has passed the uniform certified public accounting exam and met the licensing requirement for a state.
The length of time for which a business summarizes its financial information and reports its financial performance.
A fiscal period consisting of 12 consecutive months.
A financial statement showing the revenue and expenses for a fiscal period.
The difference between total revenue and total expenses when total revenue is greater.
The difference between total revenue and total expenses when total expenses are greater.
Cash paid for an expense in one fiscal period that is not used until a later period.
A proof of the equality of debits and credits in a general ledger.
A columnar accounting form used to summarize the general ledger information needed to prepare financial statements.
True or False: The accounting concept Consistent Reporting is being applied when a delivery business reports revenue for the number of deliveries made one year and the amount of revenue received for the deliveries made the next year. (p. 158)
True or False: A fiscal period must be 12 months in length. (p. 159)
True or False: Journals, ledgers, and work sheets are considered permanent records. (p. 159)
True or False: The heading on a work sheet contains the name of the business, the name of the report, and the date of the report. (p. 159)
True or False: Only accounts with a balance are listed on a trial balance. (p. 160)
True or False: The four questions asked when analyzing an adjustment are: Why? Where? When? and How? (p. 164)
True or False: The two accounts affected by the adjustment for supplies are Supplies and Supplies Expense. (p. 164)
True or False: The two accounts affected by the adjustment for insurance are Prepaid Insurance Expense and Insurance. (p. 165)
True or False: The balance in Prepaid Insurance after adjusting entries are recorded represents the amount of insurance premium still remaining. (p. 165)
True or False: Totaling and ruling the Adjustments columns of a work sheet are necessary to prove the equality of debits and credits. (p. 166)
True or False: The income statement and balance sheet are prepared from the Trial Balance columns on the work sheet. (p. 169)
True or False: Net income on a work sheet is calculated by subtracting the Income Statement Debit column total from the Income Statement Credit column total. (p. 171)
True or False: If errors are found on a work sheet, they must be erased and corrected before any further work is completed. (p. 173)
True or False: When two column totals are not in balance on the work sheet, the difference between the two totals is calculated and checked. (p. 173)
True or False: If the difference between the totals of Debit and Credit columns on a work sheet can be evenly divided by 9, then the error is most likely a transposed number. (p. 173)
True or False: If there are errors in the work sheet's Trial Balance columns, it might be because a general ledger account balance was recorded in the wrong Trial Balance column. (p. 174)
True or False: Most errors occur in doing arithmetic. (p. 174)
True or False: The best way to prevent errors is to use a calculator. (p. 174)
True or False: Adjusting entries must be posted to the general ledger accounts. (p. 176)
True or False: The balance in Supplies Expense after adjusting entries are recorded represents the amount of supplies used during the fiscal period. (p. 176)