17 terms

Chapter 6 Vocab

STUDY
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Fiscal Period
The length of time for which a business summarizes and reports financial information.
Work Sheet
A columnar accounting form used to summarize the general ledger information needed to prepare financial statements.
Trial Balance
A proof of the equality of debits and credits in the general ledger.
Balance Sheet
A financial statement that reports assets, liabilities and owner's equity on a specific date. Show financial condition.
Income Statement
A financial statement showing the revenue and expenses for a fiscal period. Shows progress over a period of time.
Net Income
The difference between total revenue and total expenses when total revenue is greater.
Net Loss
The difference between total revenue and total expenses when total expenses is greater.
Adjustments
Changes recorded on a work sheet to update general accounts at the end of a fiscal period.
Four steps to preparing a work sheet
1. Prepare a trial balance (proof of GL)
2. Prepare adjustments
3. Extend accounts to the Financial statement columns
4. Find net income/loss and finish the work sheet
Revenue - Expenses =
Net income
Expenses - Revenue
Net Loss
Which accounts are extended to the balance sheet columns?
Assets
Liabilities
Owner's Equity (Capital
Which accounts are extended to the Income Statement columns?
Revenue
Expenses
Which accounts are affected by adjustments?
Supplies
Supplies Expense
PrePaid Insurance
Insurance Expense
If the columns don't match and the difference is an even 1 then your error is most likely . . .
addition
If the columns don't match and the difference is evenly divisible by 9 then your error is most likey . . .
slide or transposition
If the columns don't match and the difference is evenly divisible by 2 then . . .
look for a number equal to it