25 terms

Chapter 6

STUDY
PLAY

Terms in this set (...)

Fiscal period
The length of time for which a business summarizes its financial information and reports its financial performance
Fiscal year
A fiscal period consisting of twelve consecutive months
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 a general ledger
Prepaid insurance
Cash paid for an expense in one fiscal period that is not used until a later period
Accrual basis of accounting
Reporting income when it is earned and expenses when they are incurred
Cash basis of accounting
Reporting income when the cash is received and expenses when the cash is paid
Adjustments
Changes recorded on a work sheet to update general ledger accounts at the end of a fiscal period
Balance sheet
A financial statement that reports the value of a business' assets, liabilities, and owner's equity on a specific date
Income statement
A financial statement showing the revenue and expenses for a fiscal period
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 are greater
Adjusting entries
Journal entries recorded to update general ledger accounts at the end of a fiscal period
What is written on the three-line heading on a worksheet?
Name of company, name of report, and date of report
What general ledger accounts are listed in the Trial Balance columns of a work sheet?
All accounts are, even if some do not have balances
Explain how the concept of Matching Expenses with Revenue relates to adjustments
Adjustments are made so the expenses and revenue from the same fiscal period go together
List the four questions asked in analyzing an adjustment on a work sheet
What is the balance of the account to be adjusted?
What should the balance be for this account?
What must be done to correct the account?
What adjustment is made?
In which Balance Sheet column is net income recorded on the work sheet?
Credit column
In which Balance Sheet column is net loss recorded on the work sheet?
Debit column
What is the first step in checking for arithmetic errors when two column totals are not in balance?
Check the difference between the two amounts
What is one way to check for an error caused by transposed numbers?
If the numbers can be divided by 9
What term is used to describe an error that occurs when numbers are moved to the right or left in an amount column?
Slide
Why are adjusting entries journalized?
So they can be posted to the general ledger accounts
Where is the information obtained to journalize adjusting entries?
Work sheet
What accounts are increased from zero balances after adjusting entries for supplies and prepaid insurance are journalized and posted?
Supplies expense and insurance expense