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Chapter 7 vocab

QuestionAnswer
When the same accounting procedures are followed in the same way in each accounting period Consistent Reporting
The length of time of which a business summarizes and reports financial information Fiscal period
When changes in financial information are reported for a specific period of time in the form of financial statements Accounting Period Cycle
A columnar accounting form used to summarize the general ledger information needed to prepare financial statements Work Sheet
Journals and ledgers of a business that are usually prepared in ink or printed by a computer Permanent records
A proof of the equality of debits and credits in a general ledger Trail Balance
When revenue from business activities and expenses associated with earning that revenue are recorded in the same accounting period Matching Expenses with Revenue
Changes recorded on a work sheet to update general ledger accounts at the end of a fiscal period Adjustments
A financial statement that reports assets, liabilities, and owner's equity on a specific date Balance Sheet
A financial statement showing the revenue and expenses for a fiscal period Income Statement
The difference between total revenue and total expenses when total revenue is greater Net Income
Amounts are to be added or subtracted Single Rule
Totals have been verified as correct Double Rule
The difference between total revenue and total expenses when total expenses are greater Net Loss
If the difference between the two columns is $1.00, the error is most likely in addition Difference is 1
Look for the amount that is half the difference between the two columns. If the amount is found, check to make sure it has been recorded in the correct debit or credit column Difference divided by 2
Look for transposed or "slides" Difference divided by 9
Look for an account balance that has not been extended or that hasn't been handled correctly Difference an omitted amount
Have all general ledger account balances been copied correctly? Have all general ledger account balances been recorded in the correct Trial Balance column? Errors- Trail Balance Column
Do debits=credits for each adjustment? Is the amount for each adjustment correct? Errors- Adjustments Columns
Has each amount been copied correctly? Has each account balance been extended correctly? Has the net income/loss been calculated correctly? Has the net income/loss been recorded in the correct Income Statement or Balance Sheet column/ Errors- Income Statement & Balance Sheet Columns
Errors should never be erased because it can raise questions about whether important financial information has been altered Errors- Permanent Records
A fiscal year beginning January 1 Calendar year
12 consecutive months which end when business activities have reached the lowest point in their annual cycle Natural business year
4 Reasons For Using a Worksheet 1.) To summarize general ledger account balances to prove that debits equal credits
4 Reasons For Using a Worksheet 2.) To plan needed changes to general ledger accounts to bring account balances up to date
4 Reasons For Using a Worksheet 3.) To separate general ledger account balances according to the financial statements to be prepared
4 Reasons For Using a Worksheet 4.) To calculate the amount of net income or net loss for a fiscal period
Created by: echavez0195