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chapter6and7

QuestionAnswer
the length of time for which a business summarizes and reports financial information fiscal period
a columnar accounting form used to summarize the general ledger information needed to prepare financial statements work sheet
a proof of equality of debits and credits in a general ledger trial balance
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
the difference between total revenue and total expenses when total expenses are greater net loss
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 false
an accounting period is also known as a fiscal period true
journals, ledgers, and work sheets are considered permanent records false
all general ledger account titles are listed on a trial balance in the same order as listed on the chart of accounts true
the four questions asked when analyzing an adjustment are: why? where? when? and how? false
the two accounts affected by the adjusment for supplies are supplies and supplies expense true
the two accounts affected by the adjustment for insurance are prepaid insurance expense and insurance false
totaling and ruling the adjustment columns of a work sheet are necessary to prove the equality of debits and credits true
two financial statements are prepared from the information on the work sheet true
net income on a work sheet is calculated by subtracting the income statement credit column total from the income statement debit column total false
if errors are found on a work sheet, they must be erased and corrected before any further work is completed true
when two column totals are not in balance on the work sheet, the difference between the two totals is calculated and checked true
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 in addition false
if there are errors in the work sheet's trial balance columns, it might be because not all general ledger account balances were copied in the trial balance column correctly true
errors in general ledger accounts should never be erased true
most errors occur in doing arithmetic true
the best way to prevent errors is to use a calculator false
the adequate disclosure accounting concept is applied when financial statements contain all information necessary to understand a business's financial statments contain all information necessary to understand a business's financial condition true
stakeholders are any persons or groups who will be affected by an action true
an income statement reports information over a period of time, indicating the financial progress of a business in earning a net income or a net loss true
the matching expenses with revenue accounting concept is applied when the revenue earned and the expenses incurred to earn that revenue are reported in the same fiscal period true
information needed to prepare an income statement comes from the trial balance columns and the income statement columns of a work sheet false
the income statement for a service business has five sections:heading, revenue, expenses, net income or loss, and capital false
the income statement's account balances are obtained from the work sheet's income statement columns true
the net income on an income statement is verified by checking the balance sheet false
single lines ruled across an amount column of an income statement indicate that amounts are to be added true
a component percentage is the percentage relationship between one financial statement item and the total that includes that item true
component percentages on an income statement are calculated by dividing sales and total expenses by net income false
all companies should have a total expenses component percnetage that is not more than 80% false
when a business has two different sources of revenue, a seperate income statement should be prepared for each kind of revenure false
an amount written in parentheses on a financial statement indicates an estimate false
a balance sheet reprts financial information on a specific date and includes the assets, liabilities, and owner's equity true
a balance sheet reports information about the elements of the accounting equation true
the owner's capital amount reported on a balance sheet is calculated as: capital account balance plus drawing account balance, less net income false
the position of the total asset line on the balance sheet is determined after the equities section is prepared true
double lines are ruled across the balance sheet columns to show that the coulmn totals have been verified as correct rue
the owner's equity section of a balance sheet may report different kinds of details about owner's equity, depending on the need of the business true
Created by: mckaelamyers