chapter6and7
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| the length of time for which a business summarizes and reports financial information | fiscal period
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| a columnar accounting form used to summarize the general ledger information needed to prepare financial statements | work sheet
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| a proof of equality of debits and credits in a general ledger | trial balance
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| changes recorded on a work sheet to update general ledger accounts at the end of a fiscal period | adjustments
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| a financial statement that reports assets, liabilities, and owner's equity on a specific date | balance sheet
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| a financial statement showing the revenue and expenses for a fiscal period | income statement
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| the difference between total revenue and total expenses when total revenue is greater | net income
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| the difference between total revenue and total expenses when total expenses are greater | net loss
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| 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
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| an accounting period is also known as a fiscal period | true
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| journals, ledgers, and work sheets are considered permanent records | false
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| all general ledger account titles are listed on a trial balance in the same order as listed on the chart of accounts | true
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| the four questions asked when analyzing an adjustment are: why? where? when? and how? | false
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| the two accounts affected by the adjusment for supplies are supplies and supplies expense | true
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| the two accounts affected by the adjustment for insurance are prepaid insurance expense and insurance | false
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| totaling and ruling the adjustment columns of a work sheet are necessary to prove the equality of debits and credits | true
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| two financial statements are prepared from the information on the work sheet | true
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| net income on a work sheet is calculated by subtracting the income statement credit column total from the income statement debit column total | false
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| if errors are found on a work sheet, they must be erased and corrected before any further work is completed | true
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| when two column totals are not in balance on the work sheet, the difference between the two totals is calculated and checked | true
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| 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
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| 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
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| errors in general ledger accounts should never be erased | true
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| most errors occur in doing arithmetic | true
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| the best way to prevent errors is to use a calculator | false
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| 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
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| stakeholders are any persons or groups who will be affected by an action | true
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| 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
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| 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
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| information needed to prepare an income statement comes from the trial balance columns and the income statement columns of a work sheet | false
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| the income statement for a service business has five sections:heading, revenue, expenses, net income or loss, and capital | false
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| the income statement's account balances are obtained from the work sheet's income statement columns | true
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| the net income on an income statement is verified by checking the balance sheet | false
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| single lines ruled across an amount column of an income statement indicate that amounts are to be added | true
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| a component percentage is the percentage relationship between one financial statement item and the total that includes that item | true
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| component percentages on an income statement are calculated by dividing sales and total expenses by net income | false
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| all companies should have a total expenses component percnetage that is not more than 80% | false
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| when a business has two different sources of revenue, a seperate income statement should be prepared for each kind of revenure | false
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| an amount written in parentheses on a financial statement indicates an estimate | false
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| a balance sheet reprts financial information on a specific date and includes the assets, liabilities, and owner's equity | true
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| a balance sheet reports information about the elements of the accounting equation | true
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| the owner's capital amount reported on a balance sheet is calculated as: capital account balance plus drawing account balance, less net income | false
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| the position of the total asset line on the balance sheet is determined after the equities section is prepared | true
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| double lines are ruled across the balance sheet columns to show that the coulmn totals have been verified as correct | rue
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| 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
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