accounting chap 6

Question 1

consistent reporting

Answer 1

when the same account procedures are followed in the same way in each accounting period

Question 2

fiscal period (accounting period)

Answer 2

length of time that a business summarizes its financial information and reports its financial performance

Question 3

fiscal year

Answer 3

twelve consecutive months

Question 4

worksheet

Answer 4

columnar accounting form used to summarize the general ledger information needed to prepare financial statements

Question 5

reasons to use a worksheet

Answer 5

to prove debits equal credits
to bring account balances up to date
separate general ledger account according to financial statements
calculate income or net loss

Question 6

prepaid expense

Answer 6

cash paid for an expense in one fiscal period that isn’t used till later

Question 7

accrual basis of accounting

Answer 7

reporting income when it is earned and expenses when they are incurred

Question 8

cash basis of accounting

Answer 8

reporting income when cash is received and expenses when the cash is paid

Question 9

adjustments

Answer 9

changes recorded on a worksheet to update general ledger accounts at the end of a fiscal period

Question 10

balance sheet

Answer 10

financial statement that reports the value of a business’s assets, liabilities, and owners equity on a specific date

Question 11

income statement

Answer 11

shows revenue and expenses

Question 12

net income

Answer 12

difference between total revenue and total expenses when total revenue is greater

Question 13

net loss

Answer 13

difference between total revenue and total expenses when expenses are greater

Question 14

3 errors on a worksheet

Answer 14

accounting records
adding and subtracting
wrong column