Chapter 6 Flashcards
applied when the same accounting procedures are followed in the same way in each accounting period
consistent reporting
the length of time for which a business information and reports for its financial performance
fiscal period
the length of time for which a business information and reports for its financial performance
fiscal period
a fiscal period consisting of 12 consecutive months
fiscal year
a fiscal period is also known as a
accounting period
a columnar accounting form used to summarize the general ledger info needed to prepare financial statements
work sheet
to prove that debits equal credits, to bring account balances up to date, separate general ledger account according to the financial statements, calculate net income or net loss
reasons to use a worksheet
cash paid for an expense in one fiscal period that is not used until a later period
prepaid insurance
reporting income when its earned and expenses when they are incurred is
accrual basis of accounting
generally accepted accounting principals require the use of the accrual basis of accounting
GAAP
reporting income when the cash is received and expenses when the cash is paid
cash basis of accounting
changes recorded on a work sheet to update your general ledger accounts at the end of a fiscal period
adjustments
a financial statement that reports the value of a business’s assets, liabilities, and owners 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
