Unit 6

Question 1

Vocab:

The length of time for which a business summarizes its financial information and reports its financial performance

Answer 1

Fiscal period

Question 2

Vocab:

A fiscal period consisting of 12 consecutive months

Answer 2

fiscal year

Question 3

Vocab:

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

Answer 3

Work sheet

Question 4

Vocab:

A proof of equality of debits and credits in a general ledger

Answer 4

Trial balance

Question 5

Vocab:

Cash paid for an expense in one fiscal period that is not used until a later period

Answer 5

prepaid expense

Question 6

Vocab:

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

Answer 6

Accrual basis of accounting

Question 7

Vocab:

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

Answer 7

cash basis of accounting

Question 8

Vocab:

A financial statement that reports assets, liabilities, and owner’s equity on a specific date.

Answer 8

Balance sheet

Question 8

Vocab:

A financial statement showing the revenue and expenses for a fiscal period

Answer 8

income statement

Question 8

Vocab:

Changes recorded on a work sheet to update general ledger accounts at the the end of a fiscal period

Answer 8

Adjustments

Question 9

Vocab:

The difference between total revenue and total expenses when total expenses are greater

Answer 9

net loss

Question 9

Vocab:

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

Answer 9

net income

Question 10

Vocab:

Journal entries recorded to update general ledger accounts at the end of a fiscal period

Answer 10

adjusting entries

Question 11

(True or False)

The accounting concept Consistent Reporting is being applies 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

Answer 11

False

Question 12

(True or False)

A fiscal period must be 12 months in length

Answer 12

False

Question 13

(True or False)

Journals, ledgers, and work sheets are considered permanent records

Answer 13

False

Question 14

(True or False)

The heading on a work sheet contains the name of the business, the name of the report, and the date of the report

Answer 14

True

Question 15

(True or False)

Only accounts with a balance are listed on a trial balance

Answer 15

False

Question 16

(True or False)

The four questions asked when analyzing an adjustments are: Why? Where? When? and How?

Answer 16

False

Question 17

(True or False)

The two accounts affected by the adjustment for supplies are supplies and supplies expense

Answer 17

True

Question 18

(True or False)

The two accounts affected by the adjustment for insurance are Prepaid Insurance Expense and Insurance

Answer 18

False

Question 19

(True or False)

Totaling and ruling the adjustments columns of a work sheet are necessary to prove the equality of debit and credits

Answer 19

True

Question 20

(True or False)

The balance in prepaid insurance after adjusting entries are recorded represents the amount of insurance premium still remanding

Answer 20

True

Question 21

(True or False)

The income statement and balance sheet are prepared from the trail balance columns on the work sheet

Answer 21

False

Question 22

(True or False) Net income on a work sheet is calculated by subtracting the income statement debit column total from the income statement credit column total

Answer 22

True

Question 23

(True or False) If errors are found on a work sheet, they must be erased and corrected before any further work is completed

Answer 23

True

Question 24

(True or False) When two column totals are not in a balance on the work sheet, the difference between the two totals is calculated and checked

Answer 24

True

Question 25

(True or False) 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 a transposed number

Answer 25

True

Question 26

(True or False) If there are errors in the work sheet's trial balance columns, it might be because a general ledger account balance was recorded in the wrong trial balance column

Answer 26

True

Question 27

(True or False) Most errors occur in doing arithmetic

Answer 27

True

Question 28

(True or False) The best was to prevent errors is to use a calculator

Answer 28

False

Question 29

(True or False) Adjusting entries must be posted to the general ledger accounts

Answer 29

True

Question 30

(True or False) The balance in supplies expense after adjusting entries are recorded represents the amount of supplies used during the fiscal period

Answer 30

True