reporting income when it is earned and expenses when they are incurred.
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Accounting I Chapter 6 Key Terms
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Worksheet and Adjusting Entries for a Service Business
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fiscal period The length of time for which a business summarizes its financial information and reports its financial performance
fiscal year A fiscal period consisting of 12 consecutive months
work sheet A columnar accounting form used to summarize the general ledger information needed to prepare financial statements.
trial balance The total of all debit account balances must equal the total of all credit account balances and this accounting form is used to prove the equality of debits and credits in a general ledger.
prepaid expense Cash paid for an expense in one fiscal period that is not used until a later period
accrual basis of accounting Reporting income when it is earned and expenses when they are incurred
cash basis of accounting Reporting income when the cash is received and expenses when the cash is paid
adjustments Changes recorded on a work sheet to update general ledger accounts at the end of a fiscal period
balance sheet A financial statement that reports assets, liabilities, and owner's equity on a specific date
income statement A financial statement showing the revenue and expenses for a fiscal period
net loss The difference between total revenue and total expenses when total expenses are greater
net income The difference between total revenue and total expenses when total revenue is greater
adjusting entries Journal entries recorded to update general ledger accounts at the end of a fiscal period
Consistent Reporting An accounting concept applied when the same accounting procedures are followed in the same way in each accounting period
Matching Expenses with Revenue An accounting concept applied when amounts that helped earn revenue for a period must be reported as expenses in the same period
Materiality An accounting concept applied when business activities creating dollar amounts large enough to affect business decisions should be recorded and reported as separate items in the accouning records and financial statements.
Unit of Measurement An accounting concept requiring that business transactions be reported in numbers that have common values--that is, using a common unit, for example, U.S. dollars
Accounting Period Cycle An accounting concept applied when changes in financial information are reported for a specific period of time in the form of financial statements
Exchange Rate The value of one currency for the purpose of conversion to another
AICPA American Institute of Certified Public Accountants
NASDAQ created by the National Association of Securities Dealers (NASD) to enable investors to trade securities on a computerized, speedy and transparent system, and commenced operations on February 8, 1971
Mrs. Huffman Business Teacher PRESTON HIGH SCHOOL Kingwood, WV View profile
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Accrual basis of accounting
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Reporting income when it is earned and expenses when they are incurred
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Adjusting Entries
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Journal entries recorded to update general ledger accounts at the end of fiscal period
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Terms in this set (33)
Accrual basis of accounting
Reporting income when it is earned and expenses when they are incurred
Adjusting Entries
Journal entries recorded to update general ledger accounts at the end of fiscal period
Adjustments
Changes recorded on a work sheet to update general ledger accounts at the end of a fiscal period
Balance Sheet
A financial statement that reports assets, liabilities, and owner's equity on a specfic date
Cash basis of accounting
Reporting income when the cash is received and expenses when the cash is paid
Fiscal Period
The length of time for which a business summarizes its financial information and reports its financial performance
Fiscal Year
A fiscal period consisting of 12 consecutive months
Income Statement
A financial statement showing the revenue and expenses for a fiscal period
Net Income
The difference between total revenue and total expenses when total revenue is greater
Net Loss
The difference between total revenue and total expenses when total expenses are greater
Prepaid Expense
Cash paid for an expense in one fiscal period that is not used until a later period
Trial Balance
A proof of equality of debits and credits in a general ledger
Work Sheet
A columnar accounting form used to summarize the general ledger information needed to prepare financial statements
1. 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
2. A fiscal period must be 12 months in length
False
3.Journals, ledgers, and work sheets are considered permanent records
False
4. The heading on a work sheet contains the name of the business, the name of the report, and the date of the report
True
5. Only accounts with a balance are listed on a trial balance
False
6. The 4 questions asked when analyzing an adjustment are: Why? Where? When? and How?
False
7. The two accounts affected by the adjustments for supplies are Supplies and Supplies Expense
True
8. The two accounts affects by the adjustment for insurance are Prepaid Insurance Expense and Insurance
False
9. The balance in Prepaid Insurance after adjusting entries are recorded represents the amount of insurance premium still remaining
True
10. Totaling and ruling the Adjustments columns of a work sheet are necessary to prove the equality of debits and credits
True
11. The income statement and balance sheet are prepared from the Trial Balance columns on the work sheet
False
12. Net income on a work sheet is calculated by subtracting the Income Statement Debit column total from the Income Statement Credit column total
True
13. If errors are found on a work sheet, they must be erased and corrected before any further work is completed
True
14. When two column totals are not in balance on the work sheet, the difference between the two totals is calculated and checked
True
15. 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
True
16. 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
True
17. Most errors occur in doing arithmetic
True
18. The best way to prevent errors is to use a calculator
False
19. Adjusting entries must be posted to the general ledger accounts
True
20. The balance in Supplies Expense after adjusting entries are recorded represents the amount of supplies used during the fiscal period
True
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Reporting income when it is earned and expenses when they are...
Reporting income when it is earned and expenses when they are incurred. :cash basis of accounting, accrual basis of accounting, income basis of accounting, balance basis of accounting
Reporting income when it is earned and expenses when they are incurred. ACCOUNTING
cash basis of accounting
accrual basis of accounting
income basis of accounting
balance basis of accounting
Answer: accrual basis of accounting1625 students attemted this question.
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Similar Questions
Reporting income when cash is received and expenses when cash is paid.
When the Income Statement Debit column total is greater than the Income Statement Credit column total on a work sheet, the business has a net income.
Net income on a work sheet is calculated by subtracting the Income Statement Debit column total from the Income Statement Credit column total.
Revenues minus expenses equals _____________________.(Revenues-Expenses = _______________)
The difference between total revenue and total expenses when total expenses are greater.
Concept: Business transactions are reported in numbers that have common values. Meaning all reporting should be done in terms of money
The accounting concept Consistent Reporting is being applied when a word processing service business reports revenue per page one year and revenue per hour the next year.
The Matching Concept states that revenue should only be recognised when it is earned and not received. If a company sells goods on credit in March and receives payment in May, this would be shown in the sales figure for?
Expenses are those items that are:
What is the missing term in the break even formula below? Break even revenue = Operating expenses / ?
What is the missing term in the break even formula below? Break even units = Operating expenses / (Selling price – ?)
Payment of Telephone expenses
The following are expenses
The financial statement that reports the revenues and expenses for a period of time such as a year or a month is the:
Entries to expenses such as Rent Expense are usually
Under the accrual basis of accounting, expenses are reported in the accounting period when the
Revenues minus expenses equals:
The ________________ __________________ is one of the main financial statements and reports revenues and expenses for a period of time such as a month or year.
The difference between total revenue and total expenses when total revenue is greater.
A financial statement showing the revenue and expenses for a fiscal period.
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