True/False
Indicate whether the
statement is true or false.
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1.
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A fiscal period is also known as an accounting period.
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2.
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All fiscal periods are one year long.
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3.
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Most businesses use a fiscal period of one year because tax reports must be made
at least once a year.
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4.
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All fiscal periods must begin on January 1.
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5.
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Many businesses choose a one-year fiscal period that ends during a period of
high business activity.
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6.
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Financial information may be reported any time a business needs it.
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7.
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A trial balance is a proof of the equality of debits and credits in a general
ledger.
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8.
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All general ledger account titles are listed on a trial balance even if some
accounts do not have a balance.
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9.
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The column in which an account balance is recorded on a trial balance shows
whether the account has a debit or credit balance.
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10.
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All account balances are written in the Trial Balance Credit column.
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11.
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A double line ruled across both Trial Balance columns shows that the two columns
are to be totaled.
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12.
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Making adjustments to general ledger accounts is an application of the Matching
Expenses with Revenue accounting concept.
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13.
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Every adjustment has debit and credit parts.
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14.
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The balance of the supplies account plus the value of the supplies on hand
equals the up-to-date balance of the supplies account.
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15.
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The value of the prepaid insurance coverage used during a fiscal period is an
expense.
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16.
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The adjustment for prepaid insurance is a debit to Prepaid Insurance and a
credit to Insurance Expense.
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17.
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When the Income Statement Credit column total is greater than the Income
Statement Debit column total on a work sheet, the business has a net income.
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18.
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A net loss results when total revenue is greater than total expenses.
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19.
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If an amount is written in an incorrect column on a work sheet, the error should
be erased and the amount should be written in the correct column.
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20.
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If the Trial Balance columns are not equal and the difference is $50.00, the
error most likely is a $25.00 amount written in the wrong column.
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21.
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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.
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22.
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Journals, ledgers, and work sheets are considered permanent records.
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23.
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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.
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24.
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The four questions asked when analyzing an adjustment are: Why? Where? When? and
How?
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25.
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The two accounts affected by the adjustment for supplies are Supplies and
Supplies Expense.
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26.
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The two accounts affected by the adjustment for insurance are Prepaid Insurance
Expense and Insurance.
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27.
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Totaling and ruling the Adjustments columns of a work sheet is necessary to
prove the equality of debits and credits.
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28.
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Two financial statements are prepared from the information on the work
sheet.
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29.
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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.
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30.
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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.
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31.
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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.
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32.
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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 columns
correctly.
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33.
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Errors in general ledger accounts should never be erased.
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34.
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Most errors occur in doing arithmetic.
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35.
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Using a calculator will help prevent errors in accounting records, but not all
errors are due to incorrect calculations.
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Multiple Choice
Identify the
choice that best completes the statement or answers the question.
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36.
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Following the same accounting procedures in the same way in each accounting
period is an application of the accounting concept ____.
a. | Matching Expenses with Revenue | c. | Consistent
Reporting | b. | Accounting Period Cycle | d. | Going Concern |
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37.
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Reporting changes in financial information for a specific period of time in the
form of financial statements is an application of the accounting concept ____.
a. | Matching Expenses with Revenue | c. | Consistent
Reporting | b. | Accounting Period Cycle | d. | Going Concern |
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38.
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A columnar form used to summarize general ledger information needed to prepare
financial statements is ____.
a. | a balance sheet | c. | a work sheet | b. | a trial balance | d. | an income
statement |
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39.
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On a trial balance, ____.
a. | all general ledger account titles are listed | b. | only general ledger
accounts that have balances are listed | c. | only accounts with debit balances are
listed | d. | only accounts with credit balances are listed |
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40.
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Changes recorded on a work sheet to update general ledger accounts at the end of
a fiscal period are ____.
a. | found on a trial balance | b. | recorded in a work sheet's Income
Statement columns | c. | reported on financial
statements | d. | adjustments |
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41.
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Recording revenue from business activities and expenses associated with earning
that revenue in the same accounting period is an application of the accounting concept ____.
a. | Matching Expenses with Revenue | c. | Consistent
Reporting | b. | Accounting Period Cycle | d. | Going Concern |
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42.
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On a work sheet, the balance of Cash is extended to the ____.
a. | Balance Sheet Debit column | c. | Income Statement Debit
column | b. | Balance Sheet Credit column | d. | Income Statement Credit column |
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43.
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On a work sheet, the balance of the owner's capital account is extended to
the ____.
a. | Balance Sheet Debit column | c. | Income Statement Debit
column | b. | Balance Sheet Credit column | d. | Income Statement Credit column |
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44.
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On a work sheet, the balance of the Sales account is extended to the
____.
a. | Balance Sheet Debit column | c. | Income Statement Debit
column | b. | Balance Sheet Credit column | d. | Income Statement Credit column |
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45.
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On a work sheet, the balance of an expense account is extended to the
____.
a. | Balance Sheet Debit column | c. | Income Statement Debit
column | b. | Balance Sheet Credit column | d. | Income Statement Credit column |
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46.
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When total revenue is greater than total expenses, the difference is a
____.
a. | net income | c. | debit balance | b. | net loss | d. | none of the
above |
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47.
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A net loss is entered in the work sheet's ____.
a. | Income Statement Debit and Balance Sheet Credit columns | b. | Income Statement
Credit and Balance Sheet Debit columns | c. | Balance Sheet Debit and Trial Balance Credit
columns | d. | Income Statement Debit and Trial Balance Credit
columns |
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48.
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If a pair of work sheet columns do not balance and the difference between the
totals is an amount that appears elsewhere on the work sheet, the error is probably ____.
a. | an error in addition | b. | an amount that has been written in the wrong
column | c. | an amount that has not been extended | d. | a slide |
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49.
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If the Trial Balance columns are not equal and the difference is 1, the error
often is ____.
a. | transposed numbers or a "slide" | b. | in writing an amount
in the wrong column | c. | in posting | d. | in
addition |
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50.
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If the Trial Balance columns are not equal and the difference can by divided
evenly by 9, the error most likely is ____.
a. | in transposed numbers or a "slide" | b. | subtraction | c. | addition | d. | in writing an amount
in the wrong column |
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