part two—analyzing accounting practices related to a work sheet and adjusting entries directions: place a t for true or an f for false in the answers column to show whether each of the following statements is true or false. 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. (p. 158) 2. a fiscal period must be 12 months in length. (p. 159) 3. journals, ledgers, and work sheets are considered permanent records. (p. 159) 4. the heading on a work sheet contains the name of the business, the name of the report, and the date of the report. (p. 159) 5. only accounts with a balance are listed on a trial balance. (p. 160) 6. the four questions asked when analyzing an adjustment are: why? where? when? and how? (p. 164) 7. the two accounts affected by the adjustment for supplies are supplies and supplies expense. (p. 164) 8. the two accounts affected by the adjustment for insurance are prepaid insurance expense and insurance. (p. 165) 9. the balance in prepaid insurance after adjusting entries are recorded represents the amount of insurance premium still remaining. (p. 165) 10. totaling and ruling the adjustments columns of a work sheet are necessary to prove the equality of debits and credits. (p. 166) 11. the income statement and balance sheet are prepared from the trial balance columns on the work sheet. (p. 169) 12. net income on a work sheet is calculated by subtracting the income statement debit column total from the income statement credit column total. (p. 171) 13. if errors are found on a work sheet, they must be erased and corrected before any further work is completed. (p. 173) 14. when two column totals are not in balance on the work sheet, the difference between the two totals is calculated and checked. (p. 173) 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. (p. 173) 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. (p. 174) 17. most errors occur in doing arithmetic. (p. 174) 18. the best way to prevent errors is to use a calculator. (p. 174) 19. adjusting entries must be posted to the general ledger accounts. (p. 176) 20. the balance in supplies expense after adjusting entries are recorded represents the amount of supplies used during the fiscal period. (p. 176)

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Accepted Answer

# Brief Explanations:
To solve these true - false questions, we need to recall the basic concepts of accounting:

1. **Consistent Reporting Concept**: Consistent Reporting requires using the same accounting methods over time. A delivery business reporting revenue based on deliveries one year and revenue received the next year is inconsistent. So this statement is False (F).
2. **Fiscal Period**: A fiscal period can be of different lengths, not necessarily 12 months. For example, a business can have a fiscal period of a quarter (3 months). So this statement is False (F).
3. **Permanent Records**: Journals and ledgers are permanent records, but work sheets are not. Work sheets are used for internal purposes and are not permanent. So this statement is False (F).
4. **Work Sheet Heading**: The heading of a work sheet typically includes the business name, the report name (like Work Sheet), and the report date. So this statement is True (T).
5. **Trial Balance**: All accounts (including those with zero balance) from the ledger are listed in the trial balance to ensure completeness. So this statement is False (F).
6. **Analyzing Adjustments**: The four questions for analyzing an adjustment are: What is the account? What is the amount? When? and How? (or similar, but not Why? Where? etc.). So this statement is False (F).
7. **Supplies Adjustment**: When adjusting for supplies, the Supplies (asset) account and Supplies Expense (expense) account are affected. As supplies are used, Supplies decreases and Supplies Expense increases. So this statement is True (T).
8. **Insurance Adjustment**: The adjustment for insurance affects Prepaid Insurance (asset) and Insurance Expense (expense), not Prepaid Insurance Expense and Insurance. So this statement is False (F).
9. **Prepaid Insurance after Adjustment**: After adjusting entries, the balance in Prepaid Insurance is the amount of insurance premium that is still unexpired (remaining). So this statement is True (T).
10. **Adjustments Columns Totaling**: Totaling and ruling the Adjustments columns of a work sheet is done to prove that the total debits equal total credits in the adjustments. So this statement is True (T).
11. **Preparing Financial Statements**: The income statement and balance sheet are prepared from the Adjusted Trial Balance columns (after adjustments) on the work sheet, not the Trial Balance columns. So this statement is False (F).
12. **Net Income Calculation on Work Sheet**: Net income is calculated as Income Statement Credit (revenue) total minus Income Statement Debit (expenses) total. So this statement is True (T).
13. **Correcting Work Sheet Errors**: If errors are found on a work sheet, they should be corrected (not just erased, but using proper accounting procedures). However, the statement says they must be erased and corrected, which is not the proper way (usually, we make adjusting entries or correct the source). But in the context of work sheet (a working document), if there is an error, we correct it (the statement's wording might be simplistic, but assuming the context, if we consider that we need to correct before further work, and "erased" as a simple way of saying corrected, but actually, work sheets are usually re - done or adjusted. But according to some basic accounting education materials, this statement might be considered True? Wait, no. Wait, work sheets are not permanent, so if there is an error, we can correct it (maybe by crossing out and writing the correct amount). So maybe the answer is T? Wait, no, the proper way is not to erase but to correct. But maybe in the context of the question, the answer is T. Wait, let's re - check. The question says "they must be erased and corrected before any further work is completed". Maybe in the basic accounting context for students, this is considered True. But I think actually, it's better to say that we correct the entries, not erase. But maybe the answer here is T? Wait, no, I think I made a mistake. Let's see, the work sheet is a tool, so if there is an error, we can correct it (the statement's wording is a bit simplistic, but maybe in the textbook's context, it's True. Wait, no, the correct approach is not to erase but to make adjustments. But maybe the answer is T. Wait, maybe I was wrong earlier. Let's move on.
14. **Checking Column Totals Discrepancy**: When two column totals are not in balance on the work sheet, we calculate the difference and check for common errors (like transposition, addition errors). So this statement is True (T).
15. **Transposed Number Error**: If the difference between debit and credit totals is divisible by 9, it is likely a transposed number (since transposing two digits, like 12 and 21, gives a difference divisible by 9). So this statement is True (T).
16. **Trial Balance Column Errors**: If there are errors in the Trial Balance columns of the work sheet, one reason could be that a general ledger account balance was recorded in the wrong Trial Balance column (debit instead of credit or vice - versa). So this statement is True (T).
17. **Most Errors Source**: Most accounting errors occur in arithmetic (addition, subtraction, etc.) when preparing ledgers, trial balances, etc. So this statement is True (T).
18. **Preventing Errors**: Using a calculator can help prevent arithmetic errors, but it's not the "best" way (best way is to have proper procedures, double - checking, etc.). But in the context of basic accounting education, maybe this statement is considered True? Wait, no. The best way to prevent errors is to follow proper accounting procedures, check work, etc. So this statement is False (F).
19. **Posting Adjusting Entries**: Adjusting entries must be posted to the general ledger accounts to update the account balances. So this statement is True (T).
20. **Supplies Expense after Adjustment**: The balance in Supplies Expense after adjusting entries is the amount of supplies used during the fiscal period. So this statement is True (T).

# Answer:
1. F
2. F
3. F
4. T
5. F
6. F
7. T
8. F
9. T
10. T
11. F
12. T
13. T (Note: The wording is simplistic, but in the context of the question, it's considered True)
14. T
15. T
16. T
17. T
18. F
19. T
20. T

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