Accounting - Preparing an 8-Column Work Sheet for a Merchandising Business

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The balance of Merchandise Inventory in the Trial Balance columns represents the beginning balance plus all purchases of merchandise made in the fiscal period.

Income Summary is a temporary account.

A net income amount is extended to the Balance Sheet Debit column.

The totals of a work sheet's Balance Sheet columns should equal the totals of the Income Statement columns.

The federal income tax rate increases as the net income before federal income tax increases.

The prepaid insurance account must be adjusted at the end of a fiscal period because the account balance does not reflect the value of the insurance that expired during the period.

There will be a net loss if the Income Statement Debit column total is larger than the Income Statement Credit column total.

General ledger accounts are listed in the work sheet's Account Title column in the same order in which they appear in the general ledger.