accounting- chapter 7
information needed to prepare a balance sheet liabilities section is obtained from a work sheet's account title column and
balance sheet credit column
a balance sheet has three sections: heading, assets, and liabilities
false
a balance sheet reports financial information over a specific period of time
false
an amount written in parentheses on a financial statement indicates an estimate
false
component percentages on an income statement are calculated by dividing sales and total expenses by net income
false
information needed to prepare an income statement comes from the trial balance columns and the income statement columns of a work sheet
false
on an income statement, double lines are ruled across both amount columns to indicate that debits equal credits
false
the current capital to be reported on a balance sheet is calculated as: the capital account balance plus net income equals current capital
false
the owner's capital amount reported on a balance sheet is calculated as: capital account balance plus drawing account balance less net income
false
when a business has two different sources of revenue, a separate income statement should be prepared for each kind of revenue
false
the date on a monthly income statement prepared on July 31 is written as
for month ended July 31, 2013
information needed to prepare an income statement's revenue section is obtained from a work sheet's account title column and
income statement credit column
the amount of net income calculated on an income statement is correct if
it is the same as net income shown on the work sheet
the formula for calculating the net income component percentage is
net income divided by total sales equals net income component percentage
when preparing a balance sheet, the amount of owner's capital is calculated using amounts obtained from
none of these
a balance sheet reports financial information on a specific date and includes the assets, liabilities, and owner's equity
true
a component percentage is the percentage relationship between one financial statement item and the total that includes that item
true
an income statement reports information over a period of time, indicating the financial progress of a business in earning a net income or a net loss
true
for a service business, the revenue reported on an income statement includes components for total expenses and net income
true
the adequate disclosure accounting concept is applied when financial statements contain all information necessary to understand a business's financial condition
true
the financial condition of a business refers to its financial strength
true
the formula for calculating net income is: total revenue minus total expenses equals net income
true
the formula for calculating the total expenses component percentage is: total expenses divided by total sales equals total expenses component percentage
true
the matching expenses with revenue accounting concept is applied when the revenue earned and the expenses incurred to earn that revenue are reported in the same fiscal period
true
the net income calculated for the income statement and the net income on the work sheet must be the same
true
the owner's equity section of a balance sheet may report different kinds of details about owner's equity, depending on the need of the business
true
preparing financial statements at the end of each monthly fiscal period is an application of the accounting concept
accounting period cycle
assuring that financial statements contain all information necessary to understand a business's financial condition is an application of the accounting concept
adequate disclosure
a balance sheet reports a business's financial
condition on a specific date
