Accounting Chapter 9

Return on Sales

Indicates what percentage of net sales represents profit

False

Financial reports are often prepared in pencil

Total Liabilities

1. Balance Sheet

Total Liabilitiies and Owner's Equity

1. Balance Sheet

Commission Revenue

1. Income Statement

Rent Expense

1. Income Statement

Net Income

1. Income Statement 2. Statement of Changes in Owners Equity.

Computer Equipment

1. Balance Sheet

Balance Sheet

A ______ is the financial statement that reports the final balances in all asset, liability, and owners equity accounts at the end of the accounting period.

True

A net income will increase the owners Capital Account

Horizontal Analysis

External comparison of company performance

Vertical Analysis

Internal Comparison of company performance

Ratio Analysis

Is a comparison of two items on a financial statement; used to evaluate the relationship between the two items

Balance sheet section of the work sheet

One source of information for completing the balance sheet is the __________.

False

Return on sales is calculated by dividing net sales by net income

Beginning Capital

Statement of Changes in OE

Statement of changes in owners Equity

The ___ is completed as a supporting document for the balance sheet

Income Statement

The ______ reports a business net income or net loss over an entire accounting period

True

The balance sheet contains only the permanent general ledger accounts.

False

The balance sheet is prepared before the statement of changes in owners equity.

True

The balance sheet reports the final balances of the permanent accounts at the end of the fiscal period

True

The balance sheet reports the final balances of the permanent accounts at the end of the fiscal period.

False

The heading is the same on all three Financial Statements

False

The income statement represents the basic accounting equation.

Income statement section of the work sheet

The information needed to prepare the income statement come from the ______?

False

The information on the statement of changes in owners equity is used in preparing the income statement

True

The primary financial statements prepared for a sole proprietorship are the income statement and the balance sheet.

True

The statement of changes in owner's equity summarizes the effects on the capital account of the various business transactions that occurred during the period.

False

The trail balance section of the work sheet provides the information used in preparing the income statement