Chapter 9, Accounting

The ____ of a financial statement answers the questions: who? what? and when?

heading

The _____ reports a business's net income or net loss over an entire fiscal period.

income statement

The information needed to prepare the income statement comes from the ____.

Income Statement section of the work sheet

True or False? The changes in the Cash in Bank account are reported in the statement of changes in owner's equity

False

True or False? The heading is the same on all three financial statements

False

True or False? The income statement represents the basic accounting equation

False: Balance Sheet

True or False? The balance sheet is prepared before the statement of changes in owner's equity

False: Income Statement

True or False? The Trial Balance section of the work sheet provides the information used in preparing the income statement

False: The Income Statement

True or False? The information on the statement of changes in owner's equity is used in preparing the income statement

False: balance sheet

____ summarize the changes resulting from business transactions that have occurred during a fiscal period

Financial statements

True or False? 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

True

A ____ is the financial statement that reports the final balances in all asset, liability, and owner's equity accounts at the end of the fiscal period.

balance sheet

The balance sheet reports financial information ____.

on a specific date

In the ____, the classification of balance sheet accounts are shown one under the other.

report form

True or False? A net income will increase the owner's capital account

True

The amount of net income or net loss reported on the income statement must match the amount shown on the ____

work sheet

The ____ is completed as a support document for the balance sheet.

Balance Sheet section of the work sheet

_______ are used up or converted to cash during the normal operating cycle and ______ are debts that must be paid within the next accounting period.

Current assets, current liabilites

____ is reported on the income statement

Net income or net loss

_____ is the process of evaluating the relationship between various amounts in the financial statements.

Ratio Analysis

A commonly used ratio is ______. To calculate it, divide net income by sales.

Return on sale

The source of information for completing the balance sheet comes from the work sheet and the _____

Statement of changes in owner's equity

True or False? The balance sheet reports the final balances of the permanent accounts at the end of the fiscal period

True

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

True