accounting chapter 7
The date on a monthly balance sheet prepared on July 31 is written as (A) For Month Ended July 31, 20-- (B) July 31, 20-- (C) 20--, July 31 (D) none of the above.
B
Information needed to prepare a balance sheet's Assets section is obtained from a work sheet's Account Title column and (A) Income Statement Debit column (B) Income Statement Credit column (C) Balance Sheet Debit column (D) Balance Sheet Credit column.
C
If a business wanted to show how the current capital balance was calculated, it would (A) only list net income on the balance sheet (B) only list net income and withdrawals on the balance sheet (C) list only the beginning capital balance on the balance sheet (D) list the beginning capital balance, the net income, the withdrawals, and the ending capital balance on the balance sheet.
D
Information needed to prepare a balance sheet's Liabilities section is obtained from a work sheet's Account Title column and (A) Income Statement Debit column (B) Income Statement Credit column (C) Balance Sheet Debit column (D) Balance Sheet Credit column
D
T/F: A balance sheet reports financial information for a specific date
True
T/F: A balance sheet reports financial information on a specific date and includes the assets, liabilities, and owner's equity
True
T/F: A financial ratio is a comparison between two components of financial information
True
T/F: For a service business, the revenue reported on an income statement is often compared to two items: total expenses and net income
True
T/F: Return on sales (ROS) is the ratio of net income to total sales
True
T/F: The Adequate Disclosure accounting concept is applied when financial statements contain all information necessary to understand a business's financial condition
True
T/F: 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
T/F: 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
T/F: The area of accounting that focuses on reporting information to internal users is called managerial accounting
True
T/F: The calculation and interpretation of a financial ratio is called ratio analysis
True
T/F: The formula for calculating the net income ratio is net income divided by total sales
True
T/F: The owner's capital amount reported on a balance sheet is calculated as capital account balance less drawing account balance plus net income
True
T/F: Vertical analysis is reporting an amount on a financial statement as a percentage of another item on the same financial statement
True
The amount of capital reported on a balance sheet is calculated as (A) Capital Account Balance + Net Income - Drawing Account Balance (B) Capital Account Balance - Net Income - Drawing Account Balance (C) Capital Account Balance + Net Income + Drawing Account Balance (D) Capital Account Balance - Net Income + Drawing Account Balance.
A
T/F: An amount written in parentheses on a financial statement indicates an estimate
False
T/F: An income statement reports information for a specific date indicating the financial progress of a business in earning a net income or net loss
False
T/F: If a business has a net loss for the period, expenses should be reported before revenues on the income statement
False
T/F: The area of accounting that focuses on reporting information to external users is called managerial accounting
False
T/F: The formula for calculating the total expenses ratio is total expenses divided by net income
False
T/F: The net income calculated for the income statement and the net income on the work sheet can be different because of adjusting entries
False
T/F: When a business has two different sources of revenue, a separate income statement should be prepared for each kind of revenue
False
Assuring that financial statements contain all information necessary to understand a business's financial condition is an application of the accounting concept: a) Adequate Disclosure, b) Going Concern, c) Objective Evidence, d) Accounting Period Cycle
a) Adequate Disclosure
The amount of net income calculated on an income statement is correct if: a) it is the same as the net income shown on the work sheet, b) debits equal credits, c) it is the same as the net income shown on the balance sheet, d) none of these
a) it is the same as the net income shown on the work sheet
An income statement reports a business's financial: a) condition over a specific period of time, b) progress over a specific period of time, c) condition on a specific date, d) progress on a specific date
b) progress over a specific period of time
Preparing financial statements at the end of each monthly fiscal period is an application of the accounting concept: a) Adequate Disclosure, b) Going Concern, c) Objective Evidence, d) Accounting Period Cycle
d) Accounting Period Cycle
When preparing a balance sheet, the amount of owner's capital is calculated using amounts obtained from: a) the general leader, b) the income statement, c) the journal, d) none of these
d) none of these