Accounting Chapter 7
Preparing financial statements at the end of each monthly fiscal period in 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
Information needed to prepare a balance sheet's Assets section is obtained from a work sheet's Account Title column and...
Balance Sheet Debit column
An amount written in parentheses on a financial statement indicates an estimate
False
An income statement reports information for a specific date indicating the financial progress of a business in earning a net income or a net loss
False
If a business has a net loss for the period, expenses should be reported before revenues on the income statement
False
The formula for calculating the total expenses ratio is total expenses divided by net income
False
The net income calculated for the income statement and the net income on the work sheet can be different because of adjusting entries
False
When a business has two different sources of revenue, a serape income statement should be prepared for each kind of revenue
False
The date on a monthly income statement prepared on April 30 is written as...
For month ended April 30, 20--
A balance sheet reports financial information for a specific date
True
A balance sheet reports financial information on a specific date and includes the assets, liabilities, ad owner's equity
True
A financial ratio is a comparison between two components of financial information
True
For a service business, the revenue reported on an income statement is often compared to two items: total expenses and net income
True
Return on sales (ROS) is the ratio of net income to total sales
True
The Adequate Disclosure accounting concept is applied when financial statements contain all information necessary to understand a business's financial condition
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
The area of accounting that focuses on reporting information to internal users is called managerial accounting
True
The calculation and interpretation of a financial ratio is called ratio analysis
True
The matching expenses with Revenue accounting concept is applied when the revenue earned and the expenses incurred to earn that revenue are reoriented in the same fiscal period
True
The owner's capital amount reported on a balance sheet is calculated as capital account balance less drawing account balance plus net income
True
There formula for calculating the net income ratio is net income divided by total sales
True
Vertical analysis is reporting an amount on a financial statement as a percentage of another item on the same financial statement
True
Information needed to prepare an income statement's Expense section is obtained from a work sheet's Account Title column and...
income statement debit column
The amount of net income calculated on an income statement is correct if...
it is the same as the net income shown on the work sheet
The formula for calculating the net income ratio is
net income divided by total sales
An income statement reports a business's financial
progress over a specific period of time
