Chapter 7 (t/f)
true
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, and owner's equity
true
a financial ratio is a comparison between two components of financial information
false
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
true
for a service business, the revenue reported on an income statement is often compared to two items: total expenses and net income
false
if a business has a net loss for the period expenses should be reported before revenues on the income statement
true
return on sales (ROS) is the ratio of net income to total sales
true
the adequate disclosure accounting concept is applies when financial statements contain all information necessary to understand a business's financial condition
false
the area of accounting that focuses on reporting information to external users is called managerial accounting
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 formula for calculating the net income ratio is net income divided by total sales
false
the formula for calculating the total expenses ratio is total expenses divided by net income
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
false
the net income calculated for the income statement and the net income on the work sheet can be different because of adjusting entries
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
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
vertical analysis is reporting an amount on a financial statement as a percentage of another item on the same financial statement
false
when a business has two different sources revenue, a separate income statement should be prepared for each kind of revenue