Accounting Chap 16 Test

True

An owners' equity statement summarizes the changes in owners' equity during a fiscal period.

False

Data needed to prepare the liabilities seciton of a balance sheet are obtained from a worksheet's Balance Sheet Debit Column.

True

Increaseing sales revenue while keeping cost of mercandise sold the same will increase gross profit on sales.

False

A distribution of net income statemnt summarizes how owners' equity has changed during a fiscal period.

False

A partnership distribution of net income or net loss is usually shown on the trial balance.

a distribution of net income statement.

A partnership financial statement showing net income or net loss distribution to each partner is ________.

True

A separate financial statement may be prepared to show the distribution of net income or loss to partners.

Fasle

Beginning merchandise inventory less purchases made during the fiscal period plus ending inventory equals cost of merchandise sold.

cost of merchandise sold, gross profit on sales, total expenses, and net income

For a merchandising business, every sales dollar reported on the income statement includes.

False

If a company has determined that hte acceptable component percentage for cost of merchandise sold is nto more than 51.1%, the current year's actual companent percentage of 48.9% is unacceptable.

False

In the prepaation of financial statements, accounting principles are applied differently from one fiscal period to the next.

False

Most businesses correct an unacceptable component percentage for gross profit by simply increasing the markup on merchandise purchased for sale because an increased selling price will always incrase profit.

False

On an income statement, componenet percentages is by making comparisons with prior fiscal periods.

True

One way a business determines acceptable component percentages is by making comparisons with prior fiscal periods.

to purchase from different vendors who offer better prices

One way to improve an unacceptable component percentage for cost of merchandise sold is

Increase sales revenue

One way to increase gross profit on ales is to____

False

Owners' equity can be changed only when a partner withdraws cash or other assets from the business or makes an additional investment in the business.

Adequate Disclosure

Preparing financial statements that provide information about a business's financial condiditon, changes in the financial condition,and the progress of operations is an application of the accoutnign concept.

True

Regardless of how earnings are shared, the steps in preparing a distribution of net income statement are the same.

False

Reporting financial information the same way from one fiscal period ot the next is an application of the accounting concept Adequate Disclosure.

False

Revenue less cost of merchandise sold equals net income.

True

Same manangemnt decisions can best be made after the owners have determined the amount of assets, liabilities, and owners' equity in the business.

Gross profit on sales

The revenue remaining after cost of merchandise sold has been deducted is_____.

The cost of merchandise sold, the cost of goods sold, the cost of sales

The total orginal price of all merchandise sold during a fiscal period is ________

True

Total expenses on an income statement are deducted from the gross profit on sales to find net income.

False

When a business's expenses are less than the gross profit on sales, the difference is known as a net loss.

True

When more detailed information about an item on a financial statement is needed, a supporting schedule may be prepared.