Chapter 7 Accounting Test
Preparing financial statements at the end of each monthly fiscal period is 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 liabilities section is obtained from a work sheet's Account Title column and __.
Balance Sheet Credit column
Information needed to prepare a balance sheet assets section is obtained from a work sheet's Account Title column and __.
Balance Sheet Debit column
A balance sheet reports financial information over a specific period of time.
F
Amounts from a work sheet's Trial Balance columns are used in preparing the revenue section of an income statement.
F
An amount written in parentheses on a financial statement indicates an estimate.
F
Information needed to prepare the assets section of the balance sheet is obtained form the work sheet's Account Title column and the Balance Sheet Credit column.
F
On a balance sheet, double lines are ruled across both amount columns to indicate that debits equal credits.
F
On an income statement , double lines are ruled across both amount columns to indicate that debits equal credits.
F
The income statement for a service business has five sections: heading, revenue, expenses, net income or loss, and capital.
F
The net income on an income statement is verified by checking the balance sheet.
F
When a business has two different sources of revenue, a separate income statement should be prepared for every kind of revenue.
F
The date on a monthly income statement prepared on July 31 is written as __.
For Month Ended July 31, 20--
Information needed to prepare an income statement's revenue section is obtained from a work sheet's Account Title column and __.
Income Statement Credit column
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
A balance sheet reports information about the elements of the accounting equation.
T
Amounts from a work sheet's Income Statement Debit column are used in preparing the expense section of an income statement.
T
An income statement reports information over a period of time, indicating the financial progress of a business in earning a net income or a net loss.
T
For a service business, the revenue reported on an income statement includes components for total expenses and net income.
T
Single lines ruled across an amount column of an income statement indicate that amounts are to be added.
T
The Adequate Disclosure accounting concept is applied when financial statements contain all information necessary to understand a business's financial conditions.
T
The Matching Expenses with Revenue accounting concept is applied when the revenue earned and the expense incurred to earn that revenue are reported in the same fiscal period.
T
The financial condition of a business refers to its financial strength.
T
The formula for calculating the total expenses component percentage is: total expenses divided by total sales equals total expenses component percentage.
T
The net income calculated for the income statement and the net income on the work sheet must be the same.
T
The work sheet is used to assist in preparing the revenue, expenses, and net income sections of an income statement.
T
The percentage relationship between one financial statement item and the total that includes that item is __.
a component percentage
A balance sheet reports a business's financial __.
condition on a specific date
The sections of an income statement are __.
heading, revenue, expenses, and net income or net loss
The amount of net income calculated on an income statement is correct if __.
it is the same as net income shown on the work sheet
The formula for calculating the net income component percentage is __.
net income divided by total sales equals net income component percentage
An income statement reports a business's financial __.
progress over a specific period of time
When preparing a balance sheet, the amount of owner's capital is calculated using amounts obtained from __.
the work sheet's Balance Sheet columns
The formula for calculating the total expenses component percentage is __.
total expenses divided by total sales equals total expense component percentage
