Chapter 9 Accounting I

One source of information for completing the balance sheet is the ____.

Balance Sheet section of the work sheet

A(n) ____ is the financial statement that reports the final balances in all asset, liability, and owner's equity accounts at the end of the accounting period.

Balance sheet

The info needed to prepare the income statement comes form the ____.

Income Statement section of the work sheet

___ are debts of the business that must be paid within the next accounting period.

Current liabilities

Return on sales is calculated by dividing net sales by net income.

False

____ is a comparison of two items on a finical statement, resulting in a percentage that is used to evaluate the relationship between the two items.

Ratio analysis

____ indicates what percentage of net sales represents profit.

Return on sales

The ____ is completed as a support document for the balance sheet.

Statement of changes in owner's equity

A net income will increase the owner's capital account.

True

Financial reports are often prepared in pencil.

false

The balance sheet reports financial information ____.

on a specific date.

The balance sheet is prepared before the statement of changes in owner's equity.

False

The changes in the Cash in Bank account are reported in the statement of changes in owner's equity.

False

_____ summarizes the changes resulting from business transactions that have occurred during an accounting period.

Financial statements

In the ____, the classifications of balance sheet accounts are shown one under the other.

Report form

The net income or net loss reported on the income statement must be the same as the net income or net loss calculated on the work sheet.

True

The Trial Balance section of the work sheet provides the information used in preparing the income statement.

False

The heading is the same on all three financial statements.

False

The income statement represents the basic accounting equation.

False

The information on the statement of changes in owner's equity is used in preparing the income statement.

False

The revenue, expense, and the Income Summary accounts are included on the statement of changes in owner's equity.

False

___ is reported on the income statement.

Net income or net loss

Current assets are those used up or converted to cash during the normal operating cycle of a business.

True

Net income or net loss is the difference between total revenue and total expenses over a specific period of time.

True

The balance sheet reports the final balances of permanent accounts at the end of the fiscal period.

True

The primary financial statements prepared for a sole proprietorship are the income statement and the balance sheet.

True

The statement of changes in owner's equity summarizes the effects on the capital account of the various business transactions that occurred during the period.

True