Chapter 9 Accounting True/False

True

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

False

A net loss and withdrawals both cause an increase to the capital account.

False

Financial reports are prepared in pencil.

True

The Balance Sheet contains only the permanent general ledger accounts.

True

The Balance Sheet is prepared from information in the balance sheet section of the worksheet and form the Statement of Changes in Owner's Equity.

True

The Balance Sheet reports the final balances of the permanent accounts at the end of the fiscal period.

True

The Balance Sheet represents the basic accounting equations.

False

The Income Statement reflects the basic accounting equation.

False

The Statement of Changes in Owner's Equity is completed as a supporting document for the Income Statement.

True

The Statement of Changes in Owner's Equity is prepared before the Balance Sheet.

False

The Statement of Changes in Owner's Equity shows the changes to the Cash in Bank account.

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.

False

The balance sheet section of the worksheet provides the information used in preparing the income statement.

False

The first amount column on the Income Statement is used to record debits and the second amount column is used to record credits

False

The heading is the same on all three financial statements.

False

The information on the Statement of Change sin Owner's Equity is used in preparing the Income Statement.

False

The primary financial statements prepared for a sole proprietorship are the Income Statement and the Statement of Changes in Owner's Equity.

False

The sections listed on the Income Statement are the heading, the revenue fro the period, the capital for the period, and the next income or net loss for the period.

True

The wording of the date line in the heading on the income statement is important.