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29 Cards in this Set
- Front
- Back
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A balance sheet reports financial information over a specific period of time T/F |
F |
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The financial condition of a business refers to its financial strength T/F |
T |
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A balance sheet has three sections: heading, assets, and liabilities T/F |
F |
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The formula for calculating net income is total revenue minus total expenses equals net income T/F |
T |
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The net income calculated for for the income statement and the net income on the work sheet must be the same T/F |
T |
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On a income statement, double lines are ruled across both amount columns to indicate that debits equal credits T/F |
F |
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For a service business, the revenue reported on a income statement includes components for total expenses and net income T/F |
T |
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The formula for calculating the total expenses component percentage is: total expenses divided by total sales equals total expenses component percentage T/F |
T |
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The current capital to be reported on a balance sheet is calculated as: the capital account balance plus net income equals current capital T/F |
F |
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Component percentages on an income statement are calculated by dividing sales and total expenses by net income T/F |
F |
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A component percentage is the percentage relationship between one financial statement item and the total that includes that item T/F |
T |
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The Adequate Disclosure accounting concept is applied when financial statements contain all information necessary to understand a business's financial condition T/F |
T |
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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/F |
T |
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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 T/F |
T |
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Information needed to prepare an income statement comes from the trail balance columns and the income statement columns of a work sheet T/F |
F |
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An amount written in parentheses on a financial statement indicates an estimate T/F |
F |
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A balance sheet reports financial information on a specific date and includes the assets, liabilities, and owners equity T/F |
T |
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When a business has two different sources of revenue, a separate income statement should be prepared for each kind of revenue T/F |
F |
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The owner's capital amount reported on a balance sheet is calculated as: capital amount balance plus drawing account balance less net income T/F |
F |
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The owner's equity section of a balance section of a balance sheet may report different kinds of details about owner's equity, depending on the need of the business T/F |
T |
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Assuring that financial statements contain all information necessary to understand a business's financial condition is an application of the accounting concept |
Adequate Disclosure |
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Preparing financial statements at the end of each monthly fiscal period is an application of the accounting concept |
Accounting Period Cycle |
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A balance sheet reports a business's financial |
Condition on a specific date |
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The date on a monthly income statement prepared on July 31 is written as |
For Month Ended July 31, 20-- |
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Information needed to prepare an income statement's revenue section is obtained from a work sheets Account Title column and |
Income Statement Credit Column |
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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 |
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The formula for calculating the net income component percentage is |
Net income divided by total sales equals net income component percentage |
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Information needed to prepare a balance sheet liabilities section is obtained from a work sheet's Account Title column and |
Balance Sheet Credit Column |
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When preparing a balance sheet, the amount of owner's capital is obtained from |
None of these |
