Unit 7 Flashcards
(True or False)
The full Disclosure accounting concept is applied when a company always prepares financial statements at the end of each monthly fiscal period
False
(True or False)
Internal users of accounting information include company managers, officers, and creditors
False
(True or False)
An income statement reports information on a specific date indication the financial condition of a business
False
(True or False)
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
True
(True or False)
Information needed to prepare an income statement comes from the Account Title column and the Income Statement columns of a work sheet
True
(True or False)
The income statement for a service business has five sections: Heading, Revenue, Expenses, Net Income or Net Loss, and Capital
False
(True or False)
The Income statement’s account balances are obtained from the work sheet’s Income Statement columns
True
(True or False)
The net income on an income statement is verified by checking the balance sheet.
False
(True or False)
Double lines ruled across both amount columns of an income statement indicate that the amount has been verified.
True
(True or False)
A financial ratio is comparison between two components of financial information.
True
(True or False)
Financial ratios on an income statement are calculated by dividing sales and total expenses by net income.
False
(True or False)
No company should have a vertical analysis ratio for total expenses higher than 48.0%
False
(True or False)
When a business has two different sources of revenue, both revenue accounts are listed on the income statement
True
(True or False)
An amount written in parentheses on a financial statement indicates a negative amount
True
(True or False)
The owner’s capital amount reported on balance sheet is calculated as: capital account balance plus drawing account balance, less income.
False
(True or False)
A balance sheet reports information about elements of the accounting equation
True
(True or False)
The owner’s capital amount reported on a balance sheet is calculated as: capital account balance plus drawing account balance, less net income
False
(True or False)
the position of the total asset line on the balance sheet is determined after the equities section prepared
True
(True or False)
Double lines are ruled across the Balance Sheet columns to show that the column totals have been verified as correct
True
(True or False)
The owner’s equity section of a balance sheet is the same for all businesses
False
Vocab:
A negative balance that remains after total expenses are subtracted from total income
Deficit
Vocab:
The ratio of net income to total sales
Return on Sales
Vocab:
Reporting an amount on a financial statement as a percentage of another item on the same financial statement
Vertical analysis
Vocab:
Any persons or groups who will be affected by an action
Stakeholders
