Accounting Chapter 7 Review

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The date on a monthly income statement prepared on April 30 is written as

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For Month Ended April 30, 20--.

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The amount of net income calculated on an income statement is correct if it is the same as the net income shown on the work sheet.

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it is the same as the net income shown on the work sheet.

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Preparing financial statements at the end of each monthly fiscal period is an application of the accounting concept

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Accounting Period Cycle.

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Information needed to prepare an income statement’s Expense section is obtained from a work sheet’s Account Title column and

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Income Statement Debit column.

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An income statement reports a business’s

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financial progress over a specific period of time.

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When preparing a balance sheet, the amount of owner’s capital is calculated using amounts obtained from: the general ledger, the income statement, the journal, none of these.

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none of these.

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The formula for calculating the net income ratio is

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net income divided by total sales.

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Information needed to prepare a balance sheet’s Assets section is obtained from a work sheet’s Account Title column and

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Balance Sheet Debit column.

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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

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Adequate Disclosure.

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For a service business, the revenue reported on an income statement is often compared to two items: total expenses and net income.

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