Chapter 7 Review

Front

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

Back

true

Front

The net income calculated for the income statement and the net income on the worksheet can be different because of adjusting entries.

Back

false

Front

An amount written in parentheses on a financial statement indicates an estimate.

Back

false

Front

The formula for calculating the net income ratio is net income divided by total sales.

Back

true

Front

The area of accounting that focuses on reporting information to internal users is called managerial accounting.

Back

true

Front

When a business has two different sources of revenue, a separate income statement should be prepared for each kind of revenue.

Back

false

Front

The Owner's Equity section of a balance sheet may report different kinds of details about owner's equity, depending on the need of the business.

Back

true

Front

If a business has a net loss for the period, expenses should be reported before revenues on the income statement.

Back

false

Front

The owner's capital amount reported on a balance sheet is calculated as capital account balance less drawing account balance plus net income. Is this statement true or false?

Back

true

Front

The area of accounting that focuses on reporting information to external users is called managerial accounting.

Back

false