Accounting: Chapter 7 Review

A balance sheet has three sections: heading, assets, and liabilities.

• True
• False

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

• True
• False

The date on a monthly income statement prepared on July 31 is written as 

• For Month ended July 31, 20xx
• July 31, 20xx
• 20--, July 31.
• none of these

Information needed to prepare an income statement's revenue section is obtained from a work sheet's Account title column and 

• Income statement debit column
• Income statement credit column
• Balance sheet debit column
• Balance sheet credit column

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
• debits equal credits
• it is the same as the balance sheet
• none of these

The formula for calculating the net income component percentage is

• net income/total sales
• total sales/total expenses
• total sales-total expenses/net income
• none of these

A balance sheet reports financial information over a specific period of time.

• True
• False

Information needed to prepare a balance sheet liabilities section is obtained from a work sheet's Account title column and

• income statement debit column
• income statement credit column
• balance sheet debit column
• balance sheet credit column

When preparing a balance sheet, the amount of owner's capital is obtained from

• the general ledger

• the income statement

• The work sheet's balance sheet columns

• none of these

The financial condition of a business refers to its financial strength.

• True
• False