Ch. 16 Financial Statements for a Corporation

The Income Summary account has a normal credit balance

• True

• False

In the accounting cycle, adjusting entries are posted to the general ledger prior to the

preparation of the financial statements

• True

• False

A corporation with net income would post a closing entry that credits Retained

Earnings

• True

• False

The amount of dividends paid during the year is presented on the balance sheet

• True

• False

Total operating expenses on an income statement are deducted from gross profit to

determine income from operations.

• True

• False

Operating revenue less cost of merchandise sold equals

• Net Income

• Gross Profit

• Net Income Before Federal income Taxes

• Net Income After Federal Income Taxes

Reporting financial information the same way from one fiscal period to the next is an application of the accounting concept Adequate Disclosure

• True

• False

The difference between an asset’s account balance and its related contra account balance

is known as

• net value

• related value

• book value

• none of these is correct

The income from operations is calculated by subtracting operating expenses from

• revenue

• net sales

• gross profit

• cost of merchandise sold

One way to increase gross profit is to

• decrease operating expenses

• decrease sales revenue

• increase sales revenue

• increase cost of goods sold