Accounting Chapter 16

In the preparation of financial statements, accounting principles are applied differently from one fiscal period to the next.

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Every amount on a financial statement is accompanied by a related discription.

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• False

Data needed to prepare the Liabilities section of a balance sheet are obtained from the Debit column of an adjusted trial balance.

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The difference between an asset's account balance and its related contra account balance is known as its book value.

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The amount of dividends paid during the year is presented on the income statement.

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Interest income is reported on the income statement in a section labeled Other Revenue.

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Operating revenue less cost of merchandise sold equals net income.

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

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• False

Increasing sales revenue while keeping cost of merchandise sold the same will increase gross profit.

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• False

All the information required to prepare a statement of stockholder's equity is obtained from the income statement and the adjusted trial balance.

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• False