Chapter 9 Quiz

The balance sheet reports the final balances of the permanent accounts at the end of the fiscal period.

• true

• false

A 2% return on sales is acceptable for most companies.

• true

• false

A net income will increase the owner’s capital account.

• true

• false

The heading is the same on all three financial statements.

• true

• false

The revenue, expense, and the Income Summary accounts are included on the statement of changes in owner’s equity.

• True

• False

The financial statement that reports net income or net loss is the

• statement of changes in the owner's equity

• income statement

• balance sheet

• statement of cash flows

At the beginning of the accounting period, Frank’s Supply Company had a capital balance of $210,050.  During the period, the owner invested $10,500 additional capital, and did not take any withdrawals.  The period showed a net loss of $24,850.  What was the ending capital for the period?  

• $196,150

• $195,700

• $224,400

• $229,550

An income summary shows how a business is doing

• for period of 12 months

• on a specific date during the year

• regarding its profits or loss

• all of the above

The purpose of the Income Statement is to report....

• all assets, liabilities, and owner's equity at a specified time

• all of accounts used in journalizing a business's transactions

• balance in the capital accounts in order to determine the net income or loss

• the net income or loss for a fiscal period

What formula tells a company how effectively a company is generating profits from its revenue?

• return on sales

• working capital

• current ratio

• quick ratio