Accounting Chapter 7 Review

he date on a monthly income statement prepared on April 30 is written as

• April 30, 20--.

• For Month Ended April 30, 20--.

• 20--, April 30.

• none of these

The amount of net income calculated on an income statement is correct if

• it is the same as the net income shown on the work sheet.

• debits equal credits.

• it is the same as the net income shown on the balance sheet.

• none of these.

Preparing financial statements at the end of each monthly fiscal period is an application of the accounting concept

• Adequate Disclosure.

• Going Concern.

• Objective Evidence.

• Accounting Period Cycle.

Information needed to prepare an income statement’s Expense 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.

An income statement reports a business’s

• financial condition over a specific period of time.

• financial progress over a specific period of time.

• financial condition on a specific date.

• financial progress on a specific date.

When preparing a balance sheet, the amount of owner’s capital is calculated using amounts obtained from

• the general ledger.

• the income statement.

• the journal.

• none of these.

The formula for calculating the net income ratio is

• net income divided by total sales.

• total sales divided by total expenses.

• total sales minus total expenses divided by net income.

• none of these.

Information needed to prepare a balance sheet’s Assets 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.

Assuring that financial statements contain all information necessary to understand a business’s financial condition is an application of the accounting concept

• Adequate Disclosure.

• Going Concern.

• Objective Evidence.

• Accounting Period Cycle.

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

• true

• false