CH 7 Study Guide

The Full Disclosure accounting concepts is applied when a company always prepares financial statements at the end of each monthly fiscal period.

• True
• False

Internal users of accounting information include company managers, officers, and creditors.

• True
• False

An income statement reports information on a specific date, indicating the financial condition of a business.

• True
• False

The Matching Expenses with Revenue accounting concept is applied when the revenue earned and the expenses incurred to earn that revenue are reported in the same fiscal period.

• True
• False

Information needed to prepare an income statement comes from the Account Title column and the Income Statement columns of a work sheet.

• True
• False

The income statement for a service business has five sections: heading, Revenue, Expense, Net Income or Net Loss, and Capital.

• True
• False

The income statement’s account balances are obtained from the work sheet’s Income Statement columns.

• True
• False

The net income on an income statement is verified by checking the balance sheet.

• True
• False

Double lines ruled across both amount columns of an income statement indicate that the amount has been verified.

• True
• False

A financial ratio is a comparison between two components of financial information.

• True
• False