Chapter 7

An income statement reports information on a specific date indicating the financial progress of a busiess in earning a net income or net loss..

• 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

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

• True

• False

When a business has two different sources of revenue, a separate income statement should be prepared for each kind of revenue.

• True

• False

A balance sheet reports financial information on a specific date.

• True

• Falase

Information needed to prepare a balance sheet's Asset section is obtained from a worksheet's Account Title Column and

• Income Statement Credit Column

• Income Statement Debit Column

• Balance Sheet Debit Column

• Balance Sheet Credit Column

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

• True

• False

The net income calculated for the income statement and the net income on the work sheet can be different because of adjusting entries.

• true

• false

An amount written in parentheses on a financial statement indicates an estimate.

• True

• False

The formula for calculating the net income ratio is net income divided by total sales.

• True

• False