Accounting I Chapter 16 Review

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

• True

• False

Dividends Payable is a long-term liability.

• True

• False

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

• True

• False

Management uses gross profit as a measure for how effectively the business is performing in its primary functions of buying and selling merchandise.

• True
• False

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

• False
• True

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

• False

• True

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

• True
• False

Some management decisions can best be made after the amount of assets, liabilities, and stockholders' equity in the business is determined.

• False

• True

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

• True
• False

Reporting financial information the same way from one fiscal period to the next is an application of the accounting concept Adequate Disclosure.

• True
• False