Accounting: Chapter 7 Review

The net income calculated for the income statement and the net income on the work sheet must be the same.

• True
• False

A balance sheet has three sections: heading, assets, and liabilities.

• True
• False

The owner's capital amount reported on a balance sheet is calculated as: capital account balance plus drawing account balance less net income. 

• True
• False

Component percentages on an income statement are calculated by dividing sales and total expenses by net income.

• True
• False

The date on a monthly income statement prepared on July 31 is written as 

• For Month ended July 31, 20xx
• July 31, 20xx
• 20--, July 31.
• none of these

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

• True
• False

Information needed to prepare an income statement's revenue 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 amount written in parentheses on a financial statement indicates an estimate.

• True
• False

A component percentage is the percentage relationship between one financial statement item and the total that includes that item.

• 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