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WorksheetsCh. 7 Financial Statements for a Proprietorship
Total questions: 20
Worksheet time: 53mins
1. Managers and owners use the general ledger to make their business decisions.
True
False
2. Which accounting concept is applied when financial statements contain all information necessary to understand a business's financial condition?
Accounting Honesty
Adequate Disclosure
Full Disclosure
Statement Honesty
3. Which accounting concept is applied when financial statements are prepared with the expectation that a business will remain in operation indefinitely?
Continual Operation
Indefinite Operation
Going Concern
Continual Concern
4. An income statement reports financial information over a specific period of time, indicating the financial progress of a business in earning a net income or a net loss.
True
False
5. To prepare an income statement, account titles are obtained from the worksheet's Account Title column and account balances are obtained from the worksheet's Income Statement columns.
True
False
6. For a service business, component percentages on an income statement compare revenue to total expenses and
net expenses.
total income.
net income.
revenue.
7. On an income statement, component percentages are calculated by dividing the amount of each component by the total amount of
total expenses.
net income.
total income.
sales.
8. On an income statement, component percentages are calculated by dividing the amount of each component by the total amount of sales.
True
False
9. For a component percentage to be useful, a business owner or manager should be familiar with what's acceptable for businesses similar to theirs.
True
False
10. If total expenses exceed _______________, a net loss is reported on an income statement.
net expenses
profit
total revenue
net income
11. A balance sheet can be prepared for any date or period of time.
True
False
12. The revenue earned and the expenses incurred to earn that revenue are not reported in the same fiscal period; expenses are reported as they are paid.
True
False
13. The difference between total revenue and total expenses is called
owner drawing
net income or net loss
total assets
owner capital
14. A balance sheet has four sections: (1) heading; (2) assets; (3) liabilities, and (4) _______________.
debits
credits
account titles
owner's equity
15. Information needed to prepare the _______________ section of a balance sheet is obtained from the work sheet's Account Title column and the Balance Sheet Debit Column.
assets
liabilities
owner's equity
total liabilities and owner's equity
16. If a business had poor available assets and many liabilities, that business is financially strong.
True
False
17. If a business's financial condition is not strong, adverse changes in the economy might cause the business to fail.
True
.
False
18. On a balance sheet, owner's equity should equal total assets plus total liabilities.
True
False
19. On a balance sheet, if total assets are $15,000.00 and total liabilities are $10,000.00, total owner's equity is
$25,000.00
$ 7,500.00
$ 2,500.00
$ 5,000.00
20. To calculate the ending balance of owner's equity, you should subtract the value of owner's drawing accounts.
True
False
