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Financial Accounting
Chapter 7 Test Concept Flashcards
| Question | Answer |
|---|---|
| The Full Disclosure accounting concept is applied when a company always prepares financial statements at the end of each monthly fiscal period. | F- Accounting Cycle Concept |
| Internal users of accounting information include company managers, officers, and creditors. | F- Creditors are external |
| The statement of owner’s equity reports changes in the capital account for a period of time. | T |
| Information needed to prepare a statement of owner’s equity is obtained from the balance sheet. | F- Income Statement |
| .When a business has a net loss, the current capital amount will be less than the capital account balance. | T |
| On the balance sheet, the current capital amount is taken from the work sheet. | F- Statement of Owner's Equity |
| An income statement reports information on a specific date indicating the financial condition of a business. | F- Balance Sheet |
| 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. | T |
| Information needed to prepare an income statement comes from the Account Title column and the income Statement columns of a work sheet. | T |
| The income statement for a service business has five sections: heading, Revenue, Expenses, Net Income or Net Loss, and Capital. | F- No Capital |
| The income statement’s account balances are obtained from the work sheet’s Income Statement columns. | T |
| The net income on an income statement is verified by checking the balance sheet. | F- Worksheet |
| Double lines ruled across both amount columns of an income statement indicate that the amount has been verified. | T |
| A financial ratio is a comparison between two components of financial information. | T |
| Financial ratios on an income statement are calculated by dividing sales and total expenses by net income. | F- By Sales |
| When a business has two different sources of revenue, both revenue accounts are listed on the income statement. | T |
| An amount written in parentheses on a financial statement indicates a negative amount. | T |
| A balance sheet reports financial information on a specific date and includes the assets, liabilities, and owner’s equity. | T |
| The position of the total asset line on the balance sheet is determined after the Equities section is prepared. | T |
| Double lines are ruled across the balance sheet columns to show that the column totals have been verified as correct. | T |
| The date on a monthly statement of owner’s equity prepared on May 31 is written as: | For Month Ended May 31, 20-- |
| Information needed to prepare a statement of owner’s equity is obtained from a work sheet’s Account Title column and: | Balance Sheet columns |
| The amount of capital reported on a statement of owner’s equity when there is a net loss is calculated as | Capital Account Balance – Net Loss – Drawing Account Balance |
| The date on a monthly balance sheet prepared on July 31 is written as | July 31, 20-- |
| Information needed to prepare a balance sheet’s Assets section is obtained from a work sheet’s Account Title column and | Balance Sheet Debit column |
| Information needed to prepare a balance sheet’s liabilities section is obtained from a work sheet’s Account Title column and | Balance Sheet Credit column. |
| An income statement reports information on specific date incdicating the financial condition of the business | F |
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nateharder276