True/False
Indicate whether the statement is true or
false.
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1.
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Managers and owners use the general ledger to make their business
decisions.
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2.
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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.
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3.
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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.
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4.
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On an income statement, component percentages are calculated by dividing the
amount of each component by the total amount of sales.
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5.
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For a component percentage to be useful, a business owner or manager should be
familiar with what's acceptable for businesses similar to theirs.
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6.
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A balance sheet can be prepared for any date or period of time.
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7.
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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.
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8.
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If a business had poor available assets and many liabilities, that business is
financially strong.
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9.
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If a business's financial condition is not strong, adverse changes in the
economy might cause the business to fail.
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10.
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On a balance sheet, owner's equity should equal total assets plus total
liabilities.
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11.
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To calculate the ending balance of owner's equity, you should subtract the
value of owner's drawing accounts.
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Matching
Use the word list provided
below. Not all words will be used; some may be used multiple times. Copy and paste from the list.
Misspellings will be counted as incorrect.
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A. | net income or net loss | G. | net income | B. | Adjustments | H. | owner's equity | C. | Going
Concern | I. | sales | D. | assets | J. | $ 5,000.00 | E. | $
25,000.00 | K. | Adequate
Disclosure | F. | total revenue |
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1.
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For a service business, component percentages on an income statement compare
revenue to total expenses and ____.
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2.
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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.
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3.
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Which accounting concept is applied when financial statements contain all
information necessary to understand a business's financial condition?
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4.
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The difference between total revenue and total expenses is called ____.
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5.
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On an income statement, component percentages are calculated by dividing the
amount of each component by the total amount of ____.
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6.
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On a balance sheet, if total assets are $15,000.00 and total liabilities are
$10,000.00, total owner's equity is ____.
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7.
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A balance sheet has four sections: (1) heading; (2) assets; (3) liabilities,
and (4) ____.
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8.
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Which accounting concept is applied when financial statements are prepared with
the expectation that a business will remain in operation indefinitely?
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9.
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If total expenses exceed ____, a net loss is reported on an income
statement.
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