Accounting Principles and Financial Statements

Accouting Question The income statement's account balances are obtained from the work sheet's Income Statement columns. (p. 192) No company should have a vertical analysis ratio for total expenses higher than 48.0%. (p. 196) A balance sheet reports financial information on a specific date and includes the assets, liabilities, and owner's equity. (p. 199) The position of the total asset line on the balance sheet is determined after the Equities section is prepared. (p. 202) The Full Disclosure accounting concept is applied when a company always prepares financial statements at the end of each monthly fiscal period. (p. 190) Internal users of accounting information include company managers, officers, and creditors. (p. 190) An income statement reports information on a specific date, indicating the financial condition of a business. (p. 192) 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. (p. 192) Information needed to prepare an income statement comes from the Account Title column and the Income Statement columns of a work sheet. (p. 192) The income statement for a service business has five sections: heading, Revenue, Expenses, Net Income or Net Loss, and Capital. (p. 192) The net income on an income statement is verified by checking the balance sheet. (p. 194) Double lines ruled across both amount columns of an income statement indicate that the amount has been verified. (p. 194) A financial ratio is a comparison between two components of financial information. (p. 195) Financial ratios on an income statement are calculated by dividing sales and total expenses by net income. (p. 195) When a business has two different sources of revenue, both revenue accounts are listed on the income statement. (p. 197) An amount written in parentheses on a financial statement indicates a negative amount. (p. 197) A balance sheet reports information about the elements of the accounting equation. (p. 201) The owner's capital amount reported on a balance sheet is calculated as: capital account balance plus drawing account balance less net income. (p. 202) Double lines are ruled across the balance sheet columns to show that the column totals have been verified as correct. (p. 202) The Owner's Equity section of a balance sheet is the same for all businesses. (p. 203) The date on a monthly balance sheet prepared on July 31 is written as Information needed to prepare a balance sheet's Assets section is obtained from a work sheet's Account Title column and Information needed to prepare a balance sheet's Liabilities section is obtained from a work sheet's Account Title column and The amount of capital reported on a balance sheet is calculated as If a business wanted to show how the current capital balance was calculated, it would Answer true false true true false false false true true false false true true false true true true false true false July 31, 20-Balance Sheet Debit column Balance Sheet Credit column. Capital Account Balance + Net Income – Drawing Account Balance list the beginning capital balance, the net income, the withdrawals, and the ending capital balance on the balance sheet. A negative balance that remains after total expenses are subtracted from total income. The ratio of net income to total sales. Reporting an amount on a financial statement as a percentage of another item on the same financial statement. Any persons or groups who will be affected by an action. The area of accounting that focuses on reporting information to internal users. A positive balance that remains after total expenses are subtracted from total income. A comparison between two components of financial information. A financial road map used by individuals and companies as a guide for spending and saving. A budgeting strategy of setting aside at least 10% of after-tax income for saving and investing. The area of accounting that focuses on reporting information to external users The calculation and interpretation of a financial ratio. deficit return on sales vertical analysis stake holders managerial accounting surplus financial ratio budget pay yourself first financial accounting ratio analysis