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    214 views3 pages

    1924 001

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    © All Rights Reserved
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    + Part One--Identifying Accounting Concepts and Practices Chepher 7 test Identifying Accounting Concepts and Practices Directions: Indicate whether each of the following statements Is true or false. 1 2 7 9. 10. a1. 13, 14, 15. 16. 17. 19. A balance sheet has three sections: heading, assets, and liabilities. ‘The owner's capital amount reported on a balance sheet Is calculated as: capital account balance plus drawing account balance less net Income. ‘The formula for calculating net income Is: total revenue minus total expenses equals net Income. ‘The net income calculated for the income statement and the net income on the work sheet must be the same. ‘The Adequate Disclosure accounting concept Is applied when financial statements contaln all information necessary to understand a business's financial condition. (On an income statement, double lines are ruled across both amount columns to indicate that debits equal credits. For a service business, the revenue reported on an income statement includes ‘components for total expenses and net Income. ‘The formula for celculating the total expenses component percentage Is: total expenses divided by total sales equals total expenses component percentage. ‘The financial condition of a business refers to Its financial strength. ‘The current capital to be reported on a balance sheet Is calculated as: the capital account balance plus net income equals current capital ‘The owner's equity section of a balance sheet may report different kinds of detalls about ‘owner's equity, depending on the need of the business. ‘Component percentages on an income statement are calculated by dividing sales and total expenses by net Income. ‘A component percentage Is the percentage relationship between one financial statement item and the total that Includes that item. ‘An Income statement reports information over a period of time, Indicating the financial progress of 8 business in earning a net Income or a net loss. ‘The Matching Expenses with Revenue accounting concept is applied when the revenue feared and the expenses incurred to earn that revenue are reported in the same fiscal period. Information needed to prepare an income statement comes from the trial balance Columns and the income statement columns of a work sheet. ‘An amount written in parentheses on a financial statement indicates an estimate, ‘A balance sheet reports financial information over a specific period of time, ‘A balance sheet reports financlal Information on a specific date and includes the assets, liablties, and owner's equity, When @ business has two different sources of revenue, a separate income statement should be prepared for each kind of revenue. 2@eeogoeaaeaec Qe ea cof © @00 0 Aa © 0 0 @o0 Q@0 00 AO oO Oo Ae a oaa eg Chophet 7 rt Two--Preparing an Income Statement and a Balance Shest test Preparing an Income Statement and a Balance Sheet Note: Please list Account Titles In the order as shown on work sheet Note: Type a Revert Soles Expenses? Insurance Expense Rent Expense ‘Supplies Expense Unites Expense ‘Total Expenses Net Income Cash Petty Cash ‘ects, Ree.—Mile Supplies Prepaid Insurance Rodriguez Accounting Income Statement For Month Ended March 31, 20 ‘Advertising Expense Miscellaneous Expense v v v v 487500) 1000) |v I v 45000 v 35000 v 7500 v 450 00 v 2/000 00, v 618 00 v 364000 747 | |v 1235 00 253) |v sign to Indicate @ negative number. tsbiees 950000 | Acct. Pay.—Zimmer 00 00 oo Owners Eaty 00 00-5 Rodeguer, cal 27500 5040.00" Toa Lots and Owners Eauty 40 460.00 13.040 00 Aa <<< pore erererd open v Chapter 7 3. Part Three--Identifying Financial Statement Procedures test aa Aa Identifying Financial Statement Procedures Directions: For each of the following items, select the word or phrase that best completes the statement from the

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