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Accounting Chapter
7 (True and False)
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The Full Disclosure

accounting concept is
applied when a company
always prepares financial
statements at the end of
each monthly fiscal
period. (p. 190)

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Terms in this set (20)

Original

The Full Disclosure accounting

concept is applied when a
company always prepares
financial statements at the end
of each monthly fiscal period.
(p. 190)

false

Internal users of accounting

information include company
managers, officers, and
creditors. (p. 190)

false

The statement of owner's equity

reports changes in the capital
account for a period of time. (p.
190).

true

Information needed to prepare

a statement of owner's equity is
obtained from the balance
sheet. (p. 190).

false

When a business has a net loss,

the current capital amount will
be less than the capital account
balance. (p. 192)

true

On the balance sheet, the

current capital amount is taken
from the work sheet. (p. 192)

false

An income statement reports

information on a specific date
indicating the financial
condition of a business. (p. 192)

false

Information needed to prepare

an income statement comes
from the Account Title column
and the Income Statement
columns of a work sheet. (p. 192)

true

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)

true

The income statement for a

service business has five
sections: heading, Revenue,
Expenses, Net Income or Net
Loss, and Capital. (p. 192)

false

The income statement's account

balances are obtained from the
work sheet's Income Statement
columns. (p. 192)

true

The net income on an income

statement is verified by
checking the balance sheet. (p.
194)

false

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Double lines ruled across both

amount columns of an income
statement indicate that the
amount has been verified. (p.
194)

true

A financial ratio is a comparison

between two components of
financial information. (p. 195)

true

Financial ratios on an income

statement are calculated by
dividing sales and total
expenses by net income. (p. 195)

false

When a business has two

different sources of revenue,
both revenue accounts are
listed on the income statement.
(p. 197)

true

An amount written in
parentheses on a financial
statement indicates a negative
amount. (p. 197)

true

A balance sheet reports

financial information on a
specific date and includes the
assets, liabilities, and owner's
equity. (p. 199)

true

The position of the total asset

line on the balance sheet is
determined after the Equities
section is prepared. (p. 202)

true

Double lines are ruled across

the balance sheet columns to
show that the column totals
have been verified as correct.
(p. 202)

true

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