Accounting - Lesson 7 Review Questions

An amount written in parentheses on a financial statement indicates an estimate.

What is petty cash used for?

Stakeholders are any persons or groups who will be affected by an action.

A balance sheet reports information about the elements of the accounting equation.

A balance sheet reports financial info on a specific date and includes, assets & OE.

What does the balance sheet tell you?

All companies should have a total expenses component percentage that is not more than 80%.

To prepare the income statement, info comes from the trial balance and IS columns of worksheet.

When a business has two different sources of revenue, a separte IS is needed for each.

Single lines ruled across an amount column of an IS indicate that amounts are to be added

An income statement reports liabilities in terms of what is owed by a business

The amount of net income calculated on an income statement is correct if:

What does the income statement tell you?

Double lines across balance sheet columns show that the totals have been verified as correct.

The formula for calculating NI component % is:  Total Sales - Total Expenses / Net Income

Which section below does not belong on the income statement?

The formula for finding current capital is: Capital + Net Income - Drawing Account balance

Component percentages are calculated by dividing sales and total expenses by net income

The net income on an income statement is verified by checking the balance sheet

The date on a monthly income statement prepared n July 31 is written as: