Accounting-Financial Statements

Managers and owners use the general ledger to make their business decisions.

• True
• False

Which accounting concept is applied when financial statements contain all information necessary to understand a business's financial condition?

• Accounting Honesty
• Adequate Disclosure
• Full Disclosure 
• Statement Honesty

Which accounting concept is applied when financial statements are prepared with the expectation that a business will remain in operation indefinitely?

• Continual Operation
• Indefinite Operation
• Going Concern
• Continual Concern

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 net loss.

• True
• False

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.

• True
• False

For a service business, component percentages on an income statement compare revenue to total expenses and

• net expenses
• total income
• net income
• revenue

On an income statement, component percentages are calculated by dividing the amount of each component by the total amount of

• total expenses
• net income
• total income
• sales

On an income statement, component percentages are calculated by dividing the amount of each component by the total amount of sales.

• True
• False

For a component percentage to be useful, a business owner/manager should be familiar with what's acceptable for businesses similar to theirs.

• True
• False

If total expenses exceed _________, a net loss is reported on an income statement.

• net expenses
• profit
• total revenue
• net income