A balance sheet has 4 sections. They are:

Heading, Assets, Liabilities, and Owner’s Equity

The owner’s capital amount reported on a balance sheet is

calculated as:

For a Net Income:

Beginning Capital + Net Income – Drawing

For a Net Loss:

Beginning Capital – Net Loss - Drawing

The formula for calculating net income is:

Total Revenue Minus Total Expenses

The net income calculated for the income statement and the net

income on the work sheet must be

The Same

The _______ _______accounting concept is applied when financial statements contain all information

necessary to understand a business’s financial condition.

Adequate Disclosure

On an Income Statement, double lines are ruled across both

amount columns to indicate ___?

The amount matches the Net Income/Net Loss on the

Worksheet.

For a service business, the ______ reported on an Income

Statement includes components for total expenses and net

income.

Revenue

The formula for calculating the total expenses component

percentage is ____?

Total Expenses Divided by Total Sales

The financial condition of a business refers to its financial

______.

Strength

The owner’s equity section of a balance sheet may report different

kinds of details about _____ _____. Depending on the need of

the business.

Owner’s Equity

Component percentages on an Income Statement are calculated

by ________________?

Divide the amount of each component by the total amount of

sales.

A component percentage is the ______ relationship between one financial statement item and the

total that includes that item.

Percentage

An Income Statement reports information over a period of time, indicating the financial progress of a business in earning a ______ or

______.

Net Income or Net Loss

The Matching Expense with Revenue accounting concept is applied when the _____ earned

and the expenses incurred to earn that revenue are reported in the

same fiscal period.

Revenue

Information needed to prepare an Income Statement comes from the _______ columns of

a worksheet.

Income Statement

An amount written in parentheses on a financial statement indicates

a/an ________.

Net Loss

A _____ _____ reports financial information for a specific date

and includes the assets, liabilities, and owner’s equity.

Balance Sheet

When a business has two different sources of revenue, do you complete one or two

Income Statements?

One

The date on a monthly Income Statement prepared on July 13 is written as `

For Month Ended July 13, 2011

The amount of Net Income calculated on the Income

Statement should equal ______?

The Net Income or Net Loss on the Worksheet.

Preparing financial statements at the end of each monthly fiscal period is an application of the accounting concept _____.

Accounting Period Cycle

Information needed to prepare an Income Statement’s Revenue

section is obtained from a worksheet’s Income Statement

_____ column.

Credit

A balance sheet reports a business’s financial condition

on a _____ date.

Specific

The formula for calculating the net income component percentage is

________.

Net Income divided by Total Sales.

Information needed to prepare the balance sheets liabilities section is

obtained from a worksheet’s Balance Sheet ______ column.

Balance Sheet Credit Column

Assuring the financial statements contain all information necessary

to understand a business’s financial condition is an

application of the accounting concept ___________.

Adequate Disclosure

You will also have to prepare an Income Statement and Balance

Sheet. A partial worksheet will be provided. Remember, capital on balance sheet is not taken form

worksheet—YOU MUST CALCULATE THE AMOUNT.