| A | B |
|---|
| In the preparation of financial statements, accounting principles are applied differently from one fiscal period to the next. | False |
| Dividends Payable is a long-term liability. | False |
| Every amount on a financial statement is accompanied by a related description. | False |
| Management uses gross profits as a measure for how effectively the business is performing in its primary functions of buying and selling merchandise. | True |
| Data needed to prepare the Liabilities section of a balance sheet are obtained from the Debit column of an adjusted trial balance. | False |
| The difference between an asset's account balance and its related contra account balance is known as its book value. | True |
| The amount of dividends paid during the year is presented on the income statement. | False |
| Some management decisions can best be made after the amount of assets, liabilities, and stockholder's equity in the business is determined. | True |
| Interest income is reported on the income statement in a section labeled Other Revenue. | True |
| Reporting financial information the same way from one fiscal period to the next is an application of the accounting concept Adequate Disclosure. | False |
| Operating revenue less cost of merchandise sold equals net income. | False |
| Total operating expenses on an income statement are deducted from gross profit to find income from operations. | True |
| When a business's expenses are less than the gross profit, the difference is known as a net loss. | False |
| Increasing sales revenue while keeping cost of merchandise sold the same will increase gross profit. | True |
| All the information required to prepare a statement of stockholder's equity is obtained from the income statement and the adjusted trial balance. | False |
| When more detailed information about an item on a financial statement is needed, a supporting schedule may be prepared. | True |
| A statement of stockholder's equity summarizes the changes in owners' equity during a fiscal period. | True |
| Interest earned on notes receivable is reported in the Operating Revenue section of an income statement. | False |
| Beginning merchandise inventory less purchases made during the fiscal period plus ending inventory equals cost of merchandise sold. | False |
| On an income statement, vertical analysis percentages are calculated by dividing the amount on each line by the amount of operating expenses. | False |
