- the ending account balances of permanent accounts for one fiscal period are the beginning account balances for the next fiscal period
- 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
- component percentages on an income statement are calculated by dividing sales by total expenses by net income
- the formula for calculated for the income statement and the net income on the worksheet must be the same
- the 'adequate disclosure accounting concept' is applied when financial statements contain all info necessary to understand a business' financial condition
- when a business has two different sources of revenue, a separate income statement should be prepared for each kind of revenue
- a balance sheets reports financial info on a specific date includes assets, liabilities, and owner's equity
- the financial condition of a business refers to its financial strength
- for a service business, the revenue reported on an income statement includes components for total expenses and net income
- the current capital to be reported on a balance sheet is calculated as: the capital account balance plus net income equals current capital
- an income statement reports info over a period of time, indicating the financial progress of a business in earning a net income or a net loss
- reporting in the same fiscal period the revenue earned and the expenses incurred to earn that revenue as in application of the accounting concept 'matching expenses with revenue'
- the formula for calculating the total expenses component percentage is: total expenses divided by total sales equals total expenses component percentage
- a component percentage is the percentage relationship between one financial statement item and the total indicated that item
- info needed to prepare an income statement comes from the trial balance columns and the income statement columns of a worksheet
- the owner's capital account reported on a balance sheet is calculated as: capital account balance plus drawing account balance less net incomes
- the owner's equity section of a balancing sheet may report different kinds of details about owner's equity, depending on the need of the business
- an amount written in parenthesis on a financial statement indicates am estimate
- a balance sheet reports financial info over a specific period of time
- on an income statement, double lines are ruled across both columns to indicate that debits equal credits