Download Chapter 3/Unit 4 Review Sheet 4/Preparing the Income Statement

Unit Review Sheet Answers
Chapter 3/Unit 4
Review Sheet 4/Preparing the Income Statement
Answer or complete the following.
K, C
1. (a) The name of the statement that presents the revenue, expenses, and net income (or net loss)
income statement
is the ________________________________
.
(b) The statement that presents the assets, liabilities, and owner’s equity is the ______________
balance sheet
__________________________________________________________________________
.
(c) An inflow of assets from customers, earned from the sale of goods or services, is _________
revenue
__________________________________________________________________________
.
expenses
(d) The costs of goods and services used by a company to bring in revenue are ______________
.
net income
(e) When revenue is greater than expenses, the difference is _____________________________
.
net loss
(f) When expenses are greater than revenues, the difference is ___________________________
.
(g) Underline the appropriate terms in the statements that follow:
Net income increases/decreases equity. Net loss increases/decreases equity.
accounting period
(h) The period of time covered by the financial statements is called the ____________________
.
$6500
(i) (1) If the revenue is $24 500 and the expenses are $18 000, the net income is ____________
.
$3500
(2) If the revenue is $24 500 and the expenses are $28 000, the net loss is _______________
.
fiscal period
(j) Another term for accounting period is ___________________________
.
calendar year
(k) The twelve-month period from January 1 to December 31 is called the _________________
.
K, C
2. Give examples of each of the following.
Requires that the time period used by a company to prepare
time-period principle: ___________________________________________________________
financial statements be defined and be consistent from one accounting period
_____________________________________________________________________________
to another.
_____________________________________________________________________________
_____________________________________________________________________________
Requires that costs recorded in the expense accounts be matched
matching principle: _____________________________________________________________
with the revenue generated during the same accounting period.
_____________________________________________________________________________
_____________________________________________________________________________
Copyright © 2002 Pearson Education Canada Inc., Toronto, Ontario
1
Chapter 3/Unit 4
Review Sheet 4/Preparing the Income Statement (cont.)
Requires that revenue be recorded when earned and
accrual basis of accounting: _______________________________________________________
expenses when incurred.
_____________________________________________________________________________
_____________________________________________________________________________
Requires that expenses be recorded only when they are paid for
cash basis of accounting: _________________________________________________________
and revenue be recorded only when the cash is received.
_____________________________________________________________________________
_____________________________________________________________________________
K, T, C, A 3. Prepare the June income statement, in acceptable form, for Gerri’s Services, using the following
information. The list below contains several assets and liabilities. Remember only the revenue
and expense accounts are used to prepare the income statement.
Salaries Expense
$ 3 000
Fees Revenue
9 975
Mortgage Payable
200 000
Other Revenue
1000
Miscellaneous Expense
80
2
Rent Expense
Building
Advertising Expense
Telephone Expense
G. Weise, Capital
$
2 000
350 000
2 000
176
197 000
Copyright © 2002 Pearson Education Canada Inc., Toronto, Ontario