Computer Accounting with Sage 50 Complete

Accounting 2013 17th Edition

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Chapter 07

Financial Statements

True / False Questions

1. Once journal entries are recorded and posted, Sage 50 automatically calculates financial
statements.

True False

7-1
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
2. Financial statements printed by Sage 50 reflect the preceding month and current month only.

True False

3. The Gross Profit by Departments financial statement is a custom report designed for the
sample company, Bellwether Garden Supply.

True False

4. Masking allows you to organize your business by department.

True False

5. In Sage 50 when a wrench is shown next to a financial statement it means that the statement
is a custom-designed form.

True False

6. The income statement is a company's summary of the assets and liabilities on a specific
date.

True False

7. Net income results when the expenses are greater than revenues.

True False

8. Sage 50's income statement includes percentage-of-revenue columns for both the current
month and year-to-date amounts.

True False

7-2
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
9. The statement of cash flow shows cash inflows, cash outflows and the overall change in
cash.

True False

10. The financial statements are independent of each other.

True False

Multiple Choice Questions

11. The balance sheet lists:

A. Assets, liabilities and capital of a business

B. Revenues and expenses of a business

C. The percentage of revenue at the end of the year

D. The percentage of debt at the end of the year

E. Cash disbursements

12. The income statement is a summary of:

A. Cash receipts and where they came from

B. Cash payments and what they were used for

C. The overall change in cash

D. Revenues and expenses over a period of time

E. Cost of goods purchased

7-3
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
13. Expenses and revenues over a period of time are shown on the:

A. Statement of cash flow.

B. Departmental gross profit report.

C. Income statement.

D. Balance sheet.

E. Retained earnings statement.

14. One way to display the balance sheet is to use these menu bar selections:

A. Reports & Forms; Financial Statements, Print.

B. Reports & Forms; Financial Statements, Inventory, Options.

C. Business Status; Category field, Financial Statements, <Standard> Balance Sheet,

Display.

D. Business Status; Category field, Financial Statements, Financial Statements, Display.

E. Tasks; select System, make the selections to print.

15. Business managers and owners, depend on financial statements because:

A. Sage 50 automatically calculates accurate financial statements.

B. Financial statements are for internal use only.

C. They have primary responsibility for the business.

D. They can evaluate cash and make appropriate decisions.

E. They can use account balances to customize financial statements.

7-4
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
16. The Income Statement's net income or (net loss) is also shown on the:

A. Income statement's revenue section.

B. Balance sheet's capital section.

C. Departmental gross profit totals.

D. Cash balance at the end of the period.

E. General ledger trial balance.

17. To go from the income statement to an original entry, use this function:

A. Drill down.

B. Options, specific the range.

C. Display.

D. Filter.

E. Columns.

18. A departmentalized accounting system provides information that can be used to:

A. Custom design departmental statements.

B. Evaluate profitability and cost effectiveness.

C. Evaluate current assets.

D. Modify SCA's standard forms.

E. Figure out the accounting period.

7-5
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
19. When you print or display a report, you can filter the departmentalized report using
____________________________ characters.

A. A prefix

B. Wildcard

C. Hexadecimal

D. Text-based

E. Unrelated

20. The _______________________________ file includes all the data needed for Chapter 7 work.

A. Exercise 6-2.ptb

B. Exercise 6-1.ptb

C. Chapter 6.ptb

D. Exercise 5-2.ptb

E. Chapter 5.ptb

7-6
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
 Chapter 07 Financial Statements Answer Key

True / False Questions

1. Once journal entries are recorded and posted, Sage 50 automatically calculates financial
statements.

TRUE

2. Financial statements printed by Sage 50 reflect the preceding month and current month
only.

FALSE

All financial statements show the current month and year-to-date amounts and each may
be modified to fit the user's needs.

3. The Gross Profit by Departments financial statement is a custom report designed for the
sample company, Bellwether Garden Supply.

TRUE

4. Masking allows you to organize your business by department.

TRUE

7-7
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
5. In Sage 50 when a wrench is shown next to a financial statement it means that the
statement is a custom-designed form.

TRUE

6. The income statement is a company's summary of the assets and liabilities on a specific
date.

FALSE

An income statement is a company's summary of revenues and expenses for a period of

time.

7. Net income results when the expenses are greater than revenues.

FALSE

A net loss results when the expenses are greater than revenues.

8. Sage 50's income statement includes percentage-of-revenue columns for both the current
month and year-to-date amounts.

TRUE

9. The statement of cash flow shows cash inflows, cash outflows and the overall change in
cash.

TRUE

7-8
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
10. The financial statements are independent of each other.

FALSE

There are interrelationships between financial statements.

Multiple Choice Questions

11. The balance sheet lists:

(p. 206)

A. Assets, liabilities and capital of a business

B. Revenues and expenses of a business

C. The percentage of revenue at the end of the year

D. The percentage of debt at the end of the year

E. Cash disbursements

Difficulty: 1 Easy

12. The income statement is a summary of:

(p. 207)

A. Cash receipts and where they came from

B. Cash payments and what they were used for

C. The overall change in cash

D. Revenues and expenses over a period of time

E. Cost of goods purchased

Difficulty: 2 Medium

7-9
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
13. Expenses and revenues over a period of time are shown on the:
(p. 207)

A. Statement of cash flow.

B. Departmental gross profit report.

C. Income statement.

D. Balance sheet.

E. Retained earnings statement.

Difficulty: 2 Medium

14. One way to display the balance sheet is to use these menu bar selections:
(p. 212)

A. Reports & Forms; Financial Statements, Print.

B. Reports & Forms; Financial Statements, Inventory, Options.

C. Business Status; Category field, Financial Statements, <Standard> Balance Sheet,

Display.

D. Business Status; Category field, Financial Statements, Financial Statements, Display.

E. Tasks; select System, make the selections to print.

Difficulty: 2 Medium

15. Business managers and owners, depend on financial statements because:

(p. 205)

A. Sage 50 automatically calculates accurate financial statements.

B. Financial statements are for internal use only.

C. They have primary responsibility for the business.

D. They can evaluate cash and make appropriate decisions.

E. They can use account balances to customize financial statements.

Difficulty: 2 Medium

7-10
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
16. The Income Statement's net income or (net loss) is also shown on the:
(p. 208)

A. Income statement's revenue section.

B. Balance sheet's capital section.

C. Departmental gross profit totals.

D. Cash balance at the end of the period.

E. General ledger trial balance.

Difficulty: 2 Medium

17. To go from the income statement to an original entry, use this function:
(p. 219)

A. Drill down.

B. Options, specific the range.

C. Display.

D. Filter.

E. Columns.

Difficulty: 1 Easy

18. A departmentalized accounting system provides information that can be used to:
(p. 206)

A. Custom design departmental statements.

B. Evaluate profitability and cost effectiveness.

C. Evaluate current assets.

D. Modify SCA's standard forms.

E. Figure out the accounting period.

Difficulty: 2 Medium

7-11
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
19. When you print or display a report, you can filter the departmentalized report using
(p. 215) ____________________________ characters.

A. A prefix

B. Wildcard

C. Hexadecimal

D. Text-based

E. Unrelated

Difficulty: 3 Hard

20. The _______________________________ file includes all the data needed for Chapter 7
(p. 205) work.

A. Exercise 6-2.ptb

B. Exercise 6-1.ptb

C. Chapter 6.ptb

D. Exercise 5-2.ptb

E. Chapter 5.ptb

Difficulty: 1 Easy

7-12
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.