File: Chapter 07 Financial Statements
True/False
[QUESTION]
1. Once journal entries are recorded and posted, Sage 50 automatically calculates financial statements.
2. Financial statements printed by Sage 50 reflect the preceding month and current month only.
3. The Gross Profit by Departments financial statement is a custom report designed for the sample
company, Bellwether Garden Supply.
4. Masking allows you to organize your business by department.
5. In Sage 50 when a wrench is shown next to a financial statement it means that the statement is a
custom-designed form.
6. The income statement is a company’s summary of the assets and liabilities on a specific date.
7. Net income 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.
[QUESTION]
9. The statement of cash flow shows cash inflows, cash outflows and the overall change in cash.
10. The financial statements are independent of each other.
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
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 > Company > Report field > <Standard> Balance Sheet > Display
e. Tasks > select System > make the selections to print
[QUESTION]
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.
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 > specify 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 Sage 50’s standard forms
e. Figure out the accounting period
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
CHAPTER 7, ANSWERS TO TRUE/MAKE TRUE QUESTIONS, QA TEMPLATES
1. Sage 50 automatically calculates financial statements once journal entries have been
journalized and posted.
2. In Chapter 7, you printed three financial statements.
In Chapter 7, six financial statements are printed:
3. The statement of cash flow is roughly the same thing as the balance sheet.
4. The balance sheet lists the revenues and expenses of the business.
5. The income statement is a summary of the revenue and expenses of a company for a
period of time, such as an accounting period or a year.
6. The financial statements printed by Sage 50 reflect month–to-date amounts only.
7. The financial statements are interrelated.
8. The term standard refers to financial statements that are designed by the company.
9. Bellwether Garden Supply showed a net loss for the current month on March 31, 2019.
10. The statement of changes in financial position derives its information from the income
statement.
ANALYSIS QUESTIONS
Explain the interrelationship of the financial statements. Specifically, answer these
questions.
ANSWER:
1. How are the income statement and balance sheet related to each other?
2. Using Bellwether Garden Supply as an example, what cash accounts does the
statement of cash flow report?
3. Does the statement of cash flow use information from both the balance sheet and
income statement?