The statement of changes in owner's equity summarizes the effects on the capital account of the various business transactions that occurred during the period.

Return on sales is calculated by dividing net sales by net income.

Current assets are those used up or converted to cash during the normal operating cycle of a business.

The net income or net loss reported on the income statement must be the same as the net income or net loss calculated on the work sheet.

The changes in the Cash in Bank account are reported in the statement of changes in owner's equity.

Closing entries transfer the net income or net loss to the withdrawals account.

Closing entries transfer the net income or net loss to the withdrawals account.

To close a revenue account, debit it for the amount of its credit balance.

When expense accounts are closed, the Income Summary account is credited.

Before closing entries are journalized and posted, the Income Summary account in the general ledger has a normal credit balance.

The Income Summary account is a simple income statement in the ledger.

After the closing entries have been posted, the balance in the capital account reflects the net income or net loss and the withdrawals for the period.

The Income Summary account is located in the owner's equity section of the general ledger.

Closing the revenue account is the second closing entry.

If a business reports a net loss for the period, the journal entry to close the Income Summary account would be a debit to capital and a credit to Income Summary.

The last step in the accounting cycle is the preparation of the post-closing trial balance.

To close the withdrawals account, the amount of its balance is debited to the capital account and credited to the withdrawals account.

The FICA tax has no maximum taxable amount.

A Form W-4 lists the marital status and number of exemptions claimed by the employee.

The number of hours worked multiplied by the hourly wage gives the net earnings for the pay period.

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