1. INTRODUCTION TO ACCOUNTING

Question 1

Which THREE are accounting conventions?

a. prudence
b. consistency
c. depreciation
d. accruals

Answer 1

all except c!

prudence = not over estimating revenue and not underestimating expenses
consistency = business should maintain the same accounting methods or principles throughout the accounting periods
accruals =

Question 2

Capital maintenance is important for;
a. the sources of finance
b. the measurement of profit
c. the relationship of debt to equity
d. the purchase of non-current asset

Answer 2

capital maintenance = income should be regcognised after it has fully recovered its cost or its capital has been maintained

answer is b. profit is essentially the increase in net assets during a period

Question 3

The profit of a business may be calculated by using which formular?

Answer 3

Closing capital + Drawing - Capital introduced - Opening Capital

(remember + - -)