1.1 Welcome to the world of Accounting

Question 1

What are the 5 main activities of Accounting?

Answer 1

1. Gathering Financial information
2. Preparing / collecting permanent records
3. Arranging, summarizing and classifying financial information
4. Preparing reports and summaries
5. stablishing controls to promote accuracy and honesty among employees

Question 2

A Good Accountant and Accounting System Should be able to Answer…

Answer 2

Is the business earning enough revenue?
Are the selling prices optimal?
How much does ABC Company owe the business?
How much does the business owe to XYZ Company?
What is the value of all of the goods for sale?
Do any of the goods for sale need to be restocked?
And so many more!

Question 3

Our Professional Accounting Designation

Answer 3

Chartered professional Accountant (CPA)

Question 4

An Asset

Answer 4

Is an item of value that is owned by a business or an individual

Question 5

A liability

Answer 5

A debt that is owed by a business or an individual
It must be paid at some point in the future

Question 6

Owner’s equity

Answer 6

Also known as equity, capital or net worth
The difference between an individual or business’s assets and liabilities
It is calculated by using the fundamental accounting equation!

Question 7

Equation

Answer 7

Assets = Liabilities + Owner’s Equity

Question 8

The Accounting Clerk (Bookkeeper)
The work of an accounting clerk is clerical in nature and for the most part it is concerned with routine matters.

Answer 8

-Ensuring that transactions are properly recorded and that the necessary supporting documents are present and correct;
-Recording the accounting entries in the books of account and balancing the ledger as necessary;
-Making the payroll calculations and preparing the payroll cheques and other payroll records;
-Carrying out all necessary banking transactions.

Question 9

The work of an accountant is broader in scope and requires more education and experience. A professional accountant is usually responsible for maintaining the entire accounting system.

Answer 9

Developing a system to ensure that correct data are entered into the accounting system;
Ensuring that generally accepted accounting standards are met;
Interpreting the data produced by the accounting system;
Preparing reports based on the data output from the system;
Participating in management meetings and assisting in making business decisions;
Supervising the work of all accounting employees.