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SHIP ACCOUNTING UNIT 1 AND 2 > 1A > Flashcards

1A Flashcards

1
Q

DEFINITION OF ACCOUNTING

A
  • systematically recording
  • classifying, summarising, measuring financial transaction
  • interpreting the results
  • communicating the info to the management
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2
Q

ECONOMIC EVENT WITH THIRD PARTY

A
  • recorded in an organisation’s accounting system
  • measured in money
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3
Q

SOURCE DOCUMENT

A

-original record documents produced with each business events and used to record every business transaction
- contain details that supports or subtantiates a transaction that will be (or has been) entered in an accounting system

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4
Q

EXAMPLES OF SOURCE DOCUMENT

A
  • sales receipts
  • bank cheque or statements
  • purchase orders
  • vendors invoices
  • company own invoices
  • employee’s time cards
  • a company’s receiving reports that supports the vendors’ invoices
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5
Q

ACCOUNTING CYCLE

A

1) record them as journal entries
2) post the journal entries to ledger or T accounts
3) unadjusted trial balance
4) make end of period adjusting journal entries
5) adjusting journal entries and prepare the adjusted trial balance
6) record reversing entries
7) post-closing trial balance for the next accounting period
8) closing entries
9) prepare financial statement

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6
Q

FIVE ACCOUNT TYPES

A
  • assets
  • liabilities
  • capital (equity)
  • revenue / income
  • expenses / costs
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7
Q

ASSETS

A

resources owned by a company and have future economic value
current assets
fixed assets

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8
Q

CURRENT ASSETS

A
  • used up in less than one year
  • used in a firm day to day operations
    examples;
  • inventory / stock
  • accounts receivable
  • bank (money)
  • cash in hand
  • investments
  • loans to others
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9
Q

FIXED ASSETS

A
  • physical assets
  • useful life more than one year
    examples;
  • land
  • plant / buildings
  • machinery
  • motor vehicles
  • office equipments
  • furniture
  • fittings
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10
Q

LIABILITIES

A
  • trade / accounts payable goods or expense
  • loans to the firms and bank overdraft
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11
Q

CURRENT LIABILITIES

A

short term
need to be paid within one year etc

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12
Q

LONG TERM LIABILITIES

A

no need to pay within one year

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13
Q

CAPITAL

A
  • owners equity
  • total amount of financial resources aka money invested in a business by an owner (or shareholders) used to leverage growth
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14
Q

REVENUE

A
  • sales / turnover
  • income that a business receives from its normal business activities
    a) sales of goods and services
    b) interest earned
    c) royalties earned
    d) other fees (eg tickets) earned
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15
Q

EXPENSE (COST)

A

the money spent or cost incurred in firm efforts to generate revenue

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16
Q

EXAMPLES OF EXPENSES

A
  • admin
  • delivery and others
  • rent
  • salaries
  • sales commissions expense
  • advertising, marketing and promotions
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17
Q

PHYSICAL RESOURCES

A

raw materials
building / office / retail space
vehicles
storage
facilites
machinery
factory / plant
vessel

18
Q

HUMAN RESOURCES

A

staff

19
Q

resource supplied by the owner

A

capital

20
Q

resources in the business =

A

resources supplied by the owner

21
Q

assets =

A

capital

22
Q

capital + liabilities =

A

assets

23
Q

liabilities + owner equity =

A

assets

24
Q

debit the receiver
credit the giver

A
  • personal accounts
25
Q

debit what comes
credit what goes out

A
  • real accounts
  • debit balance by default
  • debit what comes in = adding to the existing account balance
  • credit what goes out = reducing the account balance
26
Q

debit all expenses and losses

A

decrease the capital

27
Q

credit all incomes and gains

A

increase the capital

28
Q

capital of the company is a liability

A

= default credit balance

29
Q

Three major financial statement

A

profit and loss - info about a company’s profit and loss
balance sheet - gives the business a clear picture on its financial position of on a particular date like end of year / month
cash flow statements - reports the cash generated and spent during a specific period of time (month/daily)

30
Q

drawings accounts

A

credit cash account
debit drawing account

it is a contra equity accounts and is reported as a reduction from total equity

31
Q

revenue accounts

A

revenue are credits as owner’s equity or stockholders’ equity increase

debit asset account eg accounts receivable or cash

credit revenue account

32
Q

expenses accounts

A

owner equity decrease

debit expense account
credit asset account eg cash

33
Q

journal

A

record of financial transactions in order by date
book of original entry

process of recording a business transactions in the accounting records (applies to the double entry bookkeeping system)

34
Q

ledger / t- accounts

A

book containing accounts in which the classified and summarised information from the journals is posted as debits and credits

35
Q

debit side

A

left

36
Q

credit side

A

right

37
Q

posting

A

transfer the total balance in a sub-ledger into the general ledger

38
Q

five steps of posting from journal to ledger

A

1) typing the accounts name and number
2) specify the details of the journal entry
3) put down the debits and credits for the transactions
4) calculate the debit and credit balance
5) correct any errors

39
Q

trial balance

A

credit = debit

40
Q

invoice

A

payment request sent by the supplier

it is important as they record sales transactions

seller = sales invoice
buyer = vendor invoice

SHIP ACCOUNTING UNIT 1 AND 2 (2 decks)

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