7 - Accounting

Question 1

What are the principals of accounting

Answer 1

Consistency
Going concern
Matching
Materiality
Objectivity
Prudence
Realisation

Question 2

What is meant by consistency

Answer 2

Consistency of how dare is presented in accounting

Question 3

Wha is meant by going concern

Answer 3

Assumption that the business is running normally

Question 4

What is meant by matching

Answer 4

Accounts are done at the same time so figures aren’t distorted

Question 5

What is meant by materiality

Answer 5

Calculations are realistic for intangible value (reputation)

Question 6

What is meant by objectivity

Answer 6

Realistic, removing bias

Question 7

What is meant by prudence

Answer 7

Being conservative with value, not over or under- valueing

Question 8

What is meant by realisation

Answer 8

Making sure accounts are published on the same day

Question 9

What is an income statement also known as

Answer 9

Profit and loss account

Question 10

What is an income statement

Answer 10

A financial statement showing income and expenditure over a year, so a loss or a profit

Question 11

What is meant by sales, income, revenue and turnover

Answer 11

Money from sales

Question 12

What is gross profit

Answer 12

Revenue - cost of sales

Question 13

What is meant by cost of sales

Answer 13

Cost of resources for products sold

Question 14

What is operating profit

Answer 14

Gross profit - expenses

Question 15

What is meant by expenses

Answer 15

Salaries, overheads, marketing, research etc costs

Question 16

What is profit before tax

Answer 16

Operating profit - (interest + depreciation)

Question 17

What is net profit

Answer 17

Profit before tax - tax

Question 18

What is retained profit

Answer 18

Net profit - dividends

Question 19

What are dividends

Answer 19

Share of profits paid to shareholders

Question 20

What does a balance sheet show

Answer 20

A companies accounts at any one point in time, showing assets, liabilities and share equity

Question 21

What does a balance sheet do

Answer 21

Give an idea of a firms financial position

Question 22

What are fixed assets

Answer 22

Something owned by the firm

Question 23

What are fixed assets also known as

Answer 23

Non-current assets

Question 24

What are current assets

Answer 24

Assets that are bought and sold in short term

Question 25

Examples of current assets

Answer 25

Stock, debtors, cash

Question 26

What is stock compared to the other current assets

Answer 26

Least liquid

Question 27

What are the three types of stock

Answer 27

Raw materials
Work in progress
Finished goods

Question 28

What is a debtor

Answer 28

Someone who owes you money

Question 29

What are the 2 kinds of cash

Answer 29

Cash in hand and cash in bank

Question 30

What is current liabilities

Answer 30

Money that you owe to people

Question 31

What are Trade creditors

Answer 31

People you owe money to

Question 32

Examples of current liabilities

Answer 32

Loans, trade credit, overdraft

Question 33

What are net current assets also known as

Answer 33

Working capital

Question 34

What is working capital/net current assets

Answer 34

Money used for the day to day inning of the business (short term transactions)

Question 35

What is working capital calculated

Answer 35

Current assets - current liabilities

Question 36

What is equity shareholders funds

Answer 36

Money that has been invested into the business

Question 37

What is equity shareholders funds also known as

Answer 37

Total capital employed

Question 38

What is liquidity

Answer 38

The ability to turn an asset into cash