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Business > Accounting > Flashcards

Accounting Flashcards

1
Q

What are the 2 types of businesses

A

Services
Trading

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2
Q

What is bank overdraft

A

The bank allows you to spend more money than you have

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3
Q

Give eg.s of a non current liability

A

Mortgage
Car finance
Loans

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4
Q

Give eg. Of curent liabilities

A

creditors
bank overdraft
tax

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5
Q

What is the accounting equation

A

A=O+L

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6
Q

Owners equity sub divided

A

CIDE
Capital
Interest
Drawings
Expenses

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7
Q

How to work out owners equity

A

C+I-D-E
OE=A-L

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8
Q

What is the accounting cycle

A

Transaction
Source documents
CRJ+CPJ(documents summarized )
General ledger
Trial balance
Financial statement

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9
Q

What source documents are used when you receive money

A

Receipt
Deposit slip
CRT
Cash invoice

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10
Q

What is the source document for CRJ

A

CRT
Receipt

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11
Q

What is the source document for CPJ

A

Cheque counterfoil

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12
Q

Why is accounting important

A

It forms the basis on which the businesses management can make financial decisions.

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13
Q

What is accounting

A

The keeping of accurate records that have an effect on the financial position of the business. Then recorded and placed onto the financial statement do that the business can make informed financial desicions

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14
Q

Why is it important to have international standards

A

To be able to compare the financial performances in your and other countries
To compare the financial progress over one year by matching figures

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15
Q

What are the GAAP principles

A

Materiality concept
Historical cost concept
Going concern principal
Business entity
Matching principal

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16
Q

What is the historical cost concept
Eg

A

All assets are shown at their original cost price in the general ledger
Not at the current market value
Price of building then is shown now

17
Q

The business entity

A

The business is seen as a separate entity from the owner
Separate bank accounts and financial records

18
Q

The matching principle
Eg

A

All income and expenses for a specific financial period should be shown in that time period to calculate profit/loss
Debtor bought last year but only paying this year, should be shown this year

19
Q

Materiality concept
Eg

A

Financial statements should be kept as simple as possible only items that will have an important impact on understanding the financial statements of the busines should be shown
Postage-sundry expenses

20
Q

Going concern principle

A

It is always assumed that the business will continue to exist(remain going concern)
If it is known that it wont, it should be made availible to those that have an interest

Business (9 decks)

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