Accounting

Question 1

What is a service business

Answer 1

A business that provides a service in exchange for money

Question 2

Give examples of service businesses

Answer 2

Lawyer, doctor or a plumber

Question 3

What is a trading business

Answer 3

A business where we sell stock or goods for a profit

Question 4

Give examples of trading businesses

Answer 4

Pick n pay, Woolworths or the istore

Question 5

What is a contract of purchase and sale

Answer 5

With every sales transaction, there is one party who is the buyer and one party who is the seller

Question 6

What must be in agreement whenever a contract of payment and sale occur

Answer 6

Price
Product
Place
Promotion

Question 7

Trading stock

Answer 7

Goods that a business sells ro other businesses or to consumers

Question 8

Why is trading stock an asset

Answer 8

It is worth money to the business

Question 9

Give synonyms for trading stock

Answer 9

Goods, merchandise and stock

Question 10

What are the advantages of cash purchases

Answer 10

The seller is assured of income immediately

The buyer is sometimes able to buy at a discounted price

Less working capital required

Less administration costs as no accounts need to be managed

Question 11

What are the disadvantages of cash purchases

Answer 11

The seller may not sell as much stock as a credit seller

The seller may not have as many customers as credit traders

Increased security risks for the seller

The buyer is not able to build up a credit history with cash purchases

Question 12

What are the 2 different cash purchases made by businesses

Answer 12

C.W.O= Cash with order 
C.O.D= cash on delivery

Question 13

What does C.O.W mean

Answer 13

This means that the money for the purchase will be paid when the order is placed

Question 14

What does C.O.D mean

Answer 14

This means that the money for the purchase will be paid when the goods are delivered to the buyer

Question 15

What are the different means of cash purchases

Answer 15

Debit cards, efts, credit cards

Question 16

What are retail businesses

Answer 16

Businesses that sell goods and not services

Question 17

Cost price + profit = selling price

Question 18

Cost price = selling price - profit

Question 19

Profit = selling price - cost price

Question 20

What is the national credit act

Answer 20

To promote and advance the social and economic welfare or South Africans, promote a fair, transparent, competitive, sustainable credit market and industry and to protect consumers

Question 21

Source document

Answer 21

A credit invoice. A receipt or bank statement for a direct payment(payment of account). Or credit not(returned or damaged goods)

Question 22

Go through accounting cycle

Question 23

Clients

Answer 23

Customer to whom a business sells on credit

Question 24

Non- current asset

Answer 24

Something of value that the ompany possesses an does nit change value within a year.
Eg vehicles, equipment, land and buildings

Question 25

Current assets

Answer 25

Something of value that the company possesses, but can change within 12 months

Eg debtors, trading stock, bank

Question 26

Debtor

Answer 26

A person who owes the company money. A current asset

Question 27

Creditors

Answer 27

A person who the company owes money to. A current liability

Question 28

Expense

Answer 28

Decreases your owner’s equity. Rent expense, salaries and wages

Question 29

Income

Answer 29

Increases your owner’s equity. Rent expense, salaries and wages