Accounting

Question 1

Accounts payable

Answer 1

Amounts owed by the business for the items bought on credit

Question 2

Accounts receviable

Answer 2

Amounts owed to the business for the items sold on credit

Question 3

Assets

Answer 3

Resources that are presently owned and controlled by a business or a person.

Question 4

Liabilities

Answer 4

The amount that are presently owed by a business or a person which must be repaid in the future.

Question 5

Current Asset

Answer 5

Assets that are expected to be owned, used for less than a year or expected to be converted into cash within the next 12 months.

Question 6

Non-current asset

Answer 6

Assets that are expected to be owned, used for longer than a year or not expected to be converted into cash within the next 12 months

Question 7

Current liability

Answer 7

Liabilities that are expected to be repaid within the next 12 months

Question 8

Non-current liability

Answer 8

Liabilities that are NOT expected to be repaid within the next 12 months

Question 9

Expenses

Answer 9

Outflows of assets incurred by a business whilst it generates revenue

Question 10

Group 1 expenses

Answer 10

Expenses directly related to the promotion, distribution and provision of its goods/ services
e.g. Advertising, shop rent, shop wages

Question 11

Adminstration expenses

Answer 11

Expenses related to the daily running of the business
e.g. Rates, office rent, electricity

Question 12

Finance cost

Answer 12

Expenses related to the interest payments
e.g. Interest on loan, interest on mortgage

Question 13

Revenue

Answer 13

Income earned from the normal business operations
e.g. selling goods or providing services to the consumers

Question 14

Other income

Answer 14

Additional income earned from activities unrelated to the normal business operations
e.g. Rent received, dividends received, interest received

Question 15

Income

Answer 15

Inflows of assets from the business activities or the investments

Question 16

Income statement

Answer 16

Financial Statement used to calculate the total income and the total expense of a business, which then will be used to calculate the business Profit/Loss for the year

Question 17

Profit of the year

Answer 17

The positive amount remaining after subtracting the total expenses incurred from the total income earned over a year

Question 18

Loss of the year

Answer 18

The negative amount remaining after subtracting the total expenses incurred from the total income earned over a year

Question 19

Profitablility

Answer 19

Profitability isa measurement of a business’s income relative to its expenses