accounting

Question 1

PERIOD ASSUMPTION:

Answer 1

financial events are reported for a specific period of time, allowing valid comparisons of performance to be made. (cash flow statement)

Question 2

ACCRUAL BASIS ASSUMPTION:

Answer 2

profit for a given period of time is determined by deducting expenses incurred from the revenue earned in that same period.
(income statement.)

Question 3

GOING CONCERN ASSUMPTION:

Answer 3

a business will operate indefinitely and won’t be wound up in the near future.
EXAMPLE: balance sheet.

Question 4

ACCOUNTING ENTITY ASSUMPTION:

Answer 4

a requirement that all relevant items be reported for a business entity, excluding any transactions of the owner and any other entity.
EXAMPLE: balance sheet.

Question 5

RELEVANCE:

Answer 5

all information that could influence decision makers to be included in accounting reports.

Question 6

FAITHFUL REPRESENTATION

Answer 6

information being reported to be complete, without bias and free from error.

Question 7

COMPARABILITY:

Answer 7

financial reports to be prepared so that performance can be compared.

Question 8

VERIFIABILITY:

Answer 8

accounting information to be checked against business documents.

Question 9

TIMELINESS:

Answer 9

information to be presented in a timely manner so that it may influence decisions.

Question 10

UNDERSTANDABILITY:

Answer 10

information to be presented clearly and concisely in an understandable fashion.

Question 11

EXPLAIN WHEN A BREACH HAS OCCURRED

Answer 11

if the rules are not followed, or mandatory details are not added, the documents become invalid and cannot be processed.

Question 12

CHEQUE BUTTS:

Answer 12

a document used to verify the details of cash payments made by cheque (MUST INCLUDE: date, payee full name, details, amount, document number.)

Question 13

RECEIPTS:

Answer 13

a document used to verify the receipt of cash by a business
(MUST INCLUDE: receipt number, date, ABN, the amount, details, signature.)

Question 14

EFTPOS RECEIPTS:

Answer 14

document created by an EFTPOS terminal when a customer has paid by credit card, debit card, or gift card. (MUST INCLUDE: merchant number, terminal number, type of card, date/time, authorisation, total.)

Question 15

INVOICES:

Answer 15

a document used to verify that a credit sale or purchase has taken place. (MUST INCLUDE: ABN, tax invoice number, details, GST, total, signature.)

Question 16

CREDIT NOTES:

Answer 16

a document issued by a business to verify that goods have been returned. (MUST INCLUDE: ABN, credit note, date, reason, GST, total.)

Question 17

ASSETS:

Answer 17

resent economic resources under the control of a business entity, with the
potential to produce future economic benefits.

Question 18

CURRENT ASSETS:

Answer 18

are cash and other types of assets held primarily for the
purpose of sale or trading, or are reasonably expected to be converted to cash, sold, or consumed by a business within 12 months after the end of the reporting period,

Question 19

NON-CURRENT ASSETS:

Answer 19

are expected to be used by a business entity for a number of years and are not held for resale.

Question 20

LIABILITIES:

Answer 20

present obligations of an entity to transfer economic resources to another entity to produce economic benefits.

Question 21

CURRENT LIABILITIES:

Answer 21

obligations of the entity that are reasonable expected to be settled within 12 months after the end of the reporting period.

Question 22

NON-CURRENT LIABILITIES:

Answer 22

obligations of the entity that are not required to be settled within 12 months after the end of the reporting period.

Question 23

OWNERS EQUITY:

Answer 23

the residual interest an owner has in a business after liabilities are deducted from assets.

Question 24

EXPENSES:

Answer 24

decreases in assets or increases in liabilities that result in a decrease in owners’ equity.

Question 25

REVENUE:

Answer 25

increases in assets or decreased in liabilities that result in an increase in owner’s equity, achieved by providing goods or services to customers.

Question 26

GST LIABILITY:

Answer 26

an obligation to the taxation office that exists because the GST collected by a business exceeds the GST it paid to its suppliers.

Question 27

CALCULATING GST LIABILITY:

Answer 27

GST collected - GST paid
HOW ARE THEY RECORDED IN CASH JOURNALS? cash payment journals, under sundaes.

Question 28

ACCOUNTING EQUATION:

Answer 28

ASSETS = liabilities + owners equity
OWNERS EQUITY = assets - liabilities
LIABILITIES = assets - owners equity

Question 29

CASH RECEIPT JOURNALS

Answer 29

a summary of a firm’s receipts and payments over a stated period of time.

Question 30

CASH PAYMENT JOURNALS:

Answer 30

a daily record of the details of all cash payments.

Question 31

CASH FLOW STATEMENT

Answer 31

an accounting report that states all cash inflows and outflows over a
period.

Question 32

OPERATING ACTIVITIES:

Answer 32

cash flows that relate to the day-to-day operations of a
business.

Question 33

INVESTING ACTIVITIES:

Answer 33

cash flows that result from the purchase or the sale of non-current assets for cash.

Question 34

FINANCING ACTIVITIES:

Answer 34

cash flows that relate to changes in the financial structures of a business.