accounting Flashcards
what is accounting
This is the process of collecting, recording, classifying, summarising, analysing, interpreting, and communicating financial data
What is finanicial data
Refers to quantiative information that is used by oranisations to make financial decisions.
What is meant by book keeping?
It’s detailed recording of all financial transaction of the business taking place in a given period of time.
what are business transactions?
This is an economic event that involves exchange of goods, money or services.
What are financial statements?
These are statements that show the net worthy and the peformance of the business
what are the three statments?
- Income statement
- statement of financial position
- cash flow
what is meant by income statement?
Income statemtn helps the business to assess its peformance by checking how much profit/loss made per peiod.
what is meant by statement of financial position?
enables the business to tell its networth by showing how much assets, liabilities, and capital they own at the end of a period.
what is meant by cash flow?
cash flow is a statement that shows both the inflow and outflows of the business per period
what is the purpose of accounting?
the main purpose of accounting is to provide infromation that helps the interested parties to monitor the progress of the business.
state two purposes of measuring business profit or loss
- It enables the business to compare its profit of previous
- enables the business to compare its peformance with other competitors
List three interested parties of an internet provider and explain why accounting is important to them
Owner- To see how well their business is doing from their investments.
Investors- They use the past and present accounting records of the business to tell how well ther intended investments do in the business
Bank manager- They will use the past and present accounting records to help them to decide whether to grant a loan to the busines sor not
who are these people?
a) whether the business can pay interes when due
b) wheter the business is profitable
c) the market value of the assets that the business owns
d) whether the business has enough liquidly
a) bank manager
b)investors)
c)owners and partners
d)creditors
What s accounting
a) a process
b) A chore
c) Task
d)A system
a) a system
what are assets?
These are properties owned by the business or an individual
What are non current assets?
Assets that are expected to las more than one year in the business
what are urrent assets?
Assets that do not last for more than one year in the business.
Differentiate Non current assets and current assets
non current assets are assets which last more than ne year in the business while current assets are assets that do not last more than a year in the business
What is a liability?
These are debts that the business owes the outsiders
what is a non current liability?
these are debts of the business that are expected to be paid off for more than a year.
what are current liabilities?
These are debts of the business that are expected to be paid off within a year
differentiate non current liabilty and current liability
non current liabilities are debts f the businesses which are expected to be paid for more than a year while current assets are expected to be paid off within a year’
what is capital(owners equity)
