Accounting

Question 1

Definition of accounting

Answer 1

Accounting is a managerial and administration tool that involves recording of each transaction so that a clear summary of what happened in a business can be traced over time

Question 2

What is transaction

Answer 2

Transaction is any activity within the business that has an effect on the accounting equation

Question 3

What is accounting equation

What each letter stands for?

Answer 3

A=L+OE
A-Assets
The value of something owned by a business
L-liability
An obligation of a business must pay an amount of money owed by a business
Owner Equity
The amount that money is invested by the owner to a business

Question 4

What is financial report of accounting equation?

Answer 4

Balance sheet

Question 5

Profit equation

What each letter stands for?

Answer 5

P=R-E
R-revenue
The amount of money earned by a business usually from sales
E-expense
The running cost that a business pays regularly
P-profit
The remain once expenses are deducted from the revenue increase

Question 6

Financial statement of profit equation

Answer 6

Profit and loss sheet

Question 7

What is accounting convention

Answer 7

By using a simple set of convention, accounting profession make it possible for many people involved in the business to understand the reports that are created

Question 8

Dual aspect convention

Answer 8

The accounting system recognizes two aspects of each transaction

Question 9

Accounting cycle

Answer 9

Source document
Documents which show the transaction has occurred 
Journals
The books of first entry 
General ledger
The books of second entry
Trial balance
Test to see the books balance 
Financial report
Financial statements

Question 10

Purpose

Answer 10

By using a common set of convention and following an accounting cycle make it possible for different business to create financial reports that are understood by a very large amount of people

Question 11

Allocation

Answer 11

Distribution according to a plan

Question 12

Commercialize

Answer 12

To organize something to make profit

Question 13

Externalities

Answer 13

Positive or negative consequences (benefits or costs) of economic activities experienced by other people

Question 14

Infrastructure

Answer 14

Basic systems and services suave as transport and power supplies

Question 15

Optimal

Answer 15

The best or most likely to bring success

Question 16

Outcome

Answer 16

The result or effect of an action or situation

Question 17

Unfettered

Answer 17

Not limited by any rules or controls

Question 18

Direct tax

Answer 18

A tax on wages and salaries or on company profits

Question 19

Indirect tax

Answer 19

A tax paid on property sales transaction imports and so on

Question 20

Value-added tax

Answer 20

A tax collected at each stage of production, excluding the already-taxed costs from previous stages

Question 21

Capital gains tax

Answer 21

Profit made by selling assets

Question 22

Inheritance tax

Answer 22

Gifts to family members over a certain value

Question 23

Wealth tax

Answer 23

the annual tax imposed on people’s fortunes

Question 24

Tax avoidance

Answer 24

Making false declaration to the authorities

Question 25

Tax evasion

Answer 25

Reducing the amount of tax you pay to a legal minimum

Question 26

Tax havens

Answer 26

Countries where taxes are ,where multinational companies often set up their head office

Question 27

Total receivable

Answer 27

Money owed by customers for goods or services purchased on credit

Question 28

Account payable

Answer 28

Money owned to suppliers for purchase made on credit

Question 29

Accrued expense

Answer 29

Expenses such as wages taxes and interest that have not yet been paid at the date of the balance sheet

Question 30

Total operating expense

Answer 30

Additional expenses involved in running the company

Question 31

Cost of revenue

Answer 31

The expenses specific to providing the company ‘a services or producing products

Question 32

Interest income

Answer 32

Money received from investment

Question 33

Research & development

Answer 33

Money spend in order to produce income in the future

Question 34

Additional paid-in capital

Answer 34

Capital that shareholders have contributed to the company above the nominal or par value of the stock

Question 35

Accured

Answer 35

Adjective describe a liability which has been incurred but not yet invoiced to the company

Question 36

Deferred

Answer 36

Delayed or postponed until a later time

Question 37

Goodwill

Answer 37

The difference between the purchase price of acquired companies and their net tangible assets

Question 38

Budget

Answer 38

The financial operating plan showing the expected income and costs

Question 39

Expenditure

Answer 39

All the money the business spent on goods and services during a given period

Question 40

Income

Answer 40

All the money receives from the business during a given period

Question 41

Liability

Answer 41

The total amount of money owed that the company will have to pay out

Question 42

Intangibles

Answer 42

Assets whose value can only

be turned into cash with difficulty

Question 43

Prepaid expense

Answer 43

Money paid in advance for good and services.