ACCOUNTING AND FINANCE BASICS WEEKS 1&2

Question 1

define accounting and finance

Answer 1

language of business,recording and classifying information (invoices, bank statements)

Question 2

managerial accounting

Answer 2

used to make decisions based on the past &future, to predict any changes for internal users

Question 3

financial accounting

Answer 3

published for external users, looking at past numbers. the financial year usually ends 31st Dec with 9 months to file accounts giving a broad overview,quantitative data

Question 4

examples of internal users

Answer 4

marketing,management,hr,finance

Question 5

examples of external users

Answer 5

investors, creditors, customers

Question 6

why do we need financial statements

Answer 6

to check tax liability, prevent sole traders engaging in tax avoidance

Question 7

what is the statement of financial position/balance sheet made up of

Answer 7

profit &loss
changes in equity
cash flows (delayed payments)
accounting policies

Question 8

fundamental characteristics of financial statement info

Answer 8

must be useful,relevant,representative,complete,neutral

Question 9

optional characteristics of financial statement info

Answer 9

comparability, verifiability, understandability

Question 10

profit making business types

Answer 10

corporation/PLC
partnership
sole trader

Question 11

characteristics of a sole trader

Answer 11

owned by 1 person
receives profits, suffers losses themselves, personally liable for all debts

Question 12

characteristics of partnership

Answer 12

2 people own
unlimited personal liability

Question 13

characteristics of a PLC

Answer 13

ownership through shares
separate legal entity to its owners
limited liability