Accounting chapter 1

Question 1

Define book-keeping

Answer 1

A process of detailed recording of all transactions of a business

Question 2

Define accounting

Answer 2

Uses the book-keeping records to prepare and analyze financial statements and to assist in decision making

Question 3

Book keeping vs Accounting

Answer 3

Accounting is Analyzing, Reporting and communicating while Book-Keeping is recording

Question 4

4 reasons why accounting is important

Answer 4

1. To measure business performance by having comparison
2. Able to analyze business situation
3. Make better decision making
4. Organized and standardized recordings and reporting

Question 5

Define capital

Answer 5

The total resources provided by the owner and what the business owes the owner also knows as owner equity.

Question 6

Define Asset

Answer 6

Asset represents anything owned by or owing to the business.

Question 7

List of Assets

Answer 7

.Cash
.bank
.Premises
.machinery
.furniture
.motor vehicles
.fixtures and fitting
.Inventories
.Trade receivables

Question 8

Define liability

Answer 8

Anything owed by the business

Question 9

List of liabilities

Answer 9

.Loan from bank
.Loan from another party
.Trade payable

Question 10

Define Trade payable

Answer 10

The credit supplier the business owes to

Question 11

What is the basic Accounting equation

Answer 11

Assets= Liability + Capital