Accounting concepts

Question 1

Accounting

Answer 1

Accounting is the art of recording a transaction in terms of money

Question 2

5 forms of ownership

Answer 2

sole traders
partnerships
closed corporations
private companies
public companies

Question 3

Ownership

Answer 3

A sole trader has only one owner

Question 4

Management

Answer 4

He is responsible for the management of the business

Question 5

Capital contribution

Answer 5

the owner contribute his own money or possessions into the business

Question 6

Liability

Answer 6

He is fully responsible for the debts of the business

Question 7

Continuity

Answer 7

The lifespan of the business is limited to the owners lifespan

Question 8

TAX

Answer 8

The owner pays tax according to his income

Question 9

DEBIT

Answer 9

Asset and expense accounts increase on the debit side, losing money

Question 10

CREDIT

Answer 10

Liability ,owners equity and income accounts increase on the credit side, money coming in.

Question 11

Owners equity

Answer 11

Owners equity is the owners share or contribution to the business

Question 12

Capital

Answer 12

Money that is spent on the business to start and run the business

Question 13

Drawings

Answer 13

Money that is taken from the business account for personal use.

Question 14

Profit or loss

Answer 14

profit is when there is more money coming in then leaving and loss is the opposite

Question 15

Income

Answer 15

Income increases profit

Question 16

Expenses

Answer 16

Money that is spent by the business in order to keep the day to day requirements working

Question 17

Fixed assets

Answer 17

These assets are normally used to create more money from the business and has a year lifespan

Question 18

Current assets

Answer 18

Current assets are turned back into cash within a 12-month period

Question 19

Long-term liabilities

Answer 19

These liabilities are taken out for longer than 12 months and are paid back monthly over the entire time period

Question 20

Current Liabilities

Answer 20

Current liabilities are usually paid back within a 12-month period