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ACA - Accounting > Accounting Documents and Systems > Flashcards

Accounting Documents and Systems Flashcards

1
Q

What is accounting?

A

accounting is a way of recording, analysing and summarising the transaction of an entity

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2
Q

What are the three types of business entity?

A

sole trader
partnership
limited liability companies

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3
Q

soletrader

A

owner/manager - takes all liability

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4
Q

partnership

A

similar to sole trader but 2 or more people

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5
Q

limited liability company

A

share holders - owners
managers - directors

separate legal entity - if business fails, all shareholders lose their investment

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6
Q

Limited private

A

shares are not listed

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7
Q

Plc shares

A

listed could

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8
Q

What is the objective of financial reporting?

A

it mentions the primary users of financial info (eg. investors, lenders, and other creditors and other groups) may be interested in financial information

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9
Q

What would investors look for in a financial statement?

A

profitability

future prospects

risk and return

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10
Q

What would employees look for in a financial statement?

A

profitability

going concern - job security, cash, pension

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11
Q

What would lenders look for in a financial statement?

A

cash

assets

other loans

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12
Q

What would suppliers look for in a financial statement?

A

cash

future prospects

going concern

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13
Q

What would customers look for in a financial statement?

A

ethical

going concern - provide goods and services

profitability - value for money

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14
Q

What would government and their agencies look for in a financial statement?

A

profitability

stats - diversity, competition and environment

compliance with law

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15
Q

What would public look for in a financial statement?

A

customer - contribution to local economy and society

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16
Q

IFRS

A

International Financial Reporting Standard

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17
Q

IAS

A

International Accounting Standard

18
Q

What does an IAS presentation of financial statement identify?

A

statement of financial position

statement of profit or loss

a statement of changes in equity

a statement of cash flows and notes

19
Q

What is the statement of financial position in the UK called?

A

the balance sheet

20
Q

Statement of financial position

A

a list of all the assets controlled and the liabilities owned by business as a particular date

21
Q

What is the statement of financial position quantify?

A

the amount of shareholder interest is in the company = equity

22
Q

What is equity?

A

amount invested in a business by the owners

23
Q

What is equity known as for soletraders?

A

capital

24
Q

What is a non-current asset?

A

assets and property owned by a business that are not easily converted to cash within a year

25
Q

What is a current asset?

A

easily sold and highly liquidity

26
Q

What is capital?

A

the assets and cash in a business

27
Q

What’s a non-current liability?

A

debts a business owes, but isn’t due to pay for at least 12 months

28
Q

What is a current liability?

A

debt a business owes which is due within 12 months

29
Q

Trade payables

A

short-term expenses incurred by businesses when they use products or services from a third-party vendor or supplier to deliver their products to their customer

30
Q

Accruals

A

amounts of money that have been earned or spent, but not yet paid

31
Q

What is the statement of profit or loss called in the UK?

A

profit or loss account

32
Q

What was the statement of profit or loss called in the UK?

A

income statement

33
Q

Statement of profit or loss

A

a record of income recognised and expenditure incurred over a given period

it is a record of the entity’s financial performance over a period of time

the statement shows whether a business has had more revenue than expenditure (profit) or a loss

34
Q

What is delivery inwards?

A

delivery costs

35
Q

Sundry incomes

A

—-, dividend, rental

36
Q

Delivery outwards

A

cost to deliver to consumer

37
Q

Depreciation

A

charge forwarding non-current asset

38
Q

Bad and doubtful debts

A

trade receivables

39
Q

cost of sales =

A

opening inventory + purchase + cost of delivery - closing inventory

40
Q

What is the purpose of a financial statement that lists and entity’s total assets and total capital/liability to show:

A

financial position of the entity at particular moment in time

41
Q

What is the business entity concept?

A

business is separate to owner and personal transaction of the owner should never be mixed with business transaction

when considering a limited liability company that distinction is laid down in law - the company has separate legal identity

ACA - Accounting (2 decks)

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