Accounting Unit 3+4 definitions

Question 1

Assets

Answer 1

Economic resources under the control of an entity which have the potential to produce economic benefits.

Question 2

Current assets

Answer 2

Economic resources under the control of an entity which have the potential to produce economic benefits within the next 12 months.

Question 3

Non-Current assets

Answer 3

Economic resources under the control of an entity which have the potential to produce economic benefits in 12 months or longer.

Question 4

Liabilities

Answer 4

Present obligations of an entity to transfer economic resources.

Question 5

Current liabilities

Answer 5

Present obligations of an entity to transfer economic resources within the next 12 months.

Question 6

Non-Current liabilities

Answer 6

Present obligations of an entity to transfer economic resources in 12 months or longer.

Question 7

Owners Equity

Answer 7

The residual value of the assets of an entity after the liabilities are deducted.

Question 8

Revenues

Answer 8

Increase in assets or decrease in liabilities that result in an increase in owners equity.

Question 9

Expenses

Answer 9

Decrease in assets or increase in liabilities that result in a decrease in owners equity.

Question 10

Qualitative characteristics

Answer 10

T, timeliness 
U, understandability 
R, relevance 
F, faithful representation 
C, comparability 
V, verifibility

Question 11

Accounting assumptions

Answer 11

P, period
A, accural
G, going concern
E, entity

Question 12

Mark up

Answer 12

The percentage difference between a products cost price and selling price.

Question 13

Recommended retail price

Answer 13

The official selling price of a product made by a manufacturer to a retailer/seller.

Question 14

Brake-Even analysis

Answer 14

A calculation of the point of which revenues equals expenses.

Question 15

FIFO

Answer 15

First in First out, the assumption that the first stick in is the first to sell (lowest price first).

Question 16

Public Accountants

Answer 16

Are in business for themselves, either a sole trader or in a partnership.
There expertise are in taxation, record keeping and inventory control.

Question 17

Private Accountants

Answer 17

Are employed by one particular business as a private employee.
They work as a team who all have different areas of expertise such as taxation, record keeping, payroll and inventory control.

Question 18

Government Accountants

Answer 18

Employeed by government organisations and have three levels, state federal and local.
They are heavily involved in budgeting for future events.

Question 19

Academic Accountants

Answer 19

The smallest group of qualified accountants.

Usually work in tertiary education and help to educate future Accountants.