ACCT1101 Flashcards
What is Financial Accounting?
The act of preparing historical and past transactions for internal and external users. It is governed by strict accounting codes of practice.
What is Management Accounting?
Preparing historical and predicting future financial outcomes.
Define Sole traders
Operate and manage a business on their own. The business is not a separate legal entity and the owner is responsible for all debts.
Define Partnerships
An association of two or more persons that carry out business as partners and share profits or loss.
Define Companies
Companies are separate legal entities and are distinct from owners and shareholders.
What are the tax implications for Sole Traders, Partnerships and Companies?
Sole Traders - Considered part of normal income (no tax threshold)
Partnerships - Same as sole traders but shared between partners
Companies - Pay income tax.
What are the 4 types of companies
Share limited, guarantee limited, no liability and unlimited.
Define Current and Non Current Assets
Current assets are expected to be spend within the next accounting cycle (cash, daily resources, accounts receivable)
Non-Current Assets are not expected to be spent within the next cycle (buildings, equipment)
Define Current and Non Current Liabilities
Current liabilities are expected to be paid back within the next accounting cycle. (unpaid wages)
Non Current Liabilities are not expected to be paid back in the short term (bank loans).
Define Equity
Owners investments in business and reserved income.
Define expenses
A decrease in the amount owners can claim in business. A cost incurred.
Define assets
A thing a business has.
Define accounting process
The process of identifying, measuring and communicating economic information for decision making purposes.
What does ASIC do
Serves as a watchdog and enforces the corporations act 2001
What does ASX do
Outlines operating rules and trading.
