AOS1

Question 0

C (consistency)

Answer 0

States that accounting methods should be applied in a constant manner from one R.P to another, to allow for the comparison of reports from one period to the next.

Question 1

Principle of accounting,

Answer 1

CHER@MCG

Question 2

H (historical cost)

Answer 2

States that transactions should be recorded at their original purchase price/cost as this is verified by source document evidences. Not estimated prices/values.

Question 3

E (entity)

Answer 3

States that the business is assumed to be separated from the owner and the other entities and it’s records should be kept on this basis. The business should have it’s own bank account.

Question 4

R (reporting period)

Answer 4

States that the life of the business must be divided into ‘periods’ of time to allow reports to be prepared. Reports should reflect the ‘period’ in which the transaction occurs.

Question 5

M (monetary unit)

Answer 5

States that items must be recorded and reported in a common unit if measurement, that is Australian dollars. So all values are same and easy to compare.

Question 6

C (conservatism)

Answer 6

States that loses should be recorded when probable but gains are only recorded when certain, so that liabilities are not understated and assets are not overstated.

Question 7

G (going concern)

Answer 7

States that the lift of the business is assumed to be continuous and it’s records are kept on that basis.

Question 8

Qualitative Characteristics

Answer 8

Rruc

Question 9

R (reliability)

Answer 9

Reports should include information verified by source document evidence so that it’s free from bias and avoid using estimations.

Question 10

R (relevance)

Answer 10

Reports should include all informations that is useful for decision making. This guides us to what we should include in reports

Question 11

U (understandability)

Answer 11

Reports should be presented in a manner that is simple to understand with clear titles and headings.

Question 12

C (comparability)

Answer 12

reports should be able to match up to each other over time through the use of consistence accounting procedures.

Question 13

What is the accounting equation

Answer 13

Assets = liability and owners equity

Question 14

What are current assets

Answer 14

Is a resource controlled by the entity (as a result of past event) from which future economic benefits is expected to flow into the entity within 12 months.

Question 15

What are non current assets

Answer 15

These are resources controlled by the entity (from a past event) from which future economic benefits is expected to flow into the entity for more than12 months.
Such as furniture, vehicles, properties, equipment and computers.

Question 16

What are current liabilities

Answer 16

Is a present obligation of the entity (arising from past events) the settlement of which is expected to result in an outflow of resource embodying economic benefits within 12 months.

Question 17

What are non current liabilities

Answer 17

Is a present obligations from the entity (arising from past event) the settlement of which is expected to result in an outflow of resource embodying economic benefits in more than 12 months. Such as bank overdraft, mortgages or loans

Question 18

What is owners equity

Answer 18

Is the residual interest in the assets of the entity after the deduction of it’s liabilities. What is left over for the owner once the business has meet all it’s liabilities like capital and drawings.

Question 19

Cash receipt

Answer 19

Evidence of a cash sale, business name will be at top

Will have rec#

Question 20

Cheque butt

Answer 20

Evidence that a cash payment has been made.

Will have chq#

Question 21

Sales invoice

Answer 21

Evidence of a credit sales, business name will be at top.

Inv & business name at top - relates to stock sale

Question 22

Purchase invoice

Answer 22

Evidence that a credit purchase has been made

Inv & suppliers name at too, not your business - relates to stock income

Question 23

Memo

Answer 23

Evidence of an internal transaction

Memo# will say drawings, losses gains etc

Question 24

Statement of accounting

Answer 24

Summarises all transaction with 1 debtor or creditor of all sales/purchases.

Question 25

Order form

Answer 25

Document which requests supply of stock

Question 26

Bank statement

Answer 26

Records the balance in a bank account

Question 27

Double entry accounting

Answer 27

Rules - Every transaction will effect at least two accounts - after recording the transaction the accounting equation must balance - A= L+ OE