Business Accounting (Test 1)

Question 1

what is the first stage of the accounting process?

Answer 1

Source Documents

Question 2

what is the second stage of the accounting process?

Answer 2

Recording

Question 3

what is the third stage of the accounting process?

Answer 3

Reporting

Question 4

what is the forth stage of the accounting process?

Answer 4

Advice

Question 5

What are Source Documents

Answer 5

Receipts, Cheque butts, Invoice, Memos, EFT

Question 6

What are Recording

Answer 6

Sorting, Classifying and summarising the info so that it is more reliable or
Posting source documents to Journals and Ledgers

Question 7

What is reporting

Answer 7

taking information from accounting records and reporting the financial information
examples:
Cash Flow statement
Income Statements
Balance Sheets

Question 8

What is Advice

Answer 8

Owners in a better position to make informed decisions
and accountants provide suggestions to management and provide options for the business.

Question 9

what is an asset

Answer 9

present economic resource,
controlled by the entity,
Result of past events

Question 10

Current Assets

Answer 10

Economic resource that will flow to the business within the next 12 months of the current reporting date.

Question 11

Non Current Asset

Answer 11

Economic resources that will flow to the business for over 12 months of the current reporting date.

Question 12

Liability

Answer 12

Present obligations of the business (that will result in a transfer of economic benefits results of past events (what the business over)

Question 13

Current Liabilities

Answer 13

Economic benefits that will transferred/ paid to the creditor within the next 12 months of the current reporting date.

Question 14

Non Current Liabilities

Answer 14

Economic benefits that will transferred/paid to the creditor for a period longer than 12 months of the current reporting date

Question 15

Owners Equity

Answer 15

(Owners Equity= Assets- Liabilities)

Residual interest in the assets of the business after the deduction of liabilities. The amount of the companies assets left after the deduction from liabilities that the owner can claim

Question 16

Revenue

Answer 16

Increases assets and decreases liabilities, thus increasing owners equity but doesn’t include Capital contribution from the owner

Question 17

Expense

Answer 17

Decreases assets and increases liabilities, thus decreasing owners equity but excludes drawings by the owner (when owner take assets out of business)

Question 18

profit formula

Answer 18

Profit=Revenue-Expenses