Certi know

Question 1

Expense

Answer 1

A decrease in assets (or increase in liabilities) that reduce the owners equity. Except for Drawings.

Question 2

Revenue

Answer 2

An increase in assets or decrease in liabilities that lead to a increase in Owners Equity. Except for Capital Contribution.

Question 3

Current Liability

Answer 3

A present obligation of an entity to transfer an economic resource as a result of past events that is expected to be settled within 12 months.

Question 4

Current Assets

Answer 4

A present economic resource controlled by the entity that is expected to be sold, consumed or converted into cash within 12 months.

Question 5

Timeliness

Answer 5

Financial information should be available to decision-makers in time to be capable of influencing their decision.

Question 6

Understandability

Answer 6

Financial information should be understandable and comprehensible to users with a reasonable knowledge and presented clearly.

Question 7

Relevance

Answer 7

All information capable of making a difference to decisions by the user should be included.

Question 8

Faithful Representation

Answer 8

The financial information is reported in a faithful representation of the real - world economic event it claims to represent. Free from material error and bias.

Question 9

Verifiability

Answer 9

Ensures that different, knowledgeable and independent observers can reach the same conclusion that a particular representation of an event is faithfully represented. (use when source documents)

Question 10

Owners Equity

Answer 10

The residual interest in the assets of an entity after the deduction of its liabilties

Question 11

Depreciation

Answer 11

the allocation of the cost of a non-current asset over its useful life

Question 12

Accounting Entity Assumption

Answer 12

the assumption that the records of assets, liabilities and business activities of the entity are kept completely separate from those of the owners of the entity as well as from those of other entities.

Question 13

Going Concern Assumption

Answer 13

The assumption that the business will continue to operate in the future, and its records are kept on that basis.

Question 14

Period Assumption

Answer 14

The assumption that reports are prepared for a particular period of time, in order to obtain comparability of results.

Question 15

Accrual basis Assumption

Answer 15

The assumption that revenues are recognized when earned and expenses are recognized when incurred, so profit is calculated as revenue earned in a particular period less expenses incurred in that period.

Question 16

Non current liability

Answer 16

A present obligation of the entity to transfer an economic resource as a result of past events that is not required to be settled in 12 months.

Question 17

Non current asset

Answer 17

A present economic resource controlled by the entity as a result of past events that is not held for resale and is reasonably expected to be used for more than the next 12 months.