CHAPTER 1

Question 1

Bookkeeping system

Answer 1

A system to record the nature and monetary value of the transactions of an organization

Question 2

Stewardship Accounting

Answer 2

A form of accounting which keeps account of items

Earliest form of accounting

Question 3

annual report

Answer 3

A document that contains the financial statements and reports form management explaining what they plan to do

Question 4

Statement of financial position

Answer 4

Provides info of the financial position of an entity.

Typically details an entity’s assets, liabilities and equity capital

Question 5

Balance sheet

Answer 5

The UK equivalent of the statement of financial position

has details of an entity’s assets, liabilities and capital

Question 6

Statement of profit or loss

Answer 6

Shows the profits and losses for the a period of time from realized activities

This includes normal operating activities like selling a house

Question 7

Statement of comprehensive income

Answer 7

Statement detailing the total performance of an entity in a specific period

Includes realized income, expenditure and unrealized income

Question 8

Profit or loss for the period

Answer 8

The difference between the income for the period and the expenses incurred in the period

Question 9

Statement of cash flows

Answer 9

Shows the source and use of cash in the period

Question 10

Financial adaptability

Answer 10

An entity’s ability o take action to alter its cash flows to respond to needs or opportunities

Question 11

financial accounting

Answer 11

Process of operating an information system for collecting and recording business transactions and summarizing them and communicating the results to users to make economic/financial decisions

Question 12

Management accounting

Answer 12

The provision of information to an organizations management for the purpose of decision-making and planning

Question 13

Financial statements

Answer 13

A collective term to describe the comprehensive income statement, statement of financial position and cash flows and other notes

Question 14

Internal Control

Answer 14

Assuring achievement of an organizations effectiveness and efficiency, reliable financial reporting and compliance with laws

Question 15

Double-entry bookkeeping

Answer 15

Each transaction gets put in the books twice

This is a form of an internal check

Question 16

Internal check

Answer 16

An internal control established by the entity to ensure that a transaction has been undertaken correctly

Question 17

Stewardship objective

Answer 17

Financial statements should provide info that’s useful for assessing managements stewardship function

Question 18

Accountability

Answer 18

Refers to managements responsibility to prove a report on the way their resources have been used

Question 19

Asset

Answer 19

A present economic resource controlled by the entity as a result of past events

Question 20

Economic Resource

Answer 20

A right that has the potential to produce economic benefits

Question 21

Inventoru

Answer 21

Name for goods that have been purchased as part of operating activities but not sold yet

Question 22

Trade receivable

Answer 22

Amounts owed from a customer for credit sales

Question 23

Liability

Answer 23

A present obligation of the entity to transfer an economic resource as a result of past events

Question 24

Trade payable

Answer 24

The term given to the money that is owed to a supplier who provides goods on credit

Question 25

Equity shareholder

Answer 25

Another name for owner

Question 26

Statement of changes in equity

Answer 26

provides information on the movements within the equity accounts in the period and any payments made to equity holders

Question 27

Comparatives

Answer 27

Used to describe prior year figures that are included in financial statements