Chapter 1

Question 1

Businesses or individuals to whom money is due for services or goods supplied to the business

Answer 1

Trade payables

Question 2

Calculates the profit made by a business. Along with the statement of financial position, it makes up the financial statements of a business

Answer 2

Income statement

Question 3

All those people or groups of people who have a special interest in a business. They may be internal or external to the business, for example prospective investors, the government, trade payables, managers

Answer 3

Interested parties

Question 4

Any aspect of a business that can be measured in terms of money

Answer 4

Financial data

Question 5

Made up of an income statement and a statement of financial position

Answer 5

Financial statements

Question 6

The process of collecting, recording, classifying, summarising, analysing, interpreting and communicating financial data in order to allow the users of accounting information to make informed judgments and decisions

Answer 6

Accounting

Question 7

The collection, recording, storage and retrieval of financial transactions of a business

Answer 7

Book-keeping

Question 8

Accounting

Answer 8

The process of collecting, recording, classifying, summarising, analysing, interpreting and communicating financial data in order to allow the users of accounting information to make informed judgments and decisions

Question 9

Trade payables

Answer 9

Businesses or individuals to whom money is due for services or goods supplied to the business

Question 10

Income statement

Answer 10

Calculates the profit made by a business. Along with the statement of financial position, it makes up the financial statements of a business

Question 11

Interested parties

Answer 11

All those people or groups of people who have a special interest in a business. They may be internal or external to the business, for example prospective investors, the government, trade payables, managers

Question 12

Financial data

Answer 12

Any aspect of a business that can be measured in terms of money

Question 13

Financial statements

Answer 13

Made up of an income statement and a statement of financial position

Question 14

Book-keeping

Answer 14

The collection, recording, storage and retrieval of financial transactions of a business

Question 15

What is the difference between book-keeping and accounting?

Answer 15

Book-keeping is the detailed recording of all the financial transactions of a business. Accounting uses these book-keeping records to prepare financial statements.

Question 16

What are some purposes of measuring business profit and loss?

Answer 16

To compare profit against your own profits of previous years; to compare profit against a competitor’s profit; to take decisions such as whether to grow the business or expand the product range.