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AAT - FAPS > Chapter 1 & Some Of 2 > Flashcards

Chapter 1 & Some Of 2 Flashcards

1
Q

What are the types of transactions

A

Cash sales
Cash expenditure
Credit sales
Credit expenditure

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2
Q

What is the general ledger

A

AKA nominal ledger

Has separate record of each type of transaction.

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3
Q

What are payables also known as

A

Creditors

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4
Q

What are receivables known as

A

Debtors

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5
Q

What does DEAD CLIC stand for

A

DEAD
expense
Asset
Drawing

CLIC
liability
Income
Capital

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6
Q

Ok which side of the T account is the debit and credit

A

The credits are on the right because we cRash on the Right

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7
Q

What is the narrative heading on the T account

A

In this column should be entered the name of the opposite account to show where the second entry for the transaction would be found

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8
Q

What is interest received in the other income section of the P&L

A

This is anything which is earned and not in their trade e.g renting out a section of the office

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9
Q

What does the statement of profit and loss contain

A

Income such as sales to customers or bank interest received

Expenditure such as purchases of inventory rent or salaries

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10
Q

What elements does the statement of financial position contain

A

Assets owned by the business such as property, vehicles and cash

Liabilities owed by the business such as bank loans or unpaid tax this also includes amounts owed to the owner of the business

receivables are treated as an asset

payables are treated as a liability

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11
Q

What period of time do assets need to be to fall into non current assets

A

Over 12 months

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12
Q

Gross profit

A

Sales income - COGS (purchase costs)

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13
Q

Net profit

A

Sales revenue - all costs

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14
Q

What are the accounting concepts (7)

A

Accruals
Going concern
Business entity
Materiality
Consistency
Prudence
Money measurement

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15
Q

What are accruals

A

Accruals should be matched together and included in the period which they relate to

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16
Q

What is going concern

A

The assumption that the business will continue trading for the foreseeable future by considering the next 12 month period

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17
Q

Business entity concept

A

The idea that the business and the owner are completely separate and should be treated separately

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18
Q

Materiality

A

Financial statements should show a true and fair view. Information is material if omitting, misstating or obscuring would influence decisions

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19
Q

Consistency

A

The concept that we treat similar items in the same way in he current accounting period so that comparisons can be drawn

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20
Q

Prudence

A

Exercising caution when making judgments

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21
Q

Money measurement

A

To be recognised in the financial statement it needs to be measured in money

22
Q

What are the fundamental qualitative characteristics

A

Relevance
Relevance if it is can make a difference to the decision this will be predictive value which is used to predict future outcomes or if confirmatory value which provides feedback

Faithful representation
Complete, neutral, free from error

23
Q

What are the enhancing qualitative characteristics (4)

A

Comparability
Verifiability
Timeliness
Understandability

24
Q

Users of financial statements

A

Investors
Employees
Lenders
Suppliers
Customers

25
Q

Ethical principles - fundamental

A

Integrity, objectivity, professional competency and due care, confidentiality and professional behaviour

26
Q

ASSET, LIABILITY, EXPENSE, INCOME

‘Wages paid for the week’

A

Expense

27
Q

ASSET, LIABILITY, EXPENSE, INCOME

‘Cash in the petty cash tin’

A

Asset - it is something that the business owns

28
Q

ASSET, LIABILITY, EXPENSE, INCOME

‘Customer outstanding balance owed to the business’

A

Asset - this is owed to the business so will be a benefit in the future when the cash is received

29
Q

ASSET, LIABILITY, EXPENSE, INCOME

‘supplier outstanding balance owed by the business’

A

Liability - this is owed by the business

30
Q

ASSET, LIABILITY, EXPENSE, INCOME

‘Premises where production takes place’

A

Asset - owned

31
Q

ASSET, LIABILITY, EXPENSE, INCOME

‘Sales of units to a customer’

A

Income - this is revenue for the business

32
Q

ASSET, LIABILITY, EXPENSE, INCOME

Machinery for the factory

A

Asset - owned and will create future benefit

33
Q

ASSET, LIABILITY, EXPENSE, INCOME

Loan from an investor

A

Liability - owed

34
Q

ASSET, LIABILITY, EXPENSE, INCOME

A bank overdraft

A

Liability - owed

35
Q

ASSET, LIABILITY, EXPENSE, INCOME

Stock if materials used in production

A

Asset - owned by the business and will benefit the business

36
Q

Are the premises an asset or liability

A

Asset - as they are owned by the business

37
Q

Is a loan from the bank an asset or liability

A

Liability - owed

38
Q

Is cash in the bank an asset or a liability

A

Asset - owned by the business

39
Q

Is VAT owing to HMRC an asset or liability

A

Liability

40
Q

Is machinery an asset or liability

A

Asset - owned by the business

41
Q

BOOKS OF PRIME ENTRY

what does the cash book receipts deal with

A

A list of all receipts into the business bank account

the cash book deals with transactions through the business bank account

42
Q

BOOKS OF PRIME ENTRY

What does the cash book payments deal with

A

A list of all payments made out of the business bank account

  • the cash book deals with transactions through the business bank account*
43
Q

BOOKS OF PRIME ENTRY

what does the sales say book deal with

A

A list of all credit sales made by the business

this is a list of all the credit sales invoices raised

44
Q

BOOKS OF PRIME ENTRY

What does the purchase day book deal with

A

All credit purchases made by the business

this is a list of all the credit purchase invoices received

45
Q

When the business makes a transaction involving paying for goods what would one of the effects be

A

Purchases would be debited

46
Q

What is the first step in the sales cycle

A

Step 1 customer requests a quote - quotation

47
Q

What is the second step in the sales cycle

A

Order placed by customer - sales order

48
Q

What is the third step in the sales cycle

A

Goods delivered to customer - delivery note

49
Q

What is the fourth step in the sales cycle

A

Payment requested from customer - sales invoice

50
Q

What is step five in the sales cycle

A

Payment received from customer - remittance advice note

AAT - FAPS (10 decks)

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