Chapter 2 - acc info system (not done)

Question 1

Accounting entity theory

Answer 1

The accounting entity theory states that the actions of the owner and the activities of the business are sperate. and all transactions are recorded in the businesses point of view.

Question 2

Accounting period theory

Answer 2

It is applied where the life of a business is divided into regular time intervals.

Question 3

Going concern theory

Answer 3

A business is assumed to have an indefinite economic life unless there is credible evidence that it may close down.

Question 4

Monetary theory

Answer 4

Only business transactions that can be measured in monetary terms are recorded

Question 5

Cash trans vs Credit trans

Answer 5

In a cash transaction, payment is made at the same time or immediately during a cash sale or purchase.
In a credit transaction, payment is delayed or postponed during a credit sale or purchase.

Question 6

5 accounting process of the Accounting Information System

Answer 6

source documents - journal - ledger - trial balance - financial statements.

Question 7

1st stage of accounting cycle

Answer 7

Identify source documents and Record transactions in journal and ledger.

Question 8

2nd stage of accounting cycle

Answer 8

Adjust: Any adjusting entries are recorded in the journal and posted to the ledger at least once in a financial years

Question 9

3rd stage of accounting cycle

Answer 9

Report: Based on adjusted Trial balance, financial statements are prepared

Question 10

4rth stage of accounting cycle

Answer 10

Close: Close all accounts after finalisation of financial statements