Chapter 3

Question 1

business transcation

Answer 1

an event or activity that causes a change in the financial position of a business (e.g., purchasing items, paying utilities, getting paid for providing services)

Non-transcations include firing an employee, increasing prices of items

Question 2

The Objectivity Principle

GAAPs/IFRS

Answer 2

accounting is recorded on the basis of objective evidence called a source document

objective - factual, neutral, unbaised

Question 3

source document

Answer 3

the original record of the transcation; proof of business transcation (e.g., receipt, cheque, contract, bank statement, order statement, invoice/bill)

Question 4

equation analysis sheet

Answer 4

a tool for displaying individual transcations and the new financial position resulting from each transcation

Question 5

4 events that changes the capital

Answer 5

1. make a sale/sold a service +
2. investment into the business +
3. pay expenses (e.g. rent, advertisements, utilities, wages) -
4. withdraws by the owner for personal use -