Chapter 5 - Balance Sheet

Question 0

What is GAAP?

Answer 0

A set of rules and practices, having substantial authoritative support, that guide financial reporting

Question 1

What is a reporting entity?

Answer 1

An entity with users who rely on the information in general purpose financial statements to meet their information needs

Question 2

What is public accountability?

Answer 2

It refers to entities with securities, debt or equity, traded in public market or entities that hold assets in a fiduciary capacity as their main business activity

Question 3

What is duality?

Answer 3

It describes how every business transaction has at least two effects on the accounting equation

Question 4

What is liquidity?

Answer 4

The ability of an entity to meet its short-term financial commitments

Question 5

What does contingent mean?

Answer 5

Existence of an asset or liability arising from a past event that may be confirmed only by uncertain future events not controllable by the entity

Question 6

What is equity?

Answer 6

The residual interest in the assets of the entity after all its liabilities have been deducted

Question 7

What is realisable value?

Answer 7

Amount that an entity can expect to receive from disposal of an asset or settlement of a liability in the normal course of business

Question 8

What is a group?

Answer 8

Refers to the parent entity and all its subsidiaries