Chapters 1-5: Accounts Preparation Flashcards
Accounts Preperation
Financial Statements Primarily Compromise?
- A Profit & Loss Account; and
- A Balance Sheet.
Accounts Preperation
The System of Accounting Should be Able to Determine?
- Whether The Business is Operating at a Profit; and
- That The Business Can Meet its Liabilities as They Fall Due
Accounts Preperation
Businesses Are Eligible to Use The Cash Basis if?
The Accruals Basis is The ‘Default’ Under Accounting Standards.
- They Are Unincoporated; and
- With Income No More Than £150,000.
Accounts Preparation
For Accounting Purposes, a Business Must be Regarded as?
A Separate Entity in Its Own Right.
Accounts Preperation
How Are Current Assets Listed in The Accounts?
(If There’s More Than One Asset)
From The Least to Most Liquid Form of Asset.
Liquidity is The Ease by Which Something Can be Converted Into Cash.
Accounts Preperation
What Does Proprietor’s Funds Represent?
The Amount the Business Owes the Owner.
Accounts Preparation
What is The Golden Rule For All Accounting Transactions?
Debits Must Always Equal Credits Every Time a Transaction Occurs.
Accounts Preperation
Are The Financial Statements Part of The Double-Entry System?
The P&L a/c is. The B/S is Not.
Accounts Preperation
What is Sundry Income?
Other Sources of Income a Business May Have, Which Doesn’t Arise From Trading.
Accounts Preperation
Gross Profit is Expressed as Either:
- A % of Revenue (Gross Profit Margin); or
- A % of COS (Mark-Up)
Accounts Preperation
Trade Discounts Are Offered to?
Special Customers or For Bulk-Buying.
Accounts Preperation
Trade Discounts Are Reflected in?
A Reduced Selling Price at The Point Sale is Made.
A Normal Double-Entry is Recorded For The Cash or Credit Sale.
Accounts Preparation
Settlement Discounts Are Offered to?
Credit Customers to Encourage Prompt Payment.
Accounts Preperation
When Offering a Settlement Discount, The Business Doesn’t Know if?
The Customer Will Take Advantage of The Settlement Discount.
It Must Record The Full Value of The Sale in Their Books.