Elements of Risk Flashcards
What is Collateral?
Assests are offfered as security for a debbt. If borrower defaults on debt, assets will be seized and used as collateral
What is Liquidity?
Ability of usiness to repay short term debts
History
Credit history of the borrower
What is a Guarantor?
Business or person who guarantees they will repay debts if the borrower defaults.
3 Assumptions of a Gst Taxable Supplies?
- make sale of payment
- make sale in course of business enterprise
- sale is connected to Australia
Gst free supplies?
Busineess should not include gst in gst free supplies and can claim dredits for gst.
2 types of accunting
Cash accounting
Accrual Accounting
Advantages of Perpetual System
Low moving stock lines easily identified
value of stock always known
Easy to produce Income Statement at any point in time
Disadvantages of Perpetual
Requires expensive computing techonlogy
Annual stocktake still required
Advatnage of Periodic
Simple to use
Disadvantages of periodic
Difficult to ascertain stock levels
costs to stock take
shortage difficult to track
Purpose of finacial statements
It determines performance, fiancial position, liquidity
