End of month reporting

Question 1

Statement of profit or loss

Answer 1

Prepared outside ledger for presentation to interested parties, detailing the various revenues and expenses for a period and calculating the resultant profit or loss (R-E)

Question 2

Statement of Financial Position

Answer 2

Detailed expression of the accounting equation for business at certain time. Lists A, L, OE

Question 3

Statement of Cash flows

Answer 3

Shows inflows and outflows of a business entity during a period.
Provides information useful for making and evaluating decisions about the allocations of scare resources

Question 4

Operation activities

Answer 4

the amount of money a company brings in from its ongoing, regular business activities
Revenues from receipts received. (e.g. service fees revenue)
Payments are expenses (e.g. wages, salaries, electricity)

Question 5

Investing activities

Answer 5

cash used to purchase resources (assets)

e.g. furniture

Question 6

Financing activities

Answer 6

resources from cash inflows, loans to and from and dividends

Question 7

Interrelationship between the statements

Answer 7

• profit figure from SPL in SFP to increase equity figure
• R & E from SPL in statement of cash flows
• Final figure in SCF should balance the asset section of SFP
• dividends in SFP in the SCF

Question 8

Why is accounting used?

Answer 8

For business firms to operate efficiently to account for money received and spent.

Question 9

Accrual accounting

Answer 9

Transactions and events when they have an economic impact on the entity rather when the associated cash flow occurs.

Question 10

Accounting period concept

Answer 10

Assumes life of a business is divided into arbitrary time periods