Entities And Financial Reporting Statements 1&2

Question 1

What is stewardship accounting?

Answer 1

It is the first form of accounting when stewards were employed by wealthy individuals to ‘a count’ of items they owned (assets) and items they owed (liabilities)

Question 2

What is a statement of financial position

Answer 2

• It provides information on what the equity owns (assets) and what the entity owes (liabilities).
• The difference represents ‘equity capital’ being the amount that the company owes the owners, or to consider it another way, it is the amount the owners have invested in the company either directly or indirectly

Question 3

What is a statement of profit or loss?

Answer 3

• This statement outlines the income for the period and the expenses incurred in the period.
• The difference between income and expenses is profit or loss for the period.
• Also known as statement of financial performance

Question 4

What is a statement of cash flows?

Answer 4

It shows an entity’s financial adaptability.

Question 5

What is financial adaptability ?

Answer 5

• Financial adaptability is its ability to take effective action to alter the amount and timing of its cash flows so that it can respond to unexpected needs or opportunities.

Question 6

What is Financial accounting?

Answer 6

• is concerned with the preparation of reports for external stakeholders.

Question 7

What is management accounting

Answer 7

• is concerned with the preparation of reports for internal management purposes.

Question 8

What are financial statements?

Answer 8

Financial statement is a formal record of the financial activities and position of a business, organization, or individual

Question 9

What is a booking system?

Answer 9

Is a system which consists of maiming a record of the nature and monetary value of transactions of an entity, usually in books of accounts (accounting records)

Question 10

What should accounting systems keep a record of?

Answer 10

• Money received
• Money Paid
• liabilities
• Assets

Question 11

What is Double entry bookkeeping?

Answer 11

Regarded as the most accurate method of bookkeeping, primarily because each transaction is entered in the books twice.

Question 12

What is summary of statement of financial position?

Answer 12

1. The amount of cash and money at the bank
2. Other assets that the business owns, such as goods for resale (inventory), vehicles or machinery
3. Trade receivables and trade payables
4. The amount of capital invested in the business by its owner(s)
5. Any money that has been borrowed by the business

Question 13

What is a summary of statement of financial performance

Answer 13

1. Revenue from operating activities
2. Expenses from operating activities
3. Profit or loss in the period from operating activities
4. Other income or expenses
5. Total comprehensive income

Question 14

What is an entity?

Answer 14

An entity is an organization created by one or more people to carry out the functions of a business, and that maintains a separate legal existence for tax.

Question 15

What are four different types of entities?

Answer 15

1. Sole traders
2. Partnerships
3. Member-governed bodies
   4 common

Question 16

What is the regulatory framework of accounting?

Answer 16

Is a general term used to describe the legislation and other rules that govern the content and format of company financial statements.