everything else

Question 1

non accounting information when choosing suppliers

Answer 1

1- local or overseas suppliers
2- online vs brick-and-mortar suppliers
3- reputation of suppliers

Question 2

non accounting information to decide which TR to extend credit

Answer 2

1- reputation of customers
2- new customers’ history of repayment
3- specific industry outlook

Question 3

non accounting information when deciding which inventory to buy

Answer 3

1- types of storage
2- customers’ preference
3- nature of product

Question 4

non accounting information to decide which legal form of business to set up

Answer 4

1- owners’ expertise
2- capital commitment for initial setup
3- risks involved

Question 5

non accounting info when deciding to buy or rent NCAs

Answer 5

weigh the advantages and disadvantages before buying

Question 6

non accounting information when deciding which NCA to buy

Answer 6

1- customer’s reviews of NCAs
2- purpose of NCAs
3- features of NCAs

Question 7

what is the difference between bank loan and bank overdraft

Answer 7

a bank loan is a fixed amount of money borrowed from the bank while a bank overdraft represents money borrowed from the bank when the bank account is overdrawn and the available balance goes below zero

Question 8

define dividends

Answer 8

it is a portion of the company’s profit that is distributed to the shareholders at the end of the accounting year

Question 9

define retained earnings

Answer 9

they are profits that are kept behind by the companies for future business plans such as oversea expansion

Question 10

what are the roles of the accountant

Answer 10

accountants are stewards of the businesses who set up the accounting information system to provide relevant timely information and insights to stakeholders for decision-making

Question 11

state one advantage of operating as a private limited company

Answer 11

there are easier access to funds since banks and lenders are more likely to lend money to a private limited company as there are more business assets of high value to serve as collaterals

Question 12

two possible causes of a dishonoured cheque

Answer 12

cheque is expired or post dated

Question 13

two purposes of internal controls

Answer 13

safeguard assets of the business and ensure business transactions are recorded objectively and on a timely basis

Question 14

define depreciation

Answer 14

depreciation is the allocation of cost of a NCA over its estimated useful life and can be caused by reasons like wear and tear or obsolescence

Question 15

explain the meaning of the term share capital

Answer 15

it means cash raised by issuing shares to the shareholders

Question 16

define the term shareholders

Answer 16

it refers to owners of private limited company

Question 17

define ‘current portion of LT borrowings’

Answer 17

it is the amount of the loan to be repaid within the next financial year

Question 18

define ‘LT borrowings’

Answer 18

remaining amount of the loan to be repaid after the next accounting year

Question 19

state two features of a bank loan

Answer 19

1- cash is transferred to the business
2- amount borrowed is fixed as agreed with the bank

Question 20

define impairment loss on trade receivables

Answer 20

Impairment loss on trade receivables is the loss that the business suffers when it cannot collect the
amount of money that is owing by the trade receivable for the goods or services that it
provided on credit.

Question 21

define allowance for impairment of trade receivables

Answer 21

Allowance for impairment of trade receivables represents the amount of trade receivables that it is
UNLIKELY to be collectible.

Question 22

how to find retained earnings

Answer 22

ori RE amt plus profit minus dividends