FA

Question 1

What is an asset?

Answer 1

A present economic resource controlled by the entity as a result of past events

Question 2

What are liabilities?

Answer 2

A present obligation of the entity to transfer an economic resource as a result of past events

Question 3

What is equity?

Answer 3

The residual interest in the assets of the entity after deducting all its liabilities (net assets)

Question 4

What is income?

Answer 4

Increases in assets/decreases in liabilities that results in increases in equity

Question 5

What is an expense?

Answer 5

Decreases in assets, or increases in liabilities that result in decreases in equity

Question 6

What does a debtor represent?

Answer 6

The right to receive money from a customer as a result of a past sale or credit

Question 7

What does a creditor represent?

Answer 7

An obligation to pay money to a supplier as a result of past purchases on credit

Question 8

The reporting entity

Answer 8

An entity that prepares financial statements

Question 9

Accrual accounting

Answer 9

Represents the effects of transactions in the periods in which those effects occur, even if the resulting cash receipts and payments occur in a different period

Question 10

Matching

Answer 10

Income earned and the related expenses should be matched against each other within the periods in which those effects occur

Question 11

Aged debtors ledger

Answer 11

A record of the amounts each individual owes you

Question 12

Aged creditors ledger

Answer 12

A record of the amounts that the entity owes to each supplier

Question 13

Balance sheet

Answer 13

A FS giving details of entity’s financial position at a particular point in time, made up of assets, liabilities and capital

Question 14

Chart of accounts

Answer 14

A listing of all accounts used in the nominal ledger of an entity

Question 15

Financial Statements (FS)

Answer 15

Collection of reports prepared by an entity including the balance sheet and P&L account

Question 16

Journal entry

Answer 16

Debits and credits of a transaction entry into the accounting system

Question 17

Ledger

Answer 17

A paper or electronic book/file for recording the financial transactions

Question 18

Nominal ledger

Answer 18

The ledger where all the accounting transactions are held. It will include details of all assets, liabilities, capital, income and expenses

Question 19

Profit & Loss (P&L account)

Answer 19

A financial statement showing an entity’s net profit or loss in a given period, including details of income and expenses

Question 20

Sales invoice

Answer 20

A document that you send to your customer detailing the transaction

Question 21

Supplier invoice

Answer 21

A document you receive from a supplier when you receive goods or service from them

Question 22

Trial balance

Answer 22

Period end summary of the balances within each nominal ledger account

Question 23

Input VAT

Answer 23

The VAT paid by the entity when purchasing goods

Question 24

Output VAT

Answer 24

VAT received by the entity when selling goods