financial

Question 1

current liability

Answer 1

Amounts needed to be paid to creditors within 12 months

Question 2

non current liability

Answer 2

Amounts that can be paid to creditors in more then 12 months

Question 3

source documents

Answer 3

Pieces of papers that documents proof that trasnactions have occurred

Question 4

types of source documents

Answer 4

credit note
cheque counterfoil
purchase invoice
sales invoice
till roll
cash receipt
paying in slip counterfoil
bank statement

Question 5

debit entry

Answer 5

A debit entry represents a transfer of value into the account

Question 6

bank transactions

Answer 6

Records of money moved in or out of bank account

Question 6

credit entry

Answer 6

A credit entry represents a transfer of value out of the account

Question 7

types of bank transactions

Answer 7

standing order
direct debit
credit transfer
dishonoured cheque
debit card payment

Question 8

income statement

Answer 8

Financial report witch shows a firms income and expenditures over a set accounting period

Question 9

statement of financial position

Answer 9

Shows a snapshot of a firms value and financial position during a certain point in time

Question 10

contra entries / going concern

Answer 10

Opposing transactions being a debit and credit which affect the same account hence offsetting eachother

Question 11

single entry accounting

Answer 11

Recording financial transactions as only cash in or cash out

Question 12

double entry accounting

Answer 12

Recording financial trsanctions into relevant ledger accounts as both credits and debits

Question 13

books of prime entry

Answer 13

This is where the transactions that have been made by a business are recorded the books of prime entry contain amny different journsals

Question 14

different types of journals

Answer 14

sales journals
sales returns journal
purchase journals
purchase returns journal
cash book = receivables and payables
general journal

Question 15

susbidary accounts

Answer 15

Subsidary accounts make up control accounts and they track individuals peoples purchases on credits and paying at different times

Question 16

realisation

Answer 16

Profits are recotgnised when ownership is transferred not when the funds arrive

Question 17

materiality

Answer 17

Items witch are not included in financial accounts becasue their value is not high enough hence they are recorded as an expense

Question 18

prudence

Answer 18

Prudence concept says that exercising caution ina accounts is needed to make provision for payments witch are unlikely to be received and that assets ans revenues should not be overstated and liabilities and expenses should not be overstated

Question 19

irrecoverable/bad debts

Answer 19

Debts owed to a business that are not going to be paid hence iit is written of to the sattment of profit or loss as a bad debt

Question 20

Doubtful debts

Answer 20

A debt that a firm is not sure is going to be paid

Question 21

matching concept

Answer 21

Matching income and expenses to the year they were occurred during and not whe the exchange of funds happens

Question 22

Elements of matching concept

Answer 22

Accruals
pre payments

Question 23

closing inventory

Answer 23

Total value of stock left unsold after specific accounting period ends

Question 24

residual/scrap value

Answer 24

Estimated value of a asset at the end of its life when all depreciation is factored in

Question 25

net realizable value

Answer 25

Estimated selling price of an asset after a certain time period after factoring in depreciation sellings costs etc

Question 26

depreciation

Answer 26

The decrease of the value on an asset over time may be measured using either straight line depreciation or reducing balance depreciation.

Question 27

straight line depreciation

Answer 27

Method used to calculate depreciation by Spreading the cost of depreciation evenly across time ( same currency amount gets taken away from the value of the asset every year)

Question 28

reducing balance depreciation

Answer 28

Method used to calculate depreciation by expensing it by a specific percentage every year

Question 29

obsoletion

Answer 29

When an asset becomes out of date or no longer useful

Question 30

bank reconciliation

Answer 30

Statement wotch compares the balance in its accounting records with its bank balance to spot reasons for discrepancies

Question 31

How to do bank reconciliation

Answer 31

Make a list if all items of bank statement and cash book Tick off items that appear on both cash bok and bank statement Circle items that have not been ticked off Balance cash books in accordance to figures circles

Question 32

Trial balance

Answer 32

Financial report in the accounting process witch is opened to check that ledger accounts are all balanced by showing all the closiung balanced of all ledgers

Question 33

errors revealed in trial balance

Answer 33

incorrect adittion parietal omissio partial transposition unequal posting

Question 34

errors not revealed in trial balance

Answer 34

comission omission reversal compensating original entry

Question 35

how to spot an error in trial balance

Answer 35

Step 1 Check the adittion of all balancess of debits and credit to ensure that error was not made in the adition Step 2 subtract total debits and total creditor to identify the difernce and try find this number in list of balancess to ensure you have not missed an entry Step 3 Divide diference by two and see if that figure is in trial baalnce to spot figures in wrong colum Step 4 divide difference by 9 to see if any number may have been transposed entered as for 186 instead of 168 Step 5 go through ledger accounts individually checking caulcautions checking balances brought down checking numbered entered checking if they have been made into the right columns etc

Question 36

suspense accounts

Answer 36

An account that is used to store transactions that cant be correctly categorized method used when trial balance is not balanced

Question 37

consistency concept

Answer 37

The consistency concept is an accounting concept witch says that you should stay consistent with the accounting methods and principles you chose from the beginning

Question 38

going concern

Answer 38

Going concern concepts is a accounting concept witch says that accounts should be prepared assuming that the business will continue to trade for the foreseeable future

Question 39

Objectivity

Answer 39

The objectivity concept is an accounting concept witch says that acooutnats should remain objective and not let bias affect their work

Question 40

business entity

Answer 40

This is an account concept witch says that for accounting purposes you should asume that a business has a separate entity to its owners

Question 41

Straight line depreciation formula

Answer 41

(Purchase cost – residual value) / useful life in years

Question 42

Balance the statement of financial position formula

Answer 42

Assets + liabilities= capital+ profit - drawings

Question 43

Balance sheet formula

Answer 43

Asstes = liabilities + equity