Financial Accounting

Question 1

What are the 5 main components of a financial statement?

Answer 1

Assets, Liabilites, Equity (Capital), Income & Expenses

Question 2

What are the three main types of ‘reporting entities’

Answer 2

Sole traders, partnerships, Limited Companies

Question 3

What are debtors

Answer 3

What you’re owed but have not yet received

Question 4

What are creditors

Answer 4

What you’ve commited to spend but have not paid yet.

Question 5

What conceptual framework are financial statements typically prepared in accordance with?

Answer 5

International Accounting Standard Boards

Question 6

What is an economic resource

Answer 6

A resource that is able to produce economic benefit

Question 7

True or false, sole traderships are separate legal entities from the owner?

Answer 7

False. They are no separate and the owner is liabile for the liabilities of the business.

Question 8

How long is the normal accounting period?

Answer 8

12 month

Question 9

True or false, an accounting period must always match the calendar year (1 jan - 31 dec)?

Answer 9

False, it can be any 12 month period depending on the company

Question 10

Not overstating assets and income and not understating liabilities and expenses, is known as?

Answer 10

Prudence