GROUP 9

Question 1

“The art of recording, classifying and summarizing in a significant manner in terms of money transactions and events which in part, at least of a financial character and interpreting the results thereof” AICPA (1941)

Answer 1

ACCOUNTING

Question 2

6 COMPONENTS OF
THE PROCESS OF ACCOUNTING

Answer 2

• Economic events
• Identification of transactions
• Measuring of transactions
• Classifying of transactions
• Summarizing
• Analysis and Interpretation

Question 3

An __________________ has been defined as ‘a happening of consequence’ to a business entity.

Answer 3

economic event

Question 4

2 TYPES OF ECONOMIC EVENT

Answer 4

• EXTERNAL TYPES
• INTERNAL TYPES

Question 5

event which involves the transfer or exchange of something of value between two or more entities

Answer 5

EXTERNAL EVENT

Question 6

an economic event that occurs entirely within one enterprise.

Answer 6

INTERNAL EVENT

Question 7

A

ENUMERATE AT LEAST 2 EXAMPLES OF EXTERNAL EVENTS

Answer 7

1. Sale of goods to customers.
2. Payment of monthly rent to the landlord.
3. Purchase of raw materials by an enterprise from some other business enterprise..
4. Rendering of services to customers, etc

Question 8

AN EXAMPLE OF INTERNAL EVENT

Answer 8

Supply of raw materials or equipment by the stores department to the manufacturing department.

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Question 9

It means determining what to record. It involves observing activities and selecting those events that are considered to be evidence of economic activity.

Answer 9

Identification of Transactions

Question 10

2 TRANSACTION ACTIVITY TYPES

Answer 10

1. MONETARY
2. NON MONETARY

Question 11

It means quantification, including estimates of business transactions into financial terms. If an event cannot be quantified in monetary terms, it is not a considered for recording in financial accounts.

Answer 11

Measuring of Transactions

Question 12

After recording transactions in journal or subsidiary book, the transactions are classified by grouping similar transactions at one place. (Ledger)

Answer 12

Classifying of Transactions

Question 13

It is art of presentation of classified data in a manner which is understandable and useful to management and other users. It involves preparation of Trial Balance, Income statement and Balance Sheet

Answer 13

Summarizing

Question 14

The recorded transaction is analyzed to make useful interpretations. This process provides meaningful conclusion from information

Answer 14

Analysis and Interpretation

Question 15

is concerned with recording previous financial transactions and maintaining compliance, whereas financial analysis is the dynamic process of understanding and using financial data to inform strategic decisions.

Answer 15

Financial accounting

Question 16

5 ACCOUNTING PRINCIPLES

Answer 16

1. ACCRUAL BASIS VS CASH BASIS
2. REVENUE RECOGNITION
3. EXPENSE RECOGNITION
4. MATERIALITY
5. ENTITY CONCEPT

Question 17

___________ accounting records transactions when they occur, regardless of when cash is exchanged, providing a more accurate picture of a company’s financial health over time.

Basic Accounting Principles and Financial Statements

Answer 17

Accrual Basis

Question 18

__________ accounting records transactions only when cash is exchanged.

Basic Accounting Principles and Financial Statements

Answer 18

Cash Basis

Question 19

when it is earned, regardless of when cash is received. This principle ensures that revenue is matched with the expenses incurred to generate it.

Basic Accounting Principles and Financial Statements

Answer 19

Revenue Recognition

Question 20

: Expenses should be recognized in the period they are incurred, matching them with the related revenues to accurately reflect profitability.

Basic Accounting Principles and Financial Statements

Answer 20

Expense Recognition

Question 21

Only significant transactions need to be recorded to avoid overwhelming financial statements with immaterial details.

Basic Accounting Principles and Financial Statements

Answer 21

Materiality

Question 22

Business transactions should be recorded separately from personal transactions of owners or stakeholders.

Basic Accounting Principles and Financial Statements

Answer 22

Entity Concept

Question 23

Also known as the statement of financial position, the provides a snapshot of a company’s financial condition at a specific point in time. It lists assets, liabilities, and equity, with assets equaling liabilities plus equity.

Financial Statements

Answer 23

Balance Sheet

Question 24

Also known as the profit and loss statement, the income statement shows a company’s revenues, expenses, and net income (or loss) over a specific period. It reflects the company’s profitability.

Financial Statements

Answer 24

Income Statement

Question 25

shows how cash moves in and out of a business over a period, categorizing cash flows into operating, investing, and financing activities. It helps assess a company’s liquidity and ability to generate cash.

Financial Statements

Answer 25

Cash Flow Statement

Question 26

6 Financial projections and financial analysis for an entrepreneurial venture

Answer 26

1. REVENUE PROJECTIONS
2. COST PROJECTIONS
3. INCOME STATEMENT
4. CASH FLOW PROJECTION
5. CAPITAL REQUIREMENTS
6. SENSITIVITY ANALYSIS
7. FINANCIAL VIABILITY ASSESSMENT
8. REGULAR MONITORING AND ADJUSTMENT

Question 27

Estimate sales volume and pricing based on market research and industry trends.

Financial projections and financial analysis

Answer 27

REVENUE PROJECTIONS

Question 28

Identify and estimate all expenses including production costs, marketing expenses, and operating costs.

Financial projections and financial analysis

Answer 28

Cost Projections

Question 29

Create a projected income statement outlining revenue, costs, and expenses to assess profitability.

Financial projections and financial analysis

Answer 29

Income Statement

Question 30

Forecast cash inflows and outflows to ensure adequate liquidity and manage cash flow.

Financial projections and financial analysis

Answer 30

Cash Flow Projection:

Question 31

Determine funding needs based on projected expenses and investment in assets.

Financial projections and financial analysis

Answer 31

Capital Requirements:

Question 32

Evaluate the impact of changes in key assumptions on financial projections.

Financial projections and financial analysis

Answer 32

Sensitivity Analysis

Question 33

Analyze financial ratios and metrics to assess profitability, liquidity, and sustainability.

Answer 33

Financial Viability Assessment

Question 34

Continuously monitor actual performance against projections and make adjustments as necessary.

Answer 34

Regular Monitoring and Adjustment: