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Year 9 - Commerce > Lesson 5 - Revision > Flashcards

Lesson 5 - Revision Flashcards

1
Q

What is Accounting?

A

Accounting is a management information system that involves the collecting, sorting, classifying and recording of financial data to produce and report financial information to assist business owners in decision making.

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1
Q

What are the four stages of the accounting process?

A
  1. Source documents
  2. Records
  3. Reports
  4. Advice
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2
Q

A source document is…

A

A document that provides both the evidence that a transaction has occurred and the details of the transaction itself.

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3
Q

Recording is…

A

The process of sorting, classifying and summarising the data contained in the source documents so that it is more useable.

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4
Q

Reporting is…

A

The preparation of financial statements that communicate financial information to the owner.

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5
Q

Advice is…

A

The provision to the owners of a range of options available to their aims/objectives, together with recommendations as to the suitability of those aims / objectives

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6
Q

The accounting process is used to…

A

…take financial data and convert it into financial information in order to be able to make decisions about the business.

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7
Q

T/f - “Tax invoice” means the source document is an invoice.

A

False - this is on all source documents which involve GST and is a requirement set by the Australian Tax Office.

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8
Q

The two types of transactions are…

A

Cash and credit.

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9
Q

The point of difference between cash and credit transactions is…

A

The immediacy of the payment.
Cash = Customer pays immediately.
Credit = Customer pays at a later date.

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10
Q

Give me two pieces of info that would indicate that a source document was an invoice.

A
  1. Payment terms
  2. Invoice number
  3. The words “Due by”
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11
Q

T/f - The business at the top of the invoice has issued the source document.

A

True - the header can always be used to identify who issued the invoice.

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12
Q

This source document is a…

A

Cheque butt.

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13
Q

This source document is a…

A

Invoice.

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14
Q

T/f - This document is a source document.

A

False - This is a cheque. It cannot be used as a source document as it is not retained by either party in a transaction. It must be paid into the bank for processing.

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15
Q

This source document is a…

A

Memo.

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16
Q

T/f - This document is a source document.

A

False - a Bank Statement is not strictly a source document, though it can be used to verify a transaction in the absence of the original source document (e.g. if it got lost)

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17
Q

This source document is a…

A

Invoice.

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18
Q

This source document is a…

A

Cheque butt.

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19
Q

This source document is a…

A

Receipt.

20
Q
A
21
Q

This document is a…

A

Bank Statement

22
Q

Source documents that are used for CASH transactions are…

A

Receipt
Cheque butt

23
Q

Source documents that are used for CREDIT transactions are…

A

Invoice

24
Q
A
25
Q

What is the purpose of the Balance Sheet in Accounting?

A

A Balance Sheet is a financial statement that provides a snapshot of a company’s financial position at a specific point in time, showing its assets, liabilities, and owner’s equity.

26
Q

What’s the difference between “current” and “non-current” assets on a Balance Sheet?

A

Current assets are short-term assets that are expected to be converted into cash or used up within one year, while non-current assets are long-term assets that have a useful life of more than one year, such as property and equipment.

27
Q

What is the residual interest that an owner has invested in a business recorded as in the owners equity section?

A

Capital.

28
Q

How do you calculate the total of the owners equity section?

A

Assets - liabilities = OE

29
Q

How would you classify the following item?

A

Inventory is a current asset.

30
Q

How would you classify the following item?

A

Van is a non-current asset.

31
Q

How would you classify the following item?

A

Electricity bill is a current liability.

32
Q

How would you classify the following item?

A

Accounts Receivable is a current asset.

33
Q

How would you classify the following item?

A

Accounts Payable is a current liability.

34
Q

How would you classify drawings?

A

Owners equity.

35
Q

How would you classify capital contribution?

A

Owners equity.

36
Q

Which two figures must balance in the Balance Sheet?

A

Total Assets = Total Equities

37
Q

How do you calculate Total Equities?

A

Total Liabilities (CL+NCL) + Total OE

38
Q

Why does a balance sheet have two columns for balances?

A

Left column = item totals
Right column = element totals

39
Q

Cash payments are recorded in the…

A

Cash receipts journal

40
Q

Cash payments are recorded in the…

A

Cahs payments journal

41
Q

After being recorded in the CRJ and the CPJ, the totals are transferred to which report?

A

Statement of Receipts and Payments (SoRP)

42
Q

What is the purpose of the Statement of Receipts and Payments?

A

To calculate the Cash Surplus/Deficit and Closing Bank Balance

43
Q

How do you calculate Cash Surplus/Deficit?

A

Cash Receipts - Cash Payments

44
Q

What is the name given to the headings of each column in the CRJ and CPJ?

A

Classification columns

45
Q

What is the name given to the classification column used for infrequent receipts and payments?

A

Sundries

46
Q

In the SoRP, how are the Sundries to be recorded?

A

Sundries should be recorded individually rather than reporting a single “Sundries” total.

47
Q

T/f - The total amount of the transaction always goes in the “Bank” column.

A

True - the total goes in Bank, then the amount is split up in the classification columns.

E.g. Purchase of cleaning supplies for $550.
Bank = $550
Cleaning supplies = $500
GST = $50

48
Q

T/f - The GST column is for recorded GST Paid or GST Received only.

A

True - some items that appear in the CRJ and CPJ do not attract GST because they are not goods or services.

E.g. Drawings, capital contribution, interest, wages

Year 9 - Commerce (5 decks)

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