Midterms

Question 1

A service activity which function is to provide quantitative information, primarily financial in nature, about economic entities that is intended to be useful in making economic decisions.

Answer 1

Accountin

Question 2

Accounting phases

Answer 2

Recording
Classifying
Summarising

Question 3

Chronological record of transactions through journal

Answer 3

Recording

Question 4

Putting together similar accounts

Answer 4

Classifying

Question 5

Preparation of financial statements

Answer 5

Summarising

Question 6

Specialised accounting fields

Answer 6

Public Accounting
Private accounting
Government
Education

Question 7

Forms of Business Organisations

Answer 7

*Single or Sole Proprietorship
*Partnership
*Corporation

Question 8

This is a business owned by only an individual called the proprietor

Answer 8

Single of Sole Proprietorship

Question 9

This is an association of two or more persons who bind themselves to contribute money, property or industry to a common fund, with the intention of dividing the profits among themselves.

Answer 9

Partnership

Question 10

This is a business owned by stockholders. It has a legal personality separate and distinct from its owners and it can conduct business in its own name.

Answer 10

Corporation

Question 11

Types of Business

Answer 11

*Service
*Merchandising
*Manufacturing

Question 12

This business renders services to customers or clients for free

Answer 12

Service

Question 13

This kind of business buys good or commodities and sells them at a profit.

Answer 13

Merchandising

Question 14

This kind of business where companies buy raw materials and convert them into a finished product.

Answer 14

Manufacturing

Question 15

This defines what is accepted in accounting practice and they are like laws that must be followed in financial reporting.

Answer 15

Generally Accepted Accounting Principles

Question 16

Accounting assumptions

Answer 16

*Business Entity Concept
*Going Concern
*Time period
*Unit of Measurement
*Accrual Basis
*Matching principle

Question 17

Only transactions affecting business resources must be accounted for

Answer 17

Business Entity Concept

Question 18

In the absence of evidence, business will continue to operate indefinitely.

Answer 18

Going Concern

Question 19

The period covered when preparing the financial statements.

Answer 19

Time period

Question 20

Transactions must be consistently recorded using the same currency

Answer 20

Unit of Measurement

Question 21

Recognize revenue when earned; and expenses when incurred

Answer 21

Accrual Basis

Question 22

Matching of revenues and costs to determine net income or loss

Answer 22

Matching principle

Question 23

Basic Financial Statements

Answer 23

*Statement of Comprehensive Income
*Statement of Financial Position
*Statement of Changes in Equity
*Statement of Cash Flows
*Notes to the Financial Statements

Question 24

Summary of the company’s revenue and expenses for a given period

Answer 24

Statement of Comprehensive Income

Question 25

Shows the list of a company’s asset, liabilities, and owner’s equity

Answer 25

Statement of Financial Position

Question 26

Movement of owner’s capital account

Answer 26

Statement of Changes in Equity

Question 27

Provides information about the cash receipts and cash payments of an entity

Answer 27

Statement of Cash flows

Question 28

Qualitative Characteristics of FS

Answer 28

*Relevance
*Faithful Representation
*Comparability
*Verifiability
*Timeliness
*Understandability

Question 29

Ability to influence decisions

Answer 29

Relevance

Question 30

Representation of the substance of an economic phenomenon

Answer 30

Faithful Epresentation

Question 31

Consistency of reporting from period-to-period

Answer 31

Comparability

Question 32

Some conclusions would be reached by independent observers

Answer 32

Verfiability

Question 33

Availability of Information when decisions are being made

Answer 33

Timeliness

Question 34

Form and terminology that users understand

Answer 34

Understandability

Question 35

Users of Financial Information

Answer 35

1) Management
2) Creditors and suppliers
3) Owners
4) Investors
5) Employees
6) Government and their agencies
7) Customers
8) Financial Analyst and Advisors
9) Trade Associations
10) Others

Question 36

Elements of Financial Statements

Answer 36

*Asset
*Liabilities
*Capital / Equity
*Revenues / Income
*Expenses / Costs

Question 37

Any event that affects the financial position of the business and can be recorded reliably

Answer 37

Business transactions

Question 38

These are evidences of the daily activities of a business enterprise. It helps us identify the transactions that should be recorded in the books of accounts

Answer 38

Source Documents

Question 39

This is a list of Assets, Liabilities, Capital, Revenue and Expenses accounts applicable to a business enterprise.

Answer 39

The Chart of Accounts

Question 40

Also called the book of original entry.
This is a chronological record of business transactions

Answer 40

The General Journal

Question 41

This is the process of transferring the entries from the general journal to the respective accounts in the general ledger

Answer 41

Posting Business Transactions

Question 42

This is done to summarise the effects of business transactions on a per account basis and determine the balances of the accounts

Answer 42

Posting Business transactions

Question 43

Also called the book of final entry.

Answer 43

The general ledger

Question 44

After posting the journal entries to the ledger, the amounts of the debit and credit columns of the accounts are totaled and the difference is determined. This process is called what?

Answer 44

Footing

Question 45

The summary listing of the account titles and the balance of each account

Answer 45

Trial Balance