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BSc Actuarial Science 1a > MN-1003 > Flashcards

MN-1003 Flashcards

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1
Q

On an account, which side is credit and which side is debit?

A

LHS: Debit
RHS: Credit

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2
Q

What is the formula for assets?

A

Assets = Liabilities + Owner’s Equity

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3
Q

What 2 categories can Assets be broken down into?

A

Fixed & Current

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4
Q

What are the definitions of:

a) Fixed Assets
b) Current Assets

A

a) Fixed = items retained for over 1 year

b) Current = items that will be used within 1 year

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5
Q

What is the term for when assets are transferred between different forms? (e.g. stock is bought with cash)

A

A shift in the composition of assets

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6
Q

What happens to assets when there is a shift in the composition of assets?

A

Nothing, they still hold the same value

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7
Q

Define ‘Trade Payable’

A

The amount of money owed to creditors from a purchase

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8
Q

What part of the accounting equation does ‘Trade Payable’ fall into?

a) Asset
b) Liability
c) Equity

A

b) Liability

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9
Q

Define ‘Trade Receivable’

A

The amount of money the company is owed by customers

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10
Q

What part of the accounting equation does ‘Trade Receivable’ fall into?

a) Asset
b) Liability
c) Equity

A

a) Asset

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11
Q

Define ‘Capital’

A

The owner’s investment into the company

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12
Q

Define ‘Withdrawls’

A

A record of assets taken out of the firm by the owner for personal use

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13
Q

What is ‘Double-Entry Bookkeeping’?

A

The standard account we use with debit & credit where, when assets increase, owner’s equity also increases

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14
Q

Define ‘Revenue’

A

The earnings from sales

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15
Q

Define ‘Expenses’

A

The cost of running a business

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16
Q

Define ‘Sales Return’

A

Where sales are made but then the goods are returned

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17
Q

Define ‘Purchase Return’

A

Where purchases are made but some goods are returned to where the firm bought them from

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18
Q

In the 𝘊𝘢𝘴𝘩/𝘉𝘢𝘯𝘬 𝘈𝘤𝘤𝘰𝘶𝘯𝘵𝘴 𝘰𝘯𝘭𝘺, which side of the account does ‘money in’ go?

A

Debit

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19
Q

In the 𝘊𝘢𝘴𝘩/𝘉𝘢𝘯𝘬 𝘈𝘤𝘤𝘰𝘶𝘯𝘵𝘴 𝘰𝘯𝘭𝘺, which side of the account does ‘money out’ go?

A

Credit

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20
Q

After submitting a transaction into the cash/bank account, which side of the other ‘T account’ does it go into?

A

The opposite

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21
Q

What term is submitted into the account to make credit and debit equal after the accounts are filled in?

A

‘Balance c/f’

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22
Q

What term is submitted after the total to show how much credit/debit was needed to make credit and debit equal?

A

‘Balance b/f’

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23
Q

What does the ‘Trial Balance’ do?

A

Takes the balance of all the ‘T-accounts’ and lists them as debits or credits

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24
Q

What is unique about the total of the ‘Trial Balance’?

A

The credit side should be equal to the debit side

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25
Q

What is auditing?

A

An external check that the sales and cash balance are correct

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26
Q

What are the 4 steps of accounting?

A
  • Record Data
  • Classify Data
  • Summarise Data
  • Communicate
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27
Q

Explain what is meant by an asset shift

A

When the composition of assets changes but total assets remain the same

28
Q

Define Creditor

A

Someone the firm owes money to

29
Q

Define Debitor

A

Someone who owes the firm money

30
Q

What happens to the owner’s equity as revenue increases?

A

Owner’s equity also increases

31
Q

What happens to owner’s equity as expenses increase?

A

Owner’s equity decreases

32
Q

Define ‘Sales Return’

A

Where sales are made but the goods are returned

33
Q

Define ‘Purchases Returns’

A

Where the firm has to return purchases it has made to wherever they bought them from

34
Q

What is a ‘trial balance’?

A

The account filled out after completing the many T-accounts

35
Q

What’s the formula for Net Income?

A

Net Income = Revenue - Expenses

36
Q

What does a Profit/Loss Account show?

A

Shows the businesses performance over a period of time

37
Q

What is the order of the 3 profits?

A

Gross Profit
Operating Profit
Net Profit

38
Q

What’s the formula for Gross Profit?

A

Gross Profit = Sales - Cost of Sales

39
Q

What’s the formula for Operating Profit?

A

Operating Profit = Gross Profit - Expenses

40
Q

What’s the formula for Net Profit?

A

Net Profit = Operating Profit + Other Incomes - Interest - Tax

41
Q

Give an example of an ‘Other Income’ from the Net Profit formula?

A
  • Interest Received

- Discount Received

42
Q

What is a statement of Financial Position?

A

A snapshot of a business at a given time

43
Q

What are the two types of Depreciation?

A
  • Straight Line Method (SLM)

- Reducing Balance Method (RBM)

44
Q

What is the difference between Private and Public limited companies?

A

Private don’t issue shares to the public whereas PLCs do

45
Q

What is the Nominal Value of a share?

A

It’s original value

46
Q

What is the Market Value of a share?

A

The price people are prepared to pay for a share

47
Q

What’s the formula for Share Premium?

A

Share Premium = Market Value - Nominal Value

48
Q

What’s the formula foe Share Capital?

A

Share Capital = Nominal Value x Shares Issued

49
Q

What are ‘Dividends’?

A

Obligations to shareholders to pay a rate per share

50
Q

Under what heading are ‘dividends’ classed?

A

A current liability

51
Q

What’s the formula for ‘Retained Profit’?

A

Retained Profit = Profit after Tax + Balance b/f - Dividends Paid

52
Q

What change was recently made to taxation of firms?

A

It was previously classed as income tax but is now classified as corporation tax as the company is separate from its owner

53
Q

What’s the formula for ‘Net Working Capital’?

A

Net Working Capital = Current Assets - Current Liabilities

54
Q

Define ‘Management Accounting’?

A

The branch of accounting concerned with the collection of detailed financial data for use in planning and controlling

55
Q

Define ‘Financial Management’?

A

The branch of accounting concerned with acquiring and deploying the finance required by an entity

56
Q

Define ‘Financial Accounting’

A

The branch of accounting that reports on the performance of the firm to external users

57
Q

Name the 3 types of accounts studied weeks 1-5

A
  • Statement of financial position
  • Statement of profit/loss
  • Statement of changes in equity
58
Q

Which account is also known as a ‘Balance Sheet’?

A

Statement of financial position

59
Q

Which account is also known as a ‘Income Statement’?

A

Statement of Profit/Loss

60
Q

What is the name of the final account done at the end of the T-accounts where all the ‘Balance b/f’s are shown?

A

Trial Balance

61
Q

What does the ‘Statement of Financial Position’ show?

A

Assets, Liabilities and Equity

62
Q

What 4 things does the ‘Statement of Profit/Loss’ show?

A

Sales
Gross Profit
Operating Profit
Net Profit

63
Q

What 4 things does the ‘Statement of Changes in Equity’ show?

A

Balance b/f
Issue of Share Capital
Dividends
Profit for the Year

64
Q

Is an increase in an asset recorded as a debit or a credit?

A

Debit

65
Q

Is an increase in a liability recorded as a debit or a credit?

A

Credit

66
Q

Is a decrease in an asset recorded as a debit or a credit?

A

Credit

67
Q

Is a decrease in a liability recorded as a debit or a credit?

A

Debit

BSc Actuarial Science 1a (2 decks)

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