Module 1 Basic Concepts Flashcards
Accounting concepts must be adhered to when preparing financial statements. The following statement relates to one such concept:
“…revenue and costs are recognised as they are incurred, not as the money is actually received or paid.”
Identify which ONE of the following accounting concepts is defined by the above statement:
A) Entity
B) Prudence
C) Periodicity
D) Accruals
The correct answer is D.
Accounting concepts must be adhered to when preparing financial statements. The following statement relates to one such concept:
“…it ensures revenue and profits are not anticipated but are recognised only when realised in the form of cash or other assets.”
Identify which ONE of the following accounting concepts is defined by the above statement is:
A) Entity
B) Prudence
C) Periodicity
D) Accruals
The correct answer is B.
Identify which ONE of the following is the figure that the total (gross) column of the sales daybook represents:
A) Trade debtors
B) Bank
C) Sales
D) Trade creditors
The trade debtors account in the nominal ledger. It represents monies owed from credit customers.
The correct answer is A.
Identify which ONE of the following is the figure that the total (gross) column of the purchase daybook represents:
A) Purchases
B) Bank
C) Trade creditors
D) Trade debtors
The trade creditors account in the nominal ledger. It represents monies due to credit suppliers.
The correct answer is C.
Identify which ONE of the following books of prime entry will be used if adjustments are required between nominal ledger accounts:
A) Nominal ledger
B) Journal book
C) Cashbook payments
D) Cashbook receipts
The journal book will be used to carry out adjustments between nominal ledger accounts.
The correct answer is B.
Identify which ONE of the following is what the purchase ledger control account column of the cashbook represents:
A) Cash received from credit customers
B) Cash purchases
C) Cash paid to credit suppliers
D) Credit notes raised by suppliers
The cashbook represents payments and receipts. The purchase ledger control account column of the cashbook must then be payments made to suppliers on the purchase ledger. As the purchase ledger holds credit suppliers, this is therefore cash paid to credit suppliers.
The correct answer is C.
Identify which ONE of the following is where the total column of the cashbook receipts is posted in the nominal ledger:
A) Sales
B) Bank
C) Trade debtors
D) Trade creditors
Cashbook receipts records money received from trade debtors and cash sales. The total column always reflects the effect on the bank account.
The correct answer is B.
Sonyson purchases goods on credit for resale.
Identify which ONE of the following is where the invoice from the supplier will be first recorded:
A) Cashbook receipts
B) Cashbook payments
C) Journal book
D) Purchase daybook
Purchases on credit are first recorded in the purchase daybook.
The correct answer is D.
The nominal ledger is used to prepare the financial statements of an entity. Identify which of the following statements is/ are CORRECT:
- The books of prime entry are posted to the nominal ledger.
- The trial balance is a list of the closing balances for every account in the nominal ledger.
- The nominal ledger is a summary record of the income and expenditure amounts only.
A) 1 and 2
B) 1 and 3
C) 2 and 3
D) all of the above
The correct answer is A.
Identify which ONE of the following is the definition of an asset:
A) A resource controlled by the enterprise from which future economic benefits are expected to flow from the enterprise
B) A resource owned by the enterprise as a result of past events from which future economic benefits are expected to flow to the enterprise
C) A resource controlled by the enterprise as a result of past events from which future economic benefits are expected to flow to the enterprise
D) A resource owned by the enterprise as a result of past events from which future economic benefits are expected to flow from the enterprise
The correct answer is C.
Identify which ONE of the following is the definition of income:
A) Increases in economic benefits during the accounting period in the form of inflows that result in increases in capital
B) Increases in economic benefits during the accounting period in the form of inflows or enhancements of assets that result in increases in capital
C) Increases in economic benefits during the accounting period in the form of inflows or enhancements of assets or increases in liabilities that result in increases in capital
D) Increases in economic benefits during the accounting period in the form of inflows or enhancements of assets or decreases in liabilities that result in increases in capital
The correct answer is D.
