poa (general)

Question 1

accounting information system

Answer 1

1. source documents
2. journal entries
3. ledger accounts
4. trial balance
5. statement of financial performance
6. statement of financial position

Question 2

qualities an accountant should have

Answer 2

integrity- straightforward and honest in all professional business relationships.

objectivity- will not let bias, conflict or undue influence of others override his/her own personal judgement.

Question 3

meaning and examples of stakeholders

Answer 3

meaning: people who are interested in the activities of the business, making use of accounting or non accounting information for decision-making.

examples:
owner- make decisions on the business strategy that the business should adopt base on the performance of the business.
government- decide the amount of tax to collect from the business.
customers- decide if they want to buy from the business, whether they provide what they need or good after sales service.
suppliers- determine if they want to sell goods to the business on credit.
employees- determine if they should continue working for the business, expecting what kind of bonuses.

Question 4

name two differences between capital and revenue expenditure.

Answer 4

capital expenditure is the buying or enhancing of non current assets, revenue expenditure is the repairing and maintaining of non current assets.

capital expenditure benefits last more than one year while revenue expenditure benefits last within one year.

capital expenditure is recorded in the non current assets account in the financial position and revenue expenditure is recorded in the expense account in financial performance.

Question 5

state two differences between cash and trade discount.

Answer 5

trade discount is to encourage bulk purchase/customer loyalty and patronage while cash discount is to encourage prompt payment.

cash discount is the deduction off the invoice price while trade discount is the deduction off the list price.

cash discount is recorded as discount allowed/received in the ledger while trade discount is not recorded.

Question 6

what is the purpose of trial balance?

Answer 6

• to facilitate the preparations of the financial statements.
• ensure arithmetic accuracy while recording.

Question 7

two reasons for dishonoured cheque

Answer 7

• cheque is expired
• cheque is post dated
• information on cheque not consistent
• information incomplete

Question 8

what are internal controls? and examples of them.

Answer 8

internal controls safeguard the assets of the business and comply with laws and segregations.

examples:
- bank reconciliation
- authorisation
- segregation of duties
- custody of cash

Question 9

purpose of bank reconciliation

Answer 9

• deterrence against fraud
• check for errors in recording in the cash book and bank statements.

Question 10

what is the definition of FIFO (first-in-first-out)

Answer 10

goods purchased earliest are assumed to be sold first

Question 11

how should inventory be valued?

Answer 11

inventory should be valued at the lower of cost or net realisable value.

Question 12

double entry when inventory falls below the expected cost?

Answer 12

Dr impairment loss on inventory
Cr inventory

Question 13

causes for depreciation

Answer 13

• wear and tear
• legal limits
• usage

Question 14

what is the purpose of source documents?

Answer 14

serve as evidence to prove that a business transaction has occured and provide information for recording purposes.

Question 15

limitation of trial balance

Answer 15

a balanced trial balance is not a absolute proof of accuracy and there may errors that may not be revealed. for example, transactions that are not recorded.