Preparing Financial Accounts Flashcards
What is piece rates?
Employees are paid for each unit they produce
What are time based systems?
When your wage is calculated by how many hours you work and the rate of each hour.
Wage=hours x rate per hour
Do you add or subtract receivables front he income statement?
Subtract
Do you add or subtract payables from the income statement?
Add
What type of storage will depend upon the materials?
Weight
Bulky
Risks- theft
- floods
In choosing the location for stores, the factors which have to be taken into consideration are?
Type of production- is the stock big
Nature of material- flammable?
Transport time- how long it takes to get to a store/ factory/ storage
What does LIFO mean?
Last in first out
What does FIFO mean?
First in first out
What is the role of financial accounts?
Their duties include…
- collecting information from business document
- check the accuracy
- record appropriate transactions
- analyse and then present the financial outcome
What are the advantages and disadvantages of being a sole trader?
Advantages
- keep all the profit
- get to decide hours to work
Disadvantages
- long working hours
- no one to share the responsibility with
What is a sole trader?
A sole trader is a person who sets up and owns their own business. They may decide to employ others people but they are the only owners.
Examples…. Hairdressers
Plumber
Electricians
What are the sources of finance in a sole trader?
Capital- money from owner
Loan- borrowed from bank/family that has interest and must be paid back
Overdraft- more money than you have, but need to pay it back
Is income credit or debit?
Credit
What is an income?
Commission received
Interest received
Rent received
Is expenses debit or credit?
Debit
What are some different expenses?
Rent Rates Insurance Repairs Wages Advertising Heat Light
What is a long term liability?
This is things that you owes and will still owe after one year.
- loan
- mortgages
What is a current liability?
Things an organisation owes that will not be owed after one years
- overdraft
- rent payables
What is a current asset?
Something which a organisation own which can increase/ decrease in the everyday course of trading.
- cash
- inventory
What is a non-current asset?
Something you/ business owns which lasts for longer than a year.
- furniture
- equipment
What is a liability?
Something that you owe or a business owes.
For example
- loan
- overdraft
What is an asset?
Something which you own or a business owns.
- furniture
- equipment
What is an invoice?
An invoice is a bill. It is sent by the seller to the buyer. It includes... -date -quantity -description of goods -VAT -name of costumer and supplier -total amount due -any discount
What is a receipt?
This is sent when payment has been received from the buyer. It shows the amount paid and acts as proof of payment
