Purpose of Accounting

Question 1

Accounting

Answer 1

accounting involves the recording of financial transactions, planned or actual, and the use of these figures to produce financial information

Question 2

Income

Answer 2

Income is the money coming into a business

Question 3

Capital Income

Answer 3

The money invested by the owners or other investors, used to set up the business or buy additional equipment, e.g. loan, mortgages, shares, owners capital, debentures.

Question 4

Revenue Income

Answer 4

The money that comes into the business from performing its day-to-day function - selling goods or providing a service e.g. sales, rent rent received, commission received, interest received, discount received.

Question 5

Expenditure

Answer 5

The money spent by a business

Question 6

Capital Expenditure

Answer 6

Used to buy capital items, which are assets that will stay in the business for a long period of time

Question 7

Non-current Assets

Answer 7

Tangible items that will appear on the statement of financial position and include things like land, premises, equipment and vehicles

Question 8

Intangible Assets

Answer 8

Cannot be touched but add value to the business e.g. goodwill, patents, trademarks and brand names

Question 9

Revenue Expenditure

Answer 9

Spending on items on a day-to-day regular basis. These expenses are shown on the statement of comprehensive income