Recording Credit Sales

Question 1

What is a statement of financial position and what does it show?

Answer 1

A snapshot of the business at one point in time, it shows the business’ assets and liabilities.

Question 2

What is a non current asset?

Answer 2

Assets which the business will hold for more than one year. Examples: Property

Question 3

What is a current asset?

Answer 3

Assets which the business will hold for less than one year. Example: Stock

Question 4

What is a current liability?

Answer 4

Amounts the business owes that must be paid that year

Question 5

What is a non current liability?

Answer 5

Amounts that the business owes that are due to be paid in more than one year. Example: bank loans

Question 6

What is the accounting equation?

Answer 6

Assets - Liabilities = Capital

Question 7

What is a statement of profit and loss

Answer 7

Summary of trading activities over a period of time usually 12 months.
Shows the income and expenses that the business has received and incurred

Question 8

How do you calculate profit that a business has generated?

Answer 8

Profit = Income - Expenses

Question 9

Which details could be incorrect on any business documentation?

Answer 9

Product code
Net value
VAT
Discounts taken

Question 10

If no remittance advice note is recorded and payment is received, how do you work out which invoices are being paid?

Answer 10

Balance the T accounts
The difference should match an invoice which has been missed out