Section 1,lesson 1, unit 1

Question 1

Transactions

Answer 1

An event which results in the exchange of money for an asset.
All transactions that are recorded must have a valid document associated with them, e.g. an invoice or receipt

Question 2

Types of financial transactions include:

Answer 2

Sales - exchanging goods or services for money.
Purchase- buying a good or services.
Payments- transfer of money to someone else. (e.g. purchases,wages)
Receipts - getting money from someone else. (e.g. from customers)
Petty cash - paying for low value items with a small fund of cash.
Payroll- wages and salaries paid to employees and any payroll taxes.
Wages- money paid to employees for their work,usually every wk or month
Salaries - fixed payment for employment regardless of actual hours worked.

Question 3

Set of accounts/financial statement/financial accounts

Answer 3

Is a formal statement which includes the current financial state of the business as well as how it has performed during a period of time (usually a year)

Question 4

Profit:

Answer 4

Is the difference between the business’s income and expenses.

Question 5

Financial document:

Answer 5

The starting point of the bookkeeping process.

Documents that provide evidence that a transaction took place, e.g. an invoice is evidence of a sale.

Question 6

Books of prime entry:

Answer 6

This is where the details of the financial documents are entered and totalled.
There are several different books e.g. sales day books, cash book,purchase day book.

Question 7

Ledger accounts:

Answer 7

are used to total the value of transactions of similar types.

This info is summerized from the books of prime entry.

Question 8

Trial balance:

Answer 8

The total balance of each ledger account are listed out in the trial balance which is used to ensure no mistakes have been made in recording the transactions.

Question 9

Who is interested in the financial info of a business?

Answer 9

Tax authorities
Future investors
Bank manager
Suppliers