U1 AOS2 Revision 1 Flashcards
What are source documents in accounting?
Source documents are original records that provide evidence of financial transactions.
True or False: Source documents are only used for cash transactions.
False
Fill in the blank: A __________ is a document that records the sale of goods or services to a customer.
sales invoice
Which of the following is NOT considered a source document? A) Receipt B) Bank Statement C) Income Statement
C) Income Statement
What is the primary purpose of source documents in accounting?
To provide a reliable and verifiable record of financial transactions.
List two examples of source documents.
Invoices and receipts.
True or False: Source documents are essential for the preparation of financial statements.
True
What are the two primary qualitative characteristics of financial reporting?
Relevance and faithful representation.
True or False: Relevance means that financial information can influence the decisions of users.
True.
Fill in the blank: The qualitative characteristic that ensures financial information is complete, neutral, and free from error is called __________.
faithful representation.
True or False: Timeliness is not an important factor in the quality of financial information.
False.
Fill in the blank: Information that is presented clearly and concisely is said to have __________.
understandability.
Which qualitative characteristic is compromised if financial information is manipulated?
Faithful representation.
True or False: Timeliness can affect the relevance of financial information.
True.
What is the relationship between relevance and materiality?
Materiality is a component of relevance, determining whether information is significant enough to influence decisions.
What qualitative characteristic ensures that information is presented in a consistent manner over time?
Comparability.
