Unit 1 AOS 1 - Accounting

Question 1

Asset

Answer 1

a resource controlled by the entity that will provide future economic benefit

Question 2

Current Asset

Answer 2

a resource controlled by the entity that is expected to be sold, consumed or convered into cash within the next 12 months

Question 3

Non-current assets

Answer 3

a resrouce controlled by the entity that is expect to be kept in the business for a number of years

Question 4

liability

Answer 4

a present obligation of the entity to tranfer an economic resource

Question 5

current liability

Answer 5

an obligation of the entity that is expected to be settled within the next 12 months

Question 6

non-current liability

Answer 6

an obligation of the entity that is not expected to be settled in the next 12 months

Question 7

debt ratio

Answer 7

total liabilities/total assets x 100

Question 8

working capital ratio

Answer 8

current assets/current liabilities

Question 9

entity assumption

Answer 9

business records are kept separate from the owners and other entities

Question 10

period assumption

Answer 10

reports are prepared for a particular period of time, no more than 12 months to obtain comparability results

Question 11

going concern assumption

Answer 11

the business will continue to operate indefinetley and the records are kept on that basis

Question 12

accrual basis assuption

Answer 12

profit is calculated by revenure earned less expences incurred for the reporting period

Question 13

relevance

Answer 13

all reports should include all information that is useful for decision making and exclue information that is not

Question 14

faithful represenation

Answer 14

the financial information reported is complete, free from material error, without bias

Question 15

comparability

Answer 15

useful informaiton is provided when the financial reports of a business can be compared over time and with information of other businesses

Question 16

verifiability

Answer 16

ensures that obsevers of information can use source documents to come to the same conclusion that an event is faithfully represented

Question 17

timeliness

Answer 17

financial information should be avaliable to decision makers in time to impact their decision making

Question 18

understandibility

Answer 18

financial information should be presented in a clear and to the point, so it is understood by accountants and non-accountant users

Question 19

accounting

Answer 19

the collecting and recording of financil data to produce and report financial information to assist business owners in decision making

Question 20

accounting process

Answer 20

source documents - records - reports - advice