Unit 3 Acc Chapter 01 Glossary

Question 0

Financial Information

Answer 0

Financial data that has been sorted, classified and summarised into a more useable and understandable form

Question 1

Financial data

Answer 1

Raw facts and figures upon which financial information is based

Question 2

Transaction

Answer 2

An exchange of goods or services with another party for money.

Question 3

Source documents

Answer 3

Documents that provide both the evidence that a transaction has occurred and details of the transaction

Question 4

Recording

Answer 4

Sorting, classifying and summarising the data contained in the source documents so that it is mor useable

Question 5

Reporting

Answer 5

The preparation of financial statements that communicate financial information to the owner

Question 6

Advice

Answer 6

Provision to owners of a range of options appropriate to their aims & objectives, together with recommendations to suitability

Question 7

Agreed value

Answer 7

The accepted value of a non-cash asset at the time of its contribution by the owner

Question 8

Accounting principles

Answer 8

The generally accepted rules that govern the way accounting information is generated

Question 9

Qualitative characteristics

Answer 9

The qualities of the information is accounting report

Question 10

Accrual accounting

Answer 10

Calculating profit by comparing

revenues earned less expenses incurred in a particular reporting period

Question 11

Asset

Answer 11

A resource controlled by the entity, from which future economic benefits are expected to flow to the entity.

Question 12

Liability

Answer 12

A present obligation of the entity as a result of past events which is expected to result in outflow from entity of resources embodying economic benefits

Question 13

Owner’s equity

Answer 13

The residual interest in the assets of the entity after the deduction of its liabilities

Question 14

Revenue

Answer 14

Inflow of economic benefit in the form of increase in assets, decrease in liabilities, increase in owner’s equity (excluding capital)

Question 15

Expense

Answer 15

An outflow of economic benefit in the form of decrease in assets, increase in liabilities, reducing owner’s equity (excludes drawings)