WA1 Theory qns Flashcards
What is a trial balance?
A trial balance is a list of all the ledger accounts and their ending balances at a point in time.
What is the purpose of a trial balance
To facilitate the preparation of the financial statements and ensure arithmetic accuracy in recording
What are the limitations to a trial balance?
A balanced trial balance is not absolute proof of accuracy. There may be errors not revealed by a trial balance
What is the going concern accounting theory?
It is where a business is assumed to have an indefinite economic life unless there is credible evidence that it may close down
What is the Accounting period theory?
It is where the life of a business is divided into regular time intervals.
Which months have 31 days?
January, March, May, July, August, October, December
What is the purpose of a statement of Financial performance?
An SPE shows income earned and expenses incurred for a period of time. It informs stakeholders of the profitability of a business.
What is the purpose of a statement of Financial position?
It provides information on how resources are obtained and used in a business and the claim by the owners on the net assets of the business at a point in time.
