WEEK 1

Question 1

1. Possible users of accounting information include:

Answer 1

Managers
The bank
Tax inspectors
Investors/ Owner(s) of the business

Question 2

Define the term: Limited Liability

Answer 2

Shareholders in a company are only liable for company debts to the extent of the value of their shareholding.

Question 3

What is the process through which financial data treated to create financial reports?

Answer 3

is the process through which financial data :
Recorded
analysed
summarised
provided as information to stakeholders

Question 4

Current asset (5)

Answer 4

Account receivable ( debtor)
Bank
Cash
Closing stock
Cash in hand
Inventory

Question 5

Non-current asset ( 7)

Answer 5

machinery
van
plant
land
building
equipment
premises

Question 6

Current Liabilities

Answer 6

Account payable
Bank overdraft ( Loan short term )

Question 7

Non-current Liabilities

Answer 7

Loan long term

Question 8

Loan from A

Answer 8

Nợ tiền A

Question 9

Loan to A

Answer 9

A nợ tiền mình

Question 10

Payment from A

Answer 10

A trả tiền mình

Question 11

Payment to A

Answer 11

Mình trả tiền A

Question 12

Limited Liability

Answer 12

Shareholders will only lose what they have invested into the business

Question 13

Unlimited Liability

Answer 13

Owners is personally responsible for the debts of the business
May have to sell personal possessions to repay the debts of the business

Question 14

Public sector

Answer 14

Run by the government for the people
Funded through taxation

Question 15

Private Sector

Answer 15

Run by business aims to make a profit
Not for charities

Question 16

Owners

Answer 16

they review financial information to see how effectively the business is being run and in particular how profitable it is

Question 17

Suppliers:

Answer 17

Suppliers: need to know that the businesses cashflow is secure and it will be able to pay its debts to the suppliers

Question 18

Managers

Answer 18

Need to be update on the financial situation of the business to review investment decisions

Question 19

Return inward

Answer 19

Sale return: trả lại cho business

Question 20

Return outward

Answer 20

Purchase return : business trả lại cho customers

Question 21

Sole Trader : advantages

Answer 21

• Few legal restrictions
• Owner has complete control
• Owner is self-employed

Question 22

Sole Trader : Disadvantages

Answer 22

• Long working hours
• Difficult to borrow from bank
• Unlimited Liability

Question 23

Partnership : Advantage

Answer 23

• Decision-making shared
• Additional skill
• Cover for holidays

Question 24

Partnership : disadvantage

Answer 24

• profits are shared
• Disagreement can cause problems
• Unlimited Liability

Question 25

Private limited company : advantage

Answer 25

• Name ends in ‘ limited ( ltd)
• Control cannot be lost
• Business continues even if shareholders chang

Question 26

Private limited company : disadvantage

Answer 26

• Higher set-up cost
  -profits distributed to shareholders
• legal more complex

Question 27

Public Limited companies: Advantage

Answer 27

• Access to large amount of capital
• Easier to raise additional funds
• Widen business network

Question 28

Public Limited companies: Disadvantage

Answer 28

• Potential for loss control