Week 1 Flashcards
What is Accounting?
Manages Economic Events in of 4 Basic Activities
- identifies
- records
- communicates
- analysing
What is the Difference between Managerial and Financial Accounting?
MANAGERIAL - Info for Decision Making, and Control of an Org’s Operations ; Internal Users
FINANCIAL - Published Financial Statements and Other Financial Reports ; External Users
State 4 Types of Internal Users of Accounting Data
- Marketing
- Management
- Finance
- Human Resources
State 2 Types of External Users of Accounting Data
- Investors
- Creditors
What are the 5 Main Elements in Accounting?
- Assets
- Liability
- Equity
- Income
- Expenses
What are Accrurals?
Revenue and Costs must be Recognised as they Are Earned or Incurred, Not as Money is Received or Paid
What are the 5 Components of Financial Statements :
- Statement of Financial Position
- Statement of Profit and Loss & Other Comprehensive Income (Income Statment)
- Statement of Changes in Equity
- Statement of Cash Flows
- Accounting Policies and Explanatory Notes
What are the 2 Levels of Qualitative Characteristics of Useful Financial Information?
1) FUNDAMENTAL QUALITATIVE CHARACTERISTICS
- required or info to be useful
- include relevance and faithful representation
2) ENHANCING QUALITATIVE CHARACTERISTICS
- enhance usefulness of accounting info
- include comparability, verifiability, understandability and timelessness
State the 3 Types of Business making Business Entity
- Sole Trader
- Partnership
- Limited Company
4 Characteristics of a Sole Trader
- Unlimited Liability, personally Liable for All Debts
- Generally Owned by One Person
- Often Small Service-Type Business
- Owner receives any Profit, suffers any losses
4 Characteristics of a Partnership
- Owned by 2 or more Persons
- Often retail and service - type businesses
- Generally Unlimited Personal Liability
- Partnership agreement
3 Characteristics of a Limited Company
- Legally Separated from Owners
- Limited Liability
- Companies have greater scrutiny of their Financial Situation
