week 1 - foundations

Question 1

accounting definition

Answer 1

process of identifying, measuring and communicating economic information

Question 2

name 3 users of financial statements

Answer 2

Investors ,Customers, Governments, Regulator, Lenders

Question 3

what is IFRS

Answer 3

International Financial Reporting Standards

Question 4

name 3 characteristics of the framework

Answer 4

relevant, faithful, comparable, verifiable, timely, understandable

Question 5

what is included in the financial information?

Answer 5

balance sheet, income statement and cash flow statement

Question 6

net cash flow formula

Answer 6

inflows-outflows

Question 7

what 3 groups are cash flows sorted into

Answer 7

operating, investing, financing

Question 8

what does the cash flow statement tell us

Answer 8

the liquidity of the business

Question 9

balance sheet formula

Answer 9

assets = equity + liabilities

Question 10

assets definition

Answer 10

economic resources controlled by the entity

Question 11

liabilities definition

Answer 11

present obligations of the entity to transfer economic resources

Question 12

equity definition

Answer 12

owners investment in the entity

Question 13

income statement formula

Answer 13

profit/loss = income earned - expenses incurred

Question 14

income definition

Answer 14

increase in the economic benefits during the accounting period

Question 15

expenses definition

Answer 15

decreases in the economic benefits during the accounting period

Question 16

what does the income statement tell us?

Answer 16

the return that the business has generated from its resources

Question 17

what is the double entry system

Answer 17

a debit and credit for each transaction

Question 18

sale of goods using cash

Answer 18

DR cash CR inventory

Question 19

advertising expense not yet paid

Answer 19

DR expenses CR accounts payable

Question 20

depreciation of machinery

Answer 20

DR expenses CR fixed assets