EXAM

Cards (69)

  • What are the main types of business form? (4)
    Sole Trader
    Partnership
    Limited Liability Partnership
    Limited Liability Company (Private and Public)
  • Accounting is concerned with ..., ... and ... financial info
    Collecting
    Analyzing
    Communicating
  • What does the Statement of Financial Position shows?
    Position of accumulated wealth
  • What does Income Statement show?
    Performance in creating wealth
  • What does Statement of Cashflows show?
    Prospect in staying in business
  • What does Balance Sheet include?
    Assets
    Liabilities
    Equity
  • What does Income Statement Include?
    Revenue
    Expenses
    Profit
  • What does Statement of Cashflows include?
    Cash Inflow
    Cash Outflow
  • What are fundamental characteristics of accounting info?
    Relevance
    Faithful Representation
  • What are the enhancing characteristics of accounting info?
    Comparability
    Verifiability
    Understandability
    Timeliness
  • What does relevance mean?
    Accounting information has to have predictive and confirmatory value
  • What does faithful representation mean?
    Accounting info has to be complete, neutral and unbiased, free from error
  • What does comparability mean?
    Accounting info can be used to make valid comparisons
  • What does verifiability means?
    Accounting info can be proven and there is evidence behind it
  • What does timeliness mean?
    Accounting info is made available in time
  • What does understandability mean?
    Accounting info should be presented in clear and concise way
  • Underestimated liabilities lead to
    Overstated performance and overstated assets
  • Expense is
    A decrease in economic benefits resulting in a decrease in equity
  • Revenue is
    Economic benefit generated by a business
  • Revenue Recognition
    Revenue should be recognized when control of goods has been transferred to the customer
  • Accruals

    Revenues and expenses are recognized when earned or incurred
  • Matching Principle
    Expenses should be matched to the revenues they help generate
  • Going Concern
    Assumption that the business will operate in foreseeable future
  • Consistency
    The measurement and presentation of similar transactions and other events is carried out in a consistent way each accounting period
  • Prudence
    Gains and assets are not overstated and losses and liabilities are not understated
  • Business Entity Principle
    Business and its owners are treated separately for accounting purposes
  • Historic Cost Method
    Method of valuing assets and liabilities based on their original cost without adjustment to changing prices
  • Dual Aspect
    Each transaction has 2 aspects both of which will affect the balance sheet
  • Accrual is
    When expense is more than cash paid
  • How accruals are recognized?
    Increase in expenses in Income Statement
    Increase in Current Liability in Balance Sheet
  • Prepayment is
    When amount paid is more than the expense for the period
  • How prepayment is recognized?
    Decrease in expense in Income Statement
    Increase in Current Assets in Balance Sheet
  • Capital Expenditure is
    Expenditure to create, acquire or improve long-term assets (i.e., future benefits)
  • Revenue Expenditure is
    Expenditure for trading purposes or long-term asset maintenance (i.e., no future benefit)
  • Prime Costs is
    Total of direct costs
  • What type of costs are superviser's wage
    Stepped cost
  • Allocation is
    Assigning a whole item of cost to a single cost unit or centre
  • Apportionment is

    Spreading costs over 2 or more cost units or centres
  • Absorption is
    Attaching overhead costs to products or services
  • Cost Centre is
    A production or service location, a function, an activity or an item of equipment for which costs are accumulated