lec 1 sum

Question 1

financial accounting

Answer 1

organsiation coommunicating financial infor to external sth

Question 2

managment accounting

Answer 2

org communicating info to internal i.e between dpts

Question 3

income statement aka

Answer 3

profit and loss acount

Question 4

what does income statment show

Answer 4

profit or loss made during a particular period

Question 5

revevnue

Answer 5

money earned from main trading activities

Question 6

income

Answer 6

money company earns

Question 7

is intereest from bank account income or revenue

Answer 7

income - as not main trading activity

Question 8

if an ice cream van makes a sale from ice cream is this revenue or incom

Answer 8

revenue as income earned from the main trading activity

Question 9

if a company earns something what are they entitled to do

Answer 9

keep it and not give it back

Question 10

expenses

Answer 10

day to day runing cost of a business

Question 11

exmaple of revenue expenses

Answer 11

rent

utility bills

wages
heating
cleanning
repairs
discount allowed
depreciation of fixed assets
telephone bills
insurance
lighting
salaries
rates
legal fees
TAX

Question 12

revenue expenditure is not teh same as

Answer 12

capital expenditure

Question 13

paying off a liability is not

Answer 13

spendin

Question 14

anything you can think of in the profit or loss statement is either A

Answer 14

income

or a

loss

Question 15

what is the accrual concept

Answer 15

expenses and income should be recognisefd as soon as they occur not necessarily when they are recieved

*during the peirod *

Question 16

profit calc (in terms of income statement)

Answer 16

income - expenses

Question 17

balance sheet

Answer 17

itemised statement of what one

owes

owns

is worth

Question 18

asset

Answer 18

what business owns

Question 19

liability

Answer 19

what business owes

Question 20

current asset v non current asset

Answer 20

short term thing business is planning to use for up to a year

long term thign business is plannign to use for more than a year

Question 21

curent and non current liabltiies are made on what basis

Answer 21

how long till busines gotta pay it off

Question 22

tangible asset

Answer 22

can be seen and touched

Question 23

what are tangible assets referred to as in BS

Answer 23

Property

Plant

Equipment

Question 24

intangible asset

Answer 24

cant be seen and touched /not physical in nature -

Question 25

examples of intangible asset

Answer 25

intellectual property
e.g.
patent
reputaiotn/image - good will

Question 26

current asset - more in depth

Answer 26

cash and other assets bs expects to turn into cash within one year

Question 27

state the 4 current assets

Answer 27

cash (includes bank deposits)

inventory ( value of closing stock/goods not sold yet at the end of the year)

trade recievables - money owed to bbusiness by creditors

prepayment - pay in advance

Question 28

e.g NCL

Answer 28

mortgage

Question 29

state the 3 current liablities

Answer 29

ST borrowing e.g. overdrafts

Trade Payables - creditors who bs got to pay money back to

Accrual

Question 30

Capital/Equity

Answer 30

amount of capital invested by owners (net of withdrawals) + retained profit

Question 31

accounting entity concept -

Answer 31

business and owner treated separately so got to distinguish private and bs transactions

only assets of a business can be recorded as an asset in the balance sheet

Question 32

Capital equation

Answer 32

CAPITAL = ASSETS- LIABLIITIES

Question 33

Why does the capital equation make sense

C=A-L

Answer 33

capital is what a firm is worth

assets are money value of what the firm owns

and they use this to pay off liabilities

what is left over goes to the owner

Question 34

Why does Assets = capital + liabilities make sense

actually i think it is plus

Answer 34

once sell all assets money goes

first to pay off laibliities (internal claim)

the rest goes to capital (external claim)

Question 35

the opening capital will always …. unless

Answer 35

be there

unless its withdrawn by owner - dont matter if ti was cash and some was taken out

Question 36

closing capital =

Answer 36

(opening ) profit + capital

Question 37

ending capital =

Answer 37

opening capital +

additonal capital +

profit (-loss)

-withdrawings

Question 38

if invest money + also take out loan at the beginnngin how will c = a -l be

Answer 38

asset will be the sum of the money

and capital + liabliities will be equal to assets

basically whatever you start with will be cash

Question 39

capital =

Answer 39

net assets

Question 40

if profit increases what happens to capital

Answer 40

increases