Accounting

Question 1

What is accounting?

Answer 1

The process of analyzing and reporting financial transactions referring to a business or individual. It involves tracking and reporting the flow of money, assets and liabilities.

Question 2

What are aspects of an accountant job?

Answer 2

Taxation
Auditing
Financial reporting
Budgeting
Payroll
Business costs and revenue

Question 3

What is important information needed by an accountant?

Answer 3

• Financial documents
• Transaction details
• Invoices and receipts
• Payroll information
• Tax documentation

Question 4

What is the accounting process (and explain)

Answer 4

Source Documents: receipts, bills, invoices, checks
Records: accounting documents that detail business income and expense transactions
Reports: balance sheet, income statements, cash flow statements
Advice: advice given to the entity about wise actions

Question 5

What is economic benefit?

Answer 5

Something that will financially benefit a firm, usually money

Question 6

What are assets, and give examples of the two types?

Answer 6

Resources that will bring in future economic benefits.
Current assets (short-term):
- Cash at bank
- Accounts receivable
- Inventory
Non-current assets (long-term):
- Premises
- Vehicles
- Equipment

Question 7

What are liabilities, and give examples?

Answer 7

Debts or obligations an entity owes to another entity from past transactions
- Loan
- Bank overdraft
- Mortgage
- Accounts payable

Question 8

What is owner’s equity, and give examples?

Answer 8

Portion of assets funded by business owner
- capital contribution
- net profit/loss

Question 9

What are revenues?

Answer 9

Money generated by a business from:
- sales revenue (sale of goods/services)
- interest revenue (from money in bank account)

Question 10

What are expenses?

Answer 10

What the business entirely uses to make profit/revenue
- Rent
- Electricity/water bills
- Advertising
- WAGES
- Office expenses

Question 11

What is the accounting equation?

Answer 11

Assets = liabilities + owner’s equity

Question 12

Strategies to improve revenue?

Answer 12

• Decrease cost to increase sales
• Advertising
• Get rid of slow moving stock (promotional methods - sales)
• Improve customer service (increased repeat sales + recommendations)

Question 13

How to determine cost price from selling price?

Answer 13

Selling price/(1+markup decimal)

Question 14

How to determine selling price from cost price?

Answer 14

Cost price x (1+markup decimal)

Question 15

What are cash receipts and cash payments?

Answer 15

Cash receipts: Inflow of money to bank account
Cash payments: Outflow of money from bank account

Question 16

What is a cash surplus?

Answer 16

Cash receipts are greater than cash payments

Question 17

Difference between stakeholder and shareholder?

Answer 17

A stakeholder is a party that has an interest in a company and can either affect or be affected by the business. Shareholders are those who have partial ownership of a company because they have bought stock in it.

Question 18

Why is the manufacturing industry in decline in Australia?

Answer 18

Australia’s overwhelming reliance on the export of unprocessed raw materials to drive growth and prosperity.