accounting

Question 1

what is step 1 of the accounting cycle?

Answer 1

identify transactions

Question 2

what is step 2 of the accounting cycle?

Answer 2

prepare journal entries

Question 3

what is step 3 of the accounting cycle?

Answer 3

post to general ledger

Question 4

what is step 4 of the accounting cycle?

Answer 4

unadjusted trial balance

Question 5

what is step 5 of the accounting cycle?

Answer 5

post adjusting entries

Question 6

what is step 6 of the accounting cycle?

Answer 6

adjusted trial balance

Question 7

what is step 7 of the accounting cycle?

Answer 7

create financial statements

Question 8

define accounting

Answer 8

the collection, recording and reporting of financial information to assist businesses owners in decision-making

Question 9

what is financial data

Answer 9

raw facts and figures upon which financial information is based

Question 10

what are assets?

Answer 10

what a business owns

Question 11

what are source documents?

Answer 11

the pieces of paper that provide both the evidence that a transaction has occured, and the details of that transaction

Question 12

what are liabilities?

Answer 12

what a business owes

Question 13

what is owners equity?

Answer 13

what is left within the business once the assets have been used to pay the liabilities

Question 14

what is a transaction?

Answer 14

an agreement between 2 parties to exchange goods or services for payments

Question 15

what is the order of the accounting process

Answer 15

1. collecting source documents
2. recording info
3. reporting
4. providing advice

Question 16

explain the accounting process of collecting source documents

Answer 16

collecting source documents relating to transactions e.g. receipts

Question 17

what is an example of a source document relating to transactions

Answer 17

receipts, cheque butts, invoices, memos, bank statements etc.

Question 18

explain the accounting process of recording transactions

Answer 18

information from source documents must be written down or recorded

Question 19

explain the accounting process of reporting in financial reports

Answer 19

info that has been generated from the recording stage can now be reported as financial info so the business owner can assess and make decisions

Question 20

explain the accounting process of providing advice

Answer 20

using reports, accountants can now make some suggestions as to appropriate cources of action for business owners/managers

Question 21

what is stage 1 of the accounting process?

Answer 21

collecting source documents

Question 22

what is stage 2 of the accounting process?

Answer 22

recording transactions

Question 23

what is stage 3 of the accounting process?

Answer 23

reporting/preparing financial reports

Question 24

what is stage 4 of the accounting process?

Answer 24

advice (providing advice to the owner of the business)

Question 25

what is an accounting assumption?

Answer 25

rules or guidelines that accountants follow that govern the way accounting information is recorded

Question 26

what are the 4 accounting assumptions?

Answer 26

1. monetary unit 2. historical cost 3. entity principle 4. going concern

Question 27

explain the monetary unit

Answer 27

all items must be recorded and reported in the currency of the country of location where the reports are being prepared

Question 28

explain the historical cost

Answer 28

transactions should be recorded at their original purchase price

Question 29

explain the entity principle

Answer 29

the business is seperate from the owner and other businesses. It's records should be kept on this basis

Question 30

explain going concern

Answer 30

the life of the business is assumed to be continuous, and its records are kept on that basis

Question 31

what is the accounting equation?

Answer 31

A=L+E Assets= Liabilities+ Owners Equity

Question 32

expanded definition of assets:

Answer 32

a possesion of a business that will bring the business benefits in the future.

Question 33

what is an example of an asset?

Answer 33

a bus, land, a computer, a car etc.

Question 34

what are debtors?

Answer 34

people that owe your business money

Question 35

are debtors assets? why?

Answer 35

yes because they provide money to a business that gives the business benefits

Question 36

what are the 3 questions to determine whether or not something is an asset?

Answer 36

1. Does your business own it? 2. Will it bring your business benefits in the future? 3. Can you value it accurately?

Question 37

What is a liability?

Answer 37

An obligation of the business, which needs to be paid by the business ( the debt a business has)

Question 38

what is an exampke of a liability?

Answer 38

loans, creditors, etc.

Question 39

What is a creditor?

Answer 39

Any business/ person that a business owes money to

Question 40

What is owners equity?

Answer 40

What is left over in the assets of the business after deducting all its liabilities