ACCOUNTING UNIT 1 Flashcards
(54 cards)
What is the nature and purpose of accounting?
It is about managing and making decisions and how to best manage them
From
Managing staff
Managing customers or clients
Managing inventory and suppliers
Managing finances
T/F need infomation
What is the accounting management information system?
It involves the collecting, sorting, classifying and recording of financial data to produce and report financial information to assist business owners in decision making
What does EFT stan for
Electronic Funders Transfer
What does EFTPOS stand for
Electronic Funds Transfer Point of Sale
Is EFT a cash or credit transaction?
cash
Is a cheque Butt a source document?
Is it a cash or credit transaction?
Yes it is a source document
Cash transaction
Is a cheque a source document?
NO!!
Is an invoice a source document?
If yes, how do u know
Is it a cash or credit transaction?
Yes it is, it contains the invoice number or the terms ( 6/7 indicates 6% discount if paid in 7 days)
CREDIT
Is a receipt a source document
If yes how can u tell? (evidence)
Is it a cash or credit transaction?
YES IT IS
Because of the receipt number and the received on
CASH TRANSATCTION
Can u use the evidence of “ Tax invoice” in your answer?
NO!
This is a legal requirement that records the including of GST
Is credit card a cash or credit transaction?
Cash due to paying the business but the obligation is between the bank and the owner so that’s why its a cash
Definition of source documents
Documents that provide both the EVIDENCE tat a transaction has occurred and the DETAILS of the transaction itself
What order is the accounting process
SOURCE DOCUMENTS –> RECORDS –> REPORTS –> ADVICE
Def for recording (accounting process)
sorting, classifying and summarisng the data contained in the source documents so that it is more useable
DEF for reporting (accounting process)
the preparation of financial statements that communicate financial information to the owner
DEF for advice (accounting process)
the provision to the owners of a range of options available to their aims/objectives together with recommendations as to suitability of those aims/ objectives
ACCOUNTING PROCESS IS
the process of taking FINANCIAL DATA and converting it into FINANCIAL INFO in order to be able to make decisions
Is a MEMO a source document
If yes how can u tell? (evidence)
Is it a cash or credit transaction?
YES H/W it is not a cash or credit transaction instead it is an internal transaction
Is a BANK STATEMENT a source document
If yes how can u tell? (evidence)
Is it a cash or credit transaction?
NO it is a back up document
Accounting equation
Assets = liabilities + Owners Equity
Current assets definition
A present econmic resource controlled by the entity (as a result of past events) that is reasnably expected to be converted to cash, sold or consumed within the next 12 months after the end of the reporting period
NON CURRENT ASSESTS
present economic resource controlled by the entity ( as a result of past events) that is not held for resale and is reasonably expected to be used for more than the next 12 months after the end of the reporting period
Current liability definition
a present obligation of the entity (arising from past events) that are reasonable expected to be settled with a TRANSFER OF AN ECONOMIC RESOURCE withi the next 12 months after the end of the reporting period
Non- current Liabilities
a present obligation of the entity (arising from past events) that are NOT EXPECTED to be settled with a transfer of an economic resource within the next 12 months after the end of the reporting period.
