Chapter one

Question 1

What are the three types of industry

Answer 1

Manufacturing organisation
Retailer
Service organisation

Question 2

What is a manufacturing organisation

Answer 2

Where goods are made and then sold

Question 3

What is a retailer?

Answer 3

Where goods are brought in and sold to the public at a higher price

Question 4

What is service organisation?

Answer 4

Where there are no good at all, but a service is provided

Question 5

What are capital transactions

Answer 5

Purchase of assets for long-term use in the business and gains of sales from these assets

Question 6

What are revenue transactions?

Answer 6

All day-to-day revenue and expenses except for capital trans

Question 7

What does capital expenditure result in?

Answer 7

A non current asset on the statement of financial position of the company

Question 8

Capital expenditure results in benefitting from ..

Answer 8

An asset over a long period rather than short period.

Question 9

What does revenue expenditure result in?

Answer 9

An expense in the statement of profit n loss.

Question 10

Revenue expenditure is also known as

Answer 10

Operating expenses

Question 11

Revenue expenditure is for long or short term ?

Answer 11

Short

Question 12

What are the two main financial positions

Answer 12

Statement of profit and loss, and statement of financial position

Question 13

What are the two key types if accounting

Answer 13

Financial accounting and cost accounting (management accounting)

Question 14

What is financial accounting

Answer 14

The use of info recorded by the system to prepare financial statements related to past transactions for external use: statement profit n loss…financial position

Question 15

What is the statement of profit n loss

Answer 15

Shows sales revenue plus other operating income less expenses equalling a profit or loss.

Question 16

What is a statement of financial position

Answer 16

Shows the assets, liability and capital of a business on a particular date

Question 17

What is an asset

Answer 17

Something valuable the business owns

Question 18

What is a liability

Answer 18

Amounts that the business owes

Question 19

What is capital

Answer 19

The amount the business owes its owner once liabilities are deducted from asset

Question 20

What is a bookkeeping system

Answer 20

The recording of business transactions in the general and subsidiary ledgers

Question 21

Does the bookkeeping record past or present trans?

Answer 21

Past

Question 22

The financial statements are used for external publication

Answer 22

Investors of money into the business
Lenders and other suppliers to the business
Hmrc

Question 23

What has cost accounting been extended into?

Answer 23

Planning, control, decision making

Question 24

What is planning

Answer 24

The provision of forecast costs at different output levels

Question 25

What is control

Answer 25

Such as the provision of actual and budget costs for comparison purposes

Question 26

What is decision making

Answer 26

The provision of information about actual unit costs for the period for pricing decisions

Question 27

Cost accounting takes the same information as what?

Answer 27

Financial accounting

Question 28

Who does cost accounting provide information to?

Answer 28

People inside the business

Question 29

Why does cost accounting give info to people inside the business?

Answer 29

To run the business effectively today and in the future

Question 30

What can cost accounting analyse ?

Answer 30

Past costs incurred by elements to determine how much it will cost in future to produce any unit of product, broken down in labour, materials and expenses or overheads.

Question 31

What do cost accounting collect?

Answer 31

Similar costs together, so they can be further analysed and used internally.

Question 32

What are the lethal requirements for cost accounting and financial accounting?

Answer 32

No legal requirement for cost accounting In many countries, limited companies are required to produce financial statements

Question 33

What do financial accounts details?

Answer 33

The performance of an organisation over a defined period and the state of affairs at the end of that period

Question 34

What format is used for cost accounting?

Answer 34

Entirely up to management discretion, each company can use its own accounting system and format of reports

Question 35

What format do you use for financial accounts ?

Answer 35

Determined by law, so the accounts of different organisations can easily be compared

Question 36

What can cost accounting focus on?

Answer 36

Specific areas, to help aid decisions

Question 37

What area of the business do financial statements focus on?

Answer 37

The business as a whole, mixing revenue and costs from different operations

Question 38

Does cost accounting focus on money?

Answer 38

Can incorporate none money measures, eg miles traveled, tonnes in metal

Question 39

Financial accounts present or past

Answer 39

Past operations

Question 40

Cost accounting past or present

Answer 40

Past and future planning tool