Intro(P1)

Question 1

What is bookkeeping?

Answer 1

The process of recording financial transactions in a systematic way.

It is the first step in the accounting process.

Question 2

What is accounting?

Answer 2

The process of measuring, interpreting, analysing, and communicating financial information.

It enables users of accounting information to make informed decisions.

Question 3

What is the purpose of accounting?

Answer 3

To provide complete and accurate financial information about the business for informed decision making.

This includes both internal and external decision makers.

Question 4

Who are internal users of accounting information?

Answer 4

People within the company requiring information for decision making.

Examples include owners, managers, and employees.

Question 5

What do owners/shareholders need from accounting information?

Answer 5

To assess business performance and to determine distributable profits and dividends.

Question 6

What do managers need from accounting information?

Answer 6

To evaluate business performance, make operations decisions, and for planning ahead.

Question 7

What do employees need from accounting information?

Answer 7

To determine job security and the possibility of future pay increases.

Question 8

Who are external users of accounting information?

Answer 8

Parties outside the company requiring information for decision making.

Examples include potential investors, government, lending institutions, suppliers, customers, competitors, and the local community.

Question 9

What do potential investors need from accounting information?

Answer 9

To determine the potential return and security of any investment in the business.

Question 10

What does the government need from accounting information?

Answer 10

To determine the amount of tax the business should pay and to check compliance with laws and regulations.

Question 11

What do lending institutions need from accounting information?

Answer 11

To evaluate the ability of the business to repay loans and assess overdraft eligibility.

Question 12

What do suppliers need from accounting information?

Answer 12

To determine if the business can pay for goods and services on time.

Question 13

What do customers need from accounting information?

Answer 13

To assess business performance and reliability for future supplies.

Question 14

What do competitors need from accounting information?

Answer 14

To make performance comparisons and identify areas for improvement.

Question 15

What does the local community need from accounting information?

Answer 15

To determine employment opportunities and the environmental impact of the business.

Question 16

What are three areas where accounting skills are required?

Answer 16

• Banking
• Management
• Insurance

Additional areas include Actuary, Entrepreneurship, and Tourism.

Question 17

Name a skill needed for a career in accounting that involves analyzing financial data.

Answer 17

Analytical skills

This includes identifying trends, making forecasts, and providing insights into a company’s health and performance.

Question 18

Fill in the blank: A quality needed in the field of accounting is _______.

Answer 18

Integrity

Question 19

What is the role of Certified Public Accountants (CPAs)?

Answer 19

Prepare and audit financial statements, prepare tax returns, and provide financial consulting services.

Question 20

True or False: Auditors verify the accuracy of financial records and ensure compliance with accounting standards.

Answer 20

True

Question 21

List two examples of traditional accounting careers.

Answer 21

• Tax Accountants
• Management Accountants

Other examples include Auditors, Financial Analysts, Bookkeepers, and Payroll Accountants.

Question 22

What skill is essential for maintaining good working relationships in accounting?

Answer 22

Strong interpersonal skills

Question 23

What do forensic accountants do?

Answer 23

Investigate financial crimes and provide expert testimony in legal proceedings.

Question 24

Fill in the blank: A quality essential in accounting is _______.

Answer 24

Confidentiality

Question 25

Name an emerging career in accounting that focuses on environmental impact.

Answer 25

Sustainability/Environmental Accountants

Question 26

What is the responsibility of payroll accountants?

Answer 26

Ensure accurate and timely payment of employee wages and benefits.

Question 27

What technological skill is important for accountants?

Answer 27

Ability to work with accounting software, databases, and digital tools.

Question 28

What is the role of risk management specialists in accounting?

Answer 28

Identify and manage financial risks associated with business activities.

Question 29

Fill in the blank: A traditional accounting career focused on recording financial transactions is _______.

Answer 29

Bookkeepers

Question 30

What do data analysts in accounting focus on?

Answer 30

Use statistical and analytical tools to identify patterns and insights in financial data.

Question 31

List three qualities needed in the field of accounting.

Answer 31

* Honesty * Accuracy * Reliability

Question 32

What is the emerging role of blockchain accountants?

Answer 32

Use blockchain technology to secure financial transactions and ensure accuracy and transparency.

Question 33

What are the moral guidelines that govern the conduct of individuals and organizations within the accounting profession?

Answer 33

The ethical principles of accounting.

Question 34

What does the IESBA code require professional accountants to adhere to?

Answer 34

The five fundamental principles of ethics.

Question 35

Define Integrity in the context of accounting ethics.

Answer 35

An accountant should be straightforward and honest in all professional and business relationships.

Question 36

What does Objectivity mean for accountants?

Answer 36

An accountant should avoid bias, conflict of interest, or undue influence of others when making professional or business judgments.

Question 37

What should an accountant do to uphold Confidentiality?

Answer 37

An accountant should not disclose clients or employer’s information to third parties without proper authorization unless there is a legal or professional right or duty to disclose.

Question 38

What is the principle of Professional competence and due care?

Answer 38

An accountant has a duty to attain and maintain professional knowledge and skills to ensure competent services.

Question 39

What is meant by Professional behaviour in accounting ethics?

Answer 39

An accountant should comply with relevant laws and regulations and avoid any action that discredits the profession.

Question 40

What are the consequences of violating ethical principles in accounting?

Answer 40

Loss of job, lawsuit, loss of integrity/reputation, fines, imprisonment.

Question 41

List some ethical issues encountered in accounting.

Answer 41

* Omission of financial records * Pressure * Penalties * Disclosure * Effect of greed * The whistle blower * Fraudulent financial reporting

Question 42

True or False: An accountant can use confidential information for personal advantage.

Answer 42

False.

Question 43

Fill in the blank: An accountant should avoid _______ when making professional judgments.

Answer 43

[bias, conflict of interest or undue influence]

Question 44

What is the accounting cycle?

Answer 44

A sequence of procedures used to record and analyse business transactions during an accounting period.

Question 45

What is the first step in the accounting cycle?

Answer 45

Journalise – analyse source documents and record business transactions in books of original entry.

Question 46

What is the second step in the accounting cycle?

Answer 46

Post to ledger accounts – post information from the books of original entry to ledger accounts.

Question 47

What is the third step in the accounting cycle?

Answer 47

Prepare an unadjusted trial balance.

Question 48

What is the fourth step in the accounting cycle?

Answer 48

Make adjusting entries.

Question 49

What is the fifth step in the accounting cycle?

Answer 49

Prepare financial statements/final accounts.

Question 50

What is the sixth step in the accounting cycle?

Answer 50

Close the books.

Question 51

If asked to give the five steps of the accounting cycle, which steps should be included?

Answer 51

The first five steps.

Question 52

What do accounting principles refer to?

Answer 52

Guidelines and standards that govern the preparation and presentation of financial statements.

Question 53

What is the primary aim of accounting principles?

Answer 53

To ensure the reliability and comparability of financial information.

Question 54

What does the going concern concept assume?

Answer 54

That a business will continue indefinitely.

Question 55

What does the historical cost concept state?

Answer 55

Transactions should be recorded at their historical cost.

Question 56

What is the periodicity or time period concept?

Answer 56

It assumes that business economic activities can be divided into time periods for financial reporting.

Question 57

What does the monetary measurement concept state?

Answer 57

Only transactions that can be expressed in monetary terms should be recorded.

Question 58

What is the separate entity or business entity concept?

Answer 58

The business and its owners should be treated as separate entities for accounting purposes.

Question 59

True or False: When an owner takes cash for personal use, it is treated as a business expense.

Answer 59

False

Question 60

What does the dual aspect concept (duality) state?

Answer 60

Every financial transaction affects at least two accounts with a debit and a corresponding credit entry.

Question 61

What is the accruals concept?

Answer 61

Income should be recorded when earned, and expenses when incurred.

Question 62

What does the realisation concept (revenue recognition principle) state?

Answer 62

Revenue is recognised when earned, regardless of cash receipt.

Question 63

What does the matching principle state?

Answer 63

Expenses should be recognized in the same period as the revenue they helped generate.

Question 64

What is the consistency convention?

Answer 64

Once an accounting method is adopted, it should be maintained unless necessary to change.

Question 65

What does the prudence or conservatism convention state?

Answer 65

Income and assets should not be overstated, accounting for potential losses and liabilities.

Question 66

What does materiality mean in accounting?

Answer 66

Only significant items that affect decision-making should be disclosed.

Question 67

What is the full disclosure principle?

Answer 67

All material and relevant information should be disclosed.

Question 68

What is a transaction in accounting?

Answer 68

A business activity that changes assets, liabilities, or owner’s equity.

Question 69

What are examples of transactions?

Answer 69

Sales, purchases, and payments.

Question 70

What principle states that every financial transaction affects at least two accounts?

Answer 70

The double-entry principle.

Question 71

What is the accounting equation that must remain balanced?

Answer 71

Assets = Liabilities + Equity.

Question 72

If a transaction affects two asset accounts, what happens to the accounts?

Answer 72

One account will increase and the other will decrease.

Question 73

If a transaction affects an asset account and a liability account, what happens to both accounts?

Answer 73

Both accounts will either increase or decrease.

Question 74

If a transaction affects an asset account and a capital account, what happens to both accounts?

Answer 74

Both accounts will either increase or decrease.

Question 75

If a transaction affects a liability account and a capital account, what happens to the accounts?

Answer 75

One account will increase and the other will decrease.

Question 76

What are the rules for increasing assets in double-entry accounting?

Answer 76

Debit.

Question 77

What are the rules for decreasing liabilities in double-entry accounting?

Answer 77

Debit.

Question 78

What is the effect on capital when it is increased?

Answer 78

Credit.

Question 79

What is the effect on assets when they are decreased?

Answer 79

Credit.

Question 80

What is the effect on liabilities when they are increased?

Answer 80

Credit.

Question 81

According to the double-entry principle, what must each transaction have?

Answer 81

A debit and a credit entry that are equal in amount.

Question 82

What is the effect on cash and capital when an owner invests cash into the business?

Answer 82

Cash (+), Capital (+).

Question 83

What accounts are affected when goods are sold for cash?

Answer 83

Cash (+), Inventory (-).

Question 84

What accounts are affected when equipment is purchased with cash?

Answer 84

Equipment (+), Cash (-).