Lesson 1 - Intro to Accounting Flashcards

1
Q

What is Accounting?

A

Accounting is a management information system that involves the collecting, sorting, classifying and recording of financial data to produce and report financial information to assist business owners in decision making.

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2
Q

Financial information is…

A

Data which is usually expressed in dollar terms.

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3
Q

Non-financial information is…

A

Any information that cannot be found in the financial statements and is not expressed in dollars and cents or reliant on dollars and cents for its calculation.

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4
Q

Examples of non-financial information include…

A

No. of customer complaints
No. of website visitors (hits)
No. of sales returns

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5
Q

Who are the main users of financial information?

A

Customers
Suppliers
Banks and other financial institutions
Employees
Prospective owners
The Australian Tax Office

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6
Q

What are the four stages of the accounting process?

A
  1. Source documents
  2. Records
  3. Reports
  4. Advice
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7
Q

A source document is…

A

A document that provides both the evidence that a transaction has occurred and the details of the transaction itself.

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8
Q

Recording is…

A

The process of sorting, classifying and summarising the data contained in the source documents so that it is more useable.

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9
Q

Reporting is…

A

The preparation of financial statements that communicate financial information to the owner.

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10
Q

Advice is…

A

The provision to the owners of a range of options available to their aims/objectives, together with recommendations as to the suitability of those aims / objectives

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11
Q

The accounting process is used to…

A

…take financial data and convert it into financial information in order to be able to make decisions about the business.

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12
Q

T/f - “Tax invoice” means the source document is an invoice.

A

False - this is on all source documents which involve GST and is a requirement set by the Australian Tax Office.

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13
Q

The two types of transactions are…

A

Cash and credit.

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14
Q

The point of difference between cash and credit transactions is…

A

The immediacy of the payment.
Cash = Customer pays immediately.
Credit = Customer pays at a later date.

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15
Q

Give me two pieces of info that would indicate that a source document was an invoice.

A
  1. Payment terms
  2. Invoice number
  3. The words “Due by”
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16
Q

T/f - The business at the top of the invoice has issued the source document.

A

True - the header can always be used to identify who issued the invoice.

17
Q

This source document is a…

A

Cheque butt.

18
Q

This source document is a…

A

Invoice.

19
Q

T/f - This document is a source document.

A

False - This is a cheque. It cannot be used as a source document as it is not retained by either party in a transaction. It must be paid into the bank for processing.

20
Q

This source document is a…

A

Memo.

21
Q

T/f - This document is a source document.

A

False - a Bank Statement is not strictly a source document, though it can be used to verify a transaction in the absence of the original source document (e.g. if it got lost)

22
Q

This source document is a…

A

Invoice.

23
Q

This source document is a…

A

Cheque butt.

24
Q

This source document is a…

A

Receipt.

25
Q

This document is a…

A

Bank Statement

26
Q

Source documents that are used for CASH transactions are…

A

Receipt
Cheque butt

27
Q

Source documents that are used for CREDIT transactions are…

A

Invoice