Outcome 2

Question 1

What is verifiability

Answer 1

Source documents that can act as evidence of a businesses finances that can be checked by an independent knowledge observer through auditing

Question 2

What is understandability

Answer 2

Requires financial information in reports to be presented clearly and concisely so that users with reasonable knowledge of business and economic activities can comprehend.

Question 3

What are the stages of the accounting process

Answer 3

Source documents, records, reports and advice

Question 4

What is the entity assumption

Answer 4

Ensures that the records of assets, liabilities and business activities of the entity are kept completely seperate from those those of the owner of entity .

Question 5

Define current assets

Answer 5

Present economic resource of the entity with the potential to be converted to cash, sold, or consumed within the next 12 months of the reporting period

Question 6

Define current liabilities

Answer 6

Present obligation of the entity to transfer an economic resource as a result of a past event that are reasonably expected to be settled within 12 months of the end of the reporting period.

Question 7

Define cash flows from operating activities

Answer 7

Cash inflows and outflows related to day-to-day trading activites

Question 8

Define cash flows from investing activities

Answer 8

Cash inflows and outflows related to buying and selling of non-current assets

Question 9

Define cash flows from financing activities

Answer 9

Cash inflows and outflows related to the financial structure of the business

Question 10

Define liquidity

Answer 10

The ease with which you can convert an asset to cash, without affecting its market value

Question 11

Define cash flow cover

Answer 11

A liquidity indicator that asses the ability of the firms operating cash flows to meet its short term term debts as they fall due

Question 12

How to figure out formula for cash flow cover

Answer 12

Net cash flows from operating activities divided by current liabilities

Question 13

How to calculate the total GST

Answer 13

GST settlement should cancel out GST payable from previous month. Then do Gst receivable minus GST payable. Then whatever payable or receivable is higher it becomes the opposite.

Question 14

How to calculate including GST

Answer 14

divide the amount 11

Question 15

How to calculate plus GST

Answer 15

multiply by 10%

Question 16

What not to include in cash journals

Answer 16

Invoice, credit, memos