The Theory Book Flashcards by S4-N1 GABOY RALPH MATTHEW SEVILLA

Q

What is the role of accounting?

A

Accounting is an information system that provides accounting information for stakeholders to make informed decisions regarding the management of resources and performance of businesses.

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Q

What are the roles of accountants

A

Accountants set up an accounting information system (AIS) to prepare and provide accounting information for stakeholders’ decision making.
They are stewards of the business, which means they manage the resources of the business on behalf the owners.

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Q

State and explain 2 professional ethics that accountants need to have

A

Integrity - to be straightforward and honest in their business relationship

Objectivitiy - do not let bias, conflict of interest, or the undue influence of others override his professional judgement

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Q

State the typical accounting information required by stakeholders

A

Profit for the year, assets, borrowings,

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Q

State the typical non-accounting information required by stakeholders.

A

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Q

State the difference between a trading business and service business and give 2 examples of these 2 businesses

A

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Q

Owner and shareholder’s

Interaction with business and an example of decision to make

A

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Q

Managers

Interaction with business and an example of decision to make

A

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Q

Employees

Interaction with business and an example of decision to make

A

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Q

Lenders

Interaction with business and an example of decision to make

A

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Q

Suppliers

Interaction with business and an example of decision to make

A

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Q

Customers

Interaction with business and an example of decision to make

A

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Q

Government

Interaction with business and an example of decision to make

A

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Q

Competitors

Interaction with business and an example of decision to make

A

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Q

characteristsics of sole proprietor

number of of owners
access to funds
Extend of liability
Level of control
Transferabililty of ownership

A

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Q

characteristics of Private Limited Company

number of of owners
access to funds
Extend of liability
Level of control
Transferabililty of ownership

A

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Q

Accounting entity concept

A

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Q

Monetary concept

A

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Q

Historical cost concept

A

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Q

Objectivity concept

A

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Q

Going concern concept

A

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Q

Accounting period concept

A

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Q

Accrual basis of accounting concept

A

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Q

Matching concept

A

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Consistency concept

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Prudence concept

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Materiality concept

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Flow of accounting information system

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What is a source document?

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State and explain, with an accounting concept, why are source documents important to a business

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Explain Objectivity concept

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Purpose of the source document Invoice

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Purpose of the source document Debit Note

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Purpose of the source document Credit note

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Purpose of the source document Receipt

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Purpose of the source document Remittance advice

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Purpose of the source document Payment voucher

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Purpose of the source document Bank statement

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Accounting equation

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explain drawings

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difference between bank overdraft and bank loan

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Explain assets

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Explain liabilities

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Explain capital

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Explain income

df

Explain expenses

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Explain drawings

df

explain trade discount

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explain cash discount

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what is a trial balance

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purpose of trial balance

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limitations of trial balance

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explain current assets

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explain non current assets

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explain current liabilities

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explain non current liabilities

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explain equity

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define trade receivables

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define capital expenditure and what is the benefits

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define revenue expenditure and what is the benefits

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define depreciation

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cause of depreciation

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