Topic 1-3 [KU]

Question 1

Stakeholders

Answer 1

• The people interested in the business
• They will want to know the business is doing

E.G
- Owner/s
- Bank
- Government Tax Department
- Employees
- Suppliers
- Customers
Potential Investors

Question 2

Book-keeping

Answer 2

-Tracks all financial activities of a business keeping a detailed records of all transactions

Question 3

Auditing

Answer 3

Checking all accounting records making sure that the owners of the financial information can trust it

Question 4

Fair presentation

Answer 4

They should fairly represent the business performance, financial position and cash flow of the business
e.g Give the true view of the financial situation

Question 5

Going Concern

Answer 5

The financial statement that are prepared on the assumption that the business will continue trading in the foreseeable future

Question 6

Matching/Accrual

Answer 6

• Revenue and income must not be earned more or less same applies to the expenses which must not be more or less
• The effects of a transaction are recognized when they occur and NOT when the cash is received or paid
• The transactions are reported to the Financial Statement of the period.

Question 7

Consistency

Answer 7

• Transactions of similar nature must be recorded in the same way
• Helps in comparing different business performances to choose which one to invest in

Question 8

Materiality

Question 9

Materiality

Answer 9

• items that affect the customer decision is material and must be presented separately
• if the items are not important they are grouped with similar items

Question 10

Business Entity

Answer 10

When the business and its owner are regarded as separate existence.

e.g
when the owner puts in capital into the business. The credit in the capital a/c shows that the business owes money to its owner