W4

Question 1

What we owe to the owners/owner’s claims or equity

Answer 1

Capital

Question 2

“What we owe”

Answer 2

Liabilities

Question 3

Long term assets, lifespan more than 1 year, for production/rental purposes

Answer 3

Non-current assets

Question 4

Short-term assets, lifespan less than 1 year, used for trading purposes/sale

Answer 4

Current assets

Question 5

“What I/we have”

Answer 5

assets

Question 6

the period businesses use for preparing the financial statements, usually 12 months

Answer 6

accounting period

Question 7

In the SFP, prepayments are considered as ______________, and accruals are considered ______________.

Answer 7

current assets; current liabilities

Question 8

Formula for prepayment in 1 financial year

Answer 8

Total expense - prepayment amount

Question 9

is not calculated in full in a financial year’s statement of profit or loss, as they usually extend past the period of 1 financial year

Answer 9

prepayment

Question 10

arises where an expense has been paid before the statement of financial position date but the benefit of that expense will be experienced in the following financial year (paid, but not due)

Answer 10

prepayment

Question 11

arises when an expense has been incurred but not paid for by the date when the SFP is prepared

Answer 11

accrual

Question 12

money withdrawn from the bank > money stored in bank

Answer 12

Bank overdraft

Question 13

meaning of bank loan (10%)

Answer 13

10% interest on bank loan

Question 14

What are bank loans usually considered as?

Answer 14

Long-term loans

Question 15

What does the accounting equation mean/entail?

Answer 15

That the assets must always be equal to the sum of the capital and liabilities.

Question 16

To what is the statement of financial position similarly formatted?

Answer 16

The accounting equation

Question 17

Shows assets = capital + liabilities

Answer 17

Statement of financial position

Question 18

Net profit is not…

Answer 18

income

Question 19

Meaning of nil.

Answer 19

nothing/zero

Question 20

When is the trial balance drawn up?

Answer 20

At the end of each financial year, at the end of a financial period

Question 21

A record of all the account balances at that point in time and is used to prepare the financial statements

Answer 21

trial balance

Question 22

How is loss written?

Answer 22

It is written as a negative number

Question 23

Expenses > gross profit

Answer 23

Loss

Question 24

The inventory with which a company starts/at an initial point of a company

Answer 24

Opening inventory

Question 25

What are inventories?

Answer 25

goods for resale held in stock by the business

Question 26

Cost of goods sold in a period taking into account movements in inventories between the beginning and end of the period

Answer 26

Cost of sales

Question 27

Leftover sales/leftover after sales

Answer 27

Closing inventories

Question 28

Cost of sales formula

Answer 28

Opening inventories + purchases - closing inventories

Question 29

In the statement of profit and loss, what kind of profits are shown?

Answer 29

The gross and net profit

Question 30

Formula of net profit

Answer 30

Gross profit - expenses

Question 31

Formula of gross profit

Answer 31

Sales - cost of sales

Question 32

In the statement of profit or loss, ____________ are ignored and not calculated

Answer 32

assets

Question 33

refers to expenditure where the business will benefit for more than 1 accounting period

Answer 33

asset

Question 34

Amounts owed to suppliers of the business who, having supplied goods or services on credit, have not yet been paid by the business

Answer 34

Trade payables

Question 35

Amounts owed by the customers to businesses who having been sold goods or services on credit, have not yet paid the business

Answer 35

Trade receivables

Question 36

Recording revenues when they are earned and not received in cash, and recording expenses when they are incurred and not when they are paid

Answer 36

Accrual concept

Question 37

Is a record (computer file) used to record book-keeping entries

Answer 37

Accounting ledger

Question 38

The method of recording atleast 2 entries for each and every transaction

Answer 38

Double-entry book-keeping system

Question 39

Assets, liabilities, and capital. Which statement is this?

Answer 39

Statement of financial position (Balance sheet)

Question 40

A complete set of financial statements contains...

Answer 40

1. The statement of financial position 2. Statement of profit or loss 3. Statement of changes in equity 4. Statement of cash glow

Question 41

Sales, gross profit, and net profit. Which statement is this?

Answer 41

Statement of profit or loss (Income sheet)

Question 42

In a situation of trade payables occuring, at what moment is revenue is recognized?

Answer 42

When the goods are delivered to and accepted by the customer

Question 43

Loans are _________. An interest on a loan is an ______________.

Answer 43

liabilities, expense

Question 44

Furniture & fittings is an ____________

Answer 44

asset