Accounting Principles Key Points Module 1

Front 1

Accounting

Back 1

Is about communicating accurate, appropriate and useful information at the appropriate time, to those who need it.

Front 2

Business acquires and uses resources in order to..

Back 2

Fulfill the wants and needs of society and meet its primary objective of earning profit from its activities.

Front 3

The purpose of accounting..

Back 3

Information for making decisions.
Information of past actions.

Front 4

Objective of business

Back 4

Increase the wealth of its owners by trading profitably.

Front 5

Financing Activities

Back 5

Finding funds from two basic sources, the owners and the creditors or lenders.

Front 6

Investing Activities

Back 6

Spending funds to acquire productive assets used to achieve the businesses goals.

Front 7

Operating Activities

Back 7

Day to day transaction

Front 8

The Business Cycle

Back 8

Using resources as efficiently as possible to produce goods or services.

Aim to keep transformation process flowing smoothly.

The length of business cycle will depend on the type of business activity.

Front 9

The accounting cycle

Back 9

A set period of time over which measurements of the results of trading can be made.

Accounting periods are of equal length so that meaningful comparison of results can be made.

Front 10

If a figure is GST inclusive, to get the GST content you must..

Back 10

Divide by 23 x 3

OR

Divide by 115 x 15

Front 11

If a figure is GST exclusive, to get the GST amount to add, you must..

Back 11

Divide by 20 x 3

OR

x .15

Front 12

If a figure contains GST, to get the GST exclusive figure you must..

Back 12

Divide by 1.15

Front 13

If a figure is GST exclusive and to have it include GST you must..

Back 13

Multiply by 1.15

Front 14

The Impact of goods and services tax

Back 14

GST is excluded from the financial statements of registered businesses.

GST is a tax levy on the supply of all goods and services within NZ with the exception of financial transactions and domestic rents.

Must be paid to IRD but may be claimed and offset as a credit for the GST they pay on goods and services purchased by them for business purposes.

Front 15

Government and NZICA

Back 15

Government influences business through legislation.

NZICA is NZ's only official accounting body and comes up with the standards.

Front 16

Elements of financial reporting

Back 16

Assets, liabilities, equity, incomes, expenses, gains, losses, comprehensive income, contribution from owners, distribution to owners.