Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
26 Cards in this Set
- Front
- Back
|
What is a business transaction? |
External exchanges of resources between the entity and another entity and another entity that affects assets, liabilities and owners equity |
|
|
What is the accounting process? |
Identifying, measuring and communicating of economic information about an entity to a variety of users for decision making purposes. |
|
|
What are internal and external users of accounting information? Give 3 examples of each |
Internal- owners, managers, employees Those who work within the business..
External- government (IRD), competitors, investors, potential investors Those who are outside the business, but may be affected by business operations...
|
|
|
What is the purpose of management accounting? |
The use of economic and financial information to plan and control many of the activities of the entity and to support the management decision making process |
|
|
What is the purpose of financial accounting? |
The process that results int he preparation and reporting of financial statements for an entity. Concerned with the historical results of an entity's performance. |
|
|
What are 6 factors of Management accounting? |
1. Internal- owners, managers, employees 2. Specific purpose 3. Past and Future 4. Detailed 5. No restrictions 6. Made whenever required |
|
|
What are 6 factors of Financial accounting? |
1. External users- government (ird), competitors, potential investors 2. broad overview 3. Accounting standards and other regulations 4. usually annual 5. All about the past 6. General purpose |
|
|
What is accounting? |
The process of identifying, measuring and communicating economic information to users so they can make informed judgements and decisions. |
|
|
What are the qualative characteristics of conceptual accounting framework? Name 4 |
1. Relevance (ability to influence decisions) 2. Reliability (free from error or bias) 3. Comparability (same treatment for measurement and presentation purposes) 4. Understandability (clarity)
|
|
|
What are the four parts of an audit report? |
1. Scope the limitations of the audit 2. Accordance with the law 3. Independence 4. Opinion (unqualified= good, qualified = bad) |
|
|
What is an Asset? |
Arises from a PAST event, resource has PRESENT control, from which FUTURE economic benefit is expected to flow |
|
|
What is a contra account? Give example |
Contra accounts are deducted form related accounts.
Eg. Accumulated depreciation on buildings is a contra asset and is deducted from the asset buildings |
|
|
What is accounting entity? |
That the financial affairs of a business are separate and distinct from those of the owners |
|
|
What is unlimited liability? |
If a business cannot pay its debts, the owners become personally liable for those business debts. e. g sole trader, partnership |
|
|
What is limited liability? |
If a business cannot pay its debts the owners are not personally liable for the debts of the business.
eg. company |
|
|
What is accrual accounting? |
The transactions are reported in the period in which they relate to, regardless of whether cash has changed hands |
|
|
What is cash accounting? |
The transaction is recorded when cash changes hands, regardless of the period the transaction occurred. |
|
|
What is profit? Reference to cash |
Profit is a function of accrual accounting.. usually different from cash generated during a period. |
|
|
What is a transaction? |
Transactions are economic exchanges between entities that are accounted for and reflected in financial statements |
|
|
What are the three errors in recording business transactions? |
1. Single entry error 2. Transposition error 3. Incorrect entry |
|
|
What is a single entry error? |
- only one part of the transaction was completed - worksheet will not balance
|
|
|
What is a transposition error? |
- Occurs when 2 digits are the wrong way around (transposed) - always divisible by 9 |
|
|
What is an incorrect entry? |
-Recording 2 increases or 2 decreases on one side - recording an increase to one side and a decrease to another |
|
|
What are the 2 parts to depreciation? |
1. Depreciation expense 2. Accumulated depreciation |
|
|
What is depreciation expense? |
Depreciation is the allocation of the cost of an asset to the years in which the benefits of the asset are expected to be received |
|
|
What is accumulated depreciation? |
Cumulative total of all depreciation charges |
