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;
61 Cards in this Set
- Front
- Back
|
What is the meaning of owners equity? |
Starts amount the business owes the business owner |
|
|
State one reason why a trial balance is prepared |
To check the arithmetical accuracy of the double entry |
|
|
State one advantage of dividing the ledger into sections. |
Work can be shared amongst several people/division of work |
|
|
State what is measured by the rate of inventory turn over |
The number of times the inventory is sold and replaced in the financial year |
|
|
Define Shareholders |
Owners of the share capital of a limited liability company |
|
|
Define limited liability |
The liability of shareholders for the debts of the company is limited to the amount they agree to pay for their shares |
|
|
State 2 diff between ordinary shares and preferences shares |
1)Ordinary shares:dividend rate varies 2)preference shares:dividend is a fixed percentage |
|
|
State 2 similarities between preferences shares and debentures |
1)get a fixed return 2)have a priority over ordinary shares for the interest/dividend |
|
|
State the purpose of a narrative in a journal entry |
Useful because it may be necessary to recall the reasons the transition has been written |
|
|
State 2 uses of general journal in addition to the recording of opening entries of a business |
1)correction of errors 2)non regular transactions not recorded in any other book of prime entry |
|
|
Define assets |
What the business owns and what is owed to the business |
|
|
Define liability |
What the business owes |
|
|
Define capital |
Resources provided by the owner of the business/what the business owes to the owner of the business. |
|
|
Define capital |
Resources provided by the owner of the business/what the business owes to the owner of the business. |
|
|
Explain what is meant by statement of financial position |
Statement of the assets,liabilities,capital of the business on a certain date. |
|
|
What is meant by book of prime entry? |
A book in which transactions are recorded before being entered in the ledger. |
|
|
State two benefits of maintains a sales ledger control account |
1)Helps to reduce fraud 2)Can assist in locating errors |
|
|
State two benefits of maintains a sales ledger control account |
1)Helps to reduce fraud 2)Can assist in locating errors |
|
|
Name the acc principle applied when charging depreciation |
Accruals,prudence |
|
|
State how is prime cost calculated? |
Total of direct materials plus direct labor plus direct expenses/royalties |
|
|
State how is prime cost calculated? |
Total of direct materials plus direct labor plus direct expenses/royalties |
|
|
State 2 reasons why TP Limited purchase finished goods |
1)cheaper to buy than make 2)cannot manufacture those particular items themselves |
|
|
Name the acc principle applied when valuing inventory |
Prudence/matching |
|
|
Name the acc principle applied when valuing inventory |
Prudence/matching |
|
|
Suggest 2 reasons why the rate of inventory turnover is lowest than the previous year. |
1)Lower sales activity 2)cost of sales decreased |
|
|
State 2 reasons why Sara maintains a petty cash book |
1)to reduce the number of entries in the main cash book. 2)can be used as a form of training for junior employees. 3)division of work. |
|
|
State 2 reasons why Sara maintains a petty cash book |
1)to reduce the number of entries in the main cash book. 2)can be used as a form of training for junior employees. 3)division of work. |
|
|
Explain what is meant by the imperative system in a petty cash book. |
The petty cashier starts each period with the same amount of money. At the end of the period the chief cashier will make up the cash remaining so that it is equal to the imperative amount. |
|
|
State 2 reasons why Sara maintains a petty cash book |
1)to reduce the number of entries in the main cash book. 2)can be used as a form of training for junior employees. 3)division of work. |
|
|
Explain what is meant by the imperative system in a petty cash book. |
The petty cashier starts each period with the same amount of money. At the end of the period the chief cashier will make up the cash remaining so that it is equal to the imperative amount. |
|
|
State one advantage of the imperative system. |
The chief cashier is aware of exactly how much is spent in each period. |
|
|
State two reasons why Sara should depreciate her non-current assets. |
1) To spread the cost of the fixed assets over their useful lives. 2)To provide a more realistic view of the fixed assets. |
|
|
State two reasons why Sara should depreciate her non-current assets. |
1) To spread the cost of the fixed assets over their useful lives. 2)To provide a more realistic view of the fixed assets. |
|
|
Explain the principle of consistency. |
Where a choice of method is available, the one with the most realistic outcome should be selected and used consistently from one accounting period to the next. |
|
|
State two reasons why Sara should depreciate her non-current assets. |
1) To spread the cost of the fixed assets over their useful lives. 2)To provide a more realistic view of the fixed assets. |
|
|
Explain the principle of consistency. |
Where a choice of method is available, the one with the most realistic outcome should be selected and used consistently from one accounting period to the next. |
|
|
Explain why it is necessary to prepare a manufacturing account at the end of a financial year. |
To calculate how much it cost the business to manufacture the goods produced in the financial year. |
|
|
State two reasons why Sara should depreciate her non-current assets. |
1) To spread the cost of the fixed assets over their useful lives. 2)To provide a more realistic view of the fixed assets. |
|
|
Explain the principle of consistency. |
Where a choice of method is available, the one with the most realistic outcome should be selected and used consistently from one accounting period to the next. |
|
|
Explain why it is necessary to prepare a manufacturing account at the end of a financial year. |
To calculate how much it cost the business to manufacture the goods produced in the financial year. |
|
|
Explain mark-up |
Mark-up is the gross profit measured as a percentage of the costs. |
|
|
State two reasons why Sara should depreciate her non-current assets. |
1) To spread the cost of the fixed assets over their useful lives. 2)To provide a more realistic view of the fixed assets. |
|
|
Explain the principle of consistency. |
Where a choice of method is available, the one with the most realistic outcome should be selected and used consistently from one accounting period to the next. |
|
|
Explain why it is necessary to prepare a manufacturing account at the end of a financial year. |
To calculate how much it cost the business to manufacture the goods produced in the financial year. |
|
|
Explain mark-up |
Mark-up is the gross profit measured as a percentage of the costs. |
|
|
Explain margin |
Margin is the gross profit measured as a percentage of sales/selling price. |
|
|
State two reasons why Sara should depreciate her non-current assets. |
1) To spread the cost of the fixed assets over their useful lives. 2)To provide a more realistic view of the fixed assets. |
|
|
Explain the principle of consistency. |
Where a choice of method is available, the one with the most realistic outcome should be selected and used consistently from one accounting period to the next. |
|
|
Explain why it is necessary to prepare a manufacturing account at the end of a financial year. |
To calculate how much it cost the business to manufacture the goods produced in the financial year. |
|
|
Explain mark-up |
Mark-up is the gross profit measured as a percentage of the costs. |
|
|
Explain margin |
Margin is the gross profit measured as a percentage of sales/selling price. |
|
|
Suggest 2 ways to improve gross profit margin. |
1)reduce cost price/obtain cheaper supplies. 2)increase selling price. 3)change mix of sales. |
|
|
State two reasons why Sara should depreciate her non-current assets. |
1) To spread the cost of the fixed assets over their useful lives. 2)To provide a more realistic view of the fixed assets. |
|
|
Explain the principle of consistency. |
Where a choice of method is available, the one with the most realistic outcome should be selected and used consistently from one accounting period to the next. |
|
|
Explain why it is necessary to prepare a manufacturing account at the end of a financial year. |
To calculate how much it cost the business to manufacture the goods produced in the financial year. |
|
|
Explain mark-up |
Mark-up is the gross profit measured as a percentage of the costs. |
|
|
Explain margin |
Margin is the gross profit measured as a percentage of sales/selling price. |
|
|
Suggest 2 ways to improve gross profit margin. |
1)reduce cost price/obtain cheaper supplies. 2)increase selling price. 3)change mix of sales. |
|
|
Explain why an agreement should be drawn up when a partnership is formed. |
To avoid misunderstanding/disagreements later. |
|
|
Explain why interest on drawings should be calculated in a partnership. |
To discourage the partners from making excessive drawings. |
|
|
Explain why interest on capital should be calculated in a partnership. |
1) To compensate for an unequal work-load 2)in reconciliation of work done in the business. |
