Introduction Chapter 1 Accounts

Front 1

What are accounts?

Back 1

Accounts mean records.

Front 2

What are principles of accounts?

Back 2

Principles of accounts set guidelines as to how to establish the records in a proper manner to be understood by any user of the accounts

Front 3

What is book keeping?

Back 3

Book keeping refers to the systematic way transactions are recorded in the accounts to be used for further analysis by the business

Front 4

What is accounting?

Back 4

Accounting refers to the analysis of transactions data to process into information more meaningful for a business.

Accounting uses the bookkeeping data to prepare analytical statements such as financial statements and others for business to evaluate their performance.

Front 5

Why is accounting important?

Back 5

Accounting helps in decision making.

Front 6

Give 6 main objectives of accounting.

Back 6

1) to access whether a business is earning profit or incurring loss

2) How much money is owed by the business

3)How much money is owed to the business

4)Whether further investments can be made

5)How well the business is performing

6)Forecast the performance of the business

Front 7

What are transactions?

Back 7

Transactions mean money going out and money coming in

Front 8

What types of transactions are there?

Back 8

Transactions can either be self transactions or business transactions.

Front 9

What does self transactions mean?

Back 9

Self transactions mean private transactions or transactions made at household level

Front 10

What are business transactions?

Back 10

Business transactions are those which relate to business activities only.

Front 11

What are financial transactions?

Back 11

Financial transactions are those where there is involvement of money.

Front 12

Give the 2 types of financial transactions.

Back 12

Financial transactions: Cash transactions and credit transactions

Front 13

What are cash transactions?

Back 13

Cash transactions are those where there is movement of money on the spot that is money is received or paid on the spot.

Settlement is made on the spot

Front 14

What are Credit transactions ?

Back 14

Credit transactions are those where settlement in terms of money is made at a later date.

Front 15

Give 5 ways for settlement of money.

Back 15

1) notes and coins

2)cheques

3) plastic money (use of cards)

4) internet banking

5) mobile payment

Front 16

What is a business?

Back 16

A business is an organisation which operates with the objective to earn and maximise profits.

Front 17

Give the 3 forms of a business .

Back 17

forms of a business :

1) manufacturing concern

2) trading concern

3)service provider

Front 18

What is a manufacturing concern business?

Back 18

A manufacturing concern business is an organisation which manufactures goods and sells

Front 19

What is a trading concern business?

Back 19

A trading concern business is an organisation which buys in readymade products and sells at higher prices.

Front 20

What is a service provider business?

Back 20

A service provider business is an organisation which provide services that is no physical goods being sold.

Front 21

Give the 7 requirements to start a business.

Back 21

requirements to start a business:

1) money to start a business (capital)

2) location to carry out business activities

3)organisation skills, that is the businessman should have a minimum knowledge as to how to start a business

4)customers to buy the products

5)suppliers from whom raw materials needed for production or finished goods to be purchased,.

6)establish a list of expenses

7)identify potential additional sources of income

Front 22

What are expenses?

Back 22

Expenses are those where money is being spent.

Front 23

What are incomes?

Back 23

Incomes can be termed as transactions from which money comes in.

Front 24

What are assets?

Back 24

Assets are whatever the business buys for its own use or whatever the business owns. They are not meant for sale.

Front 25

If a restaurant doesn't own the building, is the building the asset of the restaurant?

Back 25

If a restaurant doesn't own the building, the building is not the asset of the restaurant

Front 26

Give 7 examples of assets?

Back 26

examples of assets

1) building

2) land

3)vehicles

4) equipment

5) computers

6)trade receivables

7) cash

Front 27

What are liabilities?

Back 27

Liabilities are whatever the business owes.

Front 28

Give 3 examples of liabilities.

Back 28

examples of liabilities :

1) loan from bank

2)capital

3)trade payables

Front 29

Explain the 2 types of purchases?

Back 29

1) purchases of raw materials.

Goods which are bought for resale

2) Assets.

Vehicles or land or buildings or equipment which are acquired to be used in the business only.

Front 30

Explain 2 types of sales.

Back 30

1) Revenue(sales)

Goods manufactured then sold or goods purchased then sold.

2) old assets which are of no use to the business, are disposed.

Front 31

What is the accounting equation?

Back 31

Capital (owner's equity) + liabilities = assets.

Front 32

Give the equation to find total assets.

Back 32

Non-current assets + current assets= assets

Front 33

What are non-current assets?

Back 33

Non-current assets are assets that are used in the business for a very long period of time to increase the earning capacity of the business.

Front 34

Give 4 examples of Non-current assets.

Back 34

examples of Non-current assets:

1) Land and buildings

2) Motor vehicles

3) Equipment

4) Furniture and fittings

Front 35

What are current assets?

Back 35

Current assets are assets that changes almost everyday after business transactions.

They are used to sustain the working capital of the business.

Front 36

Give 3 examples of current assets.

Back 36

examples of current assets:

1) closing inventory

2) trade receivables

3) cash in hand and at bank.

Front 37

Give the equation to find total liabilities.

Back 37

Non-current liabilities + current liabilities = liabilities.

Front 38

What are non-current liabilities?

Back 38

Non-current liabilities are liabilities that the business owes for a long period ( more than one year).

They are used to increase the total capital for a business.

Front 39

Give 2 examples of non-current liabilities.

Back 39

Examples of non-current liabilities:

1) Loan from bank

2) Mortage on premises

Front 40

What are current liabilities?

Back 40

Current liabilities are liabilities that the business owes for a short period ( less than one year).They are used for the sustainability of the working capital.

Front 41

Give 2 examples of current liabilities.

Back 41

Examples of current liabilities :

1) Trade payables

2) Other payables