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41 Cards in this Set
- Front
- Back
What are accounts? |
Accounts mean records. |
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What are principles of accounts? |
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 |
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What is book keeping? |
Book keeping refers to the systematic way transactions are recorded in the accounts to be used for further analysis by the business |
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What is accounting? |
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. |
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Why is accounting important? |
Accounting helps in decision making. |
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Give 6 main objectives of accounting. |
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 |
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What are transactions? |
Transactions mean money going out and money coming in |
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What types of transactions are there? |
Transactions can either be self transactions or business transactions. |
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What does self transactions mean? |
Self transactions mean private transactions or transactions made at household level |
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What are business transactions? |
Business transactions are those which relate to business activities only. |
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What are financial transactions? |
Financial transactions are those where there is involvement of money. |
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Give the 2 types of financial transactions. |
Financial transactions: Cash transactions and credit transactions |
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What are cash transactions? |
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 |
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What are Credit transactions ? |
Credit transactions are those where settlement in terms of money is made at a later date. |
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Give 5 ways for settlement of money. |
1) notes and coins 2)cheques 3) plastic money (use of cards) 4) internet banking 5) mobile payment |
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What is a business? |
A business is an organisation which operates with the objective to earn and maximise profits. |
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Give the 3 forms of a business . |
forms of a business : 1) manufacturing concern 2) trading concern 3)service provider |
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What is a manufacturing concern business? |
A manufacturing concern business is an organisation which manufactures goods and sells |
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What is a trading concern business? |
A trading concern business is an organisation which buys in readymade products and sells at higher prices. |
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What is a service provider business? |
A service provider business is an organisation which provide services that is no physical goods being sold. |
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Give the 7 requirements to start a business. |
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 |
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What are expenses? |
Expenses are those where money is being spent. |
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What are incomes? |
Incomes can be termed as transactions from which money comes in. |
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What are assets? |
Assets are whatever the business buys for its own use or whatever the business owns. They are not meant for sale. |
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If a restaurant doesn't own the building, is the building the asset of the restaurant? |
If a restaurant doesn't own the building, the building is not the asset of the restaurant |
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Give 7 examples of assets? |
examples of assets 1) building 2) land 3)vehicles 4) equipment 5) computers 6)trade receivables 7) cash |
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What are liabilities? |
Liabilities are whatever the business owes. |
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Give 3 examples of liabilities. |
examples of liabilities : 1) loan from bank 2)capital 3)trade payables |
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Explain the 2 types of purchases? |
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. |
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Explain 2 types of sales. |
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. |
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What is the accounting equation? |
Capital (owner's equity) + liabilities = assets. |
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Give the equation to find total assets. |
Non-current assets + current assets= assets |
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What are non-current assets? |
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. |
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Give 4 examples of Non-current assets. |
examples of Non-current assets: 1) Land and buildings 2) Motor vehicles 3) Equipment 4) Furniture and fittings |
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What are current assets? |
Current assets are assets that changes almost everyday after business transactions. They are used to sustain the working capital of the business. |
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Give 3 examples of current assets. |
examples of current assets: 1) closing inventory 2) trade receivables 3) cash in hand and at bank. |
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Give the equation to find total liabilities. |
Non-current liabilities + current liabilities = liabilities. |
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What are non-current liabilities? |
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. |
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Give 2 examples of non-current liabilities. |
Examples of non-current liabilities: 1) Loan from bank 2) Mortage on premises |
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What are current liabilities? |
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. |
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Give 2 examples of current liabilities. |
Examples of current liabilities : 1) Trade payables 2) Other payables |