5 Written questions
5 Matching questions
- Cash payments journal
- Limited liability
- a Future sacrifices of economic benefits that the entity is presently obliged to make to other parties.
- b Inflows or other enhancements, or savings in outflow of future economic benefits in the form of increases in assets or reductions in liabilities, other than those relating to contributions by owners, that result in an increase in equity during the reporting period.
- c A multi-column, special journal where all cash payments are recorded.
- d The process of forming a company or other incorporated entity, e.g., club.
- e Most companies are incorporated with limited liability (indicated by Ltd in their title). This means, in the event of company failure, the shareholders can only lose what they have invested in the company (if they hold partly paid shares they may be liable for an additional contribution of the unpaid amount on these shares).
5 Multiple choice questions
- The accounting sub-system that deals with recording the amounts owing to creditors and ensuring that all payments are authorised and that they are made in a timely manner.
- Asset, liability, equity, revenue, expense.
- The three general purpose financial reports are the Statement of Financial Position, the Statement of Financial Performance and the Statement of Cash Flows.
- The estimated time period over which the future economic benefits of an asset are expected to be consumed by the entity.
- Accounting sub-system that involves the recording and control of fixed assets such as motor vehicles, plant and machinery.
5 True/False questions
ASIC → Australian Securities and Investment Commission.
Debit → An entry that increases an asset or decreases a liability or decreases equity, that is made in the left-hand column of a columnar ledger account or on the left-hand side of a T-ledger account. Verb. The action of recording a debit.
Temporary accounts → Revenue and expense accounts.
Relevance → That quality of financial information that exists when information influences decisions by users about the allocation of scarce resources. (SAC 3).
Cash outflow → A professional person involved in the accounting functions, both for individuals and organisations.