5 Written Questions
5 Matching Questions
- Accounting records
- Cheque butt
- Net worth
- Accounting equation
- a assets = liabilities + equity
This equation is sometimes expressed as equity = assets - liabilities. The extended form of the accounting equation is assets = liabilities + equity + (revenue - expenses).
- b An entity that has been formed into a company.
- c Residual interest in the assets of the business after deducting its liabilities; the equity in the business.
- d The system (documents, books, files) in which financial transactions are recorded.
- e the part of a cheque that remains with the preparer and is used as the source document for transactions involving payment by cheque. The cheque butt will contain details of the information on the cheque, e.g., date, drawee, amount.
5 Multiple Choice Questions
- A method of calculating depreciation which is based on asset usage.
- Division of the dollar amount of an item in a financial statement by the dollar amount of another item in a statement, e.g., net profit divided by total assets. The purpose is to facilitate comparative analysis by highlighting significant trends and patterns occurring both in a single business, and between businesses, over time.
- Australian Accounting Standards. AAS standards apply to non-company entities (e.g. sole traders, not-for-profit entities) and are not legally enforceable.
- Activities which relate to the raising of funds by an entity; activities that affect equity and non-current liabilities.
- Accounting sub-system that deals with recording the amounts owed by customers and ensuring that they pay their accounts in a timely manner.
5 True/False Questions
Accounting reports → The sequence of accounting procedures from transactions, to journals, ledgers, a trial balance and financial reports (including balance day adjustments) that takes place during an accounting period.
AASB → Australian Securities and Investment Commission.
Bankruptcy → A situation where a person's affairs are subject to legal processes because of insolvency.
Cash sale → Cash paid out by an entity, e.g., for expenses, to repay amounts owing, for the purchase of assets.
Double entry accounting → Accounting system where every transaction affects two or more elements of the accounting equation so that the equation always stays in balance.