5 Written questions
5 Matching questions
- Perpetual inventory method
- Special purpose financial reports
- Accrual accounting
- a A method of accounting where all transactions (i.e., cash and credit) are recorded. Revenue is recorded in the accounting period when the goods are sold or the services are performed irrespective of when cash is received. Expenses are recognised when resources are consumed in the process of earning revenue, irrespective of when cash is paid.
- b Financial reports prepared for users who have the authority to obtain the information they need to meet their needs. SAC 2.
- c A method of accounting for inventory that provides a continuous and detailed record of all goods sold and on hand. Widely used when accounting records are computerised.
- d Australian Accounting Research Foundation.
- e Goods acquired for resale.
5 Multiple choice questions
- Accounting system where every transaction affects two or more elements of the accounting equation so that the equation always stays in balance.
- Documents that provide details of transactions, e.g., cheque butts, credit notes, invoices, cash register tapes, credit card vouchers.
- The process of allocating the cost of an intangible asset over the accounting periods benefiting from its use. Refer to depreciation.
- Statement listing what the business controls and owes at a given point in time. The statement of financial position is a detailed expression of the accounting equation: assets = liabilities + equity.
- An underlying accounting concept concerned with the extent to which information can be omitted, misstated or combined with other information without adversely affecting users in their decision making.
5 True/False questions
Conceptual framework → The underlying theoretical basis of accounting. Currently consists of four statements of accounting concepts. SAC 1, SAC 2, SAC 3, SAC 4.
T-form account → The form of the ledger account that has two distinct sides. The left-hand side is used to record debit entries and the right-hand side is used to record credit entries.
General journal → Record in which transactions may be recorded if not recorded in specialised journals.
Equity → Residual interest in the assets of the entity after deducting liabilities (SAC 4 definition) Equity is the owners' stake in the business. It consists of owners' contribution, plus accumulated profits, less accumulated losses, less withdrawals.
Accounting → Asset, liability, equity, revenue, expense.