ACCA FA1 Exam Questions and Answers All Correct

ACCA FA1 Exam Questions and Answer s All Correct What are the two main type of business transactions - Answer -Cash or Credit. Debit - Answer -Is always on the left -side of the column Credit - Answer -Is always on the right -side of the column Debit To own/have AN ASSET INCREASES eg: new office furniture CAPITAL/A LIABILITY DECREASES eg: pay an account payable INCOME DECREASES eg: cancel a sale AN EXPENCE INCREASES eg: incur advertising cost Left hand side - Answer -CERDIT To owe AN ASSET DECREASES eg: pay out cash CAPITAL/A LIABILITY DECREASES eg: buy good on credit INCOME INCREASES eg: make a sale AN EXPENCE DECREASES eg: cancel a purchase Right hand side Accounting Equation - Answer -Assets = Liabilities + Capital + Revenue - Expenses - Drawings Cash - Answer -Coins, currency (paper money) checks, credit card receipts, and money orders received from others, as well as money deposited in the bank. Cash transactions - Answer -Buyer pays cash to the seller at the time the goods or services are transferred.( simplest form of business) Credit transactions - Answer -Sale or a purchase which occurs some time earlier than cash is received or paid. What is a Business - Answer -An organization or economic system where goods and services are exchanged for one another or for money. What are the different types of business - Answer -Entity , Company , Firm Revenue (income) - Answer -The value of income supplied by customers. Expenditure (cost) - Answer -Decrease in owner's equity resulting from the cost of goods, fixed assets, and services and supplies consumed in the operations of a business. Profit (income) - Answer -Is the excess of income over expenditure. What is a invoice - Answer -Is a demand for payment What is a ledger - Answer -A book of accounts in which data from transactions recorded in journals are posted and thereby summarized. What is the purpose of the Accounting System - Answer -To record , summaries and present information contained in the documentation generated by transations Sales orders - Answer -A customer writes out an order or sign an order for goods or services they wish to buy Purchase order - Answer -A business place and order for with an business for the purchase of goods or services. Debit note - Answer -Is issued by a customer to a supplier as a means of formally requesting a credit note Credit notes - Answer -A credit note is effectively a negative invoice Trade discount - Answer -Reduction in the amount of money payable by a customer( during the negotiations ) Cash discount - Answer -Optional reduction in the amount of money payable by a customer