accounting and finance mct
what is accounting? correct answers the language of business:
-identification
-recording
-communication
-analyse and interpret
types of accounting systems correct answers Financial accounting-published financial
statements and other reports (external)
Managerial accounting- information for decision making and control of an organisation
operations (internal)
main elements in accounting correct answers -assets
-liability
-equity
-income
-expenses
what is assets? correct answers -resources a businesses owns or controls
-provides future benefits
what is liability? correct answers -obligation to transfer economic benefits as a result of
past events
-money owed
what is equity? correct answers -residual interest in the assets of an entity that remains
after deducting its liabilities
-eg share capital
what is business entity? correct answers the business is separate from its owners
what is historical cost? correct answers transactions are recorded at the cost when they
occurred (cost when bought)
What is going concern? correct answers when preparing expect the firm is continuing in
the future
what is accruals? correct answers revenue and cost must be recognised when they are
earned not when received
, what is consistency? correct answers the presentation and classification must stay the
same from one period to the next
what is materially? correct answers should represent information ethically, relevant and
correct as could influence economic decisions
what are the 4 components of a financial statement? correct answers 1.financial
position
2.profit and loss and other incomes
3.changes in equity
4.cash flows
what is fundamental as a qualitative characteristic? correct answers -relevance to
stakeholders
-faithful representation
what is enhancing qualitative characteristics? correct answers -comparability
-verifiability
-understandability
-timeliness
what is the basic accounting equation? correct answers Assets = Liabilities + Equity
what is the statement of financial position? correct answers -provides a snapshot of the
financial condition of the financial position for a year to determine if it's weak or strong
what is equity equation? correct answers shareholders capital + retained earnings
what is retained earnings equation? correct answers revenues- expenses- dividends
what is monetary unit? correct answers include in accounting records, only transactions
data can be expressed in terms of money
what is economic entity? correct answers requires the activities of the entity to be kept
separate from the activities of the owners and other economic entities
what is the purpose of the income statement? correct answers -reports profitability of
operations over a specific period of time
-shows net profit or loss
Profit Equation correct answers total revenue - total expenses
how is profit and loss statement useful? correct answers -shows performance over
period and can be compared to others
-provides basis for predicting the future
-helps assess risk of future cash flow
what is accounting? correct answers the language of business:
-identification
-recording
-communication
-analyse and interpret
types of accounting systems correct answers Financial accounting-published financial
statements and other reports (external)
Managerial accounting- information for decision making and control of an organisation
operations (internal)
main elements in accounting correct answers -assets
-liability
-equity
-income
-expenses
what is assets? correct answers -resources a businesses owns or controls
-provides future benefits
what is liability? correct answers -obligation to transfer economic benefits as a result of
past events
-money owed
what is equity? correct answers -residual interest in the assets of an entity that remains
after deducting its liabilities
-eg share capital
what is business entity? correct answers the business is separate from its owners
what is historical cost? correct answers transactions are recorded at the cost when they
occurred (cost when bought)
What is going concern? correct answers when preparing expect the firm is continuing in
the future
what is accruals? correct answers revenue and cost must be recognised when they are
earned not when received
, what is consistency? correct answers the presentation and classification must stay the
same from one period to the next
what is materially? correct answers should represent information ethically, relevant and
correct as could influence economic decisions
what are the 4 components of a financial statement? correct answers 1.financial
position
2.profit and loss and other incomes
3.changes in equity
4.cash flows
what is fundamental as a qualitative characteristic? correct answers -relevance to
stakeholders
-faithful representation
what is enhancing qualitative characteristics? correct answers -comparability
-verifiability
-understandability
-timeliness
what is the basic accounting equation? correct answers Assets = Liabilities + Equity
what is the statement of financial position? correct answers -provides a snapshot of the
financial condition of the financial position for a year to determine if it's weak or strong
what is equity equation? correct answers shareholders capital + retained earnings
what is retained earnings equation? correct answers revenues- expenses- dividends
what is monetary unit? correct answers include in accounting records, only transactions
data can be expressed in terms of money
what is economic entity? correct answers requires the activities of the entity to be kept
separate from the activities of the owners and other economic entities
what is the purpose of the income statement? correct answers -reports profitability of
operations over a specific period of time
-shows net profit or loss
Profit Equation correct answers total revenue - total expenses
how is profit and loss statement useful? correct answers -shows performance over
period and can be compared to others
-provides basis for predicting the future
-helps assess risk of future cash flow
