Accy 130 Test 1 || A+ GRADED!!
What is a financial statement? correct answers Summarise and communicate financial
information to external users. The accounting system produces 4 major financial statement.
- The income statement
- The statement of changes in owners equity
- The balance sheet
- The cash flow statement
Income statement correct answers •Summarises the results of a business operating activities
for a specific time period
•Shows profit for that period
•Includes revenues, expenses and net income
Statement of changes in owners equity correct answers •Provides info about the amount
shown in the owners equity section of the balance sheet
•Includes beginning equity, net income, owner's contributions and withdrawals and the
ending equity.
Balance Sheet correct answers •Shows financial position of a business on a given date
•Also called statement of financial position
•Includes assets, liabilities and owners equity
Cash flow statement correct answers •Summarises cash receipts, cash payments and net
change in cash for a specific time period
•Includes cash flows from operating activities, cash flows from investing activities and cash
flows from financing activities.
Private/For Profit entities correct answers Any entity that is not a public benefit entity
Public benefit entity correct answers An entity where the primary objective is to provide
goods and services for community or social benefit and where equity has been provided to
support that objective rather than for a financial return.
3 most common forms of for profit businesses? correct answers 1. Companies
2. Sole trader
3. Partnerships
A business plan correct answers An evolving report that describes a business' goals and its
current plans for achieving those goals. It typically includes
1. A description of the business
2. A marketing plan
3. An operating plan
4. An environmental management plan
5. A financial plan
Description of the business correct answers may include information about
- The organisation of the business
- Its product or service
- Its current and potential customers
, - Its objectives
- Where it is located
- Where it conducts its business
- Important people and their major roles in the business
The marketing plan correct answers The Marketing plan may include information about:
- How the business will make sales
- How the business will influence and respond to market conditions
- Evidence of the demand for the business' products or services
- Any market research that has been conducted
The operating plan may include information about correct answers - relationships between
the business and its suppliers
- relationships between the business and its customers
- how the business will develop, service, protect and support its products or services.
The environmental management plan may include information about correct answers -
environmental impact of the business
- social impact of the business.
Environmental indicators cover performance related to:
- inputs such as material, energy, water
- outputs such as emissions and waste.
Triple Bottom Line Reporting
Not just financial performance, but social and environmental performance as well
The financial plan may include information about correct answers - capital requirements i.e.
resources (assets)
- sources of capital i.e. owners (OE) and lenders (liabilities)
- projected financial performance.
Short term capital correct answers Will be repaid within a year or less. It can come from two
sources; suppliers or financial institutions.
Long term capital correct answers Will be repaid to creditors or returned to investors after
more than a year.
Fixed costs correct answers Constant in total for a specific time period; they are not affected
by differences in volume during that same time period.
- Depicted by the horizontal straight line on a graph, but when there is a change in fixed
costs, it turns into a step graph.
Variable costs correct answers Cost per unit of volume and changes in total in a time period
in direct proportion to the change in volume.
- Variable costs are an increasing positive line
Total costs correct answers at any volume are the sum of the fixed costs and the variable
costs at that volume.
Profit calculation correct answers Net income (Profit) = Revenue - Expenses
What is a financial statement? correct answers Summarise and communicate financial
information to external users. The accounting system produces 4 major financial statement.
- The income statement
- The statement of changes in owners equity
- The balance sheet
- The cash flow statement
Income statement correct answers •Summarises the results of a business operating activities
for a specific time period
•Shows profit for that period
•Includes revenues, expenses and net income
Statement of changes in owners equity correct answers •Provides info about the amount
shown in the owners equity section of the balance sheet
•Includes beginning equity, net income, owner's contributions and withdrawals and the
ending equity.
Balance Sheet correct answers •Shows financial position of a business on a given date
•Also called statement of financial position
•Includes assets, liabilities and owners equity
Cash flow statement correct answers •Summarises cash receipts, cash payments and net
change in cash for a specific time period
•Includes cash flows from operating activities, cash flows from investing activities and cash
flows from financing activities.
Private/For Profit entities correct answers Any entity that is not a public benefit entity
Public benefit entity correct answers An entity where the primary objective is to provide
goods and services for community or social benefit and where equity has been provided to
support that objective rather than for a financial return.
3 most common forms of for profit businesses? correct answers 1. Companies
2. Sole trader
3. Partnerships
A business plan correct answers An evolving report that describes a business' goals and its
current plans for achieving those goals. It typically includes
1. A description of the business
2. A marketing plan
3. An operating plan
4. An environmental management plan
5. A financial plan
Description of the business correct answers may include information about
- The organisation of the business
- Its product or service
- Its current and potential customers
, - Its objectives
- Where it is located
- Where it conducts its business
- Important people and their major roles in the business
The marketing plan correct answers The Marketing plan may include information about:
- How the business will make sales
- How the business will influence and respond to market conditions
- Evidence of the demand for the business' products or services
- Any market research that has been conducted
The operating plan may include information about correct answers - relationships between
the business and its suppliers
- relationships between the business and its customers
- how the business will develop, service, protect and support its products or services.
The environmental management plan may include information about correct answers -
environmental impact of the business
- social impact of the business.
Environmental indicators cover performance related to:
- inputs such as material, energy, water
- outputs such as emissions and waste.
Triple Bottom Line Reporting
Not just financial performance, but social and environmental performance as well
The financial plan may include information about correct answers - capital requirements i.e.
resources (assets)
- sources of capital i.e. owners (OE) and lenders (liabilities)
- projected financial performance.
Short term capital correct answers Will be repaid within a year or less. It can come from two
sources; suppliers or financial institutions.
Long term capital correct answers Will be repaid to creditors or returned to investors after
more than a year.
Fixed costs correct answers Constant in total for a specific time period; they are not affected
by differences in volume during that same time period.
- Depicted by the horizontal straight line on a graph, but when there is a change in fixed
costs, it turns into a step graph.
Variable costs correct answers Cost per unit of volume and changes in total in a time period
in direct proportion to the change in volume.
- Variable costs are an increasing positive line
Total costs correct answers at any volume are the sum of the fixed costs and the variable
costs at that volume.
Profit calculation correct answers Net income (Profit) = Revenue - Expenses
