Introduction to Financial Accounting- Exam Questions and Answers Latest Update () Fully Solved

Introduction to Financial Accounting- Exam Questions and Answers Latest Update () Fully Solved Expenditure - Answers Spending for long-term business benefit, such as investing in assets or infrastructure that will generate future income or value. Owner's investment - Answers The amount of money invested by the owner in the business, which can be in the form of cash, equipment, or other assets. Capital - Answers The total amount of money invested in the business, including the owner's investment and loans from third parties. Financial accounting - Answers The process of recording, summarizing, and communicating financial information about a business to external users, such as investors, creditors, and regulators. Credit sales - Answers The sale of goods or services where payment is received at a later date, usually through an accounts receivable. Accounts payable - Answers The amounts owed by a business to its suppliers or creditors for goods or services purchased on credit, which are expected to be paid within a year. Cash purchases - Answers The purchases made by a business with immediate cash payment, usually for goods or services that are needed immediately. Direct costs - Answers The costs that can be directly attributed to a specific product or service, such as raw materials or direct labor. Dividends - Answers The payments made to the shareholders of a company as a reward for their investment in the business. Current assets - Answers The assets held by a business that are expected to be converted into cash or used up within one year, such as cash, accounts receivable, and inventory. Shareholders' equity - Answers The total value of a company's assets minus its liabilities, representing the ownership interest of the shareholders. Financial reporting - Answers The process of providing financial information to external users, such as financial statements, to help them make informed decisions about the business. Gross profit - Answers The difference between the sales revenues and the cost of goods sold, representing the profit earned from the core operations of the business. Assets - Answers The resources owned by a business that have economic value and are expected to generate future benefits, such as cash, inventory, and property. Double-entry - Answers The method of recording financial transactions that requires two entries, a debit and a credit, to maintain the balance of the accounting equation. Indirect costs - Answers The costs that are not directly associated with a specific product or service, such as rent, utilities, and administrative expenses. Fixed costs - Answers The costs that remain the same regardless of the level of output or sales, such as rent, salaries, and insurance. Intangible assets - Answers The assets that do not have physical substance but still have value, such as patents, trademarks, and goodwill. Inventory - Answers The goods held by a business for resale, including raw materials, work-in-progress, and finished goods. Liquidity - Answers The ability of a business to meet its short-term obligations and convert its assets into cash quickly without significant loss of value. Net profit - Answers The profit earned by a business after deducting all expenses, including operating expenses, interest, and taxes. Opportunity cost - Answers The cost of forgoing the next best alternative when making a decision, representing the value of the benefits that could have been obtained from that alternative.