Flashcards
Accounting _1
Cards in this deck (51)
- 1The purpose of the Statement of Financial position (balance sheet)To measure the business's assets, liabilities and owner's equity at a point in time.
- 2Current assetsAssets which can will be turned into cash in or used in the next accounting period.
- 3Non - current assetsAssets which will be retained in the business beyond the end of the next accounting period.
- 4Current liabilitiesLiabilities which the business expects to repay within the accounting period or have an obligation to provide goods and services for which customers have already paid.
- 5Non - current LiabilitiesLiabilities which will be paid over a period of time beyond the next accounting period.
- 6Owner's equity- capital (opening/closing)
- net profit/loss
- drawings - 7characteristics of an assetAssets are resources controlled by the entity as a result of past events and from which future economic benefits are expected to flow to the entity. ( past, present, future.)
- 8characteristics of a liabilityA liability is a present obligation of the entity arising from past events, the settlement of which is excepted to result in an outflow from the entity of resources embodying economic benefits. ( past, present, future.)
- 9Characteristics of incomeIncome is increases in economic benefits in the form of inflows or enhancements of assets or decreases in liabilities that result in increases in equity, other than owners contribution.
- 10Characteristics of expensesExpenses are decreases in economic benefits in the form of outflows or depletion's of assets or increases of liabilities that result in decreases in equity, other than drawing.
- 11Accounting equationassets = liabilities + equity
- 12Accounting equation (expanded)assets + expenses = liabilities + equity + income
- 13EquityEquity is the residual value of assets less liabilities, ( E=A-L ) it is the owners share of the business.
- 14Net Profit or lossNet Profit or loss is calculated by income - expenses. ( NP = I - Ex )
- 15Capital expenditureCreates an asset, future economic benefit, longer than 1 accounting period. (e.g. transportation/installation costs )
- 16Revenue expenditureExpenses from running the business not creating an asset, short term - within one accounting period. (e.g. repairs, electricity)
- 17DepreciationDepreciation is the systematic allocation of the depreciate amount of an asset over its useful life. ( Property, Plant, Equipment)
Note : land is not depreciated because of scarcity. - 18Definition of accountingAccounting is about communicating information to users so they can make informed decisions.
- 19Definition of cash budgetsPredict the movements of cash received and paid for over a period of time.
- 20Purpose of cash budgetsTo show the expected receipts(sources) and payments (uses) of cash during the period and suggest the expected bank balance end of the period.
- 21Components of cash budgets- estimated receipts
- estimated payments
- surplus / deficit of cash
- opening bank balance
- closing bank balance - 22Purpose of Statement of Accounting PoliciesTo inform the users of financial statements which policies and concepts were used in the preparation of the financial statements and aid users in understanding those financial statements.
- 23Components of Statement of Accounting Policies.- Description of business
- Measurement base used
- Policies (and changes in policies ) used when preparing the statements. - 24Statement of cash flowsShows movement of cash and change in bank account.
- 25Example of Statement of Accounting Policies1. These financial statements are prepared for Quick Smart Consultancy a sole proprietor business consultancy firm providing advice to business.
2. The measurement base used is historical cost.
3. Property, Plant, and Equipment are initially stated - 26hhh
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- 34bmnbmnbmnbCalculates profit for a period of time.
- 35Accountants - Financial Accounting (or Chartered Accounting)Analysing and interpreting the financial information, to assist in financial decision making.
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Information
- Description
- AS 90976 - demonstrate understanding of accounting concepts for small entities.
- Created by
- Hanel Blom
- Views
- 4
- History
-
- Created by Hanel Blom · Aug 22, 2015
- Copied by Hanel Blom · Aug 22, 2015
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