Flashcards
Basic Bookkeeping
Flashcards do conjunto (43)
- 1Explain what is meant by 'separate entity' in accountingThe business is separate to its owners when accounting, even if this is not the legal position
- 2Define a Limited CompanyOwners' liability is limited to their investment in the company
- 3True or false - if a Limited company goes into liquidation, only the investment that the owners have made will be affectedTRUE
- 4What happens to the belongings of an owner of a Limited company if the company goes into liquidation?Owners will maintain possession of their belongings
- 5Who is liable for the company debts in a sole trader business or a partnership?The owners
- 6What is the Accounting Equation?Assets - Liabilities = Capital
- 7Define 'assets' in accountingSomething a business can sell/has use of, and inventory
- 8What are non-current assets?Assets that are typically held by the company for at least 1year
- 9Name 5 examples of non-current assetsLand, Buildings, Plant, Machinery, Furniture & Fittings
- 10Define 'current assets'Property of the business that is expected to be used or exhausted within the fiscal year
- 11Name 3 examples of current assetsMoney in the bank, receivables, inventory
- 12Define 'liabilities' in accountingSomething a business owes
- 13Define 'non-current liabilities'Business debts that are not expected to be paid off within the fiscal year
- 14Name 2 examples of non-current liabilitiesMortgage, bank loan
- 15Define 'current liabilities'Business debts that are expected to be paid off within the fiscal year
- 16Name 3 examples of current liabilitiesBank overdraft, trade/sundry payables, creditors
- 17Define 'capital' in accountingAmount owed to the business owner as a separate entity. Also known as 'equity'
- 18What is the equation for business capital?Capital = initial investment + income - expenses - drawings
- 19What is the 'dual effect'?Every transdaction has two effects in accounting - a debit and a credit
- 20Define 'income' in accountingMoney the business gets from the sale of goods/services
- 21Define 'expenses' in accountingPurchases and over day to day overheads. This does not include inventory.
- 22What are the main three ledgers?General, Receivables and Payables
- 23Wbat is the general ledger used for?This is where double entries are recorded
- 24What is the receivable ledger used for?Receivables is a collection of accounts relating to individual customers and is made up of single entries. It can be used to show what customers owe and have paid
- 25What is the payable ledger for?Payable ledger is made up of suppliers who have an account and consists of single entries.
- 26What are the 5 categories of T-accounts?Assets, Expenditure, Income, Liabilities and Capital
- 27True or false - the debit and credit side of a T-account does not have to equal.False - the debit and credit sides must equal each other.
- 28What does DEADCLIC stand for?Debit - Expenses, Assets, Drawings. Credit - Liabilities, Income, Capital
- 29On which side of a T-account are sales posted to?Credit side.
- 30What are two problems with T-accounts?You can't tell if a profit has been made, and you also cannot tell how much the business owns.
- 31What are two solutions to the problems with T-accounts?Prepare a statement of Profit & Loss and prepare a statement of Financial Position
- 32What is a 'trial balance'?A list of all T-accounts on the general ledger with balances transferred as debits or credits.
- 33What is the equation for net profit?Gross Profit - Everyday Expenses = Net Profit
- 34What is the equation for gross profit?Sales - Cost of Sales = Gross Profit
- 35What is the equation for calculating whether the business has made a profit or a loss?Total Expenditure - Total Income
- 36What is the equation for cost of sales?Opening Inventory + Purchases of Inventory - Closing Inventory
- 37What is analysed on the top half of a statement of financial position?Net Assets
- 38How do you calculate net assets for a statement of financial position?(Total N/C assets + total current assets) - (total N/C liabilities + total current liabilities)
- 39What type of entry are assets on a statement of financial position?Credit side.
- 40What can we tell from the bottom half of a statement of financial position?How the business is financed
- 41What is the equation for Net Assets on the bottom half of a statement of financial position?Capital + Profit (from P&L) - Drawings = Net Assets
- 42On a statement of financial position, does it matter if the net assets do not match on the bottom and top halves?Yes, the net assets should be equal on the top and bottom half of a statement of financial position
- 43Equation for Owner's FundsNet Assets = Owner's Funds
Informações
- Descrição
- AAT Accounting FlashCards sobre Basic Bookkeeping, criado por Rosie Southouse em 30-07-2024.
- Criado por
- Rosie Southouse
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