Term
| State one example of a current liability |
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Definition
| Bank overdraft, Creditors |
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Term
| State one example of a fixed asset |
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Definition
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Term
| Working Capital=__________________ |
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Definition
| current assets - current liabilities |
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Term
| What is a concept? and name one concept |
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Definition
rules which set down how the financial activity of a business is recorded.
Cosistency concept. |
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Term
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Definition
| Generally accepted methods by wich the rules are applied to given situation. |
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Term
| What is the straight line method of depreciation |
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Definition
Cost of asset
—————–———————-——
Number of expected years of use |
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Term
| What is the accounting equation? |
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Definition
For each transaction, the total debits equal the total credits.
Assets = Liabilities + Capital
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Term
| What is a trial balance used for? |
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Definition
| To state the ledger balances on a particular date |
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Term
| What is the prudence concept? |
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Definition
| Profit should never be overstated by ignoring losses,or that revenues should not be recorded before they have been earned. |
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Term
| What is meant by the business entity principle? |
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Definition
| The financial affairs of a business and it's owners are to be kept separate |
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Term
| What is the duality concept? |
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Definition
| Every transaction has two aspects- a giving and a receiving and must be recorded twice. |
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Term
| Which accounting principle states that a business will continue indefinitely? |
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Definition
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Term
Which one of these would be recorded in its accounting records?
a) the cost of property owned
b) the effect of new laws
d) the value of the managers skills |
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Definition
| a) the cost of property owned |
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Term
| What is an application of the consistency principle? |
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Definition
| Using the same method of stock valuation each year |
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Term
Revenue is recognized as being earned when ownership of goods passes to the customer.
which accounting principle is being described above? |
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Definition
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Term
| State the basis on which inventory (stock) should be valued at the end of the year |
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Definition
| Stock is valued at the lower of cost or net realisable value |
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Term
| Name two errors that do not effect the trial balance |
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Definition
Commission
Omission
Compensating
Complete reversal
Original entry
Principle |
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Term
| What is the error of omission |
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Definition
| When a transaction is completely omitted from the books |
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Term
| What is the error of commission |
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Definition
| When a transaction is entered using the correct amount and on the the correct side but in the wrong account of the same class |
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Term
| What is the error of principle |
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Definition
| When a transaction is entered using the correct amount and on the correct side but in the wrong class of account |
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Term
| What is the compensating error |
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Definition
| When two or more errors cancel out each other out. |
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Term
| What is error of original entry |
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Definition
| Where an incorrect figure is used when the transaction is first entered in the accounts |
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Term
| What is the complete reversal of entries |
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Definition
| When the correct amounts have been entered in the correct accounts but the entry has been made on the wrong side of each account |
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Term
| How do you calculate the Gross profit margin (percentage of selling price) |
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Definition
Gross profit x 100
————————
Selling price/Turnover/ Net sales |
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Term
| How do you calculate the rate of stock turnover |
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Definition
Cost of sales
———————
Average stock |
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Term
| How do you calculate Gross profit mark-up (percentage of cost price) |
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Definition
Gross profit x 100
————————
Cost of sales |
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Term
| What is limited company accounts? |
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Definition
| A legal entity which has a separate identity from its shareholder |
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Term
Name two types of limited company accounts
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Definition
Private limited company
Public limited company |
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Term
Finish this Sentence
Shareholders liability is ___a______. Shareholdersnare not responsible for the ___b______ of the company apart from their ___c_________ |
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Definition
a) limited
b) debt
c) investment |
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Term
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Definition
| Profit distributed to the members |
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Term
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Definition
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Term
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Definition
| Profit that has not beeen distributed (appropriated) |
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Term
| What are general reserves? |
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Definition
| Capital put back into the business |
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Term
JJ limited has a total company of 200, 000 shares at $2 each and decidedes to pay a dividend of 10%.
a) What is the total amount payable?
b) What is the amount per share? |
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Definition
a) 200000 x 2= 400000 x 10%= 40000
Ans: 40, 000
b) 40000/ 200000= 0.2 |
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