Accounting Principles and Concepts

Front

What is the purpose of Accounting?

Back

To provide business owners with financial information that assists in decision-making.

Front

Define ‘non-financial information’.

Back

Information that cannot be found in financial statements and is not expressed in dollars.

Front

Give two examples of non-financial information.

Back

1. Number of website hits
2. Number of customer complaints

Front

Why is non-financial information important to decision-making?

Back

It provides a complete picture of the firm’s circumstances when considered alongside financial information.

Front

Define ‘ethical considerations’ in business decision-making.

Back

Decisions influenced by social and environmental considerations, requiring integrity and objectivity.

Front

Why are ethical considerations important in business decision-making?

Back

Financial decisions have non-financial consequences affecting society and the environment.

Front

What is the difference between ‘financial data’ and ‘financial information’?

Back

Financial data are raw facts; financial information is sorted and summarized data.

Front

List the three Accounting reports and their purposes.

Back

1. Cash Flow Statement – reports cash inflows and outflows.
2. Income Statement – reports profit from trading activities.
3. Balance Sheet – reports assets and liabilities at a point in time.

Front

Define the Entity assumption.

Back

Records of the entity are kept separate from those of the owner and other entities.

Front

Define the Going Concern assumption.

Back

The business will continue to operate in the future.