Principles of Accounts

What is the purpose of internal controls?

• Ensures cash is well protected and accurately reported

• To comply with laws and regulations

• To safeguard assets of business

• To prevent information leaking

What is the purpose of bank reconciliation?

• To identify and correct any errors made in cash at bank account and statement

• To safeguard assets of business

• To identify and explain for timing differences between cash at bank account and statement

• To prevent information leaking

What are some internal controls over cash?

• Identifying and correcting any errors made

• Custody of cash

• Detering against fraud

• Segregation of duties

What are some of non accounting information?

• Types of storage

• Nature of products

• Credible, timely, relevant information

• Customers preferences

Reasons why cheques are rejected by banks / dishonoured cheques

• Information on cheque is inconsistent and incomplete

• Debit was not in transit

• Cheque is post dated

• Cheque had expired

What accounting theory is this?

"once an accounting method is chosen, this method will be applied to all future accounting periods to enable meaningful comparisons."

• monetary

• prudence

• consistency

• materiality

What accounting theory is this?

"life of a business is divided into regular time intervals"

• accounting entity

• accounting period

• going concern

• matching

What accounting theory is this?

"expenses incurred must be matched against income earned in the same period to determine profit for that period"

• materiality

• matching

• prudence

• accrual basis of accounting

What accounting theory is this?

"accounting treatment chosen should be the one that least overstates profits and assets and least understates losses and liabilities"

• matching

• historical cost

• accrual basis of accounting

• prudence

what accounting theory is this?

"the activities of a business are separate from the actions of the owner. all transactions are recorded from POV of business."

• accounting entity

• going concern

• accounting period

• historical cost