Accounting Cycle and users

What is the purpose of a source document in accounting?

• To record how we feel

• To provide proof of a business transaction

• To calculate profit and loss

• To summarize financial statements

What is the purpose of a source document in accounting?

• To record how we feel

• To provide proof of a business transaction

• To calculate profit and loss

• To summarize financial statements

What is the function of a general ledger in accounting?

• To record daily events

• To calculate the % profit of the business

• To post transactions from subsidiary journals

• To determine job security for employees

What is the formula for calculating profit in the income statement?

• Profit = Expenses - Income

• Profit = Income - Expenses

• Profit = Income * Expenses

• Profit = Income + Expenses

Who uses financial information to determine if a business is making a profit or loss?

• Creditors

• Financial institutions

• Employees

• Owner of the business

What is the role of the South African Revenue Service (SARS) in relation to financial statements?

• To provide proof of business transactions

• To compare financial results with other businesses

• To ensure income tax is levied correctly

• To determine job security for employees

What do creditors determine from financial statements?

• If the business has enough money to settle current liabilities

• If the business will be a good investment

• If the business is profitable for job security

• If the business has enough assets to meet current liabilities

What is the purpose of a trial balance in accounting?

• To record daily events

• To ensure a double entry was recorded for each transaction

• To calculate the % profit of the business

• To determine job security for employees

What is the significance of the balance sheet in accounting?

• To provide proof of business transactions

• To compare financial results with other businesses

• To show the financial position of a business at a specific point in time

• To determine job security for employees

The book of first entry for the business

• General Ledger

• Income Statement

• Subsidiary Journal

• Source document