Financial Accounting Quiz - Key terms 2

What is the term for income that has been earned but the money has not yet been received?

• Authorised share capital

• Accrued income

• Capital income

• Prepaid income

What is the maximum amount of share issue that a company has agreed can be issued?

• Bonus issue

• Rights issue

• Authorised share capital

• Capital reserves

What is the term for issuing additional shares to existing shareholders at no cost?

• Rights issue

• Bonus issue

• Authorised share capital

• Capital expenditure

What concept states that transactions recorded in an organisation’s accounts can only relate to that organisation?

• Materiality

• Business entity

• Consistency

• Accruals

What term refers expenditure on the purchase of non-current assets, including costs involved in buying and improving the non-current asset?

• Capital expenditure

• Capital income

• Revenue expenditure

• Revenue income

What is the accounting ratio that assesses the proportion of finance that comes from borrowed sources?

• Return on capital employed

• Current ratio

• Capital gearing

• Liquid capital ratio

What is income from sources other than regular day-to-day operations called?

• Accrued revenues

• Capital income

• Revenue income

• Bonus issue

What is a discount given to customers to encourage early payment of amounts owed called?

• Cash discounts

• Capital income

• Trade discount

• Bonus issue

What does the concept of Consistency in accounting state?

• Assets should be recorded at their cost valuation.

• The same accounting policies should be used in each accounting year unless there is a valid reason for change.

• For every transaction, there must be an equal debit and credit entry.

• Accounting records should be prepared on the assumption that the business will continue to trade for the foreseeable future.

What does the concept of Cost in accounting state?

• Assets should be recorded at their cost valuation.

• The same accounting policies should be used in each accounting year unless there is a valid reason for change.

• For every transaction, there must be an equal debit and credit entry.

• Accounting records should be prepared on the assumption that the business will continue to trade for the foreseeable future.