Accounting recap

What are the principles behind the accounting standards?

• Reliability

• Going concern

• Comparability

• Equality

---------- -------- are the "proper" way of recording and presenting accounting transactions.

Why might a business need to retain proof of transactions?

Answer explanation

Proof needs to retained as a legal requirement, tax purposes, in the event of returns and accounts preparation.

What does sale on credit mean?

• Goods are sold but payment is not yet received

• A credit card is sold

• Goods are sold

• Payment for goods sold is made by credit card

The consistency concept means that

• businesses must be consistent in paying creditors

• the accounting formats must be consistent

• the accounting treatment must be consistent

refers to when an expense or income is paid in advance

refers to when an income or expense has not been paid or received during the financial period

Which type of accounting produces statements used by investors?

Answer explanation

Financial Accounting

If revenue is £53,000 and gross profit is £27,000, how much is cost of sales?

• £27,000

• £26,000

• £80,000

• £53,000

Choose the correct layout for the SOFP

• Equity, NCL, CL

• NCL, CL, Equity

• CL, NCL, Equity

• NCL, Equity, CL