WorksheetsPrinciples of Accounts
Total questions: 35
Worksheet time: 2hrs 47mins
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
What accounting theory is this?
"transactions should be recorded at OG cost"
objectivity
monetary
historical cost
prudence
Which one of these are considered "capital expenditure?"
Buying equipment
replacement of engine that will extend useful life
servicing
maintainence
What is the role of accounting?
What is the role of accountants?
What are TWO professional ethics? (ELABORATE)
Name 3 stakeholders and their roles.
What is a cash vs credit transaction?
What is the accounting equation?
Assets + liabilities = Equity
Assets= Liabilities + equity
Assets= equity - liabilities
Liabilities = assets + equity
Define expense
Define liabilities
What is the purpose of trade discounts?
To earn more income.
To encourage customers to buy in bulk
For loyalty and their patronage.
To gain more traction.
What is the source document when a business overcharges a credit customer?
invoice
credit note
debit note
receipt
What source document is given when a business undercharges a credit customer?
receipt
debit note
credit note
payment voucher
Valuation rule of inventory states that Inventory is valued at ____ or ___ __________ _____, whichever is lower.
(a)
What is FIFO method?
What is a trial balance?
What are two purposes of trial balances?
To facilitate preparation of financial statements
To deter against fraud that may arise
To ensure arithmetic accuracy in recording
To ensure all balances end the same.
Going concern theory states that a business is assumed to have an __________ ________ ____ unless there is ________ evidence that it may close down.
(a)
Non current liabilities are dued to be paid beyond one financial year
True
False
Current liabilities are dued to be paid within one financial year
true
false
What happens when you wrongly classify capital expenditure as revenue expenditure?
All expenses, non current assets and profit will understate
Expenses will understate, non current assets and profit will overstate
Expenses will overstate, non current assets and profit will understate
All expenses, non current assets and profit will overstate
What happens when you wrongly classify revenue expenditure as capital expenditure?
Expenses will understate, profit and non current assets will overstate
All expenses, non current assets and profit will understate
Expenses will overstate, profit and non current assets will understate
All expenses, non current assets and profit will overstate
What are the causes of depreciation?
usage
obsolescence
wear and tear
legal limit
Accrual basis of accounting states that business activities that have occurred, regardless if ____ is ____ or ________, should be recorded in relevant __________ ______.
(a)
Explain two differences between capital and revenue expenditure.
