BSNS 115 EXAM QUESTIONS AND ANSWERS WITH
COMPLETE SOLUTIONS VERIFIED LATEST UPDATE
Limitations of accounting information
- Time lag of information
- Subjectivity of information
- Cost of providing information
- Historical data
Differences in management and financial accounting
- Accounting rules
- Timeliness
- Level of detail
- Range of users
Management accounting
Is about the internal reporting prepared for managers to plan and make decisions about
the business
Financial accounting
Is about the recording of business transactions and preparation of the financial
statements
Cash accounting
A transaction is only recorded when cash is exchanged, regardless of when the event
occurred
, Accrual accounting
A transaction is recorded when it occurs, and reported in the period to which it relates
Unlimited liability
The owners of the business are fully liable for the actions of the business. This means
that the owners are personally responsible for business debt and their personal assets
are at risk if the business cannot meet their obligations
Limited liability
The owners are not personally liable for the debts of the business if the business is
unable to meet its obligations. This means the owner's personal assets are not at risk -
their liability is limited to the value of their investment
The accounting equation:
Assets = liabilities + equity
Income statement definition
Summarises an entity's income and expenses and all changes in equity, other than new
ownership investments and drawings, for a specific period of time
Statement of changes in owner's equity definition
Shows the changes in owner's equity during a specific time period
Balance sheet
Lists the owner's assets, liabilities and owner's equity during a specific time period
Cash flow statement
Details and inflows and outflows of cash for the accounting period
Costs of goods sold
COMPLETE SOLUTIONS VERIFIED LATEST UPDATE
Limitations of accounting information
- Time lag of information
- Subjectivity of information
- Cost of providing information
- Historical data
Differences in management and financial accounting
- Accounting rules
- Timeliness
- Level of detail
- Range of users
Management accounting
Is about the internal reporting prepared for managers to plan and make decisions about
the business
Financial accounting
Is about the recording of business transactions and preparation of the financial
statements
Cash accounting
A transaction is only recorded when cash is exchanged, regardless of when the event
occurred
, Accrual accounting
A transaction is recorded when it occurs, and reported in the period to which it relates
Unlimited liability
The owners of the business are fully liable for the actions of the business. This means
that the owners are personally responsible for business debt and their personal assets
are at risk if the business cannot meet their obligations
Limited liability
The owners are not personally liable for the debts of the business if the business is
unable to meet its obligations. This means the owner's personal assets are not at risk -
their liability is limited to the value of their investment
The accounting equation:
Assets = liabilities + equity
Income statement definition
Summarises an entity's income and expenses and all changes in equity, other than new
ownership investments and drawings, for a specific period of time
Statement of changes in owner's equity definition
Shows the changes in owner's equity during a specific time period
Balance sheet
Lists the owner's assets, liabilities and owner's equity during a specific time period
Cash flow statement
Details and inflows and outflows of cash for the accounting period
Costs of goods sold
