FINANCIAL ACCOUNTING EXAM
QUESTIONS AND THEIR REVIEWED
SOLUTIONS
What is accounting?
The process of identifying, measuring and communicating
financial information about a business entity
i think that the sales ledger control account is a little
like the recievables account?
it shows how much is owed overall over time. it changes
as the grouped amounts from the day books such as sales
or payment changes it.
I need to mainly revise the cash flow statement
yes you do
What goes into the cost of a non current asset?
What does not?
Purchase price
Delivery costs
Installation costs
Professional costs
Subsequent capital investment (if improvement)
Administration costs
Staff training costs
General overhead costs
Maintenance and repairs costs
What is ISSB?
,International sustainability standards board. IFRS
framework so that there is consistency in disclosure
surrounding environmental impact.
What is an income statement?
What is its signature?
Shows financial performance over a period of time
summarises all income and expenditure over a period of
time
ENDING ...
Why is a sole trader still seen as a separate business
entity?
Understand how business is operating in this own right
Sake of government
Customers
Finance providers
What is a balance sheet?
Signature?
Also known as a statement of financial position
Shows a snapshot of assets, liabilities and capital at a
single moment
AS AT ...
Accounting formula?
Assets = liabilities + capital
What is an asset?
A liability?
Capital?
Resources owned/ controlled by the business to give
future economic benefit
What the business owes
, Investment by the owner (retained profit is seen as an
investment i believe)
Explain the accounting equation.
Assets are the resources owned by the business and
capital and liabilities are how they were paid for
What is the difference between revenue and capital
expenditure?
Revenue expenditure is where the benefits are only seen
or matched with a period whereas capital expenditure is
on objects that are used in the current and future periods
Capital E in statement of financial position and revenue E
in income statement
What is net assets?
Assets - liabilities
Same as capital
How much the business is worth to owners
Double entry bookeeping- what goes on credit, what
goes on debit?
Debit is assets
Credit is capital and liabilities
What happens when a business goes into overdraft?
Debit and credit stay the same but the bank account is
listed under liabilities instead
What are the two functions of financial accounting?
1. Design and operation of an information system for
collecting, measuring and recording an enterprises
transactions (Book keeping)
2. Summarising and communicating the results of these
transactions to users to facilitate making financial/
economic decisions
What is the difference between revenue and income?
QUESTIONS AND THEIR REVIEWED
SOLUTIONS
What is accounting?
The process of identifying, measuring and communicating
financial information about a business entity
i think that the sales ledger control account is a little
like the recievables account?
it shows how much is owed overall over time. it changes
as the grouped amounts from the day books such as sales
or payment changes it.
I need to mainly revise the cash flow statement
yes you do
What goes into the cost of a non current asset?
What does not?
Purchase price
Delivery costs
Installation costs
Professional costs
Subsequent capital investment (if improvement)
Administration costs
Staff training costs
General overhead costs
Maintenance and repairs costs
What is ISSB?
,International sustainability standards board. IFRS
framework so that there is consistency in disclosure
surrounding environmental impact.
What is an income statement?
What is its signature?
Shows financial performance over a period of time
summarises all income and expenditure over a period of
time
ENDING ...
Why is a sole trader still seen as a separate business
entity?
Understand how business is operating in this own right
Sake of government
Customers
Finance providers
What is a balance sheet?
Signature?
Also known as a statement of financial position
Shows a snapshot of assets, liabilities and capital at a
single moment
AS AT ...
Accounting formula?
Assets = liabilities + capital
What is an asset?
A liability?
Capital?
Resources owned/ controlled by the business to give
future economic benefit
What the business owes
, Investment by the owner (retained profit is seen as an
investment i believe)
Explain the accounting equation.
Assets are the resources owned by the business and
capital and liabilities are how they were paid for
What is the difference between revenue and capital
expenditure?
Revenue expenditure is where the benefits are only seen
or matched with a period whereas capital expenditure is
on objects that are used in the current and future periods
Capital E in statement of financial position and revenue E
in income statement
What is net assets?
Assets - liabilities
Same as capital
How much the business is worth to owners
Double entry bookeeping- what goes on credit, what
goes on debit?
Debit is assets
Credit is capital and liabilities
What happens when a business goes into overdraft?
Debit and credit stay the same but the bank account is
listed under liabilities instead
What are the two functions of financial accounting?
1. Design and operation of an information system for
collecting, measuring and recording an enterprises
transactions (Book keeping)
2. Summarising and communicating the results of these
transactions to users to facilitate making financial/
economic decisions
What is the difference between revenue and income?
