Year 11 VCE Accounting
Explain the role of Accounting - answer To provide advice to business owners with
financial information that will assist them in making formed decisions about the activities
of their firm.
Distinguish financial data and financial information - answer Financial data refers to the
raw facts and figures on which finical information is based. Most business contain data
from source documents such as receipts, cheque butts, invoices, memorandums and
bank statements. Once this financial information is sorted, classified and summarised, it
becomes financial information that is used for decisions for the business.
Identify and Explain the stages in the Accounting process - answer Source Documents
such as receipts, cheque butts, invoices etc -> Records -> Reports -> Advice such as
appropriate decision making.
State the various forms of source documents - answerReceipts, Cheque Butts, Invoices,
Credit Notes, Memos
Identify and Explain the four Accounting assumptions and explain their relationship to
each other. - answerThe Accounting entity assumption states that from an Accounting
perspective, the
business is separate from the owner and other entities, and its records should be kept
on this basis.
The Going concern assumption assumes that the business will continue to operate
in the future, and its records are kept on that basis.
The Period assumption states that reports are prepared for a particular period of time,
such as a month or a year, in order to obtain comparability of results.
The Accrual basis assumption will calculate profit by subtracting expenses incurred from
revenues earned in a particular reporting period. Revenue is recognised as earned
when
the expected inflow of economic benefit can be measured in a faithful and verified way.
Identify and Explain the six Qualitative characteristics and explain their relationship to
each other - answerRelevance states that financial information must be capable of
making a difference in
the decisions made by users of the report.
Faithful representation states that the financial information reported is a faithful
representation of the real-world economic event it claims to represent.
,Comparability states that useful information can be provided when the financial reports
of a business can be compared over time and compared with similar information of
other
businesses.
Verifiability helps to assure users that the information presented faithfully represents
what it claims to exemplify.
Timeliness states that stakeholders must have financial information available in time
that is able to impact their decision-making.
Understandability states that financial information should be comprehended by users
that have a reasonable understanding of business and economic undertakings.
Identify ethical considerations - answerIncludes the social and environmental
consequences of a financial decision.
Define Accounting - answerReferred to as the collecting and recording of financial data
to produce and report financial information to assist business owners in decision making
Define Financial information - answerRefers to the financial data which has been sorted,
classified and summarised into a more usable and understandable form
Define non-financial information - answerRefers to any information that cannot be found
in the financial statements and is not expressed in dollars and cents, or reliant on
dollars and cents for its calculation
Define ethical considerations - answerRefers to the social and environmental
consequences of a financial decision
Define transaction - answerRefers to an exchange of goods or services with another
party for payment
Define source documents - answerRefers to the documents that provide both the
evidence that a transaction has occurred and the details of the transaction itself
Define recording - answerRefers to the sorting, classifying and summarising the
information contained in the source documents so that it is more useable
Define reporting - answerRefers to the preparation of financial statements that
communicate financial information to the owner
Define advice - answerRefers to the provision to the owner of a range of options
appropriate to their aims/objectives and recommendations as to their suitability
, Define accounting assumptions - answerRefers to the generally accepted rules which
govern the way accounting information is recorded
Define accounting entity assumption - answerRefers to the assumption that the records
of assets, liabilities and business activities of the entity are kept completely seperate
from those of the owner of the entity as well as from those of other entities
Define going concern assumption - answerRefers to the business will continue to
operate in the future and its records are kept on that basis
Define period assumption - answerRefers to the assumption that records are prepared
for a particular period of time such as monthly or yearly in order to obtain comparability
of results.
Define accrual basis assumption - answerRefers to the assumption that the elements of
the reports are recognised when they satisfy the definitions and recognition criteria
meaning profit is calculated as revenue earned in a particular period less expenses
incurred in that same period
Define qualitative characteristics - answerRefers to the qualities of the information in
Accounting reports
Define relevance - answerFinancial information must be capable of making a difference
to the decisions made by users by helping them to form predictions and or confirm or
change their previous evaluations
Define Faithful Representation - answerRefers to the financial information reported is a
faithful representation the real world economic event it claims to represent complete,
free from material error and neutral (without any bias)
Define comparability - answerRefers to the useful information can be provided when the
financial reports of a business are compared over time and compared with similar
information of other businesses
Define verifability - answerEnsuring that different knowledgeable and independent
observations can reach the same conclusions that a particular representation of an
event is faithfully represented
Define timeliness - answerRefers to the financial information should be available to
decision makers in time be capable of influencing their decisions
Define understandability - answerRefers to the financial information should be
understandable to users with a reasonable knowledge of a business and economic
activities and present clearly and concisely
Define Cost Price - answerThe original purchase price of
Explain the role of Accounting - answer To provide advice to business owners with
financial information that will assist them in making formed decisions about the activities
of their firm.
Distinguish financial data and financial information - answer Financial data refers to the
raw facts and figures on which finical information is based. Most business contain data
from source documents such as receipts, cheque butts, invoices, memorandums and
bank statements. Once this financial information is sorted, classified and summarised, it
becomes financial information that is used for decisions for the business.
Identify and Explain the stages in the Accounting process - answer Source Documents
such as receipts, cheque butts, invoices etc -> Records -> Reports -> Advice such as
appropriate decision making.
State the various forms of source documents - answerReceipts, Cheque Butts, Invoices,
Credit Notes, Memos
Identify and Explain the four Accounting assumptions and explain their relationship to
each other. - answerThe Accounting entity assumption states that from an Accounting
perspective, the
business is separate from the owner and other entities, and its records should be kept
on this basis.
The Going concern assumption assumes that the business will continue to operate
in the future, and its records are kept on that basis.
The Period assumption states that reports are prepared for a particular period of time,
such as a month or a year, in order to obtain comparability of results.
The Accrual basis assumption will calculate profit by subtracting expenses incurred from
revenues earned in a particular reporting period. Revenue is recognised as earned
when
the expected inflow of economic benefit can be measured in a faithful and verified way.
Identify and Explain the six Qualitative characteristics and explain their relationship to
each other - answerRelevance states that financial information must be capable of
making a difference in
the decisions made by users of the report.
Faithful representation states that the financial information reported is a faithful
representation of the real-world economic event it claims to represent.
,Comparability states that useful information can be provided when the financial reports
of a business can be compared over time and compared with similar information of
other
businesses.
Verifiability helps to assure users that the information presented faithfully represents
what it claims to exemplify.
Timeliness states that stakeholders must have financial information available in time
that is able to impact their decision-making.
Understandability states that financial information should be comprehended by users
that have a reasonable understanding of business and economic undertakings.
Identify ethical considerations - answerIncludes the social and environmental
consequences of a financial decision.
Define Accounting - answerReferred to as the collecting and recording of financial data
to produce and report financial information to assist business owners in decision making
Define Financial information - answerRefers to the financial data which has been sorted,
classified and summarised into a more usable and understandable form
Define non-financial information - answerRefers to any information that cannot be found
in the financial statements and is not expressed in dollars and cents, or reliant on
dollars and cents for its calculation
Define ethical considerations - answerRefers to the social and environmental
consequences of a financial decision
Define transaction - answerRefers to an exchange of goods or services with another
party for payment
Define source documents - answerRefers to the documents that provide both the
evidence that a transaction has occurred and the details of the transaction itself
Define recording - answerRefers to the sorting, classifying and summarising the
information contained in the source documents so that it is more useable
Define reporting - answerRefers to the preparation of financial statements that
communicate financial information to the owner
Define advice - answerRefers to the provision to the owner of a range of options
appropriate to their aims/objectives and recommendations as to their suitability
, Define accounting assumptions - answerRefers to the generally accepted rules which
govern the way accounting information is recorded
Define accounting entity assumption - answerRefers to the assumption that the records
of assets, liabilities and business activities of the entity are kept completely seperate
from those of the owner of the entity as well as from those of other entities
Define going concern assumption - answerRefers to the business will continue to
operate in the future and its records are kept on that basis
Define period assumption - answerRefers to the assumption that records are prepared
for a particular period of time such as monthly or yearly in order to obtain comparability
of results.
Define accrual basis assumption - answerRefers to the assumption that the elements of
the reports are recognised when they satisfy the definitions and recognition criteria
meaning profit is calculated as revenue earned in a particular period less expenses
incurred in that same period
Define qualitative characteristics - answerRefers to the qualities of the information in
Accounting reports
Define relevance - answerFinancial information must be capable of making a difference
to the decisions made by users by helping them to form predictions and or confirm or
change their previous evaluations
Define Faithful Representation - answerRefers to the financial information reported is a
faithful representation the real world economic event it claims to represent complete,
free from material error and neutral (without any bias)
Define comparability - answerRefers to the useful information can be provided when the
financial reports of a business are compared over time and compared with similar
information of other businesses
Define verifability - answerEnsuring that different knowledgeable and independent
observations can reach the same conclusions that a particular representation of an
event is faithfully represented
Define timeliness - answerRefers to the financial information should be available to
decision makers in time be capable of influencing their decisions
Define understandability - answerRefers to the financial information should be
understandable to users with a reasonable knowledge of a business and economic
activities and present clearly and concisely
Define Cost Price - answerThe original purchase price of
