Accounting A LEVEL - ACCN1: Unit 1 -
]
Introduction to Financial Accounting
Exam
With answers
What are the reasons for keeping accounting records? - answer-- To quantify items such as
sales, expenses and profit.
- To present accounts in a meaningful way.
- To measure success in the business
- To provide information to the owner of the business and to stakeholders.
Source Documents - answer-
What is an Invoice? - answer-A request for payment
What is a Till Roll? - answer-Evidence of Cash Sales
What is a Paying In Slip? - answer-Paying Cash into the Bank
What is a Receipt? - answer-Paying a business expense with cash
What is a Credit Note? - answer-A Refund Source Document
What is a Cheque counterfoil? - answer-Paying an expense via cheque
What is a Bank Statement? - answer-Paid Business Expense such as Rent via Direct Debit or
Standing Order.
Give an example of an internal stakeholder and their interest in the business. - answer-Owner of
the Business:
- Check for liquidity or profitability of the business.
- Is there enough money to withdraw cash
Employees:
- Want to know the likelihood of being paid.
- Job Security.
Give an example of an External Stakeholder and their interest in the business. - answer-Trade
Receivables/Customers:
- Want to know liquidity and profitability.
- Want to know if they will receive their order.
Trade Payables:
, - Want to know profitability and liquidity.
- Will it continue to provide suppliers.
The Bank:
- Want to know liquidity and profitability.
- See financial statements to support loan applications.
The Government:
- Need to verify records for Taxation Purposes
Why is it important to adjust Trial Balance Figures for Accruals and Prepayments when
preparing Financial Statements? - answer-Income Statement:
- To ensure accurate/correct profit calculation
- Withdraw too much from the business.
- Correct Treatment of prepayments reduces expenses.
- Correct Treatment of Accruals increase expenses.
- For Taxation.
Balance Sheet:
- To ensure correct net current asset calculation
- For stakeholders to make valid judgement.
- Valid decision making.
- To ensure a true and fair view of accounts.
What is Capital? - answer-Capital is the amount of money invested in the business by the
owner.
Double Entry - answer-
Capital Introduced - answer-Debit Bank
Credit Capital
Purchase of a Non-Current Asset - answer-Debit Non-Current Asset
Credit Bank
Payment of Expense - answer-Debit Expense
Credit Bank
Receipt of Income - answer-Debit Bank
Credit Income
What are Drawings? - answer-When the owner takes money from the business for personal
use.
]
Introduction to Financial Accounting
Exam
With answers
What are the reasons for keeping accounting records? - answer-- To quantify items such as
sales, expenses and profit.
- To present accounts in a meaningful way.
- To measure success in the business
- To provide information to the owner of the business and to stakeholders.
Source Documents - answer-
What is an Invoice? - answer-A request for payment
What is a Till Roll? - answer-Evidence of Cash Sales
What is a Paying In Slip? - answer-Paying Cash into the Bank
What is a Receipt? - answer-Paying a business expense with cash
What is a Credit Note? - answer-A Refund Source Document
What is a Cheque counterfoil? - answer-Paying an expense via cheque
What is a Bank Statement? - answer-Paid Business Expense such as Rent via Direct Debit or
Standing Order.
Give an example of an internal stakeholder and their interest in the business. - answer-Owner of
the Business:
- Check for liquidity or profitability of the business.
- Is there enough money to withdraw cash
Employees:
- Want to know the likelihood of being paid.
- Job Security.
Give an example of an External Stakeholder and their interest in the business. - answer-Trade
Receivables/Customers:
- Want to know liquidity and profitability.
- Want to know if they will receive their order.
Trade Payables:
, - Want to know profitability and liquidity.
- Will it continue to provide suppliers.
The Bank:
- Want to know liquidity and profitability.
- See financial statements to support loan applications.
The Government:
- Need to verify records for Taxation Purposes
Why is it important to adjust Trial Balance Figures for Accruals and Prepayments when
preparing Financial Statements? - answer-Income Statement:
- To ensure accurate/correct profit calculation
- Withdraw too much from the business.
- Correct Treatment of prepayments reduces expenses.
- Correct Treatment of Accruals increase expenses.
- For Taxation.
Balance Sheet:
- To ensure correct net current asset calculation
- For stakeholders to make valid judgement.
- Valid decision making.
- To ensure a true and fair view of accounts.
What is Capital? - answer-Capital is the amount of money invested in the business by the
owner.
Double Entry - answer-
Capital Introduced - answer-Debit Bank
Credit Capital
Purchase of a Non-Current Asset - answer-Debit Non-Current Asset
Credit Bank
Payment of Expense - answer-Debit Expense
Credit Bank
Receipt of Income - answer-Debit Bank
Credit Income
What are Drawings? - answer-When the owner takes money from the business for personal
use.
