Accounting Terminology
Accounting is:
(a) recording anything that happens in a business.
(b) recording the transactions of a business.
(c) recording, analyzing and interpreting the business' transactions.
(d) recording, summarizing, analyzing and interpreting the business' transactions.
(d) Accounting is recording, summarizing, analyzing and interpreting the business' transactions.
Discuss what you understand are ethical principles.
Ethical principles provide a moral compass for individuals and businesses, guiding their decisions and actions.
What are the two main categories of people who use accounting information to make decisions?
The two main categories of people who use accounting information are:
1. Internal users
2. External users
Why is accounting necessary in an organization?
(A) It is required by law
(B) To help the government
(C) To report on financial data
(D) To have enough employees
(C) To report on financial data
Resources owned by the business are known as:
(A) Assets
(B) Capital
(C) Expenses
(D) Liabilities
(A) Assets
The recording of the transactions in the accounting books of a business is called:
(A) accounting
(B) book-keeping
(C) liabilities
(D) resources
(B) book-keeping
Name the five fundamental ethical principles issued by the International Ethics Standards Board for Accountants (IESBA).
1. Integrity
2. Objectivity
3. Professional Competence and Due Care
4. Confidentiality
5. Professional Behaviour
List Five users of accounting information.
Owner/Manager
Employees
Investors
Creditors(Bank etc.)
Government agencies
Customers
Suppliers
All of the following are entry levels jobs for those without experience or qualifications except for:
(A) Accounts clerk
(B) Bookkeeper
(C) Auditor
(D) Auditing clerk
(C) Auditor
Give two factors that influence ethical views.
Some factors which influence ethical views are:
1. Culture
2. Law
3. Consequences
4. Code of ethics
The purposes of preparing accounting documents and financial statements are to:
I. show information of the resources of a business.
II. show who has claims on the business' resources
III. help users of financial information make decisions about the business.
(A) I and II
(B) I and III
(C) II and III
(D) I, II and III
(D) I, II and III
Marlon Ettiene prepared the financial statement for BrownTown Hardware. He is of the view that the statements should show more information about the transactions that are important to the owners than simply following accounting principles. His view is against the ethical principle in accounting of
(A) Integrity
(B) Objectivity
(C) Confidentiality
(D) Professional Competence
(B) Objectivity
Which lists represents both internal and external users of financials statements?
(A) Banks, government and investors
(B) Creditors, government and managers
(C) Creditors, banks and investors
(D) Suppliers, investors and banks
(B) Creditors, government and managers
Complete the following careers for employees with experience and a degree:
(A) F_ _ _ _ _ _ _ _ Advisor
(B) A _ _ _ _ _ _
(C) F _ _ _ _ _ _ _ Accountant
(D) C _ _ _ _ _ _ _ _ _
(A) Financial Advisor
(B) Auditor
(C) Forensic Accountant
(D) Consultant
Which of the following ensures that accountants use the same principles and methods of recording from year to year within a company?
(A) Accrual
(B) Prudence
(C) Consistency
(D) Separate entity
(C) Consistency
What are the two important financial documents that a business needs to produce?
The two important financial documents that a business need to produce are:
1. the trading and profit and loss account (income statement)
2. the statement of financial position (balance sheet)
(A) Lack of objectivity
(B) Lack of confidentiality
(C) Unprofessional behaviour
(D) Unprofessional competence
(D) Unprofessional competence- John Dough's behavior demonstrates a lack of competence in his role as an accountant. His actions, such as leaving cheques unsecured and preparing reports late, indicate a failure to adhere to professional standards and practices. While he may have the technical skills to be an accountant, his unprofessional behavior undermines his credibility and effectiveness.
Which accounting user is correctly matched with its need?
(A) Banker- to determine taxes to charge the business
(B) Government- to find out if the business can repay a loan
(C) Supplier- to find out if he should invest capital in the business
(D) Owner- to determine the profit of the business over the financial period
(D) Owner- to determine the profit of the business over the financial period.
Complete the following:
You may have careers in the field of accounting in areas such as:
(A) B _ _ _ _ _ _
(B) M _ _ _ _ _ _ _ _ _
(C) I _ _ _ _ _ _ _ _
(D) E _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
(A) Banking
(B) Management
(C) Insurance
(D) Entrepreneurship
It is the end of Tiffany's financial year. She has total assets of $5000 and capital of $3600. How much were her liabilities?
(A) $8,600
(B) $5,000
(C) $1,400
(D) $3,600
Assets= Liabilities + Capital
Liabilities= Assets- Capital
$5,000 - $3,600
(C) $1,400
State briefly the importance of good financial control to the owners of a business.
Good financial control is important to the owners of a business because it helps them to generate revenues, minimize expenses and make informed decisions which would allow for a profitable and successful business venture.
A cashier at a leading private high school, responsible for collecting school fees from students, uses the fees from time to time to loan to employees, charging the employees 10% of the loan. The cashier hopes the employees repay quickly so that the missing funds will not be noticed. Some of the employees have not been repaying the loans and the manager has now asked the cashier to account for the shortages in the cash. Which of the following has the cashier been committing? Which of the following has the cashier been committing?
(A) Fraud
(B) Tax evasion
(C)Theft
(D) Errors
(A) Fraud
Which of the following statements is NOT a need of a user of accounting information?
(A) To determine whether to invest further
(B) To determine the profitability of the business
(C) To find out the number of owners in the business
(D) To add to the country's Gross Domestic Product (GDP)
(C) To find out the number of owners in the business
I. Banking
II. Insurance
III. Construction
(A) I and II
(B) I and III
(C) II and III
(D) I, II and III
(D) I, II and III - All industries use cash in their business. Therefore, people trained and skilled in accounting are needed in all of them.
Give 5 potential consequences of unethical behavior in accounting.
1. Termination of employment
2.Lose of trust and integrity
3. Disciplinary action by the professional body
4. Prosecution leading to fines, imprisonment, and a criminal record (inability to gain further employment)
5. Lawsuits
6. Application for future financial loans rejected.