Accounting Assumptions
Which accounting assumption states that a business is separate from its owner?
What is the Entity assumption?
Which qualitative characteristic means financial reports should be easy to understand?
What is Understandability?
Costs that change directly with sales volume are called what?
What are Variable Costs?
Which ownership structure has only one owner?
What is a Sole Proprietorship?
What is the accounting equation?
What is Assets = Liabilities + Owner’s Equity?
Which assumption assumes a business will continue operating into the future?
What is the Going Concern assumption?
Which characteristic allows financial reports to be compared over time?
What is Comparability?
Rent and insurance are examples of what type of cost?
What are Fixed Costs?
Which ownership structure can publicly raise capital through the ASX?
What is a Public Company?
An asset expected to be converted into cash within 12 months is called what?
What is a Current Asset?
Which assumption states reports are prepared for a specific time period?
What is the Period assumption?
Which characteristic ensures information is available in time to influence decisions?
What is Timeliness?
What is the profit at the break-even point?
What is $0?
Which ownership structure has shared decision-making between owners?
What is a Partnership?
What is internal control?
What are procedures used to protect assets and ensure accurate financial records?
Which assumption recognises revenue and expenses when they are earned or incurred?
What is the Accrual Basis assumption?
Which characteristic means information must be complete, neutral and free from material error?
What is Faithful Representation?
In CVP analysis, what four-word phrase describes the amount earned from each sale after variable costs?
What is Contribution per unit?
Which ownership structure provides limited liability to owners?
What is a Proprietary Company (Pty Ltd)?
What internal control strategy involves different people handling cash, records and approvals?
What is Separation of Duties?
Under which assumption is profit calculated as revenue earned less expenses incurred in the same period?
What is the Accrual Basis assumption?
Which characteristic ensures independent observers can reach the same conclusion?
What is Verifiability?
What formula is used to calculate profit in CVP analysis?
What is Quantity × (Selling Price − Variable Cost) − Fixed Costs?
What is one major disadvantage of a Public Company?
What are high compliance and administration costs?
Comparing cash records with the bank statement helps detect what two things?
What are errors and fraud?