Accounting Assumptions & Qualitative Characteristics
Which qualitative characteristic relates to ensuring that financial reports are prepared on-time rather than several years late?
A. Comparability
B. Timeliness
C. Understandability
D. Relevance
B. Timeliness
What is the Accounting Equation?
Assets = Liabilities + Owner's Equity
Cash at Bank is classified on a Classified Balance Sheet as:
Current Asset
Accounts Receivable is:
The amount that customers owe our business for sales on credit.
The bell to signal the end of Period 5 goes at what time?
2:22 pm
Which of the following is NOT a real qualitative characteristic?
Faithful Representation
Comparability
Verifiability
Relevance
Consistency
Timeliness
Understandability
Consistency
Calculate the value of Owner's Equity based on the following figures:
Total Assets: $4,000
Total Liabilities: $1,500
Owner's Equity = $2,500
Shop Fittings are classified on a Classified Balance Sheet as:
Non-Current Asset
Accounts Payable is:
The amount that our business owes our suppliers for purchases on credit.
What House won the most recent Swimming sports competition?
Ignis
What does the Accounting Entity assumption state in relation to businesses and their owners?
The financial records and activities of the business should be kept separate from the personal financial records of the owner.
Calculate the value of Total Liabilities based on the below figures:
Total Assets: $10,500
Owner's Equity: $6,000
Total Liabilities = $4,500
The only item listed under Owner's Equity in a Classified Balance sheet is:
Capital
Bank Overdraft is:
A negative balance in a bank account owned by the business.
Which shopping centre is older - Greensborough Plaza or Northland?
Northland (1966)
Greensborough Plaza (1978)
The ___________________ assumption states that financial reports must be prepared on the basis that the business will continue to operate in the future.
Going Concern
Calculate the Value of Current Assets based on the below figures:
Current Assets: ???
Non-Current Assets: $3,000
Current Liabilities: $2,500
Non-Current Liabilities: $4,500
Owner's Equity: $3,000
Current Assets = $7,000
Frankston Motors is a second-hand car sales business. The business has a $14,000 loan with the Bendigo Bank.
The Bendigo Bank requires monthly repayments be made of $500 per month.
How would this loan be classified on a Classified Balance Sheet?
Current Liabilities:
Loan - Bendigo Bank $6,000
Non-Current Liabilities:
Loan - Bendigo Bank $8,000
CLEARLY describe the difference between a Current Asset and a Non-Current Asset.
USE THE CORRECT TERMINOLOGY
A current asset is an asset that is expected to provide economic benefit within the next 12 months.
A Non-Current asset is an asset that is expected to provide economic benefit over a period greater than 12 months.
Which of the following McDonalds burgers has the most Calories per serve?
- Double Cheeseburger
- Quarter Pounder with Cheese
- McChicken
- Big Mac
Quarter Pounder with Cheese (520 Cal)
What is the purpose of the Verifiability qualitative characteristic?
Financial information should be supported by evidence that confirms the accuracy of financial transactions.
Calculate the value of Non-Current Liabilities based on the below information:
Current Assets = $10,500
Non-Current Assets = $14,000
Current Liabilities = $7,500
Non-Current Liabilities = ???
Owner's Equity = $3,000
Non-Current Liabilities = $14,000
4 examples of Current Assets
4 examples of Non-Current Assets
3 examples of Current Liabilities
1 example of Non-Current Liabilities
Current Assets:
Cash at Bank, Cash on Hand, Accounts Receivable, Inventory
Non-Current Assets:
Vehicles, Equipment, Office Furniture, Shop Fittings, Premises
Current Liabilities:
Bank Overdraft, Accounts Payable, Short Term Loans
Non-Current Liabilities:
Long Term Loans
The formal definition of a liability has THREE parts.
Define the term 'liability' - including each part:
A liability is a:
*a present obligation of the business
* arising from a past event
* to transfer an economic resource.
Correctly classify each of the following businesses as either Private or Public companies:
- Nova Entertainment (Radio station)
- Telstra
- Bakers Delight
- Dodo
Nova Entertainment - Private Company
Telstra - Public Company
Bakers Delight - Public Company
Dodo - Private Company