Introduction
Name an external stakeholder who lends money to the business.
Banks
These are items owned and controlled by the business.
Assets
These 3 items are found at the title of the statement of financial position (in order).
1) Name of business, 2) Name of the financial statement and 3) Statement date
The expense incurred but the cash is yet to be paid is recorded in this ledger account.
Expense payable account
This internal control accounts for the difference between the balances in the cash at bank account and bank statement.
Bank reconciliation
Name an internal stakeholder who is interested in the business's daily operations and performance.
Managers
State the basic accounting equation.
A = L + OE
How is the owner's equity determined?
Opening capital + Profit - Drawings
Income earned but the cash had yet to be received is recorded in this ledger account.
Income receivable account
In addition to an owner, these people also have claims against a business's assets.
Trade payables
The three legal forms a business may take.
1)sole proprietorships, 2)partnerships and 3)private limited companies
The amount of liabilities if assets are $2,000 and owner's equity is $500
$1,500.
A bank overdraft would be listed under this category on the statement of financial position.
Current liabilities section
This accounting theory explains the need to adjust the income and expense accounts.
Accrual basis of accounting theory
The effect on equity when an owner withdraws cash from the business
Decreases
What are the two ethics expected of an accountant?
Objectivity and integrity.
This is the difference between total assets and total liabilities.
Owner's Equity
How are long-term borrowings and current portion of long-term borrowings classified on the statement of financial position?
Long-term borrowings - Non-current liabilities
Current portion of long-term borrowings - Current liabilities
This accounting theory states that a business should record expenses when they are used to generate income
Matching theory
Which inventory management system assumes that goods purchased first will be sold off first?
FIFO
This person checks on the financial processes of the business to ensure it complies with laws and regulations.
Auditors
The ledger account on the statement of financial position that represents the amount owed for purchasing goods on credit
Trade Payables
State the effect on owner's equity when the owner paid business rent expenses using his personal fund.
Increases
1 Jan 2021 Rent expense prepaid $1,000
31 Dec 2021 Rent expense payable $1,200
Rent expenses paid for the year ended 31 Dec 2021 amount to $27,800
Calculate the annual rent expenses incurred.
$30,000
The effect and amount affected on profit for the year when a business receives cash of $1,900 in full settlement of a debt of $2,000 owed by credit customers.
Decreases by $100