Accounting 30 S Chapter 3 Review Questions A

Accounting 30 S Chapter 3 Review Questions

A financial event that causes a change in financial position

Answer: business transaction?

Evidence that a transaction has occurred e. g. bill, cheque copy, cash register summary

Answer: source document?

They are kept on file for reference purposes and are proof of transactions

Answer: What happens to source documents after the accounting entries have been completed?

Requires that a business’s accounting be recorded on the basis of clear, verifiable evidence

Answer: objectivity principle

A group of accounts

Answer: ledger

Which financial statement shows the financial position of a business?

Answer: Balance Sheet

Where does the name of a business appear in the heading of a balance sheet (on which line)?

Answer: First line

Which side of a balance sheet are the assets listed on?

Answer: Left side

Which side of a balance sheet does a creditor appear on?

Answer: Right side

What does a single ruled line beneath a column of figures indicate?

Answer: Numbers above the line have been totaled (added or subtracted)

When is a double line drawn beneath a total?

Answer: When it is a final total

What is the most liquid asset?

Answer: Cash

In what order are liabilities listed on a balance sheet?

Answer: Maturity date or the order of the date they will be paid

Debts of customers or customers who owe money to the business (debtors)

Answer: Accounts Receivable?

Debts owed by the business to suppliers or creditors

Answer: accounts payable?

Who has first claim against the assets of a business?

Answer: Creditors

Who benefits from gains (profit) made in closing down a business?

Answers: The owner

Who suffers most from losses incurred in closing down a business?

Answer: The owner

What does GAAP stand for?

Answer: Generally Accepted Accounting Principles

What does IFRS stand for?

Answer: International Financial Reporting Standards

A business’s financial information is kept separate from personal financial information

Answer: Business Entity Concept

Assets are recorded at their cost price

Answer: Cost Principle

It is assumed that the business will continue to operate in the future

Answer: Continuing Concern Concept

Give an example of a current asset

Answer: Cash, Accounts Receivable, Supplies

Give an example of a long-term asset

Example: Land, building, equipment, automobile

Give an example of a current liability

Answer: Accounts Payable, Bank Loan due within a year

Give an example of a long-term liability

Answer: Bank Loan due in more than a year, Mortgage

What is the name of the balance sheet under IFRS?

Answer: Statement of Financial Position

In a spreadsheet what is formed by the intersection of columns and rows?

Answer: Cells

What would you call a cell in row 52 and in column C?

Answer: C 52

What is the spreadsheet term for words and titles?

Answer: Labels

What is the spreadsheet term for numbers?

Answer: Values

What symbol tells a spreadsheet program you are using a formula?

Answer: = sign

What does =SUM(B 3: B 50) telling a spreadsheet to do?

Answer: To add all the values from cells b 3 to b 50

What does =A 7 -A 5 telling a spreadsheet to do?

Answer: Subtract the number in cell a 5 from the number in cell a 7