Accounting 30S Chapter 3 Review Questions

A financial event that causes a change in financial position

What is a business transaction?

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

What is a source document?

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

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

objectivity principle

A group of accounts

ledger

Which financial statement shows the financial position of a business?

Balance Sheet

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

First line

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

Left side

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

Right side

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

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

When is a double line drawn beneath a total?

When it is a final total

What is the most liquid asset?

Cash

In what order are liabilities listed on a balance sheet?

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

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

What are Accounts Receivable?

Debts owed by the business to suppliers or creditors

What are accounts payable?

Who has first claim against the assets of a business?

Creditors

Who benefits from gains made in closing down a business?

The owner

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

The owner

What does GAAP stand for?

Generally Accepted Accounting Principles

What does IFRS stand for?

International Financial Reporting Standards

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

What does the Business Entity Concept say?

Assets are recorded at their cost price

What does the Cost Principle say?

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

What does the Continuing Concern Concept say?

Give an example of a current asset

Cash, Accounts Receivable, Supplies

Give an example of a long-term asset

Land, building, equipment, automobile

Give an example of a current liability

Accounts Payable, Bank Loan due within a year

Give an example of a long-term liability

Bank Loan due in more than a year, Mortgage

What is the name of the balance sheet under IFRS?

Statement of Financial Position

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

Cells

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

C52

What is the spreadsheet term for words and titles?

Labels

What is the spreadsheet term for numbers?

Values

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

= sign

What does =SUM(B3:B50) telling a spreadsheet to do?

To add all the values from cells b3 to b50

What does =A7-A5 telling a spreadsheet to do?

Subtract the number in cell a5 from the number in cell a7