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ACCOUNTING REVISION Level 2 Flashcards | StudBud
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ACCOUNTING REVISION Level 2
ACCOUNTING REVISION Level 2
30 terms
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StudBud Administration
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138 plays
Reinforcement and revision of conceptual basis
Flashcards
30 cards
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Practice quiz
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Host live
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Questions
30
Answers
1
Identify the characteristic: Information should be complete, neutral and free from error
Faithful representation
Verifiability
Comparability
Relevance
2
When is straight line appropriate to apply?
When consumption of FEB is likely to be greatest early on
When consumption of FEB is caused by usage
When consumption of FEB is evenly distributed
3
Identify the purpose of the statement of financial position
Reports on income, expenses and profit
Reports on all assets, liabilities and equity
Reports on cash receipts and cash payments
4
Identify the concept: transactions are reported in the statements of the period it relates to
Accounting entity
Accrual basis
Historical cost
Going concern
5
What is the meaning of a non-current liability
Needs to be repaid in the current year
Payable over a period of more than 12 months
It is past the due date
6
How do we measure materiality?
To misstate or omit information
Depending on how important the information is
By size or nature
7
Identify the non-cash items
Depreciation
Rates
Discount allowed
Bad debts
8
When is diminishing value appropriate to apply?
When consumption of FEB is caused by usage
When consumption of FEB is likely to be greatest early on
When consumption of FEB is evenly distributed
9
Identify the concept: transactions need to be recorded in NZ dollars
Historical cost
Accounting entity
Monetary measurement
Accrual basis
10
What is the meaning of unlimited liability?
Liability goes on to the bank
Liability goes on to the owner
The business needs to cover their debt
11
Identify the concept: the business will continue to operate in the foreseeable future
Going concern
Monetary measurement
Historical cost
Accounting entity
12
When is units of use appropriate to apply?
When consumption of FEB is likely to be greatest early on
When consumption of FEB is evenly distributed
When consumption of FEB is caused by usage
13
Choose the correct definition of Depreciation
The depreciable amount of an asset
Writing off the original cost price of an asset
Allocating the depreciable amount over the lifetime of asset
14
What is revenue expenditure?
Expenses of a recurring nature
Only the one-off spending
All payments made in a year
15
Identify the concept / characteristic: It must be possible to compare information over time
Understandability
Verifiability
Comparability
Relevance
16
What is the meaning of depreciable amount?
Cost - accumulated depreciation
Historical cost
Cost - residual value
Cost - depreciation
17
Identify the concept: original purchase price
Accounting entity
Monetary measurement
Going concern
Historical cost
18
Identify the characteristic: different users will reach consensus that information is accurate
Understandability
Verifiability
Timeliness
Faithful representation
19
What is the meaning of recognition criteria?
Recognise transactions when they occur
Very probable that it will happen and can measure reliably
Recognise assets and liabilities in the statements
20
How do you define assets?
Past event, present obligation, future sacrifice
Past event, present obligation, future benefit
Past event, present control, future benefit
Past event, present control, future sacrifice
21
How can you measure transactions reliably?
By providing a source document as prove
Be recording it in the statements
Be asking the accountant
22
Identify the concept: the financial affairs of the owner must be reported as drawings
Accrual basis
Historical cost
Going concern
Accounting entity
23
Identify the characteristic: Information needs to be available in time
Timeliness
Comparability
Understandability
Verifiability
24
Identify the method of depreciation: (Cost - residual ) / estimated life time
Units of use
Diminishing value
Straight line
25
Identify the method of depreciation: Carrying amount x %
Diminishing value
Units of use
Straight line
26
How do you enter doubtful debts in the income statement if you decreased the allowance
List as an admin expense
List as an admin expense in brackets
List as an other income
27
What is capital expenditure?
Payments that impacts on the current year
All expenses that is paid only once a year
Payments that is a one-off creating an asset
28
Identify the concept / characteristic: Information will influence decisions
Verifiability
Relevance
Reliability
Understandability
29
How do you enter doubtful debts if you decreased the allowance for doubtful debts?
Dr Allowance for doubtful debts / Cr Doubtful debts
Dr Doubtful debts / Cr Allowance for doubtful debts
30
Identify ALL limitations of statements
Does not show market value
Estimated figures
Shows no non-financial information
No financial information
