Accountancy: Core Concepts
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Questions and Answers

What is the primary purpose of accountancy?

  • To maximize a company's revenue
  • To minimize a company's tax liabilities
  • To provide financial information for decision-making (correct)
  • To manage a company's human resources

Which of the following is a core component of the accounting equation?

  • Assets (correct)
  • Dividends
  • Market Share
  • Customer Satisfaction

Which financial statement provides a snapshot of a company's financial position at a specific point in time?

  • Statement of Cash Flows
  • Balance Sheet (correct)
  • Statement of Retained Earnings
  • Income Statement

What does the income statement report?

<p>Financial performance over a period of time (B)</p> Signup and view all the answers

Which of the following activities is NOT reported on the statement of cash flows?

<p>Marketing (A)</p> Signup and view all the answers

What accounting principle states that revenue should be recognized when earned, regardless of when cash is received?

<p>Accrual Accounting (D)</p> Signup and view all the answers

Which accounting principle suggests caution when reporting assets and revenues?

<p>Conservatism (A)</p> Signup and view all the answers

What is the purpose of financial accounting standards?

<p>To provide a common set of rules for preparing financial statements (A)</p> Signup and view all the answers

Which of the following ratios measures a company's ability to meet its short-term obligations?

<p>Liquidity Ratio (A)</p> Signup and view all the answers

What type of accounting focuses on providing information to internal users, such as managers?

<p>Management Accounting (D)</p> Signup and view all the answers

Which area of accounting involves preparing tax returns?

<p>Tax Accounting (C)</p> Signup and view all the answers

What is the main goal of auditing?

<p>To ensure financial statements are presented fairly (A)</p> Signup and view all the answers

Which type of accounting involves investigating financial fraud?

<p>Forensic Accounting (A)</p> Signup and view all the answers

What is the first step in the accounting cycle?

<p>Analyzing Transactions (D)</p> Signup and view all the answers

Which of the following is the correct accounting equation?

<p>Assets = Liabilities + Equity (B)</p> Signup and view all the answers

Flashcards

Accountancy

Recording, classifying, summarizing, and interpreting financial transactions to provide insights for stakeholders.

Assets

Resources a company controls with expected future economic benefits.

Liabilities

A company's present obligations arising from past events, expected to result in an outflow of resources.

Equity

The owner's residual interest in the assets of a company after deducting liabilities.

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Revenue

Income from a company's primary business activities.

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Expenses

Outflows or depletions of assets that decrease equity.

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Accounting Equation

Assets = Liabilities + Equity. It shows the balance between what a company owns and owes.

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Balance Sheet

A snapshot of a company's assets, liabilities, and equity at a specific point in time.

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Income Statement

Reports a company's financial performance over a period of time.

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Statement of Cash Flows

Summarizes the movement of cash in and out of a company.

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Accrual Accounting

Recognizing revenue when earned and expenses when incurred, regardless of cash flow.

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Financial Accounting

Financial statements for external users, guided by GAAP or IFRS.

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Management Accounting

Information for internal users (managers) for decision-making.

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Tax Accounting

Preparing tax returns, following tax authority rules.

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Auditing

Examining financial statements for fairness and compliance with standards.

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Description

Learn about the core concepts of accountancy, including assets, liabilities, and equity. Understand revenue and expenses in financial transactions. Provides financial information to help stakeholders make informed judgments and decisions.

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