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Questions and Answers
What is the primary purpose of an accounting system?
Which type of accounting is concerned with the preparation of tax returns?
What is the characteristic of reliable information in accounting?
What is the role of the Malaysian Accounting Standards Board (MASB)?
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Who are the internal users of financial accounting information?
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What is the purpose of financial statements?
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What is financial accounting concerned with?
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What is the characteristic of comparable information in accounting?
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Which principle ensures that accounting information is supported by independent, unbiased evidence?
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What is the assumption underlying the Going-Concern Principle?
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What is the purpose of the Monetary Unit Principle?
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Which of the following is NOT a characteristic of revenue recognition?
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What is the primary function of the Business Entity Principle?
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What is the classification of Accounts Payable?
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Which of the following is NOT a type of equity?
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What is the accounting equation?
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Study Notes
Accounting System
- Identifies, records, and communicates relevant and reliable information to help users make better decisions.
- Provides reports to stakeholders about the economic activities and condition of a business.
Branches of Accounting
- Auditing
- Taxation
- Forensic Accounting
- Financial Accounting
- Cost and Management Accounting
- Public Sector Accounting
Financial Statements
- Balance Sheet
- Income Statement
- Statement of Cash Flows
Users of Accounting Information
- External Users: Lenders, Consumer Groups, Shareholders, External Auditors, Governments, Customers
- Internal Users: Managers, Sales Staff, Officers, Budget Officers, Internal Auditors, Controllers
Accounting Principles and Rules
- Generally Accepted Accounting Principles (GAAP) govern financial accounting practice.
- Relevant Information: affects the decision of its users.
- Reliable Information: is trusted by users.
- Comparable Information: is helpful in contrasting organizations.
- Malaysian Accounting Standards Board (MASB): sets both broad and specific principles.
- Securities Commission of Bursa Malaysia: establishes reporting requirements for companies that issue shares to the public.
Accounting Principles
- Objectivity Principle: accounting information is supported by independent, unbiased evidence.
- Cost Principle: accounting information is based on actual cost.
- Going-Concern Principle: reflects the assumption that the business will continue operating.
- Monetary Unit Principle: express transactions and events in monetary units.
- Revenue Recognition Principle:
- Recognize revenue when it is earned.
- Proceeds need not be in cash.
- Measure revenue by cash received plus cash value of items received.
- Business Entity Principle: a business is accounted for separately from other business entities, including its owner.
Accounting Equation
- Assets = Liabilities + Equity
Assets
- Current Assets:
- Cash
- Accounts Receivable
- Notes Receivable
- Store Supplies
- Fixed Assets:
- Land
- Buildings
- Equipment
- Vehicles
Liabilities and Equity
- Short-term Liabilities: Accounts Payable, Bank Loan, Creditors' claims, Accrued Expenses
- Long-term Liabilities: Bond, Debenture
- Contributed Capital: Owner's claim on assets
- Retained Earnings: Dividends
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Description
This quiz covers the basics of accounting information systems, including identifying, recording, and communicating relevant financial information to stakeholders.