Accounting Processes and Concepts

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Questions and Answers

Which of the following is the process of putting records into their analysis form?

  • Accounting (correct)
  • Recording Keeping
  • Decision Making
  • Adjusting

Which of the following functions are NOT typically performed by a bookkeeper?

  • Posting transactions to ledgers
  • Analyzing financial trends (correct)
  • Recording business transactions
  • Interpreting financial data (correct)

Which of the following groups of accounts are categorized based on the classes to which they belong?

  • Rent received, interest received, commission received (correct)
  • Premises, buildings, cash (correct)
  • Rent owing, salaries payable, mortgage payable (correct)
  • Capital, accounts payable, land

When recording transactions using double-entry bookkeeping, which of the following statements is TRUE?

<p>One account is debited, and a different account is credited for each transaction (D)</p> Signup and view all the answers

Which of the following sequences correctly represents the stages of the accounting cycle?

<p>Journalizing, Posting to Ledger, Trial Balance, Final Account (B)</p> Signup and view all the answers

Which of the following scenarios would NOT be considered an accounting transaction?

<p>Communication with customers about outstanding invoices (B)</p> Signup and view all the answers

Which of the following accounts are classified as nominal accounts?

<p>Commission payable, Insurance receivable, Capital (A)</p> Signup and view all the answers

Which of the following accounts is NOT considered a real account?

<p>Rent revenue (D)</p> Signup and view all the answers

Which of the following are NOT considered personal accounts?

<p>Wages (A), Drawings (C)</p> Signup and view all the answers

Flashcards

Accounting

The process of putting records in their analysis form.

Functions of a Book-keeper

Tasks include analyzing, interpreting, posting, and recording.

Non-grouped Accounts

Accounts that are not classified by their classes.

Double-entry Book-keeping

Each transaction has a debit in one account and a credit in another.

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Accounting Cycle Stages

The correct order: journalizing, posting to ledger, trial balance, final account.

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Accounting Transaction

An event affecting financials, such as tax payment.

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Nominal Accounts

Accounts related to income and expenses.

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Real Accounts

Accounts that represent assets, like land and building.

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Study Notes

Accounting Processes and Concepts

  • Recording Process: Putting records in their analysis form is called accounting.
  • Bookkeeper Functions: Bookkeepers perform tasks like recording and posting transactions. Analyzing and interpreting are not their primary functions.
  • Account Classification: Accounts are grouped by their type; some provided examples are grouped incorrectly (e.g., capital, accounts payable, land). This isn't a function of a bookkeeper's tasks
  • Double-Entry Bookkeeping: Double-entry bookkeeping requires a corresponding debit and credit entry for every transaction.
  • Accounting Cycle Stages: The correct order for the accounting cycle stages is journalizing, posting to the ledger, trial balance, and final accounts.
  • Accounting Transactions: Physical wear and tear on equipment isn't an accounting transaction; it's depreciation.
  • Nominal Accounts: Nominal accounts are temporary accounts that reflect revenue and expenses. Examples are commission, insurance receivable, and capital.
  • Real Accounts: Real accounts are permanent accounts (assets, liabilities, and equity). Examples include land, buildings, equipment, etc.
  • Personal Accounts: Personal accounts represent individuals or entities (customers, suppliers). Drawings and wages are not personal accounts. Accounts receivable and payable are accounts, not people.

Accounting Principles and Concepts

  • Business Entity Concept: A business's financial records are separate from its owner's personal accounts. This is illustrated in the scenario where a motor cycle value was excluded from business fixed assets.
  • Matching Principle: The principle of connecting revenue and expenses (not the case in the scenario).
  • Prudence Principle: This principle guides the recognition of potential losses and liabilities without overstating revenue (as seen in the creation of a provision for Doubtful Debts).
  • Accrual Principle: Transactions are recorded when they occur, regardless of cash flow, illustrating the correct answer in the question.
  • Consistency Principle: Consistency (not relevant in the scenario).

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