Accounting Quiz on Cost and Profit Concepts

A financial statement that summarizes a firm's revenue, expenses, and profit over a specific accounting period.

Credit extended by suppliers for goods or services purchased on credit.

A short-term borrowing facility from a bank, allowing a company to overdraw their account up to a pre-agreed limit.

Taxes owed to the government, typically paid within one year.

Debts that are due to be repaid after more than one year.

Loans that are repaid over a period longer than one year.

A type of long-term debt that involves issuing bonds to raise funds.

Funds contributed by the owners of the company, including share capital and retained profits.

Funds raised by issuing shares to investors, representing ownership in the company.

Profits retained by the company instead of being paid out as dividends.

The section of the Profit and Loss Account (Income Statement) that calculates the profit or loss made from the core trading activities of a business.

The difference between the value of goods a business sells and the direct costs associated with producing or purchasing those goods, excluding other expenses.

The costs directly associated with creating or acquiring the goods that a business sells. It includes materials, labor, and other expenses related to production.

The section of the Profit and Loss Account (Income Statement) that takes into account all other income and expenses beyond the core trading activities.

Expenses that are incurred in running a business outside of the direct production or purchase of goods for sale. Examples include administrative costs, marketing costs, and rent.

A financial statement used by manufacturing companies to calculate the cost of goods manufactured. It includes direct materials, direct labor, and manufacturing overhead.

The cost of raw materials used in production, calculated by adding beginning inventory to purchases and subtracting ending inventory.

The costs directly related to the production process, including raw materials and direct labor.

Costs associated with running a factory, such as rent, utilities, and maintenance.

The value of partially completed goods at the start of an accounting period.

The value of partially completed goods at the end of an accounting period.

The total cost of producing goods during a period, taking into account the value of opening and closing work in progress.

The cash flow generated from the core business operations of a company, calculated by adjusting profit before interest and tax (PBIT) for non-cash items like depreciation and changes in working capital.

The difference between opening and closing inventory (stocks) in a company's balance sheet. An increase indicates an outflow of funds, while a decrease represents an inflow.

The difference between opening and closing debtors (accounts receivable) in a company's balance sheet. An increase signals an outflow of funds, while a decrease represents an inflow.

The difference between opening and closing creditors (accounts payable) in a company's balance sheet. An increase signifies an inflow of funds, while a decrease represents an outflow.

The payment of interest expense for the period, as shown on the profit and loss (P&L) account. It's considered a cash outflow.

A financial statement that shows the movement of cash into and out of an organization during a specific period. It is composed of three main activities: operating, investing, and financing.

This activity reflects cash flows from the day-to-day operations of a business, including revenue generated and expenses incurred.

This activity looks at cash flows related to acquiring or disposing of non-current assets, such as property, plant, and equipment.

This activity shows cash flows related to financing activities, such as obtaining loans, issuing shares, and repaying debt.

This accounting principle focuses on the movement of money in and out of a company, rather than the accrual of income and expense.

This is an accounting method in which revenues and expenses are matched to the period in which they are earned and incurred, regardless of when the actual cash is received or paid

This statement summarizes the financial performance of a company during a particular period

This is a balance sheet account that tracks the amount of profit that has been retained within the business over time

This statement shows a company's assets, liabilities, and equity at a specific point in time

This accounting equation helps us understand the relationship between a company's assets, liabilities, and equity

A plan that outlines the actions needed to achieve the company's overall goals. It focuses on a medium-term timeframe and is usually developed by middle management.

A type of planning that considers the immediate needs of the organization to ensure smooth, daily operations. It is carried out by front-line supervisors and involves setting short-term targets, budgets, and programs.

Planning for unexpected events, it helps organizations adapt to unforeseen situations and continue progressing towards their goals.

The process of gathering information, analyzing it, and identifying potential future scenarios to make informed decisions.

Specific, measurable, achievable, relevant, and time-bound goals that guide the organization's actions towards success.

Exploring different approaches or strategies that can help achieve the desired goals.

Regularly assessing if the plan is working, and making adjustments as needed to ensure the goals are achieved.

A systematic process used by organizations to set goals, create plans, and allocate resources to achieve desired outcomes.