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What is included in the Property plant and equipment account at NBV?
What is included in the Property plant and equipment account at NBV?
Which method should be followed if an accounting standard is applicable to a transaction?
Which method should be followed if an accounting standard is applicable to a transaction?
Which of the following best describes a change in accounting estimates?
Which of the following best describes a change in accounting estimates?
What can cause errors in financial statements?
What can cause errors in financial statements?
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Which of the following is NOT considered when selecting accounting policies?
Which of the following is NOT considered when selecting accounting policies?
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In the provision for Property plant and equipment account format, which element is directly related to the asset's usage over time?
In the provision for Property plant and equipment account format, which element is directly related to the asset's usage over time?
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Which statement about accounting policies is correct?
Which statement about accounting policies is correct?
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What aspect is NOT typically estimated in financial statements?
What aspect is NOT typically estimated in financial statements?
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What is typically the first step in calculating the depreciation of an asset?
What is typically the first step in calculating the depreciation of an asset?
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Which of the following does NOT require the application of SLFRS 16?
Which of the following does NOT require the application of SLFRS 16?
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How should the cost of a right of use asset be measured?
How should the cost of a right of use asset be measured?
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What comprises the cost of the right of use asset?
What comprises the cost of the right of use asset?
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How is the lease liability measured according to SLFRS 16?
How is the lease liability measured according to SLFRS 16?
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Which of the following would be included in lease payments under SLFRS 16?
Which of the following would be included in lease payments under SLFRS 16?
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What should be deducted when calculating depreciation for an asset?
What should be deducted when calculating depreciation for an asset?
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Which of the following statements about the lessee and lessor is incorrect?
Which of the following statements about the lessee and lessor is incorrect?
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What should be included in a Purchase Return Journal?
What should be included in a Purchase Return Journal?
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Which account is affected when recording a sales return?
Which account is affected when recording a sales return?
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What is the primary purpose of a Trial Balance?
What is the primary purpose of a Trial Balance?
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Which type of error would NOT affect the Trial Balance?
Which type of error would NOT affect the Trial Balance?
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In a sales journal, what must be recorded if the business is VAT registered?
In a sales journal, what must be recorded if the business is VAT registered?
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What document serves as the basis for transactions in the General Ledger?
What document serves as the basis for transactions in the General Ledger?
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If an Income account is debited, how will it affect Net Profit?
If an Income account is debited, how will it affect Net Profit?
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Which of the following is NOT a cause for differences in Bank Reconciliation?
Which of the following is NOT a cause for differences in Bank Reconciliation?
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What is the definition of an Asset in accounting?
What is the definition of an Asset in accounting?
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In reconciliation, which of the following would indicate an unpresented cheque?
In reconciliation, which of the following would indicate an unpresented cheque?
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What happens to the Equity when liabilities are deducted from assets?
What happens to the Equity when liabilities are deducted from assets?
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Which account is debited when bad debts are recognized?
Which account is debited when bad debts are recognized?
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When VAT is calculated as 15% of an amount, what is the VAT on a sale of $200?
When VAT is calculated as 15% of an amount, what is the VAT on a sale of $200?
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Which account would typically be credited when sales are made on credit?
Which account would typically be credited when sales are made on credit?
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What is the primary purpose of the consistency concept in accounting?
What is the primary purpose of the consistency concept in accounting?
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Which accounting concept addresses the importance of separately recording material items?
Which accounting concept addresses the importance of separately recording material items?
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Which principle is violated by revaluing assets to their fair market value?
Which principle is violated by revaluing assets to their fair market value?
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What is the recognition treatment for accrued expenses?
What is the recognition treatment for accrued expenses?
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In calculating total cost, what is included in the prime cost?
In calculating total cost, what is included in the prime cost?
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How is the closing accumulated fund calculated?
How is the closing accumulated fund calculated?
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Which accounting method is used for a nonprofit organization's closing balance?
Which accounting method is used for a nonprofit organization's closing balance?
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What is classified as a liability when received for life membership in a nonprofit organization?
What is classified as a liability when received for life membership in a nonprofit organization?
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What defines total cost in manufacturing accounting?
What defines total cost in manufacturing accounting?
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How is income received in advance categorized?
How is income received in advance categorized?
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When a stock has been sent on a sale or return basis, what must be done in the accounts?
When a stock has been sent on a sale or return basis, what must be done in the accounts?
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What is required to be disclosed as per the disclosure concept?
What is required to be disclosed as per the disclosure concept?
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Which method of inventory valuation must adhere to the historical cost concept?
Which method of inventory valuation must adhere to the historical cost concept?
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What is the total allocated price for the performance obligation of supplying the machine?
What is the total allocated price for the performance obligation of supplying the machine?
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Which of the following best describes a provision as per LKAS 37?
Which of the following best describes a provision as per LKAS 37?
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What entry is made when the machine is delivered to recognize sales revenue?
What entry is made when the machine is delivered to recognize sales revenue?
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How is total discount amount derived in the transaction price calculation?
How is total discount amount derived in the transaction price calculation?
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Which of the following statements accurately describes legal obligations?
Which of the following statements accurately describes legal obligations?
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What is the amount recorded as unearned revenue when services provided as of 31.03.2020 are recognized?
What is the amount recorded as unearned revenue when services provided as of 31.03.2020 are recognized?
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Which of the following is NOT a characteristic of a provision?
Which of the following is NOT a characteristic of a provision?
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What would lead to the creation of a constructive obligation?
What would lead to the creation of a constructive obligation?
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What does the Economic Order Quantity (EOQ) formula help determine?
What does the Economic Order Quantity (EOQ) formula help determine?
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Which of the following accurately describes the difference between a Bin Card and a Stores Ledger?
Which of the following accurately describes the difference between a Bin Card and a Stores Ledger?
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Which journal entry correctly represents the deduction from salaries or wages?
Which journal entry correctly represents the deduction from salaries or wages?
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What is represented by the Break-Even Point (BEP) in marginal costing?
What is represented by the Break-Even Point (BEP) in marginal costing?
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How is the Average Stock Level calculated using the Economic Order Quantity?
How is the Average Stock Level calculated using the Economic Order Quantity?
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What defines the calculation of Absorbed Overhead?
What defines the calculation of Absorbed Overhead?
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Which statement accurately describes the structure of variable costs at BEP?
Which statement accurately describes the structure of variable costs at BEP?
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What does the Minimum Stock Level formula account for?
What does the Minimum Stock Level formula account for?
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What do the assumptions of constant technology imply for Break-Even Point analysis?
What do the assumptions of constant technology imply for Break-Even Point analysis?
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Study Notes
Unit 01 - Accounting & it's importance
- Accounting provides financial statements for stakeholders and specific managerial information for managers.
- Financial statements are for existing and potential investors, lenders, and other creditors.
- Managerial information is for managers' decision-making.
- Accounting follows a sequential order: transactions, source documents, prime entry books, posting to ledger accounts, preparation of trial balance, and financial statements.
Differences between Financial and Management Accounting
- Financial Accounting: general purpose, internal and external users, compulsory reporting, annually, historical.
- Management Accounting: specific purpose, internal users, not compulsory reporting, on demand, present and forecasted.
Accounting Elements
- Assets: resources controlled by the entity.
- Liabilities: present obligations of the entity.
- Equity: residual interest in the assets of the entity after deducting liabilities.
- Expenses: decreases in economic benefits.
- Income: increases in economic benefits.
Measurement Basis of Accounting Elements
- Historical cost: the original cost of acquiring an asset.
- Current cost: the current market value of an asset.
- Fair value: the price that would be received to sell an asset or paid to transfer a liability in an arm's length transaction.
- Value in use: the benefit that an entity expects to receive from an asset as it is used in its present condition.
Qualitative Characteristics of Accounting Information
- Fundamental: relevance, faithful representation, materiality.
- Enhancing: comparability, verifiability, timeliness and understandability.
Main Underlying Assumptions
- Going concern: assumes the entity will continue to operate for the foreseeable future.
New Trends of Accounting
- Computerized Accounting: using computers for accounting tasks.
- Human Resource Accounting: considering human resources as assets.
- Environmental Accounting: evaluating the environmental impact of business operations.
- Inflationary Accounting: considering inflation when valuing assets.
- Social Responsibility Accounting: recognizing social and environmental considerations.
Unit 02 - Accounting Equation
- Basic Accounting Equation: Assets = Liabilities + Equity
- Accounting Equation: Adds Capital/Income + Drawings/Expenses = Final Accounting equation
- Net Asset Approach: Profit + Loss = Net Approach
- Net Assets are the assets that are left after deducting liabilities
- VAT and EPF recording are explained with examples.
Unit 03 - Double Entry System
- Double-entry bookkeeping: every transaction affects at least two accounts.
- All transactions are in debit and credit, hence all transactions have opposite effects on two sides.
- Recording examples of various transactions (credit sales, credit purchases, return sales, discount received...)
Unit 04 - Prime Entry Books
- Chronological records of business transactions.
- Different prime entry books (Cash Receipt Journal, Cash Payment Journal, Sales Journal, Purchase Journal, Sales return Journal, Purchase return Journal, Petty Cash journal, General Journal).
- Recording various transactions related to cash and non-cash receipts.
Unit 05 - Accounting Concepts
- Assets: Results from past transactions, controlled by the entity, have the potential for future economic benefits.
- Liabilities: Results from past transactions, represent present obligations of the entity.
- Equity: Residual interest in assets after deducting liabilities.
- Income: increases its assets, decreases liabilities that result.
- Expenses: decrease assets, increase liabilities, and reduce equity.
- Recognition criteria (relevant information, faithful representation, economic benefits, compliance with definitions, etc).
- Business entity: independent from owners and others.
- Going concern: assumed to operate indefinitely
- Periodicity: revenue and expenses are recognized on a regular basis.
- Money measurement: financial statements recorded in a currency.
Unit 06 - Sole Trader Adjustments
- Accrued expenses (relevant expense DR, accrued expense CR).
- Prepaid expenses (prepaid expense DR, relevant expense CR).
- Income receivable (income receivable DR, relevant income CR).
- Income received in advance (relevant income DR, income received in advance CR).
- Stock in transit (closing stock DR, cost of sales CR).
- Closing stock adjustment (closing stock DR, cost of sales CR).
- Stock written off (stock written off DR, cost of sales CR)-
- Stock damages (stock Loss DR, insurance receivable DR).
- Stock sent on Sale or Return (eliminate entry from books).
Unit 07 - Manufacturing Accounts
- DM + DL + DO = PRIME COST
- DM + DL + DO + POH + Non-production overheads = TOTAL COST
- Prime Cost + Total Overheads-Non Manufacturing Cost = Manufacturing Cost
- Cost of Sales = DM + DL + DO + POH + Finished Goods
- Explanation and calculations of the increase and decrease of stock.
Unit 08 - Nonprofit Organizations
- Receipts & Payments: focused on cash inflows and outflows.
- Income & Expenditure: recognizes revenue and expenses according to when they are earned or incurred.
- Accounting treatment for life memberships, special funds (Building, R&P funds).
Unit 10 - Partnership
- Calculating goodwill when a partner is admitted or retires.
Unit 11 - Accounting Standards
- Sri Lanka Accounting Standards Committee & Sri Lanka Auditing Standards Committee.
- Responsibilities regarding the preparation of accounting practices according to Sri Lanka Accounting and Auditing Standards.
- Conceptual framework's functions.
- Objectives of financial statements.
- Accounting Standards rules.
Unit 12 - Limited Company
- Differences between bonus issues and right issues on their impact on cash and equity.
- Explanations and journal entries for cash, share capital, share issue expenses.
- Comprehensive income calculation (total income - total expenses).
- First time revaluation and subsequent revaluation loss explanations and journal entries.
Unit 13 - Accounting Ratios
- Explanation of profitability ratios, gross profit, net profit ratios.
- Explanation of liquidity ratios, current and quick ratios.
- Explain about leverage ratios, debt, equity ratios.
- Explanation of relationships between turnover ratios and collection periods
Unit 14 - Cost Accounting
- Explanation of cost units.
- Diagrams showing the material purchasing process and related documents.
Unit 15 - Marginal Costing
- BEP Assumptions.
- Break Even Point calculations, using the total fixed cost and contribution per unit.
Unit 16 - Investment Appraisal
- Calculations of the average rate of return, payback period, and net present value (NPV).
- Explanation of assumptions, advantages, and disadvantages of payback period.
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Description
Explore the foundational concepts of accounting, including its significance for stakeholders and the distinction between financial and management accounting. This quiz also covers key accounting elements such as assets, liabilities, and equity, enhancing your understanding of financial statements and managerial information.
