Practice for Accounting Exam

Practice for Accounting Exam

60 Questions/Worth 30%/Chapters (1, 3, 4, 5, 6)(12 Questions from each chapter)

Lecture 1:

• Definitions of Income statement items/Balance sheet items?

Asset: A resource controlled by the entity as a result of past events and from which future economic benefits are expected to flow to the entity.

Liability: A present obligation of the entity arising from past events, the settlement of which is expected to result in an outflow from the entity of resources embodying economic benefits.

Owners Equity: Classification of equity items on the balance sheet can be based on their origin or source (that is, contributions from owners or retained earnings

Revenue: The amount of money that a company actually receives during a specific period

Expenses: Decreases in economic benefits during the accounting period in the form of outflows or depletions of assets or incurrences of liabilities that result in decreases in equity, other than those relating to distributions to equity participants.

Income statement - Statement that reports on the income and expenses of an entity for a period, and the resulting profit or loss. (Revenue and Expenses)

Balance Sheet - Statement that reports on the assets, liabilities and equity of an entity at a particular point in time. (A/L/OE)

• -Accounting Equation? :(Assets = Liabilities + Owners Equity)

Statement of changes in Owners Equity (Statement showing the change in an entity’s equity between two reporting periods.)

Lecture 2:

Know all facts about three business structures:?

Sole Trader: Individual who controls and manages a business, and is solely liable for all the business debts.

Partnership: Group of people who come together in business with a common goal of making a profit.

Company (Private(Proparity) and Public)

Private: common form of business structure adopted by small and medium-sized entities (SMEs) in Australia. These companies are largely family owned, and include entities such as plumbing supplies and kitchen companies. Proprietary companies are denoted by the words ‘Pty Limited’ or ‘Pty Ltd’(No more than 50 Owners)

Characteristics:

Advantages and Disadvantages of each:

Which one to choose:

Different format in owners equity section:

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Lecture 3:

Whether something IS or IS NOT a business transaction?

Difference between Personal/Business transactions? Business transitions- Occurrences that affect the assets, liabilities and equity items in an entity and must be recognized (recorded).

Personal: Transactions of the owner unrelated to the operations of the business.

Business: Events that will probably affect the entity without any immediate exchange of goods and services between the entity and another entity.