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BPP FA > Module 1 > Flashcards

Module 1 Flashcards

1
Q

What are Assets?

A

A present economic resource controlled by the entity as a result of past events

An economic resource is a right that has the potential to produce economic benefits

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2
Q

What is an economic resource?

A

A right that has the potential to produce economic benefits

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3
Q

What are liabilities?

A

A present obligation of the entity to transfer an economic resource as a result of past events

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4
Q

What is capital?

A

The residual interest in the assets of an entity after deducting all its liabilities

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5
Q

What is income?

A

Increases in assets, or decreases in liabilities, that result in increases in equity, other than those relating to contributions from holders of equity claims

Encompasses both revenue and gains

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6
Q

What are expenses?

A

Decreases in assets, or increases in liabilities, that result in decreases in equity other than those relating to distributions to holders of equity claims

Encompasses losses as well as expenses

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7
Q

What does DEAL stand for?

A

DEBIT

Drawings
Expenses
Assets
Loss

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8
Q

What does CLIP stand for?

A

CREDIT

Capital
Liability
Income
Profit

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9
Q

What is the separate entity concept?

A

From the business or organisations perspective

Transactions affect the entity directly

Profit goes to owner so not an asset

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10
Q

What are the three types of business entities?

A

Sole trader

Partnership

Limited liability company

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11
Q

Why is he limited liability company different to sole traders and partnerships?

A

It is a legal separate entity

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12
Q

What are the five main elements of an entity’s financial statements?

A 
Assets
Liabilities 
Capital
Income 
Expenses
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13
Q

What is the Accruals concept?

A

Recognise transactions in the period that they happen

Don’t rely on movements of cash

‘Matching’ concept

Revenue and costs are recognised as they are incurred not as money is actually received

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14
Q

What is prudence?

A

Exercise a degree of caution

Don’t overvalue or overestimate

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15
Q

What is the matching concept?

A

Accruals

Recognise revenue and costs as they are incurred not as money is actually received

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16
Q

What are the 5 Books of Prime Entry?

A 
Purchase Daybook
Cashbook Payments 
Journal Book
Cashbook Receipts 
Sales Daybook
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17
Q

What does the Purchase Daybook record?

A

Credit purchases only

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18
Q

What does Cashbook Receipts record?

A

Cash sales, Credit card sales

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19
Q

What does the sales Daybook record?

A

Credit - business gives customer days to pay

20
Q

What happens after the books of prime entry?

A

Totals posted into nominal ledger

Where double entry happens

21
Q

Nominal ledger what happens at year end

A

Trial balance

22
Q

After trial balance?

A

Profit and Loss Account

Balance Sheet

23
Q

What does the journal book record?

A

Transactions not involving us of the other books of prime entry

24
Q

What is the nominal ledger?

A

A summary record of the monetary amounts in each account

25
Q

What categories is the nominal ledger split into?

A 
Assets
Liabilities
Capital
Income
Expenses
26
Q

What does the P+L show?

A

The total profit or loss earned by the entity in the period

‘For the year ended’

27
Q

What is the balance sheet?

A

Lists the assets, liabilities and capital of an entity at the year end and provides a snapshot of the financial position as at that date

28
Q

What is a credit note?

A

If good last sold on credit are unacceptable the business may issue a credit note

Not the same as a refund
Effectively cancels out credit sale

29
Q

What is a sales invoice?

A

Issued to the customer when a business sells goods or services on credit

Detail what is provided and how much is due/how/when to pay

30
Q

Purchase ledger control account column of Cashbook represents

A

Payments made to suppliers on the purchase ledger

31
Q

Total column of cashbook receipts is posted where in the nominal ledger?

A

Bank

Receivers money from trade debtors and cash sales, reflect effect on the bank account

32
Q

What are the two types of limited liability company?

A

LTD (private)

PLC (public) stock exchange

33
Q

Sales Daybook and purchase Daybook are

A

Sales and Purchases on credit

34
Q

Cashbook record what

A

All cash received and call cash paid

Cashbook receipts- cash coming in, sales and settle trade debtor balances

Cashbook payments- cash going out

35
Q

Journal book

A

Covers what others don’t

Adjustments

36
Q

Drawings are in which financial statement?

A

Balance sheet

Never p+l

37
Q

Depreciation does what in the balance sheet and p+l?

A

Reduces assets b/s

Increases expenses p+l

38
Q

Possible and probably have what % chance of happening?

A

Probable 50%+

Possible -50%

39
Q

Number at the bottom of the balance sheet is what?

A

The value of the business

40
Q

Trade debtor is in what part of the balance sheet?

A

Asset as they owe money to you

41
Q

An invoice raised to the customer shows?

A

Bought on credit, given days to pay

42
Q

Customer pays gross or net?

A

Gross

43
Q

Business gets gross or net?

A

Net, vat goes to gov from gross figure

44
Q

Fixed/non-current time period vs current

A

More than 12 months for non-current

Less than 12 for current

45
Q

What is a provision?

A

A liability but we don’t know when or how much

E.g a warranty, has to be a reliable estimate

46
Q

Sold on credit double entry

A

Dr trade debtor

Cr bank

47
Q

Bank account goes where in which financial statement?

A

Asset in balance sheet

BPP FA (18 decks)

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