Summary: Accskills 1

Read the summary and the most important questions on Accskills 1

• 1 The accounting equation and the statement of financial position

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• Which seven key ingredients were required before a formal system could be developed?

  1. Private property
  2. Capital
  3. Commerce
  4. Credit
  5. Writing
  6. Money
  7. Arithmetic

• With which principles must an accountant comply according to the IFAC code?

  1. Integrity
  2. Objectivity
  3. Professional competence and due care
  4. Confidentiality
  5. Professional behaviour

• With what is accounting concerned with?

  • Recording data
  • Classifying and summarising data
  • Communicating what has been learnt from the data

• What is the statement of financial position?

  It shows the financial position of an organisation at a point in time, thus it presents a snapshot. It comprises those accounts with balances not included in the income statement.

• Where is the creditor shown in the statement of financial position?

  In the accounts payable. 

• 2 The double entry for assets, liabilities and capital inventory

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• What is a T-account?

  Account with a t-shape.

• What are the double entry rules for bookkeeping?

  Assets increase -> Debit

  Assets decrease -> Credit

  
  

  Liabilities increase -> Credit

  Liabilities decrease -> Debit

  
  

  Capital increase -> Credit

  Capital decrease -> debit

• What do you need to include when making an entry for a transaction?

  - The date of each transaction

  - Cross-reference title of the other account

  - Appropriate column headings

• How are accounts payable and accounts receivable treated in the accounting books?

  There is a separate account maintained for each creditor and debtor. 

• What is the rule of benefit?

  Identify the accounts affected by a transaction. Debit the account for which there has been an increase in benefit; credit the account which there has been a reduction in benefit.