Free VCE Year 11 Accounting Flashcard Review
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Name two non-financial start-up motives.
Independence and serving a community.
Is new owner capital internal finance?
No. It enters from outside the business and is external finance.
How can an accountant support a start-up?
Prepare a cash budget and interpret likely financial results.
What distinguishes a sole proprietor?
One owner, generally with unlimited liability.
What distinguishes a company?
Separate legal entity owned by shareholders.
Define an asset.
A present economic resource controlled because of past events.
Define a liability.
A present obligation to transfer an economic resource because of past events.
What is owner’s equity?
Assets less liabilities.
Are drawings an expense?
No. They are distributions to the owner.
How is mark-up price calculated?
Unit cost × (1 + mark-up rate).
How is break-even quantity calculated?
Fixed costs ÷ contribution per unit, rounding upwards when necessary.
Why compare varied sources?
Different sources reveal different facts and have different biases and limitations.
What does the entity assumption require?
Separate business transactions from the owner’s private activities.
When is service revenue recognised on an accrual basis?
When the service is earned, even if the customer has not paid.
What does a sales invoice document?
The customer, service, date, amount and credit terms.
What is the effect of collecting a receivable?
Bank increases and receivables decrease; no new revenue.
What is the accounting equation?
Assets = liabilities + owner’s equity.
How is supplies used calculated?
Opening supplies + purchases − closing supplies.
What enters a cash payments journal?
All cash payments, classified by their purpose.
How is equipment purchased for cash classified in a Cash Flow Statement?
An investing cash outflow.