Introduction to Accounting | Answers

Answers will vary; here are acceptable examples

➛ Keeping household expenses
➛ Bank statements
➛ School fee receipts
➛ Hospital invoice
➛ Supermarket till receipts
➛ Charity donation records

1. Buying a laptop
Yes | Money is exchanged.

2. Thinking about buying stock
No | No financial event has occurred.

3. Paying rent
Yes | Cash is paid.

4. Promising to pay next month | no written agreement
No | No enforceable transaction.

5. Receiving cash from customers
Yes | Cash is received.

Posting sales in the sales journal
➛ Bookkeeping

Preparing an income statement
➛ Accounting

Recording receipts in the cashbook
➛ Bookkeeping

Interpreting profit trends
➛ Accounting

1. What is accounting?

Accounting is the process of recording, summarizing, and reporting financial information to help in decision-making.

2. Name one financial statement.

Examples
➛ Income Statement
➛ Balance Sheet
➛ Cash Flow Statement
➛ Statement of Owner’s Equity

3. Give one difference between bookkeeping and accounting.

➛ Bookkeeping records daily transactions; accounting analyzes and interprets them.
➛ Bookkeeping is clerical; accounting is analytical.

4. Accounting is only used in big businesses.
➛ False. | Accounting is used by individuals, small businesses, charities, and governments too.

5. Give one example of a financial transaction.

➛ Paying rent
➛ Receiving cash from customers
➛ Buying inventory
➛ Paying salaries

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Users & Purposes of Accounting ➧ Here