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A snapshot of the summary - Accskills 1
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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?
- Private property
- Capital
- Commerce
- Credit
- Writing
- Money
- Arithmetic
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With which principles must an accountant comply according to the IFAC code?
- Integrity
- Objectivity
- Professional competence and due care
- Confidentiality
- Professional behaviour
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With what is accounting concerned with?
- Recording data
- Classifying and summarising data
- Communicating what has been learnt from the data
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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.
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Where is the creditor shown in the statement of financial position?In the accounts payable.
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2 The double entry for assets, liabilities and capital inventory
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What is a T-account?Account with a t-shape.
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What are the double entry rules for bookkeeping?Assets increase -> DebitAssets decrease -> CreditLiabilities increase -> CreditLiabilities decrease -> DebitCapital increase -> CreditCapital decrease -> debit
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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
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How are accounts payable and accounts receivable treated in the accounting books?There is a separate account maintained for each creditor and debtor.
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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.
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The following topics are covered in this summary
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account, goods, inventory
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balance, totals, credit
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account, trading, profit
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statement, position, financial
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goods, cost, outwards
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concept, business, information
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accounts, book, ledger
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discounts, allowed, accounts
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discounts, credit, customer
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credit, amount, card
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accounts, entries, journal
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vat, business, amount
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tax, income, pay
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expenditure, capital, non-current
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debts, account, allowance
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method, depreciation, asset