Chapter 4

Accounting for Non-accounting Students · 19 exercises

Problem 1

Name two important functions of a trial balance.

3 step solution

Problem 2

What are the four financial statements that make up a set of basic accounts?

2 step solution

Problem 4

Name the two stages involved in preparing the basic accounts.

2 step solution

Problem 5

What term is given to the difference between sales revenue and the cost of goods sold?

4 step solution

Problem 6

What term is given to the difference between the total of all revenue incomes and the total of all revenue expenditures?

4 step solution

Problem 7

Which two formats may be used for the presentation of financial statements?

4 step solution

Problem 9

What is meant by 'inventory'?

4 step solution

Problem 10

What is the term often used in the United Kingdom for inventory?

4 step solution

Problem 11

What is meant by 'opening inventory' and 'closing inventory'?

2 step solution

Problem 13

To which account are opening and closing inventories transferred?

4 step solution

Problem 14

Is opening inventory shown on the statement of financial position at the end of an accounting period?

4 step solution

Problem 15

Is closing inventory shown on the statement of financial position at the end of an accounting period?

4 step solution

Problem 16

What is depreciation?

4 step solution

Problem 17

Name two methods of depreciating non-current assets.

3 step solution

Problem 19

What is meant by the terms 'gross book value' and 'net book value'?

2 step solution

Problem 21

What is (a) an accrual and (b) a prepayment?

2 step solution

Problem 24

What is (a) a bad debt and (b) a doubtful debt?

2 step solution

Problem 25

What is a allowance for doubtful debts?

4 step solution

Problem 27

List eight reasons why the calculation of accounting profit is an arbitrary exercise.

8 step solution

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