what is the role of accounting
to record, classify, and summarise the events that affect the economic wealth of a person or a company, using specific language or rules (during a period of time, giving true and fair view of resources at a time)
going concern
companies are able to defer recoginition of some expenses (eg. depreciation) because they will continue to operate in the future
accrual
record financial actions when they occur, rather than only when cash is exchanged
consistency
once a company adopts an accounting method, they should stick with it
prudence
expenses and liabilities are recognised right away, when with uncertainty while revenue is only recognised when certainty exists
no offsetting
not showing items that would usually be shown seperately as net amount
materiality
strict application of certain accounting principles may be waived when the materiality of items is of little significance and doesnt affect fair representation
journal
day to day chronological register of accounting events (“diary”) -> annotations = entries
general ledger
includes all amounts listed in journal and classified by accounts
trial balance
listing of general ledger accpimts with sums and net balances of accounts
true or false The profit and loss account for the period reflects the overall performance of a company
T
Only situation accounts (or balance sheet accounts) appear in the closing entry.
T
Choose the corresponding group from the Spanish standards (SGAP):
Accounts to record the value of net equity and non-current liabilities.
group 1
Choose the corresponding group from the Spanish standards (SGAP):
Accounts to record the net value of non-current assets
Choose the corresponding group from the Spanish standards (SGAP): Accounts to record short-term receivables and payables that have not originated in financial transactions.
Group 4
Choose the corresponding group from the Spanish standards (SGAP): Accounts to record the net value of the inventories of various items that the company temporarily owns for commercial and manufacturing activities. These accounts are part of current assets.
group 3
Choose the corresponding group from the Spanish standards (SGAP): Accounts to record the net value of the various items of expenses and losses incurred by the company. These accounts appear in the debit side of the profit and loss account.
group 6
Choose the corresponding group from the Spanish standards (SGAP): Accounts to record short-term receivables and payables that result from financial transactions. Also included in this group the accounts to record treasury.
group 5
Choose the corresponding group from the Spanish standards (SGAP): Accounts to record the net value of the various concepts of income and profit incurred by the company. These accounts appear in the credit side of the profit and loss account.
group 7
The account (708) Sales returns and similar operations account should have a credit balance:
FALSE, when a sale is returned, it decreases your revenues meaning it is debitted
The Purchase returns and similar account should have a debit balance
FALSE: when you return a purchase, you decrease the expense, meaning you credit it.
gross salary =
NET salary + withholding tax + withholding employee contribution
