chapter 1

Question 1

What theory did Luca Pacioli develop?

Answer 1

double-entry accounting

Question 2

According to Pacioli, what 3 things did a successful merchant need?

Answer 2

1. A sufficient amount of cash or credit
2. Thorough bookkeeping
3. an easy accounting system

Question 3

who are the users of accounting?

Answer 3

1. government and their agencies
2. trade unions and employees
3. customers
4. lenders
5. management
6. investors
7. general public
8. suppliers

Question 4

what is GAAP and what is its core function?

Answer 4

The generally accepted accounting principles govern the manner in which each country reports its financial transactions. regulating the preparation and presentation.

Question 5

What is IAS?

Answer 5

the accounting Standards replaced by IASB

Question 6

What is IFRS?

Answer 6

international financial reporting standards

Question 7

what are the IFRS equivalents of the following
- debtors
- creditors
- sales
- trading stock

Answer 7

• accounts receivables
• accounts payable
• revenue
• inventory

Question 8

list the fundamental qualitative characteristics of a financial statement

Answer 8

• relevance
• faithful representation
• credibility
• comparability
• Materiality as a component of relevance
• verifiability
• timeliness

Question 9

What is management accounting?

Answer 9

1. focused on the future
2. internal practice
3. created when needed
4. detailed report per department
5. no framework to follow

Question 10

What is financial accounting?

Answer 10

1. reports on past events
2. reports to outside stakeholders
3. reported at the end of the financial year
4. overall performance of the whole company
5. follows IFRS framework