Accounting flashcards

What this deck covers

• Unit 3: Managing resources for a trading GST business (21 cards, 8 dot points)

  • Accounts payable control in QCE Accounting Unit 3 (2)
  • Accounts receivable, bad and doubtful debts in QCE Accounting Unit 3 (3)
  • Balance day adjustments in QCE Accounting Unit 3 (4)
  • Cash budgets and budgeted cash position in QCE Accounting Unit 3 (2)
  • Cash control and bank reconciliation in QCE Accounting Unit 3 (2)
  • Fully classified financial statements in QCE Accounting Unit 3 (2)
  • Inventory valuation and FIFO in QCE Accounting Unit 3 (2)
  • Non-current assets, depreciation and disposal in QCE Accounting Unit 3 (4)
• Unit 4: Accounting - the big picture (24 cards, 8 dot points)

  • Cash flow ratios and what they show in QCE Accounting (5)
  • Company accounting and equity in QCE Accounting Unit 4 (3)
  • Financial stability and decision-making in QCE Accounting Unit 4 (2)
  • Fully classified Statement of Cash Flows (with GST) in QCE Accounting (5)
  • Horizontal, vertical and trend analysis in QCE Accounting Unit 4 (2)
  • Interpreting a Statement of Cash Flows for decisions in QCE Accounting (1)
  • Liquidity and efficiency ratios in QCE Accounting Unit 4 (2)
  • Profitability ratio analysis in QCE Accounting Unit 4 (4)

Sample cards from this deck

1. Definition

   Balance day adjustments in QCE Accounting Unit 3

   Define Accrued expense (liability)

   The business has used something it has not yet paid for, such as wages owing at year end. Adjustment: debit the expense, credit Accrued Expense (current liability). This increases the expense to include what was incurred but unpaid.

2. Definition

   Cash flow ratios and what they show in QCE Accounting

   Define Compare, do not just calculate

   Compare with the previous year and an industry benchmark.

3. Definition

   Non-current assets, depreciation and disposal in QCE Accounting Unit 3

   Define Accumulated Depreciation

   Accumulated Depreciation is a contra-asset with a credit balance. It is not the same as the depreciation expense: the expense is the current period's allocation, while accumulated depreciation is the total to date.

4. Definition

   Company accounting and equity in QCE Accounting Unit 4

   Define Reserves

   Reserves (where present): amounts set aside, such as a general reserve.

5. Fill the gap

   Accounts receivable, bad and doubtful debts in QCE Accounting Unit 3

   To recognise this, the business estimates doubtful debts and raises an ___, a contra-asset that sits against Accounts Receivable.

   To recognise this, the business estimates doubtful debts and raises an Allowance for Doubtful Debts, a contra-asset that sits against Accounts Receivable.

6. Definition

   Profitability ratio analysis in QCE Accounting Unit 4

   Define Against the owner's expectations or alternative investments

   Analysis then links the movement to a cause and a decision. A falling net profit margin might lead to a decision to review pricing or cut discretionary expenses. A strong ROE might justify reinvesting profit to grow. The ratios are tools for decisions, so an exam answer should always interpret, not just calculate.

7. Key fact

   Accounts payable control in QCE Accounting Unit 3

   Tell me about Recording credit transactions with suppliers

   A GST-registered business buying inventory on credit recognises both the inventory and the GST it can claim back. If goods are returned to the supplier (a purchase return), both the liability and the inventory fall, and the GST originally claimed reverses.

8. Definition

   Fully classified Statement of Cash Flows (with GST) in QCE Accounting

   Define Investing activities

   Cash spent on, or received from, non-current assets such as equipment and vehicles. Inflow: proceeds from selling an asset. Outflow: purchase of an asset. Under AASB Interpretation 1031, investing (and financing) flows are shown net of GST, and the GST on them is classified in operating activities.

9. Key fact

   Cash budgets and budgeted cash position in QCE Accounting Unit 3

   Tell me about Timing is the hard part

   The skill QCAA tests most is timing. A credit sale made in March that the customer pays in April is an April receipt, not a March one.

10. Key fact

    Financial stability and decision-making in QCE Accounting Unit 4

    Tell me about Debt ratio

    A debt ratio of 60% means creditors have funded 60% of the assets and owners 40%. The higher the ratio, the greater the claim of creditors and the lower the buffer protecting them.