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level: Part one

Questions and Answers List

level questions: Part one

Question	Answer
What is the term used to describe a period of time for which financial statements are prepared?	Accounting period
What is the type of accounting where expenses are reported at the time they occur, not when the expense is paid?	Accrual Basis
What is the process where a company's accounts are examined by an external body to confirm that all transactions have been recorded accurately?	Audit
What is the term used to describe money that will be used to improve a business in any given way and increase its value over time?	Capital outlay
What is the name for small amounts of cash that are used to buy minor things that are to be used by a business?	Petty Cash
What is the name for the 12 month period that signifies the beginning and the end of an accounting period?	Financial year
What is the term used to describe the amount of money in a business, that is used to keep operations running?	Capital
What is the term used to describe debts which are not recoverable by a business?	Bad debt
What is the name for an individual or company that owns shares or stock in a private company?	Shareholder
What is the term used to describe the distribution of earnings between the shareholders of a company/business?	Dividend
What is the term used to describe assets that potentially have a long term value but no physical form, such as copyrights/patents etc?	Intangible assets
What is the term used to describe assets that can readily be converted into cash within the financial year?	Current assets
What is the term used to describe assets that are a long-term investment, but cannot be readily converted to cash within the financial year?	Non-current Assets
What is the term used to describe caution exercised by an accountant when preparing financial accounts, for instance when providing estimates for assets and liabilities?	Prudence