Accounting Terminology,

Analyse
accounting information in assessing the performance of a business operated as a sole trader in
such matters as profitability and liquidity;
debtors using an ageing analysis;
the information presented in accounting reports and budgets for a business.

Balance
ledger accounts at the end of an accounting period;
the 'disposal of asset' account to determine the profit or loss on disposal of assets.

Calculate
owners equity (capital) from a given list of assets and liabilities at a particular date;
the amount of profit earned from a given set of information relating to a specific period of time.

Check
the accuracy of ledger recordings;
a bank statement against the cash records of a business.

Classify
items into categories of assets, liabilities and owners equity, with revenue and expenses as elements of
owners equity;
items in Profit and Loss statements to provide information for assessing the performance of different
functions or responsibilities.

Compare
a 'T' ledger with a three column ledger;
the cash method of recognising a transaction with the accrual method of recognising a transaction.

Construct
a control account from data provided, e.g., a debtors control account, to determine credit sales;
a table showing the impact of different methods of depreciation on the Profit and Loss statement and
balance sheet.

Criticise
the preparation of annual accounting reports in terms of their value to the management of a business.

Debate
the view that a perpetual inventory system of recording for stock is a better system than a physical
inventory system for recording stock.

Define
accounting terms
Demonstrate
that 'equalling' totals at the foot of the trial balance does not ensure that accuracy has been achieved in
ledger recording;
that profit is an estimated measure.

Describe
the accounting process in terms of its recording, reporting, interpreting and budgeting
functions;
what is involved in recording subsidiary ledger stock records using identified cost, and in
using assumed FIFO cost flows.

Design
columnar special journals to record transactions of a like nature;
suitable headings for reports which specifically state the name of the firm, the type of report,
and the exact length and/or exact date of the report.

Discuss
alternative methods of revenue recognition and expense recognition;
each accounting principle in terms of the effect on each of the recording and reporting procedures.

Distinguish
between the asset approach to recording a payment in advance and the expense approach to prepaid
expenses;
between a current asset, and a non-current asset and a current liability and a non-current liability.

Enumerate
with explanations, the reasons for a business adopting a perpetual system of recording for stock.

Explain
the consequences for both the Profit and Loss statement, and the balance sheet of alternative
values for stock;
why the historical cost balance sheet does not show the current worth of the firm.

Evaluate
alternative methods of determining the cost of stock;
alternative procedures in the recording and reporting of inventory.

Group
ledger accounts in drawing up a chart of accounts;
transactions according to their effect on the accounting equation.

Identify
the accounting principles involved in accounting for non-current assets and depreciation;
the significance of a stocktake held at the end of the accounting period.

Illustrate
how the entity principle effects the recording of transactions;
how a firm may experience an increase in cash but have operated at a loss.

Interpret
information provided on the profitability and liquidity of a firm.
accounting data in assessing the performance (including profitability and liquidity) of a business from an
internal management point of view.

Justify
the application of the 'lower of cost and net realisable value' to individual items and groups of items but not
to aggregate stock valuations.

List
sources of finance available to a sole trader for normal trading and for expansion;
advantages resulting from the use of a subsidiary ledger.

Outline
advantages and disadvantages resulting from the use of 'double entry' recording compared with 'single
entry' recording;
the differences between the recording and reporting for stock under a perpetual inventory system, and the
recording and reporting for stock under a physical recording system.

Prepare
appropriately classified reports, such as a Profit and Loss statement and balance sheet for a sole trader;
budgeted reports, such as anticipated revenue, anticipated expenses, budgeted Profit and Loss, budgeted
balance sheet, and cash budget.

Prove
that assets will always equal liabilities plus owners equity;
that 'single entry' and 'double entry' recording procedures are able to produce the same accounting
information.
Rank
documents in the order in which they are used for the sale of goods;
current assets in the order of liquidity
Recall
the rules of posting involved in 'double entry' recording;
the accounting equation.

Recognise
a transaction involving credit;
financial transactions amongst a set of business activities.

Reconcile
the balances in subsidiary ledger accounts with the balance in the related control account;
the bank balance shown in the firm's ledger account with that shown on the bank statement.

Record
accounting transactions using both single and double entry recording procedures.
transactions for firms selling services, firms selling goods, and firms selling goods and services.

Report

the performance of a sole trader-operated business in a fully classified Profit and Loss statement;
the financial position of a business in reports showing such information as anticipated revenue, anticipated
expenses, budgeted profit, budgeted and historical cash flows, and budgeted wealth.

Rule
appropriate journals or cash books to record information from original documents;
ledger accounts to receive information being posted from journals.

State
when each of the following methods of revenue recognition would be appropriate: point of sale, point of
delivery, collection of cash, and stages in completing a contract;
why it is inappropriate to arbitrarily allocate expenses that do not bear a direct relationship to a particular
department or product

Suggest
advantages in a recording system using control accounts;
ways in which a cash budget is able to benefit a business.

Summarise
the many reasons why a firm must continually review its policies on selling prices, controlling costs,
regulating terms of sale, limiting the level of stock on hand, controlling cash, and close revenue and
expense accounts necessary to calculate profit in the ledger at the end of the accounting period and transfer
that profit to the owner's capital account.

Tabulate
examples of adjusting and closing journal entries;
examples of balance day adjustments under both 'single entry' and 'double entry' recording procedures.

Use
a set of cash books to record a series of transactions evidenced by original documents;
ledger accounts based on 'double entry' to record a series of transactions evidenced by original documents

Write
about the role of accounting in business;
about the problems of defining costs, and the effect of alternative values of stock in the Profit and Loss
statement and the balance sheet.