Unit 4: Financial Accounting

Question Paper Pattern

• Two marks for long answers

Accounting

• Definition: Accounting is the method of systematically recording financial transactions.
• 2 marks description
• Money transactions are recorded in financial accounting.

Accounting Concepts

• Business Entity Concept

  • Recognizing the business and the owner separately
  • Recording business transactions separately

• Dual Aspect Concept

  • Recording the two sides of transactions
  • Mainly debit and credit entries

• Expenses Concept

  • The method of reporting expenses in detail
  • Classifying different types of expenses

• Building Value Concept

  • Based on book value and market value
  • Explaining assets and liabilities

• Financial Year Concept

  • Preparing accounts from the beginning to the end of the financial year
  • Understanding the performance of the business

• Profit and Revenue Concept

  • Managing expenses and income
  • Measuring the profit and loss of the business

Accounting Conventions

• Guidelines to follow standard practices
• Conservation: Predicting losses to estimate
• Consistency: Implementing a method constantly without changes
• Materiality: Reporting significant items
• Full Disclosure: Providing comprehensive information

Assets and Liabilities

• Assets: Present and future values
  • Physical: Machinery, property
  • Non-physical: Intellectual property
• Liabilities: Your financial obligations
  • Current and long-term

Debit and Credit

• Debit: The expenditure of a transaction
• Credit: The received amount of a transaction
• Descriptions and examples

Journals

• General: Recording financial transactions
• Detailed Records: Complete details of transactions
• Examples