HOW WELL DO YOU KNOW YOUR COURSE MATERIALS?
These questions (and many others) will be addressed in detail in the TSFX
“Essentials – Year 12 Exam Revision Lectures”.
UNIT 3 ACCOUNTING
Do all expenses result in a reduction in the bank balance?
No. Some expenses are not cash outflows.
Could you list examples of such expenses?
Does the Cash flow from Operating Activities equal Profit or Loss for the same period?
No. There are many reasons why these two figures will differ eg. Depreciation and discounts are
non-cash expenses.
Could you list four items that could explain why Cash flows from Operating Activities are lower than the
profit result?
The accounting equation will always balance. True or false?
The answer is true.
Could you explain why this statement always holds true?
Can you name three transactions relating to GST that involve a cash inflow?
1. GST on cash sales.
2. Debtor Collections (includes GST).
3. GST refund from ATO.
Why is GST a potential cash flow problem for a business? Refer to transaction 2 in your answer.
With reference to an accounting principle and qualitative characteristic explain why balance day
adjustments are necessary.
The life of a business is divided to determine profit by matching revenues earned with expenses incurred
during a period to provide useful information for decision-making.
Why is the information in the special journals not sufficient to produce accurate profit results?
Why does a business make a higher profit using FIFO during a period of rising prices?
FIFO assumes that the oldest stock is sold first.
Could you explain why this reduces the cost of sales?
Do all transactions that lead to an increase in net assets represent revenue?
No. The exception is new capital.
Can you name a revenue that reduces liabilities?
Explain the effect on the Accounting Equation when there is a GST refund from the Aust. Tax Office.
No effect.
Can you explain why?
Explain why the GST Settlement from the Australian Tax Office is recorded in the sundries column
rather than the GST column in the Cash Payments Journal.
The GST settlement is recorded in the sundries column because it represents the payment from the ATO of
last period's GST balance.
What then is the purpose of the GST column?
Justify the use of Agreed Value rather than Historical Cost?
Agreed Value represents the economic benefit that is being acquired by the business entity. This gives a
truer reflection of the net worth of the business.
Can you identify and discuss the conflict that this causes between two qualitative characteristics?
Can you explain why an existing stock gain will increase if a sales invoice had inadvertently been
omitted?
Hint: The physical stock take figure must remain the same.
These questions (and many others) will be addressed in detail in the TSFX
“Essentials – Year 12 Exam Revision Lectures”.