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FAC 1503 LEARNING UNITS 1-7 Online Assesments
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Online Self-Assessments of Learning Units 1-7 of FAC1503 Pages 45
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20211
FAC1503
Online Learning Units
Assessment Questions and Answers
Self-assessment Learning Units 1 – 7
Written by
Camecia Cass
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1. Self-assessment: Learning Unit 1
1. What is accounting?
Accounting is the bookkeeping method, which generates a financial record of all the
business transactions entered into by a business (entity).
2. How does accounting convey information?
Accounting uses words and figures to convey financial information to the users of
such information. These words and figures are known as the concepts, principles,
and procedures of accounting.
3. How will you define financial accounting?
Financial accounting is the orderly and systematic identification and recording of the
monetary values of financial transactions of an individual or business entity, and the
reporting of the results of these transactions by way of the preparation and
presentation of financial statements to enable the users to use the information as a
basis for decision-making.
4. What is the objective of financial accounting?
To enable the users of financial information to ascertain readily what the financial
results and financial position of the entity is.
5. What is the objective of financial statements?
The objective of financial statements is to provide information about the financial
position, performance and changes in the financial position of an entity that is useful
to a wide range of users in making economic decisions.
6. What does bookkeeping entail?
Bookkeeping is the systematic recording of transactions.
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7. What is accounts receivable?
Accounts receivable are amounts due to the business from customers/clients that
have received goods or services on credit. The amounts arise from providing
services or products to clients and they have not yet paid the business.
8. What is accounts payable?
Accounts payable is money owed by a business to its suppliers. The amounts arise
from people who have supplied the business with goods and services but the
supplier has yet to be paid.
9. What is an expense?
An expense is a cost related to the day-to-day running of a business. An expense is
a debit.
10. What is income?
Income is the revenue a business receives from selling services and goods to clients
or customers and returns on investments.
11. Explain the nature of
(i) Assets are the possessions of the entity.
(ii) Equity is the interest which the owner has in the business and which the entity
therefore owes to him.
(iii) Liabilities are creditors’ interest or interests of parties other than the owner(s).
Liabilities are therefore the debts of the entity.
12. What category of account is accounts payable?
Accounts payable is a liability account (a debt of the business).
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13. What element is accounts payable?
Accounts payable is a liability.
14. What is a current asset?
A current asset is either cash or a resource that is expected to be converted into
cash within one year.
15. What is a current liability?
Current liabilities are debts of a business (money owed to third parties), e.g. bank
overdrafts and creditors
2. Self-assessment Learning Unit 2
1. What is posting?
Posting is recording the information contained in the journal in the ledger accounts.
2. What is the double–entry system?
The double-entry system implies that there are two sides or aspects to every
business transaction and this translates to for every debit there must be a
corresponding credit.
3. What is an account?
An account is: a part of the accounting system , used to classify and summarise the
increases, decreases, and balances, of each asset, liability, and equity item (i.e.,
revenue, expense etc).
4. What does bookkeeping entail?
Bookkeeping is the systematic recording of transactions.
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