O Level Accounting Revision Flashcards (Based on Notes)

A comprehensive set of practice flashcards covering basic accounting concepts, depreciation, final accounts, source documents, bank reconciliation, control accounts, manufacturing and management topics, financial statements for NPOs and companies, payroll, and more based on the provided notes.

What are the five pillars of accounting?

Assets, Liabilities, Capital, Expenses, Revenues (ALCER).

Differentiate between Non-Current (Fixed) Assets and Current Assets with examples.

Non-Current (Fixed) Assets: machines, motor vehicles, factories; Current Assets: Inventory, Receivables, Cash and Cash Equivalents.

Differentiate between Non-Current Liabilities and Current Liabilities with examples.

Non-Current Liabilities: long-term loans, debentures; Current Liabilities: payables, bank overdraft, short-term loans.

What is the basic accounting equation?

Capital = Assets - Liabilities.

What is the difference between Capital Expenditures and Revenue Expenditures?

Capital Expenditures relate to acquiring/improving non-current assets; Revenue Expenditures are day-to-day running costs.

What is the difference between Revenues and Profits?

Revenues are incomes from business activities; Profits are Revenues minus Expenses.

What is the double-entry system?

Every transaction has a debit and a credit; dual aspect principle.

What is a T-account?

A ledger shaped like a 'T' with Debit (left) and Credit (right) sides.

What is a Trial Balance?

A list of balances from ledgers to check arithmetical accuracy.

What are the final accounts and their components?

Final accounts consist of Income Statement (profit or loss) and Statement of Financial Position (Balance Sheet).

What are Prepayments and Accruals?

Prepayments: expenses paid in advance (current assets); Accruals: expenses incurred but not yet paid (current liabilities). Accrued income and pre-received income relate to incomes.

Explain PAAP and APPA adjustments in final accounts.

PAAP relates to expenses (prepayments and accruals); APPA relates to revenues (accruals and prepayments).

What is Depreciation and why is it needed?

Depreciation is the loss in value of fixed assets over useful life; guided by Prudence and Matching concepts.

List the seven depreciation methods.

Straight Line, Reducing Balance, Revaluation, Usage, Mileage, Depletion, Sum of Years Digits.

What is Straight Line depreciation formula and rate?

Depreciation = (Cost - Scrap Value) / Estimated Useful Life; Rate = (Depreciation / Cost) × 100.

Explain Reducing Balance depreciation.

Depreciation each year = rate × Net Book Value; NBV decreases each year (written-down value).

What is Net Book Value (NBV)?

NBV = Cost − Accumulated Depreciation.

What are common depreciation policies for year of purchase vs year of sale?

Policy options: (1) Full year’s depreciation in purchase year and none in sale year; (2) Full year’s depreciation in sale year and none in purchase year; (3) Pro-rata depreciation when policy is silent.

How is asset disposal treated in accounts?

Compare NBV with sale proceeds: if NBV > Proceeds = Loss; NBV < Proceeds = Gain; NBV = Proceeds = No gain/no loss.

What is Inventory Valuation and NRV?

Valued at lower of Cost or NRV. NRV = Selling Price − Costs of sale. Methods: FIFO, AVCO; LIFO not used under IAS 2; valuation usually at period end.

What are Source Documents used for in accounting?

They prove transactions and include: Quotation, Purchase Order, Sales Invoice, Goods Received Note, Debit Note, Credit Note, Receipt, Cheque Counterfoil, Statement of Account.

What is Bank Reconciliation?

Process of aligning the cash book balance with the bank statement to identify discrepancies and adjust records.

What are the common causes of bank statement discrepancies?

Standing Orders, Direct Debits, Credit Transfers, Bank Charges, Interest on Overdraft/Deposit, Dishonoured Cheques, Unpresented Cheques, Uncredited Deposits.

What are Control Accounts and their purpose?

Sales Ledger Control Account (Total Receivables) and Purchases Ledger Control Account (Total Payables) to detect errors, fraud, and reconcile totals.

What is Departmental Accounting?

Preparing a Columnar Income Statement and a separate Financial Position with expenses allocated by basis to each department.

What is NPO accounting and its main accounts?

Non-Profit Organizations use Accumulated Funds, Receipts and Payments, Income and Expenditure; subscriptions are a major income; possible trading; financing by 'Financed By' in balance sheet.

What is Goodwill and how is it treated?

Goodwill = Purchase Price − Fair Value of Net Assets. It is an Intangible Non-Current Asset; can be amortized/impairment or written off in partnerships.

What are key share capital terms in Limited Companies?

Authorized Share Capital, Issued Share Capital, Called-up Share Capital, Uncalled-up Share Capital, Paid-up Capital; Share Premium; Market Value.

What are dividends and their types?

Interim (during year), Final (end of year), Proposed; Preference vs Ordinary shares; priority in insolvency.

What are the main components of Payroll and deductions?

Gross Pay, Net Pay; Deductions: Statutory (Income Tax, NIC) and Voluntary (pension, trade union, donations); employer NIC included in cost.

What are the basic payroll double entries?

Dr Cost of Employing; Cr Net Pay; Dr Bank; Cr Deductions; Dr Payment to Authorities; Cr Bank.

What are common payroll terms: Clock Card, Time Sheet, Payslip, Payroll Register, Wages Sheet?

Clock Card records time spent; Time Sheet tracks hours by job; Payslip shows details of pay; Payroll Register records all employee pay; Wages Sheet lists workers, rates, deductions.