| A | B |
|---|
| Organisations can be classified as: | profit seeking or not for profit |
| Where do businesses source resources? | money, goods, services |
| Name the parties (sometimes called stakeholders) that transact with a typical business | owners, lenders, suppliers, employees, customers, IRD, Banks |
| What activites do businesses carry out? | fincancing, investing, operating activities |
| What are the four main types of business ownership? | Sole Traders, Partnerships, Companies, Incorporated Societies |
| Sole Traders are? | Persons who own and operate 'small' unincorporated (not a company) businesses |
| Partnerships are? | Groups of two or more people who onw and operate a 'small' unicorporated business |
| Companies are? | Profit seeking businesses registered under the Companies Act 1993 |
| Incorporated Societies are? | Not-for-profit clubs and societies incorporated under The Incorporated Societies Act 1908 |
| What is the main benefit (to the owners) of operating as a company? | Limited Liability - the owner(s) are not liable for the debts of the business |
| 9 steps in the planning process | Initiate the process, Establish objectives, Determine planning premises, Identifiy alternatives, Evaluate alternatives, Selectionof the appropriate Alternative, Formuate support plans, Implement PLans |
| GST exclusive items | Interest, salaries/wages, residential rent, exports, loan repayments, depreciation, bank charges. |
| 6 basic components of a typical accounting system | Chart of Accounts, Source Documents, Journals, Ledgers, Trial Balance, The Financial Statements |
| 5 financial elements | Assests, liabilities, Equity, Revenue, Expenses |
| Accounting Assumtions | Going concern, Period Reporting, Accrual basis |
| Going concern | the business will continue in the foreseeable future |
| Period Reporting | economic activity can be divided into yearly periods |
| Accrual basis | the effects of transactions are recognised when they occur. Which is often before cash is received or paid |
| Source documents | Documents that evidence a transaction and are used to support entries in an accounting system |
| Journals | A record of transactions and adjustments classified in debit/credit form |
| Ledgers | A record of transactions and adjustments classified by sub-element |
| Trial balance | A record of the balance of each ledger |
| Management Accounting | provides internal decision makers |
| Financial accounting | Provides info to external decision makers |
| Public Accounting | Central Govt and Local authorities publish financial statements |
| 33% | Company Tax rate |
| 1994 | Year of the Tax Act |
| Taxable Income | Gross income less allowable deductions |
| Statement of Concepts | Revenues less expenses (except tax) = surplus (before tax) |
| Equity = | Assets - Liabilities |
| Examples of Assets | Bank, receivables, inventory, fixed assets, intangibles |
| Asset | Something that will bring a material future benefit to the business and that has a value that can be reliably measured |
| Liability | Future financial obligation that can be measured in dollars with reliability |
| Interest | An expense |
| Interest Payable | A Liability |
| Revenues | Transactions that increase equity |
| Expenses | Transactions that decrease equity |
| New Name: Surplus | Old Name: Profit |
| New Name: Deficit | Old Name: Loss |
| New Name: Statement of Financial Performance | Old Name: Profit & Loss Account |
| New Name: Statement of Financial Position1 | Old Name: Balance Sheet |
| Dividends | Distributions of profits |
| Company owners | Not liable for the debts of a business |
| A = | Eq [end of year] + L |
| Eq [end of year] = | Eq [start of year] + surplus + Cont - Dist |
| Assets + Expenses + Distributions = | Equity + contributions + Revenues + Liabilities |
| Who do you love | Mary |
| Who has a cute bottom | Bunny |
| Who is just a baby | Piggy |
| Who has a big smile | BOB |
