BSBFIM501 Manage budgets and financial plans - Assessment 4: Questions

Assessment: BSBFIM501 Manage budgets and financial plans

Assessment: BSBFIM501 Manage budgets and financial plans
Assessment 4:
Questions
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1. What is Accrual Accounting?
Accrual accounting is an accounting method which records the expenditure and revenue of an
organization at the time of incurring the transaction rather than the time when the cash is exchanged.
In other words it is a term which records for the revenue and expenses in absence of the cash in the
transaction.
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2. What is the difference between single and double entry accounting?
Single entry accounting is a normal form of accounting and bookkeeping in which every transaction of the
business transaction is recorded single time and it affects on a single account of the company whereas double
entry accounting is an advanced form of accounting and bookkeeping in which every transaction of the
business transaction is recorded double time and it affects on double account of the company. In case of
double entry accounting system, accrual reporting system is used whereas in single entry, cash basis is used.
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3. List the 5 types of accounts which underpin double entry bookkeeping.

Assessment: BSBFIM501 Manage budgets and financial plans
Double entry accounting system explains that every financial transaction of the business affects
the two accounts. Double entry accounting is a system of record keeping in which every transaction
is recorded twice. list of few accounts of double entry system is as follows:
1. Liability account
2. Expenses account
3. equity account
4. assets account
5. revenue account
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4. Describe what is included in each of the following reports:
Profit and
Loss
 Sales and total turnover
 Cost of goods sold
 Gross profit
 office and administrative expenses
 selling and distribution expenses
 Net profit
Balance Sheet
Assets
 Current assets
 Property, plant and equipment
 Investment
 Intangible assets
 Other assets
Liabilities:
 Owner’s equity
 Long term liabilities and
 Current liabilities

Assessment: BSBFIM501 Manage budgets and financial plans
Statement of
Changes in Equity
Cash flow from operating activities
Cash flow from investing activities
Cash flow from financing activities
Free cash flow
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5. List and explain 5 different financial records that a company must keep.