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What is a sole trader?
A sole trader is a business that is not a legal entity owned and is operated by one person.
What is a partnership?
A partnership is an unincorporated business owned by two or more partners with a common view to make a profit.
What is a company?
A company is an incorporated body registered under the Corporations Act 2001. It has a legal existence separate from its owners and is subject to legal regulation administered by ASIC.
What is the accounting entity assumption?
The assumption that the business entity is viewed as being separate from the owner(s) and the business records are kept separate from the records of the owner.
What is the principle of double entry?
Every transaction has a two fold effect, each part affecting one or more of the elements of the accounting equation in such a way that it remains in balance.
What is the accounting equation?
- The equation expresses the relationship between a firm's assets and the sources from which these have been funded and can be shown as:
- A = L + E
What is the accounting period assumption?
The operating life of a business can be divided into equal, arbitrary time intervals for reporting purposes.
What is the going concern assumption?
The going-concern assumption is that the life of the business will continue in operation for the foreseeable future and this will be reflected in the asset values in the balance sheet.
What is the accrual basis assumption?
Income and expense are recognised when they take place - income when it is earned and expense when it is incurred - not necessarily when the payments are made or received.
What is the monetary assumption?
Measurements of the elements of financial statements and their reporting shall be in terms of monetary values (i.e.the currency of the country in which the report is being presented) and only items capable of being expressed in monetary terms are included in financial reports.
What is the historical cost principle?
Assets and other expenditures will normally be recorded and reported at their actual, historical cost, as evidenced by the documents used to support the original payment.
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