Year 11 - Income Statement

Revenue is...

• a decrease in assets or decrease in liabilities that leads to an increase in owner’s equity (except for a capital contribution)

• an increase in assets or decrease in liabilities that leads to an increase in owner’s equity (except for a capital contribution)

• an increase in assets or decrease in liabilities that leads to an increase in owner’s equity (including a capital contribution)

• a decrease in assets or increase in liabilities that leads to an increase in owner’s equity (including for a capital contribution)

Which of the following best describes an expense?

• An increase in assets or decrease in liabilities that leads to an increase in owner’s equity

• A decrease in assets or increase in liabilities that leads to a decrease in owner’s equity

• An increase in liabilities or decrease in assets that leads to an increase in owner’s equity

• A decrease in liabilities or increase in assets that leads to a decrease in owner’s equity

Which accounting assumption considers the following: revenue is recognised as earned in the period in which the expected inflow of economic benefits can be measured in a faithful and verifiable manner

• Going Concern Assumption

• Period Assumption

• Accrual Basis Assumption

• Accounting Entity Assumption

Which accounting assumption considers the following: assumes that the life of the business is continuous or never-ending, so to follow this assumption alone means that profit could never be determined!

• Going Concern Assumption

• Period Assumption

• Accrual Basis Assumption

• Accounting Entity Assumption

Which accounting assumption allows us to it allows us to divide the life of the business into arbitrary periods in order to determine profit.

• Going Concern Assumption

• Period Assumption

• Accrual Basis Assumption

• Accounting Entity Assumption

True or False:

Revenue then represents the increase in owner’s equity that occurs through business activities, and in most cases will be what the business has earned from the services that it has provided to its customers. The key here is that revenue must increase owner’s equity, but not as a consequence of the owner making a contribution to the business

• True

• False

True or False:

expenses refer to what the business has consumed to earn revenue, not what the owner has withdrawn for personal purposes, so Drawings is excluded as an expense

• True

• False

Which of the following cash inflows are considered revenue?

Groups:

(a) Revenue

,

(b) Cash receipts - not revenue

• Cash Fees

• GST Recieved

• Recipet from Accounts Receivable

• Loan from Bank

• Interest on Bank Account

• Capital Contribution

• Credit Fees

An income statement is...

• an Accounting report that details the gst liability and gst refund incurred during the reporting period

• an Accounting report that details the current assets and current liabilities during the reporting period

• an Accounting report that details the cash inflows and cash outflows incurred during the reporting period

• an Accounting report that details the revenue earned and expenses incurred during the reporting period

Which of the following are expenses?

Groups:

(a) Expense

,

(b) Cash Outflows - not expenses

• Materials

• Wages

• Electricity

• Payments to Accounts Payable

• Mortgage repayment

• Interest on Mortgage

• GST Paid

• Office Equipment

• Drawings

• GST Settlement