FNSACC412 Ass 2 Patsita.docx - ASSESSMENT 2 1.What is the...

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ASSESSMENT 2 1.What is the difference between cash and accrual accounting? Accrual basis accounting: Businesses that use accrual accounting recognise earnings as soon as they raise an invoice with a customer. And when a bill comes in, it's known as an expense, even though payment will not be made for a further 30 days. Cash basis accounting: Sales and expenses are only considered by companies using cash basis accounting as money changes hands. They should not count invoices sent as purchases, or bills as costs, until they have been settled. Cash base accounting has little to do with the type of payment you receive, despite the term. You will be digitally charged and also do cash accounting. 2.What is the difference between single and double entry accounting? The single entry is a way of tracking financial transactions where only one entry is labelled for either a debit entry or a credit entry for a given transaction. A double entry ensures that an equal credit entry must be filed for any single debit entry, while each credit entry must be done by filing a similar debit entry, ensuring that each entry has an opposite entry. When filing financial statements, companies are required to comply with the dual entry system, as it ensures the arithmetic consistency needed to calculate taxes for the tax department. 3.Pedro's Pasta purchases a car for $8,800 using a loan from the bank suppler. Referring to double entry accounting, what are the two effects of action? Show how you would record the transaction in the ledger. Motor Vehicles Debit $8800 Bank Loan Credit $8800 4. What are performance indicators? Provide 2 different PI’s that can be used for budgets and financial plans. Quality metrics are important measures of progress against the target goal. KPIs work on strategic and systemic reform, have an independent decision-making mechanism and help guide focus to what matters most. For example, it can be used for budgets and financial plans; it can track productivity, viability, consistency, timeliness, governance, compliance, actions, economics, progress of programmes, performance of workers or usage of resources.
5. What is regression analysis? What benefits are there to this technique? The study of regression is a series of mathematical processes used to estimate the relationship between a dependent variable and one or more independent variables. Linear regression, in which a researcher finds a line (or more complex linear combination) that best fits the data according to a specific statistical criterion, is the most common method of regression analysis. The value of a regression analysis for a small company is that it will determine which variables matter most, which it can ignore, and how these variables associate with each other. Study of regression is important because it uses an effective statistical approach that helps a person to determine the relationship between two or more variables of interest.

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