Define a liability
Briefly explain the difference between a current liability and a non-current liability, and
give an example of each.
What is a contingent liability? Give an example.
You have been asked to advise a client, who is currently operating their business as a sole
trader, whether they should continue with that structure or whether they should form a
limited liability company. State, and briefly explain,
Describe how a business can have low profit and high cash in the bank OR high profit and
low cash in the bank. Explain using at least 2 examples to demonstrate your explanation.
Question 6: Accounting Elements and Concepts
a) Describe the Historic Cost convention
b) Describe the conservatism/prudence convention
c) Describe the objectivity/reliability convention
d) Describe the matching conven
a) Explain the difference between financial accounting and management accounting?
Give 4 specific differences.
b) Depreciation is an expense, and Accumulated Depreciation is a contra asset. Explain.
Explain the difference between operating activities, financing activities and investing
activities in a cash flow statement. Provide at least 2 examples of each stating if the example
you give is an inflow or an outflow.
a) What is the difference between depreciation expense and accumulated
depreciation? Give examples to demonstrate your explanation.
b) In which statement, and in which section, do you record depreciation expense?