Term
| What are 2 reasons that it is important to Have financial records? |
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Definition
1 First thr Real Estate Services Act requires certain financial statements to be made when a business is sold.
2 If you have proper understanding of the financial and profit generating aspects of the business, you will be able to determine it's market value |
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Term
| The obligations imposed by the Real Estate Services Act and Rules regarding the brokers own records are.. |
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Definition
| According to rule 8-1 1 A broker must keep such financial records in connection with it's business as are necessaey to ensure the appropriate and timely accounting of all transactions relating to real estate services provided by the brokerage and it's related licensees. |
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Term
| What is the nature and function of financial statements? |
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Definition
Financial statements are the end result of the recording, summarization, and classifying of the accounting process. They represent the the medfium through which information about business transactions that occured over a certian period of time [usually 1 year] are communicated to interested parties.
Financial statements provide quantitative information about a particular entity which is intended to be useful in making economic decisions.
These economic decisions usually involve making rational choices among alternative choices of action. However not all the information that is needed will be contained in the financial statements. |
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Term
| What are the 2 genarally accepted accounting principals? |
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Definition
As of Jan 1 2011 the 2 different sets of generally acceped accounting principals in use in Canada are , public companies are required to report in compliance with the International Financial Reporting Standards [IFRS] and private companies will be able to chose weather their financial statements will comply with the IFRS or the Canadian Standards for Private Enterprise [ASPEs]
Most private companies will elect to comply with the ASPEs which are less onerous because there will be insufficient benefitin compliance with IFRs to offset the higher costs involved. |
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Term
| What are the 6 Accounting Principals? |
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Definition
From page 4.5
1 Cost principal.
2 Revenue Recognition Principal
3 Matching Principal.
4 Materiality Principal
5 Objectivity Principal.
6 Consistancy principal |
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Term
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Definition
| Current assets are those assets that will either be converted into cash , sold, or consumed within 1 year or the normal operating cycle of the business, whichever is longer. Current assets are listed in order of liquidity [the items that are most readily converted into cash would be listed first.] Examples of current assets would include cash, marketable securities, accounts recievable, inventories, and prepaid expenses. |
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Term
| What are Non -current [fixed] Assets? |
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Definition
| Non current assets are those that will not be sold or consumed within 1 year or the normal operating cycle of the business. These include investments that management has no intention of selling within 1 yearas well as property , plant , and equipment. |
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Term
| What are current liabilities? |
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Definition
Current liabilities are those liabilities that the enterprise expects to pay off within 1 year.
Examlpe of current liabilities would include accounts payable, tenants deposits, interest payable, property taxes payable, wages payable, and income taxes payable. |
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Term
| What are 3 ways that budgets help management coordinate a business? |
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Definition
1 I any business entity, the achievement of a well laid out plan will force managers to think about the relationship among individual operations and the company as a whole.
2 Because the implementation of plans in a business organization involves all departments each department must consider the constraints of other departments so that managers plan can be implemented.
3 Budgeting will reveal weaknesses in an organization. For a budget to be properly adminstered , communication problems must be identified in advance. the responsibility of individual departments will be fixed and difficulties in working relatiionships will become apparent. |
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Term
| What are the 5 different types of budgetsused by businesses? |
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Definition
1 Annual operating budget ..a budget prepared for 1 fiscal year.
2 Continuous budget..an annual nudget which continues to delete one minth or period and add one month or period . so that a 12 month or other periodic forcast is always available.
3 Fixed [ static] budget..a budget that is based on 1 level of activity.
4 Flexable[Variable] budget....A budget prepared for different levels of activity.
5 Long range budget, a forcast that covers more than 1 fiscal year. |
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Term
| The nature of a cash budget. |
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Definition
| The cash basis of accounting referres to situations where revenue is recognized only when cash is recieved and expenses are recorded only when cash is paid. A cash budget is not an operating statement, it is a prediction, based on careful analysis of past experience and anticipated conditions, of the flow of cash through the company. |
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Term
| What are the 2 methods most commonly used in cash forcasting? |
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Definition
1 Cash receipts and disbursement method...a detailed listing of the sources of cash recipts and the nature of cash dispursements is contained in the forcast; all sources of cash must be given consideration.
2 Adjusted net income method...non-cash tranactions must be adjusted
to arrive at an estimated income on a cash basis. |
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Term
| Briefly explan 'Cash andn Bank Records' |
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Definition
| In any business, accurate and timely recording of all cash an banking is a must. This can be done in a variety of different forms, but no matter what form the record takes, the purpose is the same. The journal provides that: a complete record of cash receipts and disbursements (cheques); a breakdown of expenses paid for; a way to keep a running record of the bank balance; and a convenient summary for recording transactions in the accounts. |
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Term
| Give a brief summery of a Payroll Record. |
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Definition
| Whenever a payroll is prepared, accurate records for both accounting and tax reporting is a must. a detailed report must be kept for each employee so the proper deductions for income tax, Cananda pension and employment insurance may be made. |
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Term
| When are payroll deductions due to Canada Revenue Agency? |
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Definition
| By the 15 of the following month. |
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