Questions:
- Define business activity.
- List three types of business activities that an enterprise can operate.
- Explain the difference between sales and purchases.
- Define a business transaction.
- Describe the difference between cash and credit transactions.
- What is a barter transaction? Provide an example.
- State whether the following is a service or a trading business:
- a) Restaurant
- b) Bookstore
- c) Car repair shop
- Define bookkeeping.
- List any three reasons why bookkeeping is important for a business.
- Explain the difference between bookkeeping and accounting.
- What is accounting? Why is it important for businesses?
- Name two internal users of accounting information.
- Name two external users of accounting information.
- What is the main source of income for a trading business?
- Explain the difference between a trading business and a manufacturing business.
Answers
- Business activity is any action that involves providing goods or services to earn a profit.
- Manufacturing, Retail, and Service.
- Sales are when a business sells goods or services; purchases are when a business buys goods or services.
- A business transaction is any event that involves the exchange of goods, services, or money.
- A cash transaction is paid immediately, while a credit transaction is paid later.
- A barter transaction is the exchange of goods or services without using money. Example: Trading a book for a toy.a) Service, b) Trading, c) Service.
- Bookkeeping is recording all financial transactions in an organized way.
- It helps a business know how much money it has, shows which products or services are selling well, and ensures legal compliance.
- Bookkeeping records financial data; accounting analyzes and interprets this data for decision-making.
- Accounting is analyzing and interpreting financial records; it is important for planning, budgeting, and financial decisions.
- Managers and employees.
- Investors and creditors.
- The main source of income is selling goods or services to customers.
- A trading business buys and sells products; a manufacturing business makes products from raw materials.
