What defines an enterprise in terms of financial independence and purpose?
It is a financially independent organization producing goods or services to make a profit.
What are the four essential aspects of an enterprise?
The market, the product, the benefit, and financial independence.
What social, financial, and economic roles does an enterprise have?
It distributes money and income, participates in payment flows, and contributes to goods and services circulation.
In what ways does an enterprise participate in payment flows?
As both customer and supplier, and as borrower and lender.
What defines a public or parapublic enterprise by legal nature?
The State owns all or part of it.
What characterizes a private enterprise by legal nature?
It belongs to individuals, including individual enterprises and companies like SA, SNC, and SARL.
What do primary-sector enterprises produce according to activity?
Raw materials or food using natural resources.
What is the role of secondary-sector enterprises according to activity?
They transform raw materials into finished goods.
What do tertiary-sector enterprises do according to activity?
They distribute goods or provide services.
What are the steps in a commercial enterprise's operating cycle?
Buying merchandise, storing it, and reselling it as received.
How does an industrial enterprise operate its cycle?
It buys raw materials, transforms them into finished products, and sells those products.
What is accounting according to AUDCIF 2017?
An information system capturing, classifying, recording data and presenting faithful financial statements.
What is one main purpose of accounting related to wealth?
Measuring and controlling the distribution of wealth.
What does accounting processing do with source documents?
Classifies, enters, and records them by category of operation.
Which source documents are processed in accounting?
Invoices, checks, payroll sheets, and cash documents.
What is accounting normalization?
The codification of rules, principles, and technical methods to eliminate unnecessary variations.
When was the revised AUDCIF adopted and enforced?
Adopted on 26 January 2017 and enforced on 1 January 2018.
What does the continuity principle assume about an entity's operation?
That it will continue to operate in the reasonably foreseeable future unless liquidation is intended or required.
What does the independence-of-periods principle require for accounting periods?
Each period must include only the events and transactions that belong to it.
How does the prudence principle treat expected expenses and income?
It recognizes expected expenses and losses but recognizes income and gains only when realized.
What does the non-compensation principle prohibit in accounting?
Offsetting asset and liability items or expense and income items unless legally justified.
How many classes does the OHADA accounting system contain?
Nine classes.
What distinguishes the Normal System in OHADA financial reporting?
It is for medium and large entities.
Which OHADA financial reporting system applies to very small entities below legal thresholds?
The Minimal Treasury System.
What is the SMT eligibility threshold for trading entities?
60,000,000 CFA francs.
What is the SMT eligibility threshold for craft and similar entities?
40,000,000 CFA francs.
What is the SMT eligibility threshold for service entities?
30,000,000 CFA francs.
What are the four financing sources presented?
Equity capital, borrowing, subsidies, and leasing.
In what forms can capital contributions at enterprise formation be made?
In cash, in kind, or mixed combining money and property.
What do investment subsidies finance?
The acquisition or creation of fixed assets.
What do operating subsidies compensate for?
Insufficient selling prices or operating expenses.
What do balancing subsidies compensate?
All or part of an overall loss.
What does the investment cycle include?
Capitalized expenses, intangible and tangible fixed assets, financial fixed assets, and business acquisition or disposal.
Which cycles are included in the enterprise's other cycles?
Sales and customers, purchases and suppliers, personnel and wages, inventories and production, and treasury.
What types of flows are included in economic flows?
Real or physical goods, quasi-real labor and services, and financial flows of money and receivables.
What defines a credit relationship in payment terms?
Payment deferral creates a receivable for the seller and a debt for the buyer until payment.
What are economic flows in economics?
Movements of goods, services, or means of payment between economic agents.
What do real or physical flows concern in economic transactions?
Goods bought or sold.
For the seller, what do real flows represent?
Outgoing sales resources.
For the buyer, what do real flows represent?
Incoming uses such as investments or operating purchases.
What do financial flows consist of?
Money and quasi-money flows like cheques, and creditor-debtor flows from deferred payment.
What does employment represent in double-entry flow translation?
The use of the element transferred into the enterprise.
What is a resource in the context of flow translation?
The origin of a flow representing means used to satisfy or finance a need.
According to Art. 17, alinéa 2° AUDCIF, what does the double-entry principle require?
Every operation records at least two accounts, one debited and one credited, with total employment equaling total resource.
How is employment recorded in double-entry accounting?
As a debit.
How is resource recorded in double-entry accounting?
As a credit.
What is the first step in an accounting operation recording circuit?
A dated source document.
What must support every accounting entry according to Art. 16-17 et 24 AUDCIF?
A dated and preserved document.
For how many years must accounting documents be retained?
Ten years.
What information does the journal record daily and chronologically?
Date, accounts, amounts, description, and source-document reference.
What is the general ledger in accounting?
The collection of all accounts opened by the enterprise.
How are journal operations transferred to the general ledger?
Account by account.
What is the general trial balance according to Art. 19, 3e tiret AUDCIF?
An exhaustive table listing all enterprise accounts with balances and movements at a given date.
What condition defines a balanced trial balance?
Equal total debit and credit movements and balances, matching the journal totals.
What does the balance sheet present at a given date?
The enterprise's assets and liabilities showing its financial position.
Which categories do assets include on a balance sheet?
Fixed assets, current assets, and cash assets.
Which categories do liabilities include on a balance sheet?
Stable resources, current liabilities, and cash liabilities.
How do asset accounts increase and decrease?
They increase by debit and decrease by credit.
How do liability accounts increase and decrease?
They increase by credit and decrease by debit.
What formula expresses the balance-sheet result?
Result = Total assets - Total liabilities = Employment - Resources.
When is the balance-sheet result a profit?
When total assets exceed total liabilities.
Which types of resources are included in enterprise resources?
Material, intangible, and financial resources.
Name examples of material resources in an enterprise.
Vehicles and merchandise inventories.
What intangible resources does an enterprise have?
Customers, brands, and software.
What financial resources are part of an enterprise?
Payment instruments, bank deposits, and cash.
Which four main domestic groups does an enterprise interact with besides the rest of the world?
Enterprises, households, the Administration or State, and financial institutions.
Which accounting books provide evidentiary value?
Journal, general ledger, general trial balance, and inventory book.
How many articles does the AUDCIF contain and how are they organized?
It contains 113 articles organized into four titles.
What does the permanence-of-methods principle require about accounting methods?
Methods must remain consistent between periods unless justified by better information or imperative circumstances.
What is the first level of account division in OHADA decimal coding?
Two-digit accounts.
What is the second level of account division in OHADA decimal coding?
Three-digit accounts.
What is the formula for the bond redemption premium?
Premium equals redemption price minus issue price.
What is leasing?
A contract renting property with a purchase option at specified dates.
How do external flows differ from internal flows in an enterprise?
External flows connect to other economic agents; internal flows occur between internal departments without external contact.
Which cycles does buying merchandise in cash involve?
Operating and treasury cycles.
Which cycles does acquiring transport equipment by bank check involve?
Investment and treasury cycles.
What do quasi-real flows concern in economic terms?
Services supplied by agents other than industrial and commercial enterprises.
Which services are included in quasi-real flows?
Labor measured by wages and social contributions, financial services by interest payable, and public services by taxes payable.
In the example of a 2,600,000 equipment purchase, which account is debited?
The transport equipment account.
In the 2,600,000 equipment purchase example, which accounts are credited?
The bank and the investment supplier accounts.
How long must the journal be retained after the last entry according to Art. 19 and 66 AUDCIF?
At least ten years.
What are the numbering requirements for the journal by the competent court?
It must be numbered continuously, initialled, and paginated.
How many columns can trial balances have and which form is most complete?
They can have 2, 4, 6, or 8 columns; the 8-column form is most complete.
Why is the 8-column trial balance form considered the most complete?
Because it distinguishes opening balances, period movements, net variations, and closing balances by debit and credit.
What are the total debit and credit movements in the DAREL application example?
Each total debit and credit movements are 3,153,000.
What are the total debit and credit balances in the DAREL application example?
Each total debit and credit balances are 3,065,000.
How does the OHADA functional approach classify fixed assets?
As durable uses.
Test your knowledge with 44 questions on General Accounting Foundations.
1. Which characteristic distinguishes an enterprise from a dependent organization?
2. Which set contains the four essential aspects of an enterprise?
Review the complete course in the study sheet for General Accounting Foundations.
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