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ACCA Paper F3/FA/FFA


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[Front]


IAS 37 covers what topics?
[Back]


- Provisions - Contingent liabilities - contingent assets

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ACCA Paper F3/FA/FFA - Details

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412 questions
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IAS 37 covers what topics?
- Provisions - Contingent liabilities - contingent assets
What topic is covered by IAS 1?
Presentation of Financial Statements
What topic is covered by IAS 7?
The Statement of Cash Flows
What topic is covered by IAS 10?
Events after the reporting period
What topic is covered by IAS 16?
Property, Plant and Equipment
What topic is covered by IAS 27?
Separate Financial Statements
What topic is covered by IAS 28?
Investments in Associates and Joint Ventures.
What topic is covered by IFRS 10?
Consolidated Financial Statements
What topic is covered by IFRS 15?
Revenue from contracts with customers
What is the role of the IASB?
To issue/produce/create/formulate the IFRS.
What is the role of the IFRS?
To enable a convergence of national accounting standards and IFRS standards while giving examples of best practice in financial reporting for national bodies who produce requirements.
What is the role of the IFRS Advisory Council?
The IFRS forum for consulting with the outside world.
What is a contingent liability?
"A possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the entity's control."
What are the qualities of Faithful Representation?
- Completeness - Neutrality - Free from Error
What are the Enhancing Qualitative Characteristics of Financial Information?
- Comparability & Consistency - Timeliness - Verifiability - Understandability
What are the Fundamental Accounting Concepts?
- Fair Presentation - Going Concern - Accruals - Consistency - Materiality - Substance over form - Business Entity Concept
What is materiality ?
"A threshold or cut-off point for information whose omission or misstatement could influence the economic decisions of users taken on the basis of the financial statements."
What are the three characteristics of faithful representation?
It is: - Complete - Neutral - Free from error
When is understandability enhanced?
When the information is: - Classified - Characterised - Presented clearly and consistently
What are the qualities of Relevance?
Predictive value or Confirmatory value
What are the qualities of Faithful Representation?
- Completeness - Neutrality - Free from Error
What is Relevance?
Information that is capable of making a difference in the decisions made by users.
What is Faithful Representation?
Accounting information should be presented in accordance with best practice and that the commercial substance of transactions should be presented in the financial statements, rather than their strict legal form.
What is Substance Over Form?
The economic substance of a transaction should be reflected in the financial statements. Even when the legal form is in conflict.
What are the books of prime entry?
- The Cash book (For non-credit transactions) - The Purchase Day Book (for credit transactions) - The Sales Day Book (for credit sales) - The Petty Cash Book (for small cash transactions) - The Journal (For unusual transactions)
What are the basic steps in the accounting cycle?
1) Recording transactions in the T accounts using double entry. 2)Balancing the accounts
What are the books of prime entry?
- The Cash book (For non-credit transactions) - The Purchase Day Book (for credit transactions) - The Sales Day Book (for credit sales) - The Petty Cash Book (for small cash transactions) - The Journal (For unusual transactions)
What are the basic steps in the accounting cycle?
1) Recording transactions in the T accounts using double entry. 2)Balancing the accounts
What are the books of prime entry?
- The Cash book (For non-credit transactions) - The Purchase Day Book (for credit transactions) - The Sales Day Book (for credit sales) - The Petty Cash Book (for small cash transactions) - The Journal (For unusual transactions)
What are the basic steps in the accounting cycle?
1) Recording transactions in the T accounts using double entry. 2)Balancing the accounts
What are the books of prime entry?
- The Cash book (For non-credit transactions) - The Purchase Day Book (for credit transactions) - The Sales Day Book (for credit sales) - The Petty Cash Book (for small cash transactions) - The Journal (For unusual transactions)
Assets - Liabilities =
Opening Capital + Profits - Drawings
Assets =
(Capital + Profit - Drawings) + Payables
Trader's Profit =
Closing capital + Drawings - Capital introduced - Opening Capital
Increase in Net Assets =
Profit + New Capital - Drawings
What is the Imprest System of petty cash?
A system petty cash where the previous week/months expense's worth of petty cash is topped up from the bank. This keeps the petty cash at a set balance, that is low enough for there not to be a great loss if there is any theft.
What is the Journal used for?
Recording unusual movements between accounts for any double entries which don't arise from the other books of prime entry.
In what order are transactions recorded?
Books of Prime Entry -> General Ledger
What are ledger accounts?
The individual accounts for each item on the chart of accounts.
When closing the accounts, what should be done with an item which belongs in the SFP?
The T account should be balanced, closed, and left with the closing balance.
When closing the accounts, what should be done with an item which belongs in the SPL?
The T account should be balanced, closed, and moved to the SPL account. If it is an income item, then Dr the T account and Cr the SPL account. If it is an expense item, the Cr the T account and Dr the SPL account.
What new T account must be opened when closing the books?
The Statement of Profit or Loss account.
What are the books of prime entry?
- The Cash book (For non-credit transactions) - The Purchase Day Book (for credit transactions) - The Sales Day Book (for credit sales) - The Petty Cash Book (for small cash transactions) - The Journal (For unusual transactions)
What are the basic steps in the accounting cycle?
1) Recording transactions in the T accounts using double entry. 2)Balancing and closing the ledger accounts. 3)Preparing the Trial Balance 4)Closing off the accounts and producing th financial statements.
What is a Liability?
'A present obligation of the entity to transfer economic resource as a result of past events. An obligation is a duty of responsibility that the entity has no practical ability to avoid.‘
What is an Asset?
'A present economic resource controlled by the entity as a result of past events. An economic resource is a right that has the potential to produce economic benefits.‘
What should the cost of inventory include?
The cost of purchase, cost of conversions, cost of transport of the purchases.
How should inventory be valued?
The lower of cost and net realisable value.
How is the Net Realisable Value (NRV) calculated?
Selling price less any extra costs that there are in order to get the goods in a sellable state.
What is Cost in terms of inventory?
The cost of getting the goods to the state that they are in.
How should a dishonoured check be recorded in the receivables ledger account?
It should be recorded as DR in the receivables account because it would have previously been deducted from the account.
When should a provision be recognised?
When: 1) There is a present obligation as a result of a past event 2)There is a probability of an outflow of resources to settle the obligation 3) There is a reliable estimate of the amount of obligation.
What is the difference between provisions and other liabilities?
There is an uncertain timing or amount of expenditure with provisions.
How are provisions accounted for?
Dr. Expenses (SPL) Cr. Provisions (SFP)
How should contingent liabilities be disclosed/recognised in the financial statements?
They should *not* be recognised, but rather disclosed, unless there is only a remote possibility of needed to fulfil the possible obligation. When there is only a remote chance, then it is not even disclosed.
Capital Balance =
Open Capital + Profits - Drawings
Depreciation Balance =
Equipment at Cost less Accumulated Depreciation less Depreciation for the Year.
What is the purpose of the Trial Balance?
A method used to test the accuracy of the double entries and therefore the accounting records.
What are the limitations of the Trial Balance?
When: - There is a complete omission of a transaction - Transactions are recorded in the wrong account but on the correct side. - There are cancelling errors - There are errors of 'principle'
What are non-adjusting events?
Events relate to conditions that arose after the reporting period.
What are adjusting events?
Events that provide evidence of conditions that existed at the end of the reporting period.
What types of items are NOT recorded in the statement of cashflows?
Non-cash items, even if they relate to the capital of the company. e.g. bonus issue of shares, revaluation of non-current assets.
What should the statement of cashflows contents be split into?
Operating activities Investing activities Financing activities
What is the indirect method of calculating cashflows from operating activities?
Start with the profit figure, then add back all the non-cash items.
What types of items are added back on the indirect method of cashflows?
Depreciation & amortisation Loss on sale of NCA Decreases in Receivables & Inventory Increases in Payables
What types of items are deducted in the indirect method of cashflows?
Profit on sale of NCA Increases in Receivables & Inventory Decreases in Payables
How are payments for the acquisition of non-current assets calculated in the statement of cash flows?
Carrying Amount - Depreciation - Disposals = X (Purchases) - Carrying amount at end of year
What items will appear under the Investing section of the cashflow statement?
- Cash spent acquiring non-current assets - Cash received from the sale of non-current assets - Income from investments
Cash =
Cash in hand + Deposits repayable upon demand - Overdrafts
What are Cash Equivalents?
Short-term, highly liquid investments that are readily convertible to known amounts of cash and are subject to an insignificant risk of changes in value. - IAS 7, para 6
What are Cash Flows?
Inflows and outflows of cash and cash equivalents
How are Cash Equivalents treated?
They are Current Asset Investments
How are payments for the acquisition of non-current assets in the SOC calculated?
Opening/B less Depreciations less Disposals less Closing/B
How is cost of sales calculated for the consolidated statement of financial position?
P's balance + S's balance - Intra-group cost of sales + (Profit from intra-group transaction inventory held)
How is NCI for the new period calculated for the SFP?
Fair Value of NCI + X% of Post-Acquisition profits
When calculating consolidated retained earnings, what adjustment may be required?
An adjustment for unrealised profit from intra-group transactions. This will need deducting.