ACCA Paper F3/FA/FFA
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ACCA Paper F3/FA/FFA - Leaderboard
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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 2? | Inventories |
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 IAS 38? | Intangible Assets |
What topic is covered by IFRS 3? | Business Combinations |
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. |
Who is "the Board"? | The IASB |
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 Fundamental Qualitative Characteristics of Financial Information? | - Relevance - Faithful Presentation |
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 types of transactions are recorded in the sales/purchases day books? | Credit Transactions |
What are ledger accounts? | The individual accounts for each item on the chart of accounts. |
On a T account, what transactions are recorded on the right side? | The Cr (Credit record) Entires |
On a T account, what transactions are recorded on the left side? | The Dr (Debit record) Entries. |
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.‘ |
Gross means what? | Inclusive |
Net means what? | Exclusive |
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. |
How will profit for the year be affected by an asset prepayment? | Profit will increase. |
Capital Balance = | Open Capital + Profits - Drawings |
Depreciation Balance = | Equipment at Cost less Accumulated Depreciation less Depreciation for the Year. |
How will profit for the year be affected by an expense accrual? | Profit will decrease. |
How will profit for the year be affected by an asset prepayment? | Profit will increase. |
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' |
How are material non-adjusting events disclosed in the financial statements? | By a note in the financial statements. |
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. |
What is the first standard working required in preparing a consolidated statement of financial position? | Establish the group structure. |
What is the second standard working required in preparing a consolidated statement of financial position? | What the net assets of the subsidiary are. |