ACCA FA
ACCA Financial Accounting (FA) Flashcards
What is a sole trader?
What user groups are interested in a company’s financial statements?
What does the Statement of Financial Position show?
What does the Statement of Profit or Loss show?
What is the Conceptual Framework definition of an asset?
What is the Conceptual Framework definition of a liability?
What is the definition of gross profit?
What is the separate entity concept?
What is the definition of capital?
What is the definition of drawings (or withdrawals)?
What are non-current liabilities?
What are current liabilities?
What are current assets?
What are non-current assets?
State the accounting equation.
What is meant by net assets?
Will an increase in an expense be a debit or a credit in the ledger account for the expense?
Will an increase in an asset be a debit or a credit in the ledger account for the asset?
Will drawings be a debit or a credit entry in the drawings account?
Will an increase in a liability be a debit or a credit in the ledger account for the liability?
Will an increase in income be a debit or a credit entry in the ledger account for the income?
Will an increase in capital be a debit or a credit entry in the ledger account for capital?
What is the double entry for the purchase of goods for resale on credit?
What is the double entry for the sale of goods on credit?
What is meant by an early settlement discount?
What is the main purpose of a trial balance?
Inventory is valued at the lower of which two amounts?
In the context of inventory valuation, what is meant by net realisable value?
What methods of calculating the cost of inventory are allowed by the accounting standard?
Is sales tax a direct or an indirect tax, and why?
What is input sales tax?
What is output sales tax?
What is meant by the gross selling price of goods?
What is meant by the net selling price of goods?
What is meant by a prepaid expense?
What is meant by accrued income?
What is meant by prepaid income?
What is meant by an irrecoverable debt?
What is the purpose of the allowance for receivables?
What is an aged receivables analysis?
What is the purpose of an aged receivables analysis?
What is meant by a credit limit?
What is meant by capital expenditure?
What is meant by revenue expenditure?
What is the difference between tangible and intangible non-current assets?
What is the non-current asset register?
What is the purpose of depreciation?
How is the land and buildings category treated for depreciation purposes?
What is the straight-line method of depreciation?
What is the reducing balance method of depreciation?
When using the straight-line method of depreciation, what is meant by the term residual value?
What is a part-exchange agreement when a non-current asset is disposed of?
What is a goods delivery note?
What is a goods received note?
What is the difference between a purchase invoice and a sales invoice?
What is a statement?
What is a credit note?
What is meant by a refund?
What is the general (or nominal) ledger?
What is the purpose of a bank reconciliation?
What is an outstanding (unpresented) cheque?
What is an uncleared lodgement (or lodgement not yet credited)?
If a bank statement shows a debit balance for a company, does the company have money at the bank or is it overdrawn?
What is an overdraft?
What is an error of omission?
What is an error of commission?
What is an error of principle?
What are compensating errors?
What is meant by an error of original entry?
What is the difference between the statement of profit or loss and the statement of profit or loss and other comprehensive income?
What is meant by mark-up?
What is meant by a gross margin?
What does the Statement of Changes in Equity show?
What are the differences between ordinary and preference shares?
What is a rights issue of shares?
What is a bonus (scrip) issue of shares?
What does the share premium account record?
What are capital reserves?
What are revenue reserves?
Under IAS 10, how is an adjusting event after the reporting period treated?
Under IAS 10, how is a non-adjusting event after the reporting period treated?
What is meant by the term ‘provision’?
What is a contingent liability?
What is a contingent asset?
How is a present obligation arising from a past event treated where an outflow of economic benefits is regarded as probable?
How is a contingent liability treated in the Financial Statements if the likelihood of the liability being confirmed is regarded as possible?
How is a contingent liability treated in the Financial Statements if the likelihood of the liability being confirmed is regarded as remote?
How is a contingent asset treated in the Financial Statements if the likelihood of the asset being confirmed is regarded as possible?
How is a contingent asset treated in the Financial Statements if the likelihood of the asset being confirmed is regarded as probable?
According to IAS 38 – Intangible assets – how should research be treated in the financial statements?
What are the three main headings that appear on a statement of cash flows?
What items appear on a statement of cash flows under the heading Investing Activities?
What items appear on the Statement of Cash Flows under the heading Financing Activities?
What is the difference between the direct and indirect methods of arriving at ‘cash generated from operations’ in a statement of cash flows?
How does a bonus issue of shares affect the statement of cash flows?
How does a surplus on revaluation of a non-current asset affect the statement of cash flows?
Where does a rights issue of shares appear in the statement of cash flows?
What is the definition of a subsidiary?
How is the goodwill arising on consolidation calculated?
In a consolidated Statement of Financial Position, how is the share capital calculated?
In consolidations, under what circumstances will a provision for unrealised profit (PURP) adjustment be necessary?
What is the definition of an associate?
What is the difference between financial accounting and management accounting?
What is a partnership?
What is meant by limited liability?
What is the difference between a public limited company and a private limited company?
Who is legally responsible for preparing a limited company's financial statements?
What information do lenders and other creditors principally seek from a company's financial statements?
State the ledger entries to record payment of cash to a credit supplier.
State the accruals basis of accounting.
What is an accrued expense, and how is it presented in the statement of financial position?
How is a prepaid expense presented in the statement of financial position?
How is prepaid (deferred) income presented in the statement of financial position?
How is a prepayment calculated at the reporting date, and how does it affect the expense?
State the three conditions that must all be met before a provision is recognised under IAS 37.
State the double entry to create a provision, and how a later change in the estimate is recorded.
State the double entry to record the annual depreciation charge.
How is the reducing balance depreciation charge calculated in year 2 and later years?
How is a change in the estimated useful life of a non-current asset accounted for?
Which costs may be included in the initial cost of an item of property, plant and equipment?
State the accounting entries to record an upward revaluation of a non-current asset.
How is depreciation calculated after a non-current asset has been revalued upwards?
State the formula for the profit or loss on disposal of a non-current asset.
How is the profit or loss on disposal of a non-current asset calculated?
State the double entry to write off an irrecoverable debt.
State the double entry when cash is received from a customer whose debt was written off in an earlier period.
What amount in respect of the allowance for receivables is charged to profit or loss each year?
What are the steps when a receivable is written off and an allowance is then required against the remainder?
Which costs are included in the cost of inventory under IAS 2?
Which inventory cost formula is prohibited by IAS 2?
At what level is the lower of cost and net realisable value comparison made?
How is net realisable value calculated, and how does it affect the carrying amount of inventory?
Under FIFO, which costs are treated as sold and which remain in closing inventory?
What is the effect on profit of overstating closing inventory?
State the main advantages of a computerised accounting system over a manual one.
State the main disadvantages and risks of a computerised accounting system.
What is batch processing in an accounting system?
What is real-time (online) processing in an accounting system?
What is an integrated accounting package?
What is the purpose of passwords and access rights in a computerised accounting system?
Why are back-ups taken of accounting data, and what makes a back-up effective?
Why is a spreadsheet not a substitute for an accounting package?
What is a journal entry?
What must a journal entry contain?
For what transactions is the journal typically used?
List the books of prime entry.
State the journal to record the depreciation charge for the year.
State the journal to record closing inventory at the year end.
What is the imprest system of petty cash?
How does an imprest petty cash system work, and how much is reimbursed?
How do you extract the sales tax from a gross (tax-inclusive) amount, and how do you add it to a net amount?
State the ledger entries for a credit sale of goods where sales tax is charged.
What does the balance on the sales tax control account represent, and how is it presented?
How is irrecoverable input sales tax treated?
How are dividends dealt with in a company's financial statements?
State the ledger entries when ordinary shares are issued for cash at a premium.
Under the indirect method, what adjustments are made to profit before tax to arrive at cash generated from operations?
How do movements in inventory, receivables and payables affect cash generated from operations?
Which bank reconciliation differences require an entry in the cash book?
Which bank reconciliation differences require no entry in the cash book?
How is the bank statement balance reconciled to the corrected cash book balance?
What is the purpose of reconciling a supplier statement?
What are the common reconciling items between a supplier statement and the payables ledger account?
What is the payables ledger, and is it part of the double entry?
What does the payables ledger control account contain?
What is the purpose of the payables ledger control account reconciliation?
Give examples of errors that affect the control account but not the list of individual balances.
Give examples of errors that affect the list of individual balances but not the control account.
How is a supplier statement reconciled to the balance on the supplier's account in the payables ledger?
In what circumstances does a suspense account arise?
Which types of error do not cause a suspense account to arise?
What is the effect on profit of correcting an error that affects only two statement of financial position accounts?
How does an omitted discount received, and an overstatement of closing inventory, each affect draft profit?
How do you convert a mark-up on cost into the equivalent gross margin (and back again)?
Why are mark-up and margin used in incomplete records questions?
In incomplete records, how are sales derived from a known mark-up?
State the formula used to derive closing inventory when it is the missing figure.
What are the two fundamental qualitative characteristics of useful financial information?
What are the four enhancing qualitative characteristics of useful financial information?
What is the going concern assumption?
What makes information material?
What is meant by substance over form?
What is the difference between an accounting policy and an accounting estimate, and how is a change in each accounted for?
What is meant by prudence?
Why must accounting policies be applied consistently?
What period do 'events after the reporting period' cover?
What is an adjusting event under IAS 10?
What is a non-adjusting event under IAS 10?
Give examples of adjusting events after the reporting period.
Give examples of non-adjusting events after the reporting period.
How is a dividend declared after the reporting date treated?
What is the IAS 38 definition of an intangible asset?
State the criteria that must all be met before development expenditure is capitalised.
How is internally generated goodwill treated?
When does amortisation of capitalised development costs begin, and over what period?
What is the difference between research and development activity?
How is expenditure split between research and development, and from what date may development costs be capitalised?
How is purchased goodwill treated, and how does this differ from internally generated goodwill?
What is control for the purpose of consolidation?
On what basis are the assets and liabilities of a subsidiary included in the consolidated statement of financial position?
What happens to the parent's 'investment in subsidiary' in the consolidated statement of financial position?
State the goodwill calculation on the acquisition of a subsidiary.
How is the non-controlling interest in the consolidated statement of financial position calculated?
How are consolidated retained earnings calculated?
How are intra-group receivables and payables dealt with on consolidation?
What is the consolidation adjustment for unrealised profit on intra-group goods still held in inventory?
How is unrealised profit on intra-group inventory calculated where the seller used a MARK-UP on cost?
How is unrealised profit on intra-group inventory calculated where the seller used a MARGIN on selling price?
Why is a fair value adjustment made on consolidation, and what is its continuing effect?
Whose retained earnings are reduced by an unrealised profit adjustment when the subsidiary made the sale?
On what basis are the results of a subsidiary included in the consolidated statement of profit or loss?
How is intra-group trading eliminated in the consolidated statement of profit or loss?
How is consolidated revenue calculated where there have been intra-group sales?
Where does the unrealised profit adjustment appear in the consolidated statement of profit or loss?
How is the profit attributable to the non-controlling interest calculated?
How is the profit attributable to the non-controlling interest calculated?
A parent with a 31 December year end acquires a subsidiary on 1 July. How much of the subsidiary's results are consolidated?
How is a dividend received by the parent from its subsidiary treated in the consolidated statement of profit or loss?
What is significant influence?
How is an associate shown in the consolidated statement of financial position?
How is an associate shown in the consolidated statement of profit or loss?
Why is an associate not consolidated line by line in the same way as a subsidiary?
How is the carrying amount of an associate calculated under the equity method?
How is a shareholding of less than 20% in another entity accounted for in the group financial statements?
State the formula for return on capital employed and what it measures.
State the formula for gross profit margin, and calculate it where revenue is $500,000 and cost of sales is $350,000.
State the formula for the operating (net) profit margin and what a change in it indicates when the gross margin is unchanged.
State the formula for asset turnover and its relationship with return on capital employed.
State the formula for the current ratio and calculate it where current assets are $180,000 and current liabilities are $90,000.
State the formula for the quick (acid test) ratio and why it differs from the current ratio.
State the formula for the inventory holding period and what a lengthening period may indicate.
State the formula for the receivables collection period and what an increase may indicate.
State the formulas for gearing and interest cover.
What are the main limitations of ratio analysis?
What is the role of the IFRS Foundation?
What is the role of the International Accounting Standards Board?
What is the role of the IFRS Interpretations Committee?
What is the role of the IFRS Advisory Council?
Outline the main stages in the process of developing a new IFRS Accounting Standard.
What is the purpose of the Conceptual Framework, and what is its status?
What is the objective of general purpose financial reporting?
Why are accounting standards needed?
What is a purchase order?
What is a remittance advice?
What is a quotation?
Card 1 of 245. Question side.