Financial Accounting (ACCA)

555 Pages·2016·8.71 MB·English

by  Bpp

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FINANCIAL ACCOUNTImNG E v v
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BPP Learning Media is an ACCA Approved Content Provider for the FIA
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qualification. This means we work closely wuith ACCA to ensure this Interactive Text aa
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 Highlight the most important elements in the syllabus and the key skills you
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 Provide lots of excam focus points demonstrating what the examiner will want l.cl.c
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 Emphasise key points in regular fast forward summaries
 Test youre knowledge in quick quizzes
 Examine your understanding in our practice question bank
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 Reference all the important topics in our full index
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BPP’s Practice & Revision Kit also supports this paper.
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FOR EXAMS FROM 1 SEPTEMBER 2015 TO 31 AUGUST 2016

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FFA/F3 FINANCIAL ACCOUNTING

First edition March 2011 m
Fourth edition April 2015
ISBN 9781 4727 3525 6 A note about copyright
(Previous ISBN 9781 4453 7027 9) o
eISBN 9781 4727 2854 8
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Certified Accountants for permission to reproduce
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past examination questions. The suggested cc
solutions in the practice answer bank have been oo
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prepared by BPP Laearning Media Ltd, except
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CONTENTS
Contents
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Introduction
Helping you to pass ......................................................................................................................v
Chapter features..............................................................................................o.............................vi
Studying FFA/F3..........................................................................................................................vii
The Computer Based Examination...............................................................c..................................xx
Tackling Multiple Choice Questions..............................................................................................xxiv
Part A The context and purpose of financial reporting .
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1 Introduction to accounting.....................................................................................................3
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2 The regulatory framework....................................................................................................19
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Part B The qualitative characteristics of financial information dd
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3 The qualitative characteristics of financial information........r.....................................................31 ww
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Part C The use of double entry and accounting systems e lolo
4 Sources, records and books of prime entry.............................................................................45 aa
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5 Ledger accounts and double entry.........................t................................................................59
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6 From trial balance to financial statements..............................................................................89
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Part D Recording transactions and events rere
7 Sales tax...................................................m.......................................................................107 v v
8 Inventory.........................................................................................................................117 isis
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9 Tangible non-current assets...............................................................................................143 tt

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10 Intangible non-current assets..............................................................................................179
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11 Accruals and prepayments.................................................................................................191 tptp
12 Irrecoverable debts and allowances.....................................................................................205 :/:/
13 Provisions and contingencies........d......................................................................................221 /f/f
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Part E Preparing a trial balance ee
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14 Control accounts...............................................................................................................235 cc
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15 Bank reconciliations..........................................................................................................257
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16 Correction of errors...........................................................................................................269 ss
17 Preparation of financials statements for sole traders...............................................................283 tutu
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Part F Preparing basic financial statements yy
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18 Incomplete records............................................................................................................297
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19 Introduction to company accounting....................................................................................321 tt
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20 Preparation of financial statements for companies................................................................339 rr
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21 Events after the reporting period.........................................................................................367 aa
22 Statementsc of cash flows...................................................................................................373 l.cl.c
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Part G Preparing saimple consolidated financial statements mm
23 Introduction to consolidated financial statements..................................................................393
24 The consolidated statement of financial position...................................................................407
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25 The consolidated statement of profit or loss and other comprehensive income..........................433
Part H Inteerpretation of financial statements
26 Interpretation of financial statements...................................................................................451

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Practicfe question bank.........................................................................................................................479
Practice answer bank...........................................................................................................................505
Index.....................................................................................................................................................517
Review form

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FFA/F3 FINANCIAL ACCOUNTING

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INTRODUCTION
Helping you to pass
BPP Learning Media – Approved Content Provider
As an ACCA Approved Content Provider, BPP Learning Media gives you the opportunity mto use study
materials reviewed by the ACCA examination team. By incorporating the examination team's comments
and suggestions regarding the depth and breadth of syllabus coverage, the BPP Learning Media
Interactive Text provides excellent, ACCA-approved support for your studies. o
The PER alert! c
To become a Certified Accounting Technician or qualify as an ACCA member, you have to not only pass
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all your exams but also fulfil a practical experience requirement (PER). To help you to recognise areas
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of the syllabus that you might be able to apply in the workplace to achieve different performance
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objectives, we have introduced the 'PER alert' feature. You will find this feature throughout the oo

Interactive Text to remind you that what you are learning in order to pass your FIA and ACCA exams is dd
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equally useful to the fulfilment of the PER requirement.
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Your achievement of the PER should be recorded in your onlinee My Experience record. ll
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Tackling studying dd
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Studying can be a daunting prospect, particularly when you have lots of other commitments. The oo
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different features of the Text, the purposes of which are explained fully on the Chapter features page, ee
will help you whilst studying and improve your chanmces of exam success. v v
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Developing exam awareness h h
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Our Texts are completely focused on helping you pass your exam.
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Our advice on Studying FFA/F3 outlines tdhe content of the paper and the recommended approach to /fr/fr
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Exam focus points are included within the chapters to highlight when and how specific topics might be cc
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Using the Syllabus and Study Guide
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You can find the Syllabus and Study Guide on page ix of this Interactive Text.
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Testing what you can do rr
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Testing yourself helcps you develop the skills you need to pass the exam and also confirms that you can l.l.
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recall what you have learnt. oo
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We include Questions – lots of them – both within chapters and in the Practice Question Bank, as well
as Quick Quizzes at the end of each chapter to test your knowledge of the chapter content.
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FFA/F3 FINANCIAL ACCOUNTING
Chapter features
Each chapter contains a number of helpful features to guide you through each topic.
Topic list Tells you what you will be studying in this cmhapter and the
relevant section numbers, together with the ACCA syllabus
references.
Introduction Puts the chapter content in the contexot of the syllabus as a
whole.
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Study Guide Links the chapter content with ACCA guidance.
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Fast Forward Summarises the content oaf main chapter headings, TT
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allowing you to preview and review each section easily.
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Key Term Definitions of important concepts that can often earn you nn
easy marks in exaems. lolo
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Exam Focus Tells you hoaw specific topics may be examined. oo
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Formula Formulae which have to be learnt. ii
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PER Alert This feature gives you a useful indication of syllabus areas //
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Question Gives you essential practice of techniques covered in the cc
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Chapter Roundup a A full list of the Fast Forwards included in the chapter, ymym
providing an easy source of review.
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Quick Quiz A quick test of your knowledge of the main topics in the iaia
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Practice Question Bank Found at the back of the Interactive Text with more exam-
style chapter questions. Cross referenced for easy
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navigation.
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INTRODUCTION
Studying FFA/F3
How to Use this Interactive Text
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Aim of this Interactive Text
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To provide the knowledge and practice to help you succeed in the examination for Paper FFA/F3
Financial Accounting.
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To pass the examination you need a thorough understanding in all areas covered by the syllabus and
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teaching guide.
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Recommended approach dd
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(a) To pass you need to be able to answer questions on everything specified by the syllabus and
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teaching guide. Read the Text very carefully and do note skip any of it. ll
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(b) Learning is an active process. Do all the questions as you work through the Text so you can be dd
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(c) After you have covered the material in the Interactive Text, work through the Practice Question
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Bank, checking your answers carefully against the Practice Answer Bank.
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in your knowledge? If so, study the section again. ::
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(iv) Read the chapter roundups, which are a summary of the fast forwards in each chapter.
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(v) Do the quick quiszzes again. If you know what you're doing, they shouldn't take long. tutu
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This approach is only a sugagestion. You or your college may well adapt it to suit your needs. mm
Remember this is a practical course. aa
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(a) Try to relate thec material to your experience in the workplace or any other work experience you ee
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For practice and revision use BPP Learning Media's Practice & Revision Kit, i-Pass and Passcards.
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FFA/F3 FINANCIAL ACCOUNTING
What FFA/F3 is about
Paper FFA/F3 aims to develop your knowledge and understanding of the underlying principles, concepts
and regulations relating to financial accounting. You will need to demonstrate technical proficiency in the
use of double entry techniques, including the preparation of basic financial statements for incorporated
and unincorporated entities, as well as simple consolidated financial statements for groupm incorporated
entities. You also need to be able to conduct a basic interpretation of financial statements. If you plan to
progress through the ACCA qualification, the skills you learn at F3 will be built on in Papers F7 and P2.
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Approach to examining the syllabus
Paper FFA/F3 is a two-hour paper. It can be taken as a written paper or a comcputer based examination.
The questions in the computer based examination are objective test questions – multiple choice, number
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entry and multiple response. (See page xx for frequently asked questions about computer based
examinations.) l
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Both the written and computer based examinations are structured as follows. oo

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Section A 35 compulsory objective test questions of two marrks each 70 ww
Section B 2 compulsory multi-task questions of fifteen mareks each 30 nlnl
100 oo
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Multi-task questions are a series of short questions relatintg to one scenario. These short questions can
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take a number of formats eg drop down lists, multiple cahoice, number entry and multiple response.
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ensure that an error is only penalised once. m v v
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