Financial Accounting (F3/FFA) This is - ACCA | ACCA Global

14 Pages·2015·0.07 MB·English

Financial Accounting Syllabus rationale

(F3/FFA) This is a narrative explaining how the syllabus is
structured and how the main capabilities or sections
September 2015 to
of the syllabus are linked. The rationale also
explains in further detail what the examination
August 2016 (for CBE
intends to assess and how.
exams up to 22
Detailed syllabus
September 2016)
This shows the breakdown of the main capabilities

(sections) of the syllabus into subject areas. This is
This syllabus and study guide are designed to help
the blueprint for the detailed study guide.
with teaching and learning and is intended to

provide detailed information on what could be
Approach to examining the syllabus
assessed in any examination session.

This section briefly explains the structure of the
THE STRUCTURE OF THE SYLLABUS AND
examination and how it is assessed.
STUDY GUIDE

Study Guide
Relational diagram with other papers

This is the main document that students and
This diagram shows direct and indirect links
learning and content providers should use as the
between this examination and other examinations
basis of their studies, instruction and materials
which precede or follow it. Some examinations are
respectively.
directly underpinned by others. These links are
Examinations will be based on the detail of the
shown as solid line arrows. The indirect links are
study guide which comprehensively identifies what
shown as dotted line arrows. The relational diagram
could be assessed within any examination session.
therefore indicates where learners are expected to
The study guide is a precise reflection and
have underpinning knowledge and where it would
breakdown of the syllabus. It is divided into sections
be useful to review previous learning before
based on the main capabilities identified in the
undertaking study.
syllabus. These sections are divided into subject

areas which relate to the sub-capabilities included
Overall aim of the syllabus
in the detailed syllabus. Subject areas are broken

down into sub-headings which describe the detailed
This explains briefly the overall objective of the
outcomes that could be assessed in examinations.
examination and indicates in the broadest sense the
These outcomes indicate what exams may require
capabilities to be developed within the examination.
students to demonstrate, and the broad intellectual

level at which these may need to be demonstrated

(*see intellectual levels below).
Main capabilities

Learning Materials
This syllabus’s aim is broken down into several

main capabilities which divide the syllabus and
ACCA's Approved Content Programme is the
study guide into discrete sections.
programme through which ACCA approves

learning materials from high quality content

providers designed to support study towards ACCA’s
Relational diagram of main capabilities
qualifications.

This diagram illustrates the flows and links between
ACCA has three Approved Content Providers, Becker
the main capabilities (sections) of the syllabus and
Professional Education,
should be used as an aid to planning teaching and
BPP Learning Media and Kaplan Publishing.
learning in a structured way.

For information about ACCA's

Approved Content Providers, please go to
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ACCA's Content Provider Directory. education framework regulator for further
information about recognition.
ACCA's Content Provider Directory also lists
materials by other publishers, these materials have GUIDE TO EXAM STRUCTURE
not been quality assured by ACCA but may be
helpful if used in conjunction with approved learning The structure of examinations varies within and
materials or for variant exams where no approved between modules and levels.
content is available. You will also find details of The Foundations examinations contain 100%
Additional Reading suggested by the examining compulsory questions to encourage candidates to
teams and this may be a useful supplement to study across the breadth of each syllabus.
approved learning materials. All Foundations examinations are assessed by two-
hour paper based and computer based
ACCA's Content Provider Directory can be found examinations.
here – The pass mark for all FIA examination papers is
http://www.accaglobal.com/uk/en/student/acca- 50%.
H
qual-student-journey/study-revision/learning-
providers/alp-content.html GUIDE TO EXAMINATION ASSESSMENT

Relevant articles are also published in Student ACCA reserves the right to examine anything
Accountant and available on the ACCA website. contained within any study guide within any
examination session. This includes knowledge,
techniques, principles, theories, and concepts as
LEVEL OF ASSESSMENTS – INTELLECTUAL specified.
DEMAND
For specified financial accounting, audit and tax
ACCA qualifications are designed to progressively papers, except where indicated otherwise, ACCA
broaden and deepen the knowledge and skills will publish examinable documents once a year to
demonstrated by the student at a range of levels indicate exactly what regulations and legislation
through each qualification. could potentially be assessed within identified
examination sessions.
Throughout, the study guides assess both
knowledge and skills. Therefore a clear distinction is For this examination regulation issued or legislation
drawn, within each subject area, between assessing passed on or before 1st September 2014, will be
knowledge and skills and in assessing their assessed from September 2015 to August 31st
application within an accounting or business 2016. Please refer to the examinable documents
context. The assessment of knowledge is denoted by for the paper (where relevant) for further
a superscriptK and the assessment of skills is information.
denoted by the superscriptS.

Regulation issued or legislation passed in

accordance with the above dates may be
VALUE OF ASSESSMENTS – GUIDED LEARNING
examinable even if the effective date is in the future.
HOURS AND EDUCATION RECOGNITION
The term issued or passed relates to when

regulation or legislation has been formally approved.
As a member of the International Federation of
Accountants, ACCA seeks to enhance the education The term effective relates to when regulation or
recognition of its qualification on both national and legislation must be applied to entity transactions
international education frameworks, and with and business practices.
educational authorities and partners globally. In
doing so, ACCA aims to ensure that its qualifications The study guide offers more detailed guidance on
are recognized and valued by governments, the depth and level at which the examinable
regulatory authorities and employers across all documents will be examined. The study guide
sectors. To this end, ACCA qualifications are should therefore be read in conjunction with the
currently recognized on the education frameworks in examinable documents list.
several countries. Please refer to your national
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Qualification Structure
The qualification structure requires candidates who wish to be awarded the Diploma in Accounting and Business
to pass the F1/FAB, F2/FMA and the F3/FFA examinations and successfully complete the Foundations in
Professionalism module

Diploma in
F1/FAB F2/FMA F3/FFA
+ + + FiP* = Accounting

and Business

* Foundations in Professionalism

Syllabus Structure

The Foundations in Accountancy suite of Students are recommended to enter Foundations in
qualifications is designed so that a student can Accountancy at the level which is most appropriate
progress through three discrete levels; Introductory to their needs and to take examinations in order, but
Certificate level, Intermediate Certificate level and this is not a mandatory requirement
the Diploma level.

P2 ACCA

F7

FIA FFA F3

FA2

FA1

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Syllabus financial statements from the individual financial
statements of group incorporated entities.

AIM MAIN CAPABILITIES
To develop knowledge and understanding of the
underlying principles and concepts relating to On successful completion of this paper, candidates
financial accounting and technical proficiency in the should be able to:
use of double-entry accounting techniques including
the preparation of basic financial statements. A. Explain the context and purpose of financial
reporting
RATIONALE
B. Define the qualitative characteristics of
The syllabus for Paper FFA/F3, Financial financial information
Accounting, introduces the candidate to the
fundamentals of the regulatory framework relating to C. Demonstrate the use of double-entry and
accounts preparation and to the qualitative accounting systems
characteristics of useful information. The syllabus
then covers drafting financial statements and the D. Record transactions and events
principles of accounts preparation. The syllabus
then concentrates in depth on recording, processing, E. Prepare a trial balance (including identifying
and reporting business transactions and events. The and correcting errors)
syllabus then covers the use of the trial balance and F. Prepare basic financial statements for
how to identify and correct errors, and then the incorporated and unincorporated entities.
preparation of financial statements for incorporated
and unincorporated entities. The syllabus then G. Prepare simple consolidated financial
moves in two directions, firstly requiring candidates statements
to be able to conduct a basic interpretation of
financial statements; and secondly requiring the H. Interpretation of financial statements
preparation of simple consolidated

RELATIONAL DIAGRAM OF MAIN CAPABILITIES

The context and purpose The qualitative
of financial reporting characteristics
(A) of financial info rmation (B)

Recording

transactions
The use of double-entry and accounting system s (C)
and events (D)

Preparing a trial balance (E)

Preparing basic financial statements (F)

Interpretation of
financial
Preparing simple consolidated financial statements (G)
statements (H)
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DETAILED SYLLABUS
10. Capital structure and finance costs
A The context and purpose of financial reporting
E Preparing a trial balance
1. The scope and purpose of financial statements
for external reporting 1. Trial balance

2. Users’ and stakeholders’ needs 2. Correction of errors

3. The main elements of financial reports 3. Control accounts and reconciliations

4. The regulatory framework (legislation and 4. Bank reconciliations
regulation, reasons and limitations, relevance
of accounting standards) 5. Suspense accounts

5. Duties and responsibilities of those charged F Preparing basic financial statements
with governance.
1. Statements of financial position
B The qualitative characteristics of financial
information 2. Statements of profit or loss and other
comprehensive income
1. The qualitative characteristics of financial
information 3. Disclosure notes

C The use of double-entry and accounting 4 Events after the reporting period
systems
5. Statements of cash flows
1. Double-entry book-keeping principles including 6. Incomplete records
the maintenance of accounting records and
sources of accounting information
G Preparing simple consolidated financial
2. Ledger accounts, books of prime entry, and statements
journals
1. Subsidiaries
D Recording transactions and events
2. Associates
1. Sales and purchases
H Interpretation of financial statements
2. Cash
1. Importance and purpose of analysis of financial
3. Inventory statements

4. Tangible non-current assets 2. Ratios

5. Depreciation 3. Analysis of financial statements

6. Intangible non-current assets and amortisation

7. Accruals and prepayments

8. Receivables and payables

9. Provisions and contingencies
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APPROACH TO EXAMINING THE SYLLABUS

THE SYLLABUS IS ASSESSED BY A TWO HOUR
PAPER-BASED OR COMPUTER-BASED
EXAMINATION.

The syllabus is assessed by a two hour paper-based
or computer-based examination. Questions will
assess all parts of the syllabus and will test
knowledge and some comprehension or application
of this knowledge. The examination will consist of
two sections. Section A will contain 35 two mark
objective questions. Section B will contain 2 fifteen
mark multi-task questions. These will test
consolidations and accounts preparation. The
consolidation question could include a small
amount of interpretation and the accounts
preparation question could be set in the context of a
sole trader or a limited company.

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Study Guide 5. Duties and responsibilities of those charged
with governance

A THE CONTEXT AND PURPOSE OF FINANCIAL
a) Explain what is meant by governance
REPORTING
specifically in the context of the preparation of

financial statements[K]
1. The scope and purpose of, financial statements

for external reporting
b) Describe the duties and responsibilities of

directors and other parties covering the
a) Define financial reporting – recording,
preparation of the financial statements. [K]
analysing and summarising financial data.[K]

B THE QUALITATIVE CHARACTERISTICS OF
b) Identify and define types of business entity –
FINANCIAL INFORMATION
sole trader, partnership, limited liability

company.[K]
1. The qualitative characteristics of financial

information
c) Recognise the legal differences between a sole

trader, partnership and a limited liability
a) Define, understand and apply qualitative
company.[K]
characteristics:[K]

i) Relevance
d) Identify the advantages and disadvantages of
ii) Faithful representation
operating as a limited liability company, sole
iii) Comparability
trader or partnership.[K]
iv) Verifiability

v) Timeliness
e) Understand the nature, principles and scope of
vi) Understandability
financial reporting.[K]

b) Define, understand and apply accounting
2. Users’ and stakeholders’ needs
concepts:[K]

i) Materiality
a) Identify the users of financial statements and
ii) Substance over form
state and differentiate between their
iii) Going concern
information needs.[K]
iv) Business entity concept

v) Accruals
3. The main elements of financial reports
vi) Fair presentation

vii) Consistency
a) Understand and identify the purpose of each of

the main financial statements.[K]

C THE USE OF DOUBLE-ENTRY AND
b) Define and identify assets, liabilities, equity,
ACCOUNTING SYSTEMS
revenue and expenses.[K]

1. Double-entry book-keeping principles including
4. The regulatory framework
the maintenance of accounting records

a) Understand the role of the regulatory system
a) Identify and explain the function of the main
including the roles of the IFRS Foundation
data sources in an accounting system.[K]
(IFRSF), the International Accounting

Standards Board (IASB), the IFRS Advisory
b) Outline the contents and purpose of different
Council (IFRS AC) and the IFRS Interpretations
types of business documentation, including:
Committee (IFRS IC).[K]
quotation, sales order, purchase order, goods

received note, goods despatched note, invoice,
b) Understand the role of International Financial
Reporting Standards.[K]
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statement, credit note, debit note, remittance 2. Cash
advice, receipt.[K]
a) Record cash transactions in ledger accounts.[S]
c) Understand and apply the concept of double-
entry accounting and the duality concept.[K] b) Understand the need for a record of petty cash
transactions.[K]
d) Understand and apply the accounting
equation.[S] 3. Inventory

e) Understand how the accounting system a) Recognise the need for adjustments for
contributes to providing useful accounting inventory in preparing financial statements.[K]
information and complies with organisational
policies and deadlines.[K] b) Record opening and closing inventory.[S]

f) Identify the main types of business transactions c) Identify the alternative methods of valuing
e.g. sales, purchases, payments, receipts.[K] inventory.[K]

2. Ledger accounts, books of prime entry and d) Understand and apply the IASB requirements
journals for valuing inventories.[S]

a) Identify the main types of ledger accounts and e) Recognise which costs should be included in
books of prime entry, and understand their valuing inventories.[S]
nature and function.[K]
f) Understand the use of continuous and period
b) Understand and illustrate the uses of journals end inventory records.[K]
and the posting of journal entries into ledger
accounts.[S] g) Calculate the value of closing inventory using
FIFO (first in, first out) and AVCO (average
c) Identify correct journals from given narrative.[S] cost) – both periodic weighted average and
continuous weighted average.[S]
d) Illustrate how to balance and close a ledger
account.[S] h) Understand the impact of accounting concepts
on the valuation of inventory.[K]
D RECORDING TRANSACTIONS AND EVENTS
i) Identify the impact of inventory valuation
1. Sales and purchases methods on profit and on assets.[S]

a) Record sale and purchase transactions in
ledger accounts.[S] 4. Tangible non-current assets

b) Understand and record sales and purchase a) Define non-current assets.[K]
returns.[S]
b) Recognise the difference between current and
c) Understand the general principles of the non-current assets.[K]
operation of a sales tax.[K]
c) Explain the difference between capital and
d) Calculate sales tax on transactions and record revenue items. [K]
the consequent accounting entries.[S]
d) Classify expenditure as capital or revenue
e) Account for discounts allowed and discounts expenditure.[S]
received.[S]
e) Prepare ledger entries to record the acquisition
and disposal of non-current assets.[S]
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f) Calculate and record profits or losses on b) Identify types of intangible assets.[K]
disposal of non-current assets in the statement
of profit or loss including part exchange c) Identify the definition and treatment of
transactions.[S] “research costs” and “development costs” in
accordance with International Financial
g) Record the revaluation of a non-current asset in Reporting Standards.[K]
ledger accounts, the statement of profit or loss
and other comprehensive income and in the d) Calculate amounts to be capitalised as
statement of financial position.[S] development expenditure or to be expensed
from given information.[S]
h) Calculate the profit or loss on disposal of a
revalued asset.[S] e) Explain the purpose of amortisation.[K]

i) Illustrate how non-current asset balances and f) Calculate and account for the charge for
movements are disclosed in financial amortisation.[S]
statements.[S]
7. Accruals and prepayments
j) Explain the purpose and function of an asset
register.[K] a) Understand how the matching concept applies
to accruals and prepayments.[K]
5. Depreciation
b) Identify and calculate the adjustments needed
a) Understand and explain the purpose of for accruals and prepayments in preparing
depreciation.[K] financial statements.[S]

b) Calculate the charge for depreciation using c) Illustrate the process of adjusting for accruals
straight line and reducing balance methods.[S] and prepayments in preparing financial
statements.[S]
c) Identify the circumstances where different
methods of depreciation would be d) Prepare the journal entries and ledger entries
appropriate.[K] for the creation of an accrual or prepayment.[S]

d) Illustrate how depreciation expense and e) Understand and identify the impact on profit
accumulated depreciation are recorded in and net assets of accruals and prepayments.[S]
ledger accounts.[S]
8. Receivables and payables
e) Calculate depreciation on a revalued non-
current asset including the transfer of excess a) Explain and identify examples of receivables
depreciation between the revaluation surplus and payables.[K]
and retained earnings.[S]
b) Identify the benefits and costs of offering credit
f) Calculate the adjustments to depreciation facilities to customers.[K]
necessary if changes are made in the estimated
useful life and/or residual value of a non- c) Understand the purpose of an aged receivables
current asset.[S] analysis.[K]

g) Record depreciation in the statement of profit d) Understand the purpose of credit limits.[K]]
or loss and statement of financial position.[S]
e) Prepare the bookkeeping entries to write off an
6. Intangible non-current assets and amortisation irrecoverable debt.[S]

a) Recognise the difference between tangible and f) Record an irrecoverable debt recovered.[S]
intangible non-current assets.[K]
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g) Identify the impact of irrecoverable debts on b) Record movements in the share capital and
the statement of profit or loss and on the share premium accounts.[S]
statement of financial position.[S]
c) Identify and record the other reserves which
h) Prepare the bookkeeping entries to create and may appear in the company statement of
adjust an allowance for receivables.[S] financial position.[S]

i) Illustrate how to include movements in the d) Define a bonus (capitalisation) issue and its
allowance for receivables in the statement of advantages and disadvantages.[K]
profit or loss and how the closing balance of
the allowance should appear in the statement e) Define a rights issue and its advantages and
of financial position.[S] disadvantages.[K]

j) Account for contras between trade receivables f) Record and show the effects of a bonus
and payables.[S] (capitalisation) issue in the statement of
financial position.[S]
k) Prepare, reconcile and understand the purpose
of supplier statements.[S] g) Record and show the effects of a rights issue in
the statement of financial position.[S]
l) Classify items as current or non-current
liabilities in the statement of financial h) Record dividends in ledger accounts and the
position.[S] financial statements.[S]

9. Provisions and contingencies i) Calculate and record finance costs in ledger
accounts and the financial statements.[S]
a) Understand the definition of “provision”,
“contingent liability” and “contingent asset”.[K] j) Identify the components of the statement of
changes in equity.[K]
b) Distinguish between and classify items as
provisions, contingent liabilities or contingent E PREPARING A TRIAL BALANCE
assets.[K]
1. Trial balance
c) Identify and illustrate the different methods of
accounting for provisions, contingent liabilities a) Identify the purpose of a trial balance.[K]
and contingent assets.[K]
b) Extract ledger balances into a trial balance.[S]
d) Calculate provisions and changes in
provisions.[S] c) Prepare extracts of an opening trial balance.[S]

e) Account for the movement in provisions.[S] d) Identify and understand the limitations of a
trial balance.[K]
f) Report provisions in the final accounts.[S]
2. Correction of errors
10. Capital structure and finance costs
a) Identify the types of error which may occur in
a) Understand the capital structure of a limited bookkeeping systems.[K]
liability company including: [K]
i) Ordinary shares b) Identify errors which would be highlighted by
ii) Preference shares (redeemable and the extraction of a trial balance.[K]
irredeemable)
iii) Loan notes. c) Prepare journal entries to correct errors.[S]

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