LSBF class notes ACCA F3

239 Pages·2011·3.95 MB·English

ACCA Paper F3

Financial Accounting
(INT)

Class Notes

June 2011
© The Accountancy College Limited January 2011
All rights reserved. No part of this publication may be reproduced, stored in a
retrieval system, or transmitted, in any form or by any means, electronic,
mechanical, photocopying, recording or otherwise, without the prior written
permission of The Accountancy College Limited.
2 www.studyinteractive.org
Contents
PAGE

INTRODUCTION TO THE PAPER 5

CHAPTER 1: INTRODUCTION TO FINANCIAL REPORTING 9

CHAPTER 2: FINANCIAL STATEMENTS 13

CHAPTER 3: DOUBLE ENTRY BOOKKEEPING 19

CHAPTER 4: INVENTORY 39

CHAPTER 5: NON-CURRENT ASSETS 47

CHAPTER 6: IRRECOVERABLE DEBTS AND ALLOWANCES 61

CHAPTER 7: ACCRUALS AND PREPAYMENTS 69

CHAPTER 8: SALES TAX 77

CHAPTER 9: BOOKS OF PRIME ENTRY 81

CHAPTER 10: CONTROL ACCOUNT RECONCILIATIONS 91

CHAPTER 11: CORRECTION OF ERRORS AND SUSPENSE ACCOUNTS 97

CHAPTER 12: BANK RECONCILIATIONS 105

CHAPTER 13: LIMITED COMPANY ACCOUNTS 113

CHAPTER 14: FROM TRIAL BALANCE TO FINANCIAL STATEMENTS 123

CHAPTER 15: ACCOUNTING STANDARDS 127

CHAPTER 16: INCOMPLETE RECORDS 135

CHAPTER 17: PARTNERSHIPS 145

CHAPTER 18: STATEMENTS OF CASH FLOW 155

CHAPTER 19: CONCEPTUAL FRAMEWORK 169

APPENDIX: SOLUTIONS TO EXERCISES AND EXAMPLES 177

www.studyinteractive.org 3
4 www.studyinteractive.org
Introduction to the
paper
INTRODUCTION TO THE PAPER
AIM OF THE PAPER
The aim of the paper is to develop a knowledge and understanding of the
underlying principles and concepts relating to financial accounting and technical
proficiency in the use of double-entry accounting techniques including the
preparation of basic financial statements.
MAIN CAPABILITIES
On successful completion of this paper candidates should be able to:
A Explain the context and purpose of financial reporting
B Define the qualitative characteristics of financial information and the
fundamental bases of accounting
C Demonstrate the use of double-entry and accounting systems
D Record transactions and events
E Prepare a trial balance (including identifying and correcting errors)
F Prepare basic financial statements for incorporated and unincorporated
entities
EXAMINER
The examiner for paper F3 is Nicola Ventress. Nicola wrote the F3 pilot paper (in
your study manual, revision kit and available to download via the ACCA website).
This gives us a good indication of how the syllabus areas will be examined.
FORMAT OF THE EXAM
This exam can be sat as a written or computer based exam.
The exam is 2 hours long with no reading time.
50 questions with 90 marks available.
These 90 marks are split down as 40 two mark questions and 10 one mark
questions.
Both computational and non-computational questions.
Questions can be tested as multiple choice, multiple response, multiple response
matching, or (most commonly) number entry.
All questions are compulsory.
Pass mark is 50%.
6 www.studyinteractive.org
INTRODUCTION TO THE PAPER
INTERNATIONAL AND UK STREAMS
The following notes are suitable for both the International and UK streams. There
is some terminology differences between the two streams. These are summarised
below:
International UK
Statement of comprehensive income Profit and loss account
Statement of financial position Balance sheet
Non-current assets Fixed assets
Inventory Stock
Trade receivables Debtors
Non-current liabilities Long term liabilities
Trade payables Creditors
Irrecoverable debts Bad debts

w w w . s t u d y i n t e r a c t i v e . org 7
INTRODUCTION TO THE PAPER

8 www.studyinteractive.org
Chapter 1
Introduction to
financial reporting
CHAPTER 1 – INTRODUCTION TO FINANCIAL REPORTING
CHAPTER CONTENTS
WHAT IS FINANCIAL REPORTING? ------------------------------------ 11

WHAT IS A BUSINESS? 11
TYPES OF ACCOUNTS AND THEIR USERS ----------------------------- 12

MANAGEMENT ACCOUNTS 12

FINANCIAL ACCOUNTS 12

1 0 www.studyinteractive.org