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Acca - Fa/Ffa (F3) : Course Overview

This document provides an overview of the ACCA FA/FFA (F3) course which covers key accounting concepts including: 1. Types of business entities and the two elements of accounting - recording and summarizing financial information. 2. Key financial statements - the income statement and statement of financial position - and their associated users. 3. Double entry bookkeeping and how transactions are recorded across debit and credit ledger accounts to maintain the accounting equation. 4. International accounting standards and how they inform the preparation and presentation of financial statements, accounting for items like inventory, revenue, and intangible assets.

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Nikesh Kunwar
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40 views

Acca - Fa/Ffa (F3) : Course Overview

This document provides an overview of the ACCA FA/FFA (F3) course which covers key accounting concepts including: 1. Types of business entities and the two elements of accounting - recording and summarizing financial information. 2. Key financial statements - the income statement and statement of financial position - and their associated users. 3. Double entry bookkeeping and how transactions are recorded across debit and credit ledger accounts to maintain the accounting equation. 4. International accounting standards and how they inform the preparation and presentation of financial statements, accounting for items like inventory, revenue, and intangible assets.

Uploaded by

Nikesh Kunwar
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
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ACCA – FA/FFA (F3)

Course overview
Chapter 1
INTRODUCTION TO
ACCOUNTING
Types of business entity

• Sole trader

• Partnership

• Company
Accounting consists of 2 elements:

1.Recording

2.Summarising

- Income Statement

- Statement of Financial Position


Users of financial statements
Chapter 2

STATEMENT OF FINANCIAL
POSITION & INCOME
STATEMENT
INCOME STATEMENT
$ $
Sales X
Cos
Opening inventory X
Purchases X
Closing inventory (X)
(X)
Gross profit X
Less expenses:
Rent & rates (X)
Heat & light (X)
Wages (X)
(X)
Net profit X
STATEMENT OF FINANCIAL
POSITION
$ $
Non-current assets
Intangible X
PPE X
X
Current assets
Inventory X
Receivables X
Bank X X
X
Equity
Capital X
Profit X
Less drawings (X)

Non-current liabilities
Bank loan X
Current Liabilities X
Payables X X
X
Chapter 3

DOUBLE ENTRY
BOOKKEEPING
Duality concept

• Every transaction has at least 2 effects


on the financial statements.

• Captured in ledger accounts.


Double entry ledger accounts
Debit Electricity Credit

Date Details $ Date Details $

1 Jan Bank 500

Debit Bank Credit

Date Details $ Date Details $

1 Jan Electricity 500


Chapter 4

INVENTORY
IAS 2 INVENTORY
Chapter 5

SALES TAX
Chapter 6

ACCRUALS & PREPAYMENTS


Accruals concept
Income & expenditure should be
accounted for in the period in which it
relates not when cash is received or
paid.
Accruals

Expenses charged against profits for the


period even though they have not yet been
paid for.

Prepayments

Payments made in one period but charged


against profits in a later period to which
they relate.
Chapter 7

IRRECOVERABLE DEBTS &


ALLOWANCE FOR
RECEIVABLES
Irrecoverable debts

An irrecoverable debt should be written off


to the income statement in accordance with
the prudence concept.
Allowance for receivables

• Where the recoverability of a receivable is


uncertain an allowance may be set up to
reflect this in accordance with prudence.

• The allowance will offset the receivables


balance in the statement of financial position.
Chapter 8

NON-CURRENT ASSETS
Chapter 9
FROM TB TO FINANCIAL
STATEMENTS
Chapter 10

BOOKS OF PRIME ENTRY &


CONTROL ACCOUNTS
• A book of prime entry is used to
capture data as it arises.

• Totals transferred to:

- Ledger accounts

- Individual accounts
Chapter 11

CONTROL ACCOUNT
RECONCILIATIONS
Control Accounts

• A control account is used to represent the


total of a similar asset or liability e.g.
payables.

• Individual accounts are also maintained.

• A reconciliation between the control


account and the individual accounts helps
to detect errors.
Chapter 12

BANK RECONCILIATIONS
Bank Reconciliations
Bank reconciliations are required to explain
differences between the cash book and the
bank statement.

Differences:

• Timing differences
• Errors
• Omissions
Chapter 13
CORRECTION OF ERRORS
AND SUSPENSE ACCOUNTS
Suspense Accounts

• A suspense account arises from errors


causing the TB not to balance.

• Any balance on the suspense must be


eliminated before the final accounts can be
prepared.
Types of errors

Errors where TB still balances Errors where TB does not balance


(suspense created)

Error of omission Single sided entry

Error of commission Debit ≠ credit

Error of principle Same sided entry

Error of original entry Incorrect addition of ledger

Compensating errors Extraction error

Reversal of entries Opening balance not brought down

Transposition errors
Chapter 14

INCOMPLETE RECORDS
Chapter 15

COMPANY ACCOUNTS
Chapter 16

ACCOUNTING STANDARDS
IAS 38 Intangible Assets
An intangible asset has a value to the business
but no physical form.

2 TYPES
Purchased Internally Generated
Capitalised at cost Capitalise if market value exists

Exception:
Research & Development

• Research = expense
• Development = Capitalise
(if criteria are met).
IAS 10 Events after the
reporting period
Events that occur between the reporting date and
the date the financial statements are authorised
for issue.

Adjusting Events Non-Adjusting Events


Provide additional evidence of Concern conditions that did not exist
conditions that existed at the at the reporting date.
reporting date.

• Adjust the financial statements • Disclose if material


IAS 37 Provisions

A provision is a liability of uncertain timing or amount.

Probability of Liability Asset


occurrence
Probable Provide* Contingent asset
(Disclose)

Possible Contingent liability Do Nothing


(Disclose)

Remote Do nothing Do nothing


IAS 8 Changes in accounting
policies, accounting estimates &
errors
Changes in accounting policies Adjust opening balance on retained earnings
& restate comparative

Changes in accounting estimates Change applied in current year & disclosure


note if material

Errors Adjust opening balance on retained earnings


& restate comparative
IAS 18 Revenue

Recognition occurs when it is probable that future


economic benefits will flow to the entity and when
these benefits can be reliably measured.
IAS 18 covers revenue from:

• Sale of goods
• Provision of services
• Interest, royalties & dividends
Chapter 17

STATEMENT OF CASH FLOWS


Chapter 18
Consolidated Statement of
Financial Position
Chapter 19
Consolidated Statement of
Comprehensive Interest
Chapter 20
Interpretation of Financial
Statements
Profitability Ratios

• Gross Profit Margin

• Operating Profit Margin

• Return on Capital Employed


Liquidity and Efficiency

• Current Ratio
• Quick Ratio

• Inventory Turnover

• Inventory Days

• Receivables Collection Period

• Payables Period
Long Term Financial Stability
Ratios

• Gearing

• Interest Cover
Investor Ratios

• Earnings Per Share

• Price Earnings Ratio

• Dividend Yield

• Dividend Cover
Chapter 21
THE REGULATORY &
CONCEPTUAL FRAMEWORK
Structure of the Regulatory
Framework
Conceptual Framework

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