Association of Chartered Certified Accountants (ACCA) Financial Accounting (FA) Syllabus

Financial Accounting (FA) syllabus — full chapter and topic list

Expand any chapter to see its topics and sub-topics. This is the whole examinable outline for Financial Accounting (FA) in Association of Chartered Certified Accountants (ACCA), not a summary of it.

1. 1

   The Context and Framework of Financial Reporting

   3 topics

   • Purpose and users of financial statements
     • Stewardship and decision usefulness
     • Regulatory framework and IFRS
   • Qualitative characteristics of useful information
     • Relevance and faithful representation
     • Comparability, verifiability, timeliness, understandability
   • Underlying assumptions and elements
     • Going concern and accruals
     • Definitions of assets, liabilities, equity
2. 2

   Recording Transactions and the Double Entry System

   4 topics

   • Double entry bookkeeping
     • The accounting equation
     • Debits, credits and ledgers
   • Books of prime entry and the trial balance
     • Sales, purchases and cash books
     • Extracting a trial balance
   • Sales tax (VAT) accounting
     • Input and output tax
     • VAT control account
   • Accruals and prepayments
     • Matching income and expenses
3. 3

   Recording Specific Assets and Liabilities

   4 topics

   • Property, plant and equipment
     • Depreciation methods
     • Disposals and revaluations
   • Intangible assets and inventory
     • IAS 2 inventory valuation
     • Research and development treatment
   • Receivables and payables
     • Irrecoverable debts and allowances
   • Provisions and contingencies
     • IAS 37 recognition criteria
4. 4

   Control Accounts, Reconciliations and Error Correction

   3 topics

   • Bank reconciliations
     • Timing differences and adjustments
   • Control account reconciliations
     • Receivables and payables ledger control
   • Suspense accounts and error correction
     • Types of error
     • Journal corrections
5. 5

   Preparing Financial Statements

   4 topics

   • Statement of profit or loss and OCI
     • Sole trader and company formats
   • Statement of financial position
     • Classification of items
   • Statement of cash flows
     • IAS 7 direct and indirect methods
   • Incomplete records
     • Mark-up and margin techniques
6. 6

   Consolidated Financial Statements and Interpretation

   3 topics

   • Group accounts fundamentals
     • Goodwill and non-controlling interest
     • Consolidated statement of financial position
   • Associates
     • Equity method introduction
   • Interpretation of financial statements
     • Profitability, liquidity and gearing ratios
     • Limitations of ratio analysis

Financial Accounting (FA) flashcards for Association of Chartered Certified Accountants (ACCA)

18 of 70 cards from the Financial Accounting (FA) deck — real questions with worked answers.

1. What is the primary purpose of financial statements according to the IASB Conceptual Framework?

   To provide financial information about the reporting entity that is useful to existing and potential investors, lenders and other creditors in making decisions about providing resources to the entity (e.g. buying/selling equity and debt, or providing loans).

2. Who are the primary users of general purpose financial statements?

   Existing and potential investors, lenders and other creditors who cannot demand information directly from the entity. Other users (employees, customers, governments, public) may use them but they are not the primary audience.

3. What are the two fundamental qualitative characteristics of useful financial information?

   Relevance and Faithful representation.

4. What are the four enhancing qualitative characteristics of useful financial information?

   Comparability, Verifiability, Timeliness and Understandability.

5. For information to be a faithful representation, what three attributes should it ideally have?

   It should be complete, neutral and free from error.

6. What makes financial information relevant?

   It has predictive value, confirmatory value, or both, and is material (could influence the decisions of users).

7. What is the going concern assumption?

   The assumption that the entity will continue in operation for the foreseeable future and has neither the intention nor the need to liquidate or curtail materially the scale of its operations. It is the key underlying assumption in preparing financial statements.

8. State the accounting (accruals) equation that links the elements of the statement of financial position.

   $$\text{Assets} = \text{Liabilities} + \text{Equity}$$ equivalently $\text{Assets} - \text{Liabilities} = \text{Equity}$ (net assets).

9. Define an asset under the IASB Conceptual Framework.

   A present economic resource controlled by the entity as a result of past events, where an economic resource is a right that has the potential to produce economic benefits.

10. Define a liability under the IASB Conceptual Framework.

    A present obligation of the entity to transfer an economic resource as a result of past events.

11. What is the golden rule of double entry bookkeeping?

    For every debit there must be an equal and opposite credit; total debits always equal total credits, keeping the accounting equation in balance.

12. Under double entry, what do debit entries record?

    Increases in assets and expenses, and decreases in liabilities, capital and income (mnemonic DEAD CLIC: Debits = Expenses, Assets, Drawings).

13. Under double entry, what do credit entries record?

    Increases in liabilities, capital and income, and decreases in assets and expenses (CLIC: Credits = Liabilities, Income, Capital).

14. What is a trial balance and what is its main purpose?

    A list of all ledger account balances with debits in one column and credits in another. Its purpose is to check the arithmetical accuracy of the double entry (total debits should equal total credits) and to act as a basis for preparing financial statements.

15. Name the main books of prime entry.

    Sales day book, purchases day book, sales returns day book, purchases returns day book, cash book, petty cash book and the journal.

16. List the types of error that a trial balance will NOT detect.

    Errors of omission, commission, principle, original entry, compensating errors, complete reversal of entries, and transposition errors of equal value on both sides — these all leave the trial balance still balanced.

17. How is output VAT (sales tax on sales) recorded in the books?

    Output VAT is collected from customers on sales; it is credited to the VAT/sales tax control account (a liability owed to the tax authority). Sales are recorded net of VAT.

18. For a VAT-registered business, is sales tax included in revenue and purchases figures?

    No. Sales are recorded net of output VAT and purchases/expenses net of recoverable input VAT. VAT is not income or expense; it passes through the VAT control account.

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