All flashcard decksACCA Applied Knowledge (BT, MA, FA) syllabus →
35 cardsACCA Applied Knowledge (BT, MA, FA)

ACCA FA: Double Entry, Accounting Rules and Ratios

Cards on the accounting equation, double-entry rules, IFRS definitions, depreciation and inventory rules, reconciliations, consolidation and financial ratios for ACCA Financial Accounting (FA) study. Study material written for practice.

Start studyingPlay Match
PDF study sheet

Free account needed to save, copy or download. We bring you back here.

1 / 35
0 known
TermClick or press Space to flip
Accounting equation
GetMyMockTestQuestion side

Full list

Terms in this deck (35)

ACCA Applied Knowledge (BT, MA, FA) mock tests →
1
Accounting equation
Assets = Liabilities + Equity, so Equity = Assets − Liabilities.
2
Debit or credit: increase in an asset
Debit. Assets and expenses increase with debits.
3
Debit or credit: increase in a liability
Credit. Liabilities, equity and income increase with credits.
4
Debit or credit: increase in income
Credit. Revenue is credited when earned.
5
Debit or credit: increase in drawings
Debit. Drawings reduce the owner's capital.
6
Fundamental qualitative characteristics (Conceptual Framework)
Relevance and faithful representation.
7
Enhancing qualitative characteristics
Comparability, verifiability, timeliness and understandability.
8
Definition of an asset
A present economic resource controlled by the entity as a result of past events.
9
Definition of a liability
A present obligation of the entity to transfer an economic resource as a result of past events.
10
Definition of equity
The residual interest in the assets of the entity after deducting all its liabilities.
11
Cost of sales
Opening inventory + purchases (+ carriage inwards − purchase returns) − closing inventory.
12
Inventory valuation under IAS 2
The lower of cost and net realisable value, using FIFO or weighted average cost. LIFO is not allowed.
13
Net realisable value
Estimated selling price less estimated costs to complete and costs necessary to make the sale.
14
Straight-line depreciation
(Cost − residual value) ÷ useful life.
15
Reducing balance depreciation
Rate × net book value at the start of the year.
16
Profit or loss on disposal
Disposal proceeds − net book value (cost − accumulated depreciation).
17
Capital versus revenue expenditure
Capital expenditure acquires or improves non-current assets; revenue expenditure maintains them and is charged to profit or loss.
18
Research and development under IAS 38
Research is expensed. Development is capitalised only when the recognition criteria are met.
19
Expense accrual
Closing accrual is added to the cash paid; the opening accrual is deducted: expense = paid + closing accrual − opening accrual.
20
Prepayment
An expense paid in advance. It is a current asset: the part of a payment that relates to the next period.
21
Allowance for receivables charge
Irrecoverable debts written off + increase (or − decrease) in the allowance.
22
Provision recognition (IAS 37)
Present obligation from a past event, a probable outflow of benefits and a reliable estimate.
23
Bank reconciliation: items to adjust the cash book
Bank charges, direct debits, standing orders, dishonoured cheques, interest and errors.
24
Bank reconciliation: timing differences
Unpresented cheques and outstanding lodgements. They reconcile the adjusted cash book to the bank statement.
25
Types of error that do NOT affect the trial balance
Omission, commission, principle, original entry, reversal and compensating errors.
26
Suspense account
A temporary account used to make the trial balance agree until errors are found and corrected.
27
Adjusting event after the reporting period (IAS 10)
An event that gives evidence of conditions existing at the reporting date, such as a customer's insolvency. The amounts are adjusted.
28
Goodwill on acquisition (IFRS 3)
Consideration + non-controlling interest − fair value of identifiable net assets acquired.
29
Associate (IAS 28)
Significant influence, usually 20% to 50% of voting rights. Equity method: cost + share of post-acquisition profit − dividends.
30
Unrealised profit in inventory (PURP)
Profit on the goods still in inventory, eliminated on consolidation: goods held × margin (mark-up ÷ (100 + mark-up)).
31
Return on capital employed (ROCE)
Profit before interest and tax ÷ (equity + non-current liabilities).
32
Gross profit margin and net profit margin
Gross profit ÷ revenue, and (operating) profit ÷ revenue.
33
Current ratio and quick ratio
Current assets ÷ current liabilities; (current assets − inventories) ÷ current liabilities.
34
Receivables days and payables days
Receivables ÷ credit sales × 365; payables ÷ credit purchases (or cost of sales) × 365.
35
Gearing and interest cover
Debt ÷ (debt + equity) (or debt ÷ equity); profit before interest and tax ÷ finance costs.

ACCA Applied Knowledge (BT, MA, FA) in the United Kingdom

In the United Kingdom, ACCA Applied Knowledge (BT, MA, FA) is part of: Professional exams.

Students on the same pathway also practise:

More ACCA Applied Knowledge (BT, MA, FA) practice

Other ACCA Applied Knowledge (BT, MA, FA) flashcard decks

ACCA Applied Knowledge (BT, MA, FA) mock tests

All ACCA Applied Knowledge (BT, MA, FA) practice →