ACCA FA (F3) A Complete Course on Financial Accounting

This chapter, Regulatory Framework" is a theoretical short chapter. There are no calculation questions involved in this chapter. The topic focuses on the background of IAS and IFRS as well as the organizations involved in the preparation of accounting standards such as IFRS Foundation, IASB (International Accounting Standard Board), IFRSIC (International Financial Reporting Standards Interpretation Committee), IFRSAC (International Financial Reporting Standards Advisory Council)

Students must read the text books carefully and remember the structure of the organizations and their specific roles and responsibilities.

LEARNING OUTCOMES ARE:

Understand the role of the regulatory system including the roles of the:

1. International Financial Reporting Standards Foundation (IFRSF)

2. International Accounting Standards Board (IASB)

3. International Financial Reporting Standards Advisory Council (IFRSAC)

4. International Financial Reporting Standards

5. Interpretations Committee (IFRSIC)

Understand the role of International Financial Reporting Standards (IFRS)

• Define, understand and apply accounting concepts and qualitative characteristics.

• Understand the balance between qualitative characteristics

• Understand the concepts such as

1. Fair Presentation

2. Accrual

3. Going Concern

4. Prudence

5. Materiality

6. Consistency

7. Substance over Form

LEARNING OUTCOMES

•Identify and explain the function of the main data sources in an accounting system and how the accounting system provides useful information.

•Outline the contents and purpose of different types of business documentation such as an invoice.

•Identify the main types of business transactions, for example, sales, purchases, payments and receipts.

•Identify the main types of ledger accounts and books of prime entry, and understand their nature and function.

•Understand and record sales and purchase returns.

•Understand the need for a record of petty cash transactions and security over the petty cash system.

LEARNING OUTCOMES

•Understand and apply the concept of double entry accounting, the duality concept and the accounting equation.

•Identify the main types of ledger account and illustrate how to balance and close a ledger account.

•Understand and illustrate the uses of journals and the posting of journal entries into ledger accounts.

•Identify correct journals from given narrative.

•Record credit sale; credit purchase and cash transactions in ledger accounts and day books.

Understand and record sales and purchase returns

Chapter Syllabus

(a) Recognise the need for adjustments for inventory in preparing

financial statements.

(b) Record opening and closing inventory.

(c) Identify the alternative methods of valuing inventory.

(d) Understand and apply the IASB requirements for valuing inventories.

(e) Recognise which costs should be included in valuing inventories.

(f) Understand the use of continuous and period end inventory records.

(g) Calculate the value of closing inventory using FIFO (first in, first out) and AVCO (average cost).

(h) Understand the impact of accounting concepts on the valuation of inventory.

(i) Identify the impact of inventory valuation methods on profit and on assets

CHAPTER SYLLABUS AND LEARNING OUTCOMES

• Define non-current assets and recognise the difference between current and non-current assets.

• Explain the difference between capital and revenue items and classify expenditure accordingly.

• Understand and explain the purpose of depreciation.

• Calculate the charge for depreciation using the straight line and reducing methods, identifying when each is appropriate.

• Calculate the adjustments to depreciation necessary if changes are made in the estimated useful life and/or residual value of a non-current asset.

• Record depreciation in the statement of profit or loss and statement of financial position.

• Calculate and record profits or losses on disposal of non-current assets in the statement of profit or loss.

• Record the revaluation of a non-current asset and calculate its subsequent depreciation and profit or loss on disposal.

• Prepare ledger entries to record the acquisition, disposal, depreciation and accumulated depreciation of non-current assets.

• Illustrate how non-current asset balances and movements are disclosed in company financial statements.

• Explain the purpose and function of an asset register.