Foundations in P R Accountancy / A C ACCA T I C E Financial Accounting & (FFA/FA) R E V I S I O Welcome to BPP Learning Media's Practice &Revision Kit for FFA/FA. In this N Practice & Revision Kit, which has been reviewed by the ACCA examining team, we:  Include Do you know? Checklists to test your knowledge and understanding of topics  Provide you with two mock exams including the Specimen Exam K  Provide the ACCA's exam answers to the Specimen Exam as an additional I revision aid T FOR EXAMS FROM 1 SEPTEMBER 2018 TO 31 AUGUST 2019 These materials are provided by BPP FFA/FA FINANCIAL ACCOUNTING First edition May 2011 A note about copyright Seventh e dition February 2018 Dear Customer ISBN 9781 5097 1755 2 What does the little © mean and why does it matter? Previous ISBN 9781 5097 1138 3 e-ISBN 9781 5097 1904 4 Your market-leading BPP books, course materials and e-learning materials do not write and update themselves. 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Email: [email protected] “IASB”, “IFRS for SMEs”, “IASs”, “IFRS”, “IFRSs”, Web: www.ifrs.org “International Accounting Standards” and “International Financial Reporting Standards”, “IFRIC” “SIC” and “IFRS Disclaimer: The IASB, the International Financial Reporting Standards Taxonomy” are Trade Marks of the IFRS Foundation. (IFRS) Foundation, the authors and the publishers do not accept Further details of the Trade Marks including details of countries responsibility for any loss caused by acting or refraining from acting in where the Trade Marks are registered or applied for are reliance on the material in this publication, whether such loss is available from the Licensor on request. caused by negligence or otherwise to the maximum extent permitted by law. © BPP Learning Media Ltd 2018 ii These materials are provided by BPP CONTENTS Contents Page Finding questions Question index..............................................................................................................................v Helping you with your revision......................................................................................................viii Using your BPP Practice & Revision Kit...........................................................................................ix Passing the FFA/FA exam...............................................................................................................x Approach to examining the syllabus.................................................................................................x Tackling Multiple Choice Questions.................................................................................................xi Using your BPP products..............................................................................................................xii Questions and answers Questions....................................................................................................................................3 Answers..................................................................................................................................177 Exam practice Mock exam 1 – ACCA Specimen Exam  Questions.........................................................................................................................245  Answers...........................................................................................................................259 ACCA's exam answers to Specimen Exam ...................................................................................267 Mock exam 2  Questions.........................................................................................................................275  Answers...........................................................................................................................289 Review form These materials are provided by BPP iii FFA/FA FINANCIAL ACCOUNTING iv These materials are provided by BPP QUESTION INDEX Question index Time Page allocation Marks Mins Question Answer Part A: The context and purpose of financial reporting The context and purpose of financial reporting Questions 1.1 to 1.14 28 34 5 177 Part B: The qualitative characteristics of financial information The qualitative characteristics of financial information Questions 2.1 to 2.13 26 31 11 178 Part C: The use of double entry and accounting systems Double entry bookkeeping Questions 3.1 to 3.19 38 46 17 179 Questions 4.1 to 4.18 36 43 20 180 Part D: Recording transactions and events Sales tax Questions 5.1 to 5.8 16 19 27 182 Inventory Questions 6.1 to 6.19 38 46 28 183 Tangible non-current assets Questions 7.1 to 7.19 38 46 34 186 Questions 8.1 to 8.20 40 48 39 188 Intangible non-current assets Questions 9.1 to 9.12 24 34 43 190 Accruals and prepayments Questions 10.1 to 10.15 30 36 46 191 Receivables and payables Questions 11.1 to 11.20 40 48 50 194 Provisions and contingencies Questions 12.1 to 12.13 26 31 54 196 Capital structure and finance costs Questions 13.1 to 13.14 28 34 58 197 These materials are provided by BPP v FFA/FA FINANCIAL ACCOUNTING Time Page allocation Marks Mins Question Answer Part E: Preparing a trial balance 15 mark question: trial balance Question 14.1 15 18 65 199 Control accounts Questions 15.1 to 15.19 38 53 66 200 Bank reconciliations Questions 16.1 to 16.15 30 36 72 203 Correction of errors Questions 17.1 to 17.18 36 44 76 204 Suspense accounts Questions 18.1 to 18.11 22 27 80 206 Part F: Preparing basic financial statements 15 mark questions: preparing basic financial statements Questions 19.1 to 19.7 105 126 87 207 Incomplete records Questions 20.1 to 20.16 32 38 97 213 Company financial statements Questions 21.1 to 21.10 20 24 101 215 Disclosure notes Questions 22.1 to 22.9 18 22 103 216 Events after the reporting period Questions 23.1 to 23.9 18 22 105 216 Statements of cash flows Questions 24.1 to 24.21 42 51 108 217 Part G: Preparing simple consolidated financial statements 15 mark questions: preparing simple consolidated financial statements Questions 25.1 to 25.4 60 72 117 218 Consolidated financial statements Questions 26.1 to 26.27 54 65 124 221 vi These materials are provided by BPP QUESTION INDEX Time Page allocation Marks Mins Question Answer Part H: Interpretation of financial statements 15 mark question: interpretation of financial statements Question 27.1 15 18 135 225 Interpretation of financial statements Questions 28.1 to 28.11 22 26 136 225 Mixed banks Mixed bank 1: Questions 29.1 to 29.19 38 46 138 226 Mixed bank 2: Questions 30.1 to 30.20 40 48 143 228 Mixed bank 3: Questions 31.1 to 31.19 38 46 149 230 Mixed bank 4: Questions 32.1 to 32.17 34 43 155 232 Mixed bank 5: Questions 33.1 to 33.20 40 48 160 234 Mixed bank 6: Questions 34.1 to 34.18 36 41 165 236 Mixed bank 7: Questions 35.1 to 35.18 36 43 170 238 Mock exams Mock exam 1 (ACCA Specimen Exam) 100 120 245 259 Mock exam 2 100 120 275 289 These materials are provided by BPP vii FFA/FA FINANCIAL ACCOUNTING Helping you with your revision BPP Learning Media – ACCA Approved Content Provider As an ACCA Approved Content Provider, BPP Learning Media gives you the opportunity to use revision materials reviewed by the ACCA examining team. By incorporating the ACCA examining team's comments and suggestions regarding the depth and breadth of syllabus coverage, the BPP Learning Media Practice & Revision Kit provides excellent, ACCA-approved support for your revision. These materials are reviewed by the ACCA examining team. The objective of the review is to ensure that the material properly covers the syllabus and study guide outcomes, used by the examining team in setting the exams, in the appropriate breadth and depth. The review does not ensure that every eventuality, combination or application of examinable topics is addressed by the ACCA Approved Content. Nor does the review comprise a detailed technical check of the content as the Approved Content Provider has its own quality assurance processes in place in this respect. Selecting questions We provide signposts to help you plan your revision, including a full question index. Attempting mock exams There are two mock exams that provide practice at coping with the pressures of the exam day. We strongly recommend that you attempt them under exam conditions. Mock exam 1 is the ACCA Specimen Exam. Mock exam 2 reflects the question styles and syllabus coverage of the exam. viii These materials are provided by BPP USING YOUR BPP PRACTICE AND REVISION KIT Using your BPP Practice & Revision Kit Aim of this Practice & Revision Kit To provide the practice to help you succeed in the examination for FFA/FA Financial Accounting. To pass the examination you need a thorough understanding in all areas covered by the syllabus and teaching guide. Recommended approach  Make sure you are able to answer questions on everything specified by the syllabus and teaching guide. You cannot make any assumptions about what questions may come up in your exam. The examining team aims to discourage 'question spotting'.  Learning is an active process. Use the DO YOU KNOW? Checklists to test your knowledge and understanding of the topics covered in FFA/FA Financial Accounting by filling in the blank spaces. Then check your answers against the DID YOU KNOW? Checklists. Do not attempt any questions if you are unable to fill in any of the blanks – go back to your BPP Interactive Text and revise first.  When you are revising a topic, think about the mistakes that you know that you should avoid by writing down POSSIBLE PITFALLS at the end of each DO YOU KNOW? Checklist.  Once you have completed the checklists successfully, you should attempt the questions on that topic. All sections have a selection of OBJECTIVE QUESTIONS (including Multiple Choice Questions). Make good use of the HELPING HANDS provided to help you answer the questions.  There is a mark allocation for each question. Each mark carries with it a time allocation of 1.2 minutes. A 2 mark question should therefore be completed in 2.4 minutes.  70% of the exam consists of objective questions, including Multiple Choice Questions. You should attempt each bank of objective test questions to ensure you are familiar with their styles and to practise your technique. Ensure you read Tackling Multiple Choice Questions on page xi to get advice on how best to approach them.  Once you have completed all of the questions in the body of this Practice & Revision Kit, you should attempt the MOCK EXAMS under examination conditions. Check your answers against our answers to find out how well you did. These materials are provided by BPP ix FFA/FA FINANCIAL ACCOUNTING Passing the FFA/FA exam FA Financial Accounting aims to develop your knowledge and understanding of the underlying principles, concepts and regulations relating to financial accounting. You will need to demonstrate technical proficiency in the use of double entry techniques, including the preparation of basic financial statements for incorporated and unincorporated entities, as well as simple consolidated financial statements for group entities. You also need to be able to conduct a basic interpretation of financial statements. If you plan to progress through the ACCA qualification, the skills you learn at FA will be built upon in the exams FR Financial Reporting and SBR Strategic Business Reporting. To access Foundations in Accountancy syllabi, visit the ACCA website www2.accaglobal.com/students/fia The exam All questions in the exam are compulsory. This means you cannot avoid any topic, but also means that you do not need to dedicate time in the exam deciding which questions to attempt. There are thirty-five objective test questions in the exam, including a mixture of MCQs and other types of objective questions (for example, number entry, multiple response and multiple response matching) in the CBE. This means that the examining team is able to test most of the syllabus at each sitting, so you need to have revised right across the syllabus for this exam. Revision This Practice and Revision kit has been reviewed by the FA examining team and contains the ACCA Specimen Exam, so if you just work through it to the end you would be very well prepared for the exam. It is important to tackle questions under exam conditions. Allow yourself just the number of minutes shown next to the questions in the index and don't look at the answers until you have finished. Then correct your answer and go back to the Interactive Text for any topic you are having trouble with. Try the same questions again a week later – you will be surprised how much better you are getting. Doing the questions like this will really show you what you know, and will make the exam experience less worrying. Doing the exam If you have diligently done your revision you can pass this exam. There are a couple of points to bear in mind:  Read the question properly.  Don't spend more than the allotted time on each question. If you are having trouble with a question leave it and carry on. You can come back to it at the end. Approach to examining the syllabus FFA/FA is a two-hour exam. The exam is structured as follows: No of marks Section A – 35 compulsory objective questions of 2 marks each 70 Section B – 2 compulsory multi-task questions of 15 marks each 30 100 x These materials are provided by BPP