ACCA F3 flashcards – set 1

Learn or revise key terms and concepts for your ACCA exams using OpenTuition F3 ACCA Flashcards

ACCA flashcards are interactive and only work on line, flashcards are NOT downloadable/printable

See also ACCA F3 Flashcards: Set 1 | Set 2 | Set 3 | Set 4


What is the difference between the Statement of Comprehensive Income and the Income Statement?

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The Statement of Comprehensive Income is the same as the Income Statement but with the addition of any surplus on revaluation.
(For later exams there are other differences, but the above is the only relevant one for Paper F3).

What is meant by a gross margin?

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The gross margin is the gross profit expressed as a percentage of the sales.

What is meant by an early settlement discount?

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An early settlement is a discount given if payment is made quickly.

What is the double entry for the sale of goods on credit?

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Debit receivables
Credit sales

What is the double entry for the purchase of goods for resale on credit?

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Debit purchases
Credit payables

Will an increase in capital be a debit or a credit entry in the ledger account for capital?

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An increase in capital will be a credit entry in the capital account.

Will an increase in income be a debit or a credit entry in the ledger account for the income?

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An increase in income will be a credit entry in the income account.

Will an increase in a liability be a debit of a credit in the ledger account for the liability?

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An increase in a liability will be a credit entry in the liability account.

Will drawings be a debit or a credit entry in the drawings account?

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Drawings will be a debit entry in the drawings account.

Will an increase in an asset be a debit or a credit in the ledger account for the asset?

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An increase in an asset is a debit entry in the asset account.

Will an increase in an expense be a debit or a credit in the ledger account for the expense?

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An increase in an expense is a debit entry in the expense account.

What is meant by net assets?

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Net assets = total assets – total liabilities

What is the accounting equation?

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The increase in net assets = capital introduced + profit – drawings

What are non-current assets?

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Non-current assets are assets acquired on a long-term basis, not held for resale in the normal course of trading.

What are current assets?

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Current assets are assets which are expected to be realised in the normal course of trading.

What are current liabilities?

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Current liabilities are liabilities payable within 12 months of the reporting date.

What are non-current liabilities?

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Non-current liabilities are liabilities payable more than 12 months after the reporting date.

What is the definition of drawings (or withdrawals)?

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Drawings is anything taken from the business by a sole trader, whatever he/she chooses to call it.

What is the definition of capital?

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Capital is the amount due to the owner(s) of the business.

What is the separate entity concept?

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The business is treated as separate from its owners.

What is the definition of gross profit?

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The gross profit is the sales revenue less the cost of goods sold.

What is the definition of a liability?

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A liability is an item owed by the business.

What is the definition of an asset?

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An asset is an item owned by the business.

What does the Income Statement show?

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The revenues, expenses and profit or loss of the business – the financial performance of the business over a period of time.

What does the Statement of Financial Position show?

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The assets, liabilities and capital of the business – the financial position of the business at one point in time.

What user groups are interested in a company’s financial statements?

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* Management
* Investors and potential investors
* Employees
* Lenders
* Government agencies
* Suppliers
* Customers
* Competitors
* The public

What is a sole trader?

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A sole trader is a business owned and operated by one person


Comments

  1. avatar says

    open tution please help . can ypu please explain how Closing net asset + Drawings – Capital introduced – Opening net assets calculated net profit. (from acca polot paper December 2011)
    I kind of think its to do with the a/c equation assets = liabilities + capital. In Sofp does the opening balance come first or closing balance. Please explain.

  2. Avatar of randy says

    Its very helpful, but i have one question, one of the flashcards defined the term ‘Asset’ to be an item that is owned by the business which is true but my lecturer said that an asset is an item that is controlled by a business.control is more important than ownership according to him, so can someone please help me clear this up please……..thanks…..

  3. Avatar of ishtiaqahmed says

    I am so much thankful to you opentution these are awsome questions and answers they helped me alot because i haven’t studied Accounting before i mean to say that no CAT or FIA so i am weak in accounting thanks once again.

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