ACCA F3 flashcards – set 2

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 does the Statement of Changes in Equity show?

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The Statement of Changes in Equity shows the reasons for the changes in share capital and reserves during the accounting period.

What is the definition of an associate?

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An associate is an entity over which the investor has significant influence but which is not a subsidiary (usually due to a shareholding of 20% to 50%).

What is the definition of a subsidiary?

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A subsidiary is an entity that it is controlled by another entity (usually with a shareholding of more than 50%).

What is the purpose of depreciation?

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Depreciation is used to reflect the cost of using a non-current asset. It matches the cost of using the assets to the revenues generated by the asset over its useful life.

What is the straight-line method of depreciation?

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The depreciation charge is the same each year – the cost is spread over the expected useful life.

Do we depreciate Land and Buildings?

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Buildings will be depreciated because they have a limited useful life.
Land will not normally be depreciated because it has an unlimited life.

What is the non-current asset register?

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The non-current asset register is a record of the non-current assets held by the business. It is for internal control purposes and is not part of the double entry bookkeeping.

What is the difference between tangible and intangible non-current assets?

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Tangible assets can be touched (have a physical substance) e.g. machines, buildings, motor vehicles.
Intangible assets cannot be touched (do not have a physical substance) e.g. goodwill, development expenditure.

What is meant by revenue expenditure?

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Revenue expenditure refers to expenses of running the business (will appear on the Income Statement).

What is meant by capital expenditure?

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Capital expenditure refers to the purchase of non-current assets and expenditure that enhances the asset (will appear on the Statement of Financial Position).

What is meant by a credit limit?

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A credit limit is the maximum amount of credit that the business is prepared to allow to the customer.

What is the purpose of an aged receivables analysis?

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To help keep track of outstanding debts and follow up on any that are overdue.

What is an aged receivables analysis?

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An aged receivables analysis is a list showing how much each customer owes and how old their debts are.

What is the purpose of the allowance for receivables?

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The allowance for receivables is made to recognise the possibility that some of the receivables might not be received (because they are doubtful).

What is meant by an irrecoverable debt?

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An irrecoverable debt is an amount owing to the business that will not be received.

What is meant by prepaid income?

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Prepaid income is income for the next year that has been received in the current year.

What is meant by accrued income?

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Accrued income is income for this year that has not been received by the year end.

What is meant by a prepaid expense?

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A prepaid expense occurs when some of the next years expense has been paid in the current year.

Is the net selling price the selling price including or excluding sales tax?

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The net selling price is the selling price excluding sales tax.

Is the gross selling price the selling price including or excluding sales tax?

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The gross selling price is the selling price including sales tax.

Is output sales tax the tax charged on purchases or the tax charged on sales?

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Output tax is the tax charged on sales.

Is input sales tax the tax charged on purchases or the tax charged on sales?

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Input tax is the tax charged on purchases.

Is sales tax a form of direct or indirect taxation?

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Sales tax is a form of indirect taxation.

What methods of calculating the cost of inventory are allowed by the accounting standard?

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FIFO (first in first out)
AVCO (average cost_
Unit cost (actual cost)

In the context of inventory valuation, what is meant by net realisable value?

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Net realisable value is the expected selling price less any expected future costs there will be before sale.

Inventory is value at the lower of ___ and ___?

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Inventory is valued at the lower of cost and net realisable value.

What is the main purpose of a trial balance?

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A trial balance checks that for every debit entry made, there has been an equal credit entry.


Comments

  1. avatar says

    A company receives rent from a large number of properties. The total received in the year ended 30 April
    2008 was $1,154,880.
    The following were the amounts of rent in advance and in arrears at 30 April 2007 and 2008:
    30 April 2007 30 April 2008
    $ $
    Rent received in advance 68,880 74,880
    Rent in arrears (all subsequently received) 50,880 44,160
    What amount of rental income should appear in the company’s income statement for the year ended
    30 April 2008?
    A $1,167,600
    B $1,106,160
    C $1,203,600
    D $1,142,160

    can someone help me please. i saw the answer already, but i don’t understand why :

    the opening balance of 68,880 is on the credit side and the closing balance of 44,160
    the opening balance of 50880 and closing balance of 74880 on the credit side

  2. avatar says

    Ques: D/allowed was credited to D/rcvd by 3840.
    D/rcvd was debited to D/allowed by 2960
    Please help Sir @johnmoffat: Could you pls tell me which of the following answer is correct (Im a confused because LSBF course notes claim
    DR D/rcvd 880
    Dr D/allowed 880
    Cr. Suspense a/c 1760
    As the right answer while Opentuition notes claim
    Dr. D/allowed 7680
    Cr. D/rcvd 5920
    Cr. Suspense 1760 as the right answer?? O_o

  3. avatar says

    Orange made sales of $463,680 during the year ended 30 September 2011. Inventory decreased by $31,680 over the year, and all sales were made at a mark up of 42%.
    What was the cost of purchases during the year to the nearest $1,000?

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