ACCA F3 flashcards – set 3

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

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


What is an meant by an error of original entry?

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An error of original entry is when the correct double entry has been made, but where the amount is wrong.

What are compensating errors?

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Compensating errors are two or more errors when the net effect is zero.

What is an error of principle?

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An error of principle is when an entry that should have been recorded in an asset account has been recorded in an expense account (or vice versa).

What is an error of commission?

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An error of commission is when an entry has been posted to the wrong account.

What is an error of omission?

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An error of omission is a transaction that has not been recorded in the books of the company.

What is an overdraft?

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An overdraft is a negative balance at the bank (i.e. the company owes money to the bank).

If a bank statement is showing a debit balance for a company, does it mean that the company has money at the bank or that the company is overdrawn?

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A debit balance on a bank statement means that the company is overdrawn.

What is an uncleared lodgement (or lodgement not yet credited)?

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An uncleared lodgement is a receipt that has been entered in the cash book but has not yet appeared on the bank statement.

What is an outstanding (unpresented) cheque?

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An outstanding cheque is one that has been entered in the cash book but has not yet appeared on the bank statement.

What is the purpose of a bank reconciliation?

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The bank reconciliation is done to check the accuracy of the entries in the cash book (and the accuracy of the bank statement).

What are we trying to achieve when we reconcile the receivables ledger control accounts with the receivables ledger?

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The balance on the receivables ledger control account should be the same as the total of all the balances on the individual accounts in the accounts receivables ledger. If they are not the same then there must be an error.

What is the payables ledger control account?

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The payables ledger control account is an account in the general (nominal) ledger recording the total amount owing to suppliers.

What is the receivables ledger control account?

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The receivables ledger account is an account in the general (nominal) ledger recording the total amount owing from customer.

What is the general (or nominal) ledger?

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The general ledger contains all the accounts necessary to produce the financial statements. The double entry is made between these accounts.

What is recorded in the accounts payable ledger (payables ledger)?

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The accounts payables ledger records the amounts owing to each individual supplier.

What is recorded in the accounts receivable ledger (receivables ledger)?

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The accounts receivables ledger records the amounts owing by each individual customer.

What is recorded in the sales day book (or sales journal)?

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The sales day book records all sales made on credit.

What is recorded in the purchase day book (or purchases journal)?

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The purchase day book records all purchases made on credit.

What is meant by a refund?

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A refund is a repayment of cash previously paid. It can occur for various reasons – e.g. the customer overpaid by mistake; the customer returned goods for which they had already paid.

What is a credit note?

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A credit note is a ‚negative invoice‘ and is prepared by the supplier to cancel a previous invoice (or part of an invoice) because of goods having been returned or because of an overcharge on the invoice.

What is a statement?

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A statement is prepared by the supplier and summarises the amount owing by the customer.

What is the difference between a purchase invoice and a sales invoice?

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Both are prepared by the supplier of the goods or services and detail the amount of payment being requested. The supplier calls it a sales invoice, the customer calls it a purchase invoice.

What is a goods received note?

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A goods received note is prepared by the company receiving the goods, and lists the quantity and description of the goods being received.

What is a goods delivery note?

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A delivery note is provided by the supplier and lists the quantity and description of the goods being supplied.

What is meant by a part-exchange agreement when a non-current asset is disposed of?

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A part-exchange agreement is where an old asset is provided in part payment for a new asset, the balance of the cost of the new asset being paid in cash.

When using the straight-line method of depreciation, what is meant by the term residual value?

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The residual value of an asset is the estimated disposal value at the end of its useful life.

What is the reducing balance method of depreciation?

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A reducing amount of depreciation is charged each year (a fixed percentage of the net book value).


Comments

    • Profile photo of John Moffat says

      An accrued expense is when we know that we owe money (for example we might owe for telephone), but we have not yet received the invoice. (The invoice for telephone will usually arrive after we have been using the telephone, but we have still incurred the expense (and are going to have to pay for it) even if the bill has not arrived yet)

      If you have not already watched it, then I do suggest that you watch my lecture on this website on accruals and prepayments.

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