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FA Chapter 2 Questions The Statement of Financial Position and Statement of Profit or Loss

VIVA

 

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    • No – there is no ambiguity.
      He withdraws 980 per month. We are looking at the period from 1 February 2007 to 31 January 2008, which is 12 months.
      Unless the question said differently, you would assume it was 980 for each of the 12 months.
      (This was actually a past exam question)

    • If you click on F3 on the bar at the top of this page (underneath the red bar) then you will get a page listing all of our free resources for Paper F3.

      If you scroll down the page you will find a button saying “View all F3 lectures” – if you click on it then you will get a page listing all of the lectures, including those for this chapter.

      (The lectures are a complete free course for Paper F3 and cover everything needed to be able to pass the exam well.)

    • You need to use the accounting equation (I assume that you have watched my free lecture on this before attempting the test?)

      You know that the profit is (30,600); you know what the capital introduced is (7,200); and you know what the drawings are (12 months at 960, plus 840, so a total of 23,360)

      If you put these in the accounting equation then you will know the increase in net assets over the year.
      You know what the net assets are at the end of the year ((64,800) and so if you subtract the increase over the year you will have the net assets at the start of the year.

  6. I don’t understand question 1. For example – OB – 10, Drawing – 5, Capital introduced – 10 and CB (obviously) – 15. If we use the formula above 15-5+10-10 = 0 but that’s not true because net profit = 10-5 e.g 5

    • Have you watched the free lectures for this chapter of our lecture notes? (My lectures are a complete free course for Paper F3 and cover everything needed to be able to pass the exam well.)

      This is testing you on the accounting equation.

      Increase in net assets = capital introduced + profit – drawings
      The net assets at the end of the year are 34,000 – 8,000 = 26,000. Therefore the increase in net assets = 26,000 – 23,000 = 3,000.

      Therefore, using the accounting equation:
      3,000 = 2,000 + profit – (12 x 500) = 2,000 + profit – 6,000 = profit – 4,000
      Therefore profit = 3,000 + 4,000 = 7,000

      • good day Sir

        if I’m not mistaken didn’t you say in the lecture that the accounting equation was net assets =profit-drawings+capital introduced?
        can the equation be rearranged or is the correct format for the equation net assets = capital introduced + profit – drawings?

    • No.

      For a sole trader, the retained earnings at the start of the year are part of the total capital at the start of the year (retained earnings for a sole trader are not show separately).
      For a limited company (which is dealt with in later chapters) the retained earnings at the start of the year (together with the share capital and other reserves) are always equal to the net assets at the start of the year.

      In either case, the change in the net assets over the year is only ever equal to any capital introduced during the year plus the profit for the year less the drawings for the year (or in the case of limited companies, the dividends paid in the year).

    • The ACCA does not release past exams, so I cannot give you a link.

      Assuming that you have a Revision Kit from one of the approved publishers (as we recommend), then you will have more than enough exam standard questions to practice 🙂

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