FA Chapter 2 Questions The Statement of Financial Position and Statement of Profit or Loss
211 Comments
H
Henry·
Is statement 1 on Sole traders not correct since they are liable to taxes hence their Financials are only private to themselves , but what about Government revenue in terms of taxes
J
John MoffatTutor·
I assume that you are referring to question 4.
The business does not pay tax. It is the owner who pays tac on all of their income which will include the profits they make from the business.
I do explain this in my free lectures :-)
K
khush999·
Helped me so much!!
S
sadeekxasharma·
ahhh very helpful
G
ginidika·
thank you so much, my exam is in the next 8 weeks. These formulars will definitely help me.
S
sadeekxasharma·
Did you passed your exam??
V
Vibhor·
in simple words we can understand by the term liabilites
H
Haddy s Faye·
Liabilities are present obligations owed by an entity.
S
Siddharth·
What exactly is the meaning of the statement "Claims against those Assets" ? Do they indirectly mean Liabilities and Owner's Equity ?
N
Nabiha·
Yes, the statement "Claims against those assets" refers to how a company's assets are financed or claimed by different parties (liabilities and capital/Equity)
V
Vibhor·
in simple words we can understand by the term liabilites
M
Mascuud Farah·
That is liability
T
Ts\'ítso·
for question number two i dont understand why do we say the correct option is B
J
John MoffatTutor·
There is no option B for question 2
The correct statement is the last one (as is explained in the answers that appear then you select ‘review quiz’.
M
MayThuKhaing·
100% yes I tought I only correct 4 question
A
Amdad·
CLOSING NET ASSETS - OPENING NET ASSETS (INCREASE IN NET ASSETS) = PROFIT - DRAWINGS + CAPITAL INTRODUCED
IF YOU WANT TO FIND OUT THE FOLLOWING YOU JUST RE-ARRANGE THE FORUMLA
PROFIT = CLOSING NET ASSETS - OPENING NET ASSETS + DRAWINGS - CAPITAL INTRODUCED
CAPITAL INTRODUCED = CLOSING NET ASSETS - OPENING NET ASSETS - PROFIT + DRAWINGS
DRAWINGS = PROFIT + CAPITAL INTRODUCED - CLOSING NET ASSETS + OPENING NET ASSETS
CLOSING NET ASSETS = PROFIT - DRAWINGS + CAPITAL INTRODUCED + OPENING NET ASSETS
OPENING NET ASSETS = CLOSING NET ASSETS - PROFIT + DRAWINGS - CAPITAL INTRODUCED
JOHN CAN YOU PLEASE VERIFY THE ACCURATENESS OF THE ABOVE.
THANKS
AMDAD
T
Threaser·
80% have tried
N
Nayana·
80%
F
faith·
IS THERE ONLY ONE MOCK EXAM//??
J
John MoffatTutor·
Yes! For more you should buy a Revision Kit from BPP - it has three mock exams. And, of course, there are more on the ACCA website.
F
Fambai·
Capital take it as you are the owner of business. Opening capital is the money you invest in your business let's say 10000 so if after 3 months you decide to add some more 4000 then this added money is capital introduced and the first sum of money is the opening so in total your capital increased to 14000.
J
John MoffatTutor·
That is correct, and at any point in time the total capital is quest to the net assets.
R
Rajendra·
I dont understand ?5
Profit is 3,000
Net profit and Increase in net assets isnt the samething?
J
John MoffatTutor·
No, because of capital introduced and drawings. Have you watched the free lectures on the accounting equation?
J
John MoffatTutor·
The opening capital is the capital at the start of the year in question.
In the first year of the business it will indeed be the capital introduced. However at the end of the year the closing capital will have changed (increased by the profit and decreased by the drawings) and this is then the opening capital for the following year. So each year the opening capital will be different.
G
George·
Hello,
I really enjoy your videos, I have been using them in my preparation for the last few months.
I do not understand this formula, I have watched the free lecture notes a few times but I have not seen this formula before. According to the free lecture notes Net Assets=Capital, so isn`t opening net assets the same as capital introduced?
Kind Regards
A
Ameer·
Capital introduced implies that new capital has been added to an already existing balance of capital. Opening Net Assets can be thought of as Opening Capital balance.
If I'm wrong, kindly correct me :)
S
Sir lytes·
Guys how is everyone saying they are getting 80%?? i cant even go past 20% Idk whats wrong. I saw different formulars in the book and now here the formulars are completely different ahh. its so annoying.
J
John MoffatTutor·
The only formulae relevant for this test are those covered in Chapter 2 of our free lecture notes and the free lectures working through the chapter. Have you watched the free lectures?
(Other formulae relevant for Paper FA are covered in later chapters).
C
conwell·
I did well
C
conwell·
Excellent practice question, I am ready to take the exam now.
J
John MoffatTutor·
Great :-)
J
Joseph·
I got 100%
Who needs a tutor when you have open tuition.
I am embarking on ACCA next year for sure. God hear my prayers by providing finances.
J
jahedul·
got 100% good qst all are
T
Tarklarie·
I want to write F3 end of January
S
sayyada·
thanks i got 80% , i failed question of purpose of statement of financial position
C
Clifford·
I used the formula( closing net assets -drawing +capital introduced -opening net assets) to calculate profit in the final question and got it rights but question1 says the formulae is wrong can someone explain
J
John MoffatTutor·
The formula you have typed is not correct and does not give the right answer.
J
Jahonov·
that one is:
Profit=Closing net asset-Opening NA-Additional Capital+Drawings
S
Shiv·
Hi, please explain question 3 to me. Am new. Thank you
J
John MoffatTutor·
If you click on 'review quiz' after submitting your answers then you will see the workings to arrive at the correct answer. It is using the accounting equation as explained in my free lectures.
A
Abdallah·
the last question i got the answer but the format was wrong
A
afital12·
Same here. My increase in net assets total was $11,000. I did not subtract the liabilities.
A
afital12·
I just figured out where I went wrong with the formula. I did not consider the equation for net assets (assets - liabilities).
J
John·
How to treat net assets
J
John MoffatTutor·
Which question are you referring to?
S
stephen·
Can someone explain the final question please. im lost
J
John MoffatTutor·
If you choose 'review quiz' after submitting your answers you will see the workings for the correct answer.
The question is testing on the accounting equation as explained in the free lecture. If after reviewing the workings you are unclear where any of the figures come from then state which figures you are unsure about and I will then explain.
D
Diana Halacheva·
pg. 15 from the notes, do each one by one of the last formulae Use P instead of profit, it's easy to get confused, that what he mentioned.
S
sudheer·
it is easy to solve in t format
liabilities amount assets amount
capital
(23000+2000) 25000
drawings 6000
(500.12)
liabilities 8000
profit 7000
(balancing figure)
total 34000 total 34000
simple way to solve this question is first arrange thing given in question in proper postion and the blancing figure is answer
G
Geanette·
I got 80%
S
Shrutika saxena·
100%.
S
Syed Daniyal·
Got 80% :)
B
bnyamunokora·
I also gt 80%
R
Raynolds·
Very good practice.
L
Lukos·
Thank you so much for these lectures,notes and quiz. I got 80 percent
E
Emmanuel·
insightfull....thanks a lot
J
John MoffatTutor·
Thank you for your comment :-)
A
anisa mohamed kalil·
I got 60% which I didn't expect and I learned a lot from my mistakes. This is helpful since I'm learning most of the things myself outside of class. Thank you so much for these notes, lectures, and quizzes.
B
Bianca·
Hello! Why we added withdrawals?
G
Govind Sah·
we use to subtract opening assets with closing. here in order to find opening assets, it will be in negative so we multiply by minus (-) on both side to get positive results.
increase in N.A = capital introduced + profit - drawing
closing assets - opening assets = capital introduced + profit - drawing
- opening assets = capital introduced + profit - drawing - closing assets
opening assets = closing assets + drawing - profit - capital introduced ( multiplying both side by minus)
Hope you understand
S
Shiraz·
I got 80%. These notes and the lectures are great and useful. Concise and straight to the point. Love from Afghanistan. I promise I will donate half of my first salary to Open Tuition. You are doing an excellent job Mr. John Moffat. Wholeheartedly thank you.
J
John MoffatTutor·
Thank you for your comment :-)
M
Munawwar·
1 got 80% for this quick practice exam
K
kenedy·
I got 100% ,the questions are so beautiful.
S
sigauke·
It opened up my mind, I got 60%
J
John MoffatTutor·
Great :-)
M
Mohammad·
Nice, I got 4 out 5 correct answers! Thanks a bunch!
A quick question though, the first question, what does 'closing net assets' and 'opening net assets' mean? I can't seem to understand this formula based off the notes.
Thanks again!
A
Abijah·
Please sir, for the question where we are to find the net profit as at 1 Feb 2007, why did we add drawings and less the profits?
J
John MoffatTutor·
The question asks for the net assets at the start of the year. We know the net assets at the end of the year and these are after adding the profit and subtracting the drawings. To find the net assets at the start of the year we therefore need to work backwards.
A
Abijah·
Thank you, sir.
J
John MoffatTutor·
You are welcome.
K
kashraf·
Yes I clearly didn't read the question so I did it in reverse. Thanks for clarity and the reminder to read what is required
J
John MoffatTutor·
:-)
M
Michael·
100%
Thanks for this.
Been having a meltdown on some of the more worded questions in the practice kits (across various chapters), with a lot of tricky questions to test my understanding. So took a couple of weeks to clear my head.
Do you recommend just going through them till I understand how to get the relevant information out of the question and know what to do with it.
J
John MoffatTutor·
Yes I do - the more questions you attempt the better :-)
J
John MoffatTutor·
Yes I do - the more questions that you attempt the better :-)
Z
ZY·
Got a 100, thx for the free Notes
J
John MoffatTutor·
:-)
D
Dileshram·
Hello sir. Thanks
In question 2, why the fourth answer isn't right? It do makes sense right?And why the first answer is correct? Please clear my doubt sir ...
J
John MoffatTutor·
The choices appear in a different order every time you attempt the test, so I do not know which you got as the first and the fourth choices. If you state which choices you are referring to, then I will explain.
S
SAMUEL·
the question tricks your understanding of the topic.
L
luzi·
seems examples and quiz are bit difference in terms of tricks given
otherwise thanks so much
J
John MoffatTutor·
In the real exam, the examiner always manages to think up new 'tricks' so as to check your understanding. Make sure that you have a Revision Kit from one of the ACCA Approved Publishers and that you practice all of the questions so as to get used to these 'tricks'.
H
Hannah·
Sorry meant how number 2 is wrong?
J
John MoffatTutor·
Do you mean question 2? And what are you meaning is wrong?
K
k·
hello sir. can you please explain queston no. 1?
J
John MoffatTutor·
Did you watch the free lectures on this chapter before attempting the test, because it is just rearranging the accounting equation.
The know that the increase in net assets = closing net assets less opening net assets = capital introduced + profit - drawings .
If subtract capital introduced from both sides and add drawing to both sides, we then have the profit.
E
emmu2009·
I thought the quiz was refreshingly testing the grasp of the concepts. Really good
M
Mubin·
Thanks a lot
A
Asif·
Hello sir,
How many maximum minutes could we take to solve the calculation problems within the quiz , during the exam ?
The drawing per month was a real distractor for me. That took away my time. Need to practice
A
Asif·
I mean to say, how much maximum time should one take and not exceed per such big calculation questions during the exam ?
J
John MoffatTutor·
2 or 3 minutes per question.
M
Mohammad Shajjad·
Is book keeping control and the ledger same thing
J
John MoffatTutor·
Why are you asking that under a test of Chapter 2 of our lectures notes?
In future please ask questions in the Ask the Tutor Forum.
The word 'ledger' means book, and there are several different ledgers.
There is no such expression as 'bookkeeping control'. You may be referring to control accounts in which case they are accounts in the general (nominal) ledger.
All of this is explained in my free lectures. The lectures are a complete free course for Paper FA and cover everything needed to be able to pass the exam well.
H
hesham·
Thank you sir
a phenomenal master
for the exam is enough to learn just those thing that you taught us or does it need to study other course ?
again thank you sir
J
John MoffatTutor·
The lectures are a complete free course. However it is vital that you buy a Revision Kit from one of the ACCA approved publishers. It is full of exam-standard questions for practice, and practice is essential for passing the exam.
M
Maxamed·
How I can buy revision kit? I need it?
A
Asiya·
Dear sir. Can you explain why we DR. REV RESERVE AND CR RETAINED EARNINGS when we have excess depreciation.
Thank you
J
John MoffatTutor·
It is because Revaluation Reserves cannot be paid out as dividends, as I explain in my lectures.
However, given that the excess depreciation reduces the gain on revaluation it does them become distributable and so it can be transferred to Revenue Reserves (which is distributable as dividend). However, it is not compulsory but the company can do this if they want to.
Z
zeeshanzafar49·
Dear Sir John need some explanation & guidance to understand the question-3 of this test.
J
John MoffatTutor·
It is testing the accounting equation - did you watch the free lecture before attempting the test?
We know the profit for the year (30,600), we know the capital introduced (7,200), and we know the drawings ((12 x 960) + 840). So we can calculate in the increase in net assets over the year using the accounting equation.
Given that we know the net assets at the end of the year and we now know the increase over the year, we can now calculate what the net assets were at the start of the year.
Z
zeeshanzafar49·
Yes sir i have watched the lectures the thing which was confusing was that year of 2012 & little concept of opening & closing balance of Net asset calculation.
J
John MoffatTutor·
I hope that it is clear now.
M
Mireille·
On the FA practice question 5, we are asked to calculate the profit for the year. But the answer given as the correct answer is the increased in net assets not taking the drawings and capital introduced into consideration. Please can you explain a little further?
M
Mireille·
My question is for FA Chapter 2 practice question 5. Thank you.
J
John MoffatTutor·
The answer given is not the increase in net assets (maybe you didn't scroll down the explanation).
We know the increase in net assets is 3,000. We know that the capital introduced is 2,000 and that the drawings are 12 x 500 = 6,000.
Therefore the profit = 3,000 - 2,000 + 6,000 = 7,000 (which is what is given as the correct answer).
N
nichoku·
Good day sir, thank you for this platform. With question 3, why did we have to add the drawings of year 2007 instead of subtracting it, as i got the point of subtracting capital introduced and net profit but i could't explain why we didn't subtract the entire drawings of 12,360 from that year?
J
John MoffatTutor·
It is because we are working backwards. We know the net assets at the end of the year and we are calculating what they were at the start of the year. Drawings reduce the net assets over the year and so the figure at the start of the year will have been higher than at the end of the year.
K
Kok Hue·
Formula 1:
Increased in net assets = increased in capital
Formula 2:
Increase in Capital = Final Net Assets - Liabilities - Initial Net Assets
Substitute into formula 1 .
Increased in net assets = Final Net Assets - Liabilities - Initial Net Assets
We know the Increased in net asset is $3000 now .
Substitute $3000 into formula 3 .
Formula 3:
Increased in Net Assets = Capital Introduced + Profits - Drawing
L
Lois·
got all correct, thanks for a clarity of lectures
J
John MoffatTutor·
Thank you for your comment :-)
T
Tramy·
Thank you for the exercises. Love it
Explaination and work out clear.
J
John MoffatTutor·
Thank you for your comment :-)
G
gernot·
Nice test, good explanation, thank you sir.
J
John MoffatTutor·
Thank you for your comment :-)
C
Chukwunonso·
Hello Good evening opentuition i must really commend this site it is really helping a lot please i couldn't find anywhere else to write this. I just took the FA practice EXAMS on here and I realized i couldn't scroll down to see the remaining options as a lot of the question displayed just two options same with the section B i couldn't answer any because I couldn't see the open box to type in my answer it won't scroll down. i guess its the new outlook because it has changed since when i last took this same practice exam. thank you and please help. Kind regards.
O
opentuition_teamAdmin·
hi,
maybe change the screen resolution?
the tests have not changed their look for few years
Z
Zahra·
Took my time listening to all the lecture parts of this chapter. Now got all the questions right, yayyy.?
J
John MoffatTutor·
Great :-)
H
heshepem·
Hurray, me too
S
shagor·
I got everything right :D
J
John MoffatTutor·
Well done :-)
A
archana123·
Hey.
This is regarding the 4th question of FA practise questions for chapter 2.
The answer was worked out as - (960 x 11) / 840
Why do we divide it by 840?
J
John MoffatTutor·
I assume that you actually mean question 3 :-)
The answer does not divide anything by 840 !! (And you would realise this if you checked the total for withdrawals of 12,360)
If you look carefully, the total drawings are (960 x 12) + 840.
(960 is multiplied by 12 (not 11) because there are 12 months in the year, and then 840 is added because of the inventory taken).
K
kunleolley·
Sir, l need clarification regarding the explanation to the answering of question 3 of 5 of the FA chapter 2. The question was net asset as at February 1st and not January 1st , hence the withdrawals should be for 11 months i.e. 11 x $ 960 and not 12 x $960 please help clarify.
J
John MoffatTutor·
The answer is correct.
You are given the net assets at 31 January 2008 and asked to calculate the net assets at 1 February 2007. The accounting period is the 12 months from 1 February to 31 January.
K
kunleolley·
Thank you
J
John MoffatTutor·
You are welcome :-)
S
simranwasan2203·
Dear Sir,
In the chapter 13 of FA notes, there are several examples given but in the answers to examples section, it says that there are no examples at all. This is a very big chapter. I hope you could find a way to send me the answers for the same as I am facing difficulty in solving these.
You can mail the same to me at simranwasan2203@gmail.com.
R
resman·
I'm new to accounts..my teacher told me to study through this and I'm doing edexcel as(1st stage) do you have the basic accounts materials here..plz reply me if you have and send the link too
J
John MoffatTutor·
In future please ask this kind of question in the Ask the Tutor Forum - not as a comment on a practice test.
We provide free study material for the ACCA and CIMA examinations. ACCA Paper FA is basic accounting and applies to any exams.
You can find out material by following the links to ACCA and then FA at the top of the page.
A
Alimul·
sir john how can get f3 mock exam?
J
John MoffatTutor·
We have an online mock exam that is linked from the main Paper F3 page. However, you need more than 1 mock exam - you must buy a Revision Kit from one of the ACCA approved publishers. The Revision Kit contains mock exams, and also lots of exam-standard questions for practice (and practice is vital to passing the exam).
V
vuthydara·
Well Done. Sir
J
John MoffatTutor·
Thank you for your comment :-)
S
sanjay69·
Hey john..
I have a question for you ..
are these practise questions effective and sufficient to score a good marks in exams ??
Just asking you cause these questions seems to be easy :)
J
John MoffatTutor·
The questions are exam standard, but you need far more practice than we can provide here which is why you must buy a Revision Kit from one of the ACCA approved publishers. They contain lots of exam standard question to practice :-)
S
sanjay69·
Ok thanks for your suggestion... i wil get one :)
J
John MoffatTutor·
Great :-)
L
Liya·
It was so easy! yayy! :D Hope the exam be like this! I doubt it tho! :/
J
John MoffatTutor·
Well it is only chapter 2 :-)
D
dmwsyee·
Morning, Sir.
Regarding F3 Chapter 2 Questions 5 of 5,
Q: On 1 July 2012 a business had net assets of $23,000.
At 30 June 2013 they had total assets of $34,000 and total liabilities of $8,000.
During the year the owner had introduced $2,000 more capital, and had taken drawings of $500 per month.
What was the profit for the year ended 30 Jun 2013?
I would like to ask sir, how to solve this question.
Thanks.
J
John MoffatTutor·
You need to use the accounting equation - you know the opening and closing net assets, you know the capital introduced and the drawings, so profit is the missing figure.
You should watch the free lectures before attempting the tests. The lectures are a complete free course for Paper F3 and cover everything needed to pass the exam well.
D
dmwsyee·
Thanks sir!
I will try again.
Sorry for late reply.
Thanks.
J
John MoffatTutor·
You are welcome :-)
J
jamal·
hi sir
i would like to ask you a personal question
that is, practicing more questions in open tuition and also practicing its mock exams several times
could it help and support me to pass for sitting my f2 paper next week
with high marks like 80 or 70 and above
otherwise we found this site very helpful and thank you
for being available eveytime
J
John MoffatTutor·
In future, please ask this sort of question in the Ask the Tutor Forum rather than as a comment on a test.
The more practice you get the better - there is also a practice exam on the ACCA website, and best of all is to use a Revision Kit from one of the ACCA approved publishers because they are full of practice questions.
Z
Zurarath·
Hi
i am not able to start the question because the start quiz button dosent appear ?
could you help me ?
J
John MoffatTutor·
Please ask on the support page - then admin might be able to help you.
(The link is above)
Z
Zurarath·
Thank you john, Appreciate your prompt respose
J
John MoffatTutor·
You are welcome :-)
S
stevensim95·
Thanks Mr John!!! Your lectures,practice questions was a great help for me!!!
I sat my F3 paper on 13/7 and i pass it. Can't do it without you again.
J
John MoffatTutor·
Thank you for the comment, and many congratulations on passing :-)
H
hamza98·
Hello, I don't understand the reasoning behind the solution of Question 1 and Question 3.
In Question - 1 : The correct answer had 'Capital Introduced' subtracted while the 'Drawings' were added, shouldn't it be the other way around with drawings being subtracted and capital introduced treated as an addition ?
In Question - 3 : I did everything correctly but I subtracted Drawings ( Less : Withdrawal ) while the correct answer had (Add : Withdrawals). Isn't Drawings something that owner withdraws from the business ? Then why isn't it treated as a subtraction ?
J
John MoffatTutor·
The pop-up answers to both questions are correct.
they are both applications of the accounting equation: increase in net assets = capital introduced plus profit less drawings.
This is explained in full in the free lectures, and you should watch the lectures before attempting the tests. The lectures are a complete free course for Paper F3 and cover everything needed to be able to pass the exam well.
M
Magdalin Divya·
I really feel regret that I didn't know about this website earlier. I got to know about this website just a couple of weeks earlier from our management. Besides, I don't have any basics on accounting and also I couldn't understand my class lecturer. But now I just went through this two chapters and now on wards I'm feeling confident that I can do this exam better. All the credit goes to you Sir! Thank you for that.
J
John MoffatTutor·
Thanks you for your comment.
J
jsmc·
This is a wonderful site to help students. A lot of time is required to find and read the notes and download the lectures.
I have the following suggestions:
a. both readers and tutor time will be saved if the Lecture Notes and Lecture Videos can be downloaded by pressing a button
b. the other interactive parts can be left as they are, e.g. the Mock Exam Questions, Quiz, etc.
J
John MoffatTutor·
There is a button for downloading the notes above each lecture, and they obviously only need downloading once.
Lectures cannot be downloaded - they can only be watched online. That is the only way that we can keep this website free of charge. (You will find the same applies on paid for websites also)
M
Magdalin Divya·
Very helpful questions. Thnkyou Sir! :)
R
RashadSupporter·
Please Review question number 3 , you said that 960$ is withdrawn per month but haven't given the period or specify it. ( ddoes it strt to withdraw from august or february, there is ambigiuty )
J
John MoffatTutor·
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)
H
hafedh·
Hi, I tried to watch your free lectures for this chapter, but I couldn't reach it! please provide the link
J
John MoffatTutor·
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.)
A
ANZHELA·
Thank you very much, very helpful for revision.
J
John MoffatTutor·
You are welcome :-)
R
ruhina·
can you please tell me how to solve question number 3?
J
John MoffatTutor·
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.
S
sajuali786·
hi I do not understand question number 3. Can you please explain Thanks a lot.
J
John MoffatTutor·
But I have explained in my previous reply!
Have you watched my free lectures on the accounting equation?
R
ruhina·
Thank you sir
J
John MoffatTutor·
You are welcome :-)
N
Nikolay·
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
J
John MoffatTutor·
If by OB and CB you mean opening net assets and closing net assets, the profit using your figures is certainly not 10 - 5!! The profit on your figure would be 0 because the increase in net assets using your figures is equal to the capital introduced minus the drawings.
I do not think you can have watched the free lectures before attempting the test, and I suggest that you do.
N
Nikolay·
I'm sorry for the stupid question. I thought for net assets instead net profit...that's my mistake. Thanks for helping.
J
John MoffatTutor·
No problem :-)
B
blee12derrick·
Hello, sir
Please help me and explain to me question quiz No.5. i have not understood.
Thanks
J
John MoffatTutor·
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.
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?
J
John MoffatTutor·
Of course it can be re-arranged any way you want!!
The two equations you typed are both exactly the same, it is very basic algebra :-)
D
domik·
Thank you.
J
John MoffatTutor·
You are welcome :-)
B
Bharat·
Can we treat retained earnings as a profit on accounting equation concept?
J
John MoffatTutor·
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).
B
Bharat·
Thanks
J
John MoffatTutor·
You are welcome :-)
H
Habibullah Habibi·
I have attempt this question many times, eventually I got it that "Net Asset= Closing Net Asset- Opening Net Asset", am I right? anyone can help me?
J
John MoffatTutor·
You do not say which question!
And no - you are not right.
The increase in net assets = closing net assets - opening net assets.
(Have you watched my free lectures on this? Our lectures are a complete free course.)
H
Habibullah Habibi·
Thank you very much
J
John MoffatTutor·
You are welcome :-)
S
shameema·
How to study f3 plzz any one can help me or suges me.
J
John MoffatTutor·
Our free lectures are a complete course for Paper F3.
L
Lolo Lox·
If I had you as my Tutor from few years back would have been a PwC senior partner by now. :)
J
John MoffatTutor·
Thank you :-)
M
Mahdi khaliif·
I need link F3 past exam
thanks
J
John MoffatTutor·
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 :-)
S
sandybmoyo60·
am enjoying this
J
John MoffatTutor·
:-)
A
abrams·
nycc
J
jamilahghani·
thank you for this questions.
J
John MoffatTutor·
You are welcome :-)
S
soltanovaleyla·
Thank you)
J
John MoffatTutor·
You are welcome :-)
A
amina·
When pressing start nothing comes.
E
Edmore·
nice
J
John MoffatTutor·
Good! :-)
C
colin·
This is very nice for quick revision.
I appreciate.
Thanks
J
John MoffatTutor·
You are welcome :-)
S
silence·
Hie Mr John ....may you help me,Im not receiving the mock exam l only see a blank page
J
John MoffatTutor·
The page is working fine - maybe it is something to do with either your computer or with your internet connection.
Please ask on the support page (the link is above the comments) and admin should be able to help you.
The business does not pay tax. It is the owner who pays tac on all of their income which will include the profits they make from the business.
I do explain this in my free lectures :-)
The correct statement is the last one (as is explained in the answers that appear then you select ‘review quiz’.
IF YOU WANT TO FIND OUT THE FOLLOWING YOU JUST RE-ARRANGE THE FORUMLA
PROFIT = CLOSING NET ASSETS - OPENING NET ASSETS + DRAWINGS - CAPITAL INTRODUCED
CAPITAL INTRODUCED = CLOSING NET ASSETS - OPENING NET ASSETS - PROFIT + DRAWINGS
DRAWINGS = PROFIT + CAPITAL INTRODUCED - CLOSING NET ASSETS + OPENING NET ASSETS
CLOSING NET ASSETS = PROFIT - DRAWINGS + CAPITAL INTRODUCED + OPENING NET ASSETS
OPENING NET ASSETS = CLOSING NET ASSETS - PROFIT + DRAWINGS - CAPITAL INTRODUCED
JOHN CAN YOU PLEASE VERIFY THE ACCURATENESS OF THE ABOVE.
THANKS
AMDAD
Profit is 3,000
Net profit and Increase in net assets isnt the samething?
In the first year of the business it will indeed be the capital introduced. However at the end of the year the closing capital will have changed (increased by the profit and decreased by the drawings) and this is then the opening capital for the following year. So each year the opening capital will be different.
I really enjoy your videos, I have been using them in my preparation for the last few months.
I do not understand this formula, I have watched the free lecture notes a few times but I have not seen this formula before. According to the free lecture notes Net Assets=Capital, so isn`t opening net assets the same as capital introduced?
Kind Regards
If I'm wrong, kindly correct me :)
(Other formulae relevant for Paper FA are covered in later chapters).
Who needs a tutor when you have open tuition.
I am embarking on ACCA next year for sure. God hear my prayers by providing finances.
Profit=Closing net asset-Opening NA-Additional Capital+Drawings
The question is testing on the accounting equation as explained in the free lecture. If after reviewing the workings you are unclear where any of the figures come from then state which figures you are unsure about and I will then explain.
liabilities amount assets amount
capital
(23000+2000) 25000
drawings 6000
(500.12)
liabilities 8000
profit 7000
(balancing figure)
total 34000 total 34000
simple way to solve this question is first arrange thing given in question in proper postion and the blancing figure is answer
increase in N.A = capital introduced + profit - drawing
closing assets - opening assets = capital introduced + profit - drawing
- opening assets = capital introduced + profit - drawing - closing assets
opening assets = closing assets + drawing - profit - capital introduced ( multiplying both side by minus)
Hope you understand
A quick question though, the first question, what does 'closing net assets' and 'opening net assets' mean? I can't seem to understand this formula based off the notes.
Thanks again!
Thanks for this.
Been having a meltdown on some of the more worded questions in the practice kits (across various chapters), with a lot of tricky questions to test my understanding. So took a couple of weeks to clear my head.
Do you recommend just going through them till I understand how to get the relevant information out of the question and know what to do with it.
In question 2, why the fourth answer isn't right? It do makes sense right?And why the first answer is correct? Please clear my doubt sir ...
otherwise thanks so much
The know that the increase in net assets = closing net assets less opening net assets = capital introduced + profit - drawings .
If subtract capital introduced from both sides and add drawing to both sides, we then have the profit.
How many maximum minutes could we take to solve the calculation problems within the quiz , during the exam ?
The drawing per month was a real distractor for me. That took away my time. Need to practice
In future please ask questions in the Ask the Tutor Forum.
The word 'ledger' means book, and there are several different ledgers.
There is no such expression as 'bookkeeping control'. You may be referring to control accounts in which case they are accounts in the general (nominal) ledger.
All of this is explained in my free lectures. The lectures are a complete free course for Paper FA and cover everything needed to be able to pass the exam well.
a phenomenal master
for the exam is enough to learn just those thing that you taught us or does it need to study other course ?
again thank you sir
Thank you
However, given that the excess depreciation reduces the gain on revaluation it does them become distributable and so it can be transferred to Revenue Reserves (which is distributable as dividend). However, it is not compulsory but the company can do this if they want to.
We know the profit for the year (30,600), we know the capital introduced (7,200), and we know the drawings ((12 x 960) + 840). So we can calculate in the increase in net assets over the year using the accounting equation.
Given that we know the net assets at the end of the year and we now know the increase over the year, we can now calculate what the net assets were at the start of the year.
We know the increase in net assets is 3,000. We know that the capital introduced is 2,000 and that the drawings are 12 x 500 = 6,000.
Therefore the profit = 3,000 - 2,000 + 6,000 = 7,000 (which is what is given as the correct answer).
Increased in net assets = increased in capital
Formula 2:
Increase in Capital = Final Net Assets - Liabilities - Initial Net Assets
Substitute into formula 1 .
Increased in net assets = Final Net Assets - Liabilities - Initial Net Assets
We know the Increased in net asset is $3000 now .
Substitute $3000 into formula 3 .
Formula 3:
Increased in Net Assets = Capital Introduced + Profits - Drawing
Explaination and work out clear.
maybe change the screen resolution?
the tests have not changed their look for few years
This is regarding the 4th question of FA practise questions for chapter 2.
The answer was worked out as - (960 x 11) / 840
Why do we divide it by 840?
The answer does not divide anything by 840 !! (And you would realise this if you checked the total for withdrawals of 12,360)
If you look carefully, the total drawings are (960 x 12) + 840.
(960 is multiplied by 12 (not 11) because there are 12 months in the year, and then 840 is added because of the inventory taken).
You are given the net assets at 31 January 2008 and asked to calculate the net assets at 1 February 2007. The accounting period is the 12 months from 1 February to 31 January.
In the chapter 13 of FA notes, there are several examples given but in the answers to examples section, it says that there are no examples at all. This is a very big chapter. I hope you could find a way to send me the answers for the same as I am facing difficulty in solving these.
You can mail the same to me at simranwasan2203@gmail.com.
We provide free study material for the ACCA and CIMA examinations. ACCA Paper FA is basic accounting and applies to any exams.
You can find out material by following the links to ACCA and then FA at the top of the page.
I have a question for you ..
are these practise questions effective and sufficient to score a good marks in exams ??
Just asking you cause these questions seems to be easy :)
Regarding F3 Chapter 2 Questions 5 of 5,
Q: On 1 July 2012 a business had net assets of $23,000.
At 30 June 2013 they had total assets of $34,000 and total liabilities of $8,000.
During the year the owner had introduced $2,000 more capital, and had taken drawings of $500 per month.
What was the profit for the year ended 30 Jun 2013?
I would like to ask sir, how to solve this question.
Thanks.
You should watch the free lectures before attempting the tests. The lectures are a complete free course for Paper F3 and cover everything needed to pass the exam well.
I will try again.
Sorry for late reply.
Thanks.
i would like to ask you a personal question
that is, practicing more questions in open tuition and also practicing its mock exams several times
could it help and support me to pass for sitting my f2 paper next week
with high marks like 80 or 70 and above
otherwise we found this site very helpful and thank you
for being available eveytime
The more practice you get the better - there is also a practice exam on the ACCA website, and best of all is to use a Revision Kit from one of the ACCA approved publishers because they are full of practice questions.
i am not able to start the question because the start quiz button dosent appear ?
could you help me ?
(The link is above)
I sat my F3 paper on 13/7 and i pass it. Can't do it without you again.
In Question - 1 : The correct answer had 'Capital Introduced' subtracted while the 'Drawings' were added, shouldn't it be the other way around with drawings being subtracted and capital introduced treated as an addition ?
In Question - 3 : I did everything correctly but I subtracted Drawings ( Less : Withdrawal ) while the correct answer had (Add : Withdrawals). Isn't Drawings something that owner withdraws from the business ? Then why isn't it treated as a subtraction ?
they are both applications of the accounting equation: increase in net assets = capital introduced plus profit less drawings.
This is explained in full in the free lectures, and you should watch the lectures before attempting the tests. The lectures are a complete free course for Paper F3 and cover everything needed to be able to pass the exam well.
I have the following suggestions:
a. both readers and tutor time will be saved if the Lecture Notes and Lecture Videos can be downloaded by pressing a button
b. the other interactive parts can be left as they are, e.g. the Mock Exam Questions, Quiz, etc.
Lectures cannot be downloaded - they can only be watched online. That is the only way that we can keep this website free of charge. (You will find the same applies on paid for websites also)
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 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 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.
Have you watched my free lectures on the accounting equation?
I do not think you can have watched the free lectures before attempting the test, and I suggest that you do.
Please help me and explain to me question quiz No.5. i have not understood.
Thanks
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
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?
The two equations you typed are both exactly the same, it is very basic algebra :-)
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).
And no - you are not right.
The increase in net assets = closing net assets - opening net assets.
(Have you watched my free lectures on this? Our lectures are a complete free course.)
thanks
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 :-)
I appreciate.
Thanks
Please ask on the support page (the link is above the comments) and admin should be able to help you.