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Journal entries

Forums › ACCA Forums › ACCA FR Financial Reporting Forums › Journal entries

  • This topic has 3 replies, 2 voices, and was last updated 3 weeks ago by Kim Smith.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • July 22, 2022 at 12:08 pm #661636
    jangodango
    • Topics: 6
    • Replies: 3
    • ☆

    How necessary is it to understand journal entries in order to pass FR?
    How do I learn it quick?

    July 22, 2022 at 12:19 pm #661637
    Kim Smith
    Keymaster
    • Topics: 91
    • Replies: 6237
    • ☆☆☆☆☆

    I’m not quite sure what you’re asking – the syllabus doesn’t specifically mention “journal entries” – which is a way of recording “debits and credits” – this is the foundation of financial ACCOUNTING (as opposed to financial REPORTING) and is assumed knowledge of Financial Accounting.

    What is it you don’t understand?

    July 23, 2022 at 4:17 am #661673
    jangodango
    • Topics: 6
    • Replies: 3
    • ☆

    For instance:
    Dr. Current tax
    Cr. Deferred tax liability
    Cr. Current tax payables

    It all seems confusing to me. So I just wanted to know how important is it to understand debit and credit for FR

    July 23, 2022 at 9:05 am #661682
    Kim Smith
    Keymaster
    • Topics: 91
    • Replies: 6237
    • ☆☆☆☆☆

    It depends on whether you are seeing it as someone’s explanation of something – or you are seeing it in a published answer to a past Q. If you’re seeing it in answer to any of the questions in the practice platform you should really be understanding it.

    If there is more than one Dr/Cr it means the entries are being summarised. For example:

    Current tax for the year is 100:
    Dr Tax expense (P/L) 100
    Cr Current tax liability (SoFP) 100

    Deferred tax for the year is 200:
    Dr Tax expense (P/L ….. but could be OCI in the case of revaluation) 200
    Cr Deferred tax liability (SoFP) 200

    So over journal:
    Dr Tax expense (P/L) 300
    Cr Current tax liability (SoFP) 100
    Cr Deferred tax liability (SoFP) 200

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