ACA [ICAEW] – ACCOUNTING EXAM 2023 WITH 100% CORRECT ANSWERS

Books of Original Entry - correct answer 1. Cash Book 2. Sales Day Book (Credit Sales) 3. Purchases Day Book (Credit Purchases) 4. Petty Cash Book 5. Journal Book 6. The Payroll Statement of Financial Position - correct answer SOFP - Snapshot of assets controlled, liabilities owned and capital at a point in time Statement of Profit and Loss - correct answer Income and expenses over a period of time The Business entity concept - correct answer Business transactions should be kept separate from the personal transaction of the owner Qualitative characteristics of financial information - correct answer Two fundamental concepts 1. Relevance [Assists users in evaluating past and predicting future events + Materiality] 2. Faithful Representation [Neutral; Free from Error; Complete] Four Enhancing Characteristics 1. Verifiability [Can be proven] 2. Timeliness [In time to influence decisions of users] 3. Understandability [Readily understandable by people with reasonable knowledge] 4. Comparability [Consistency] Accrual basis of accounting - correct answer - Items recognized as assets, liabilities, equity, income and expenses (elements of FS) when they satisfy definitions and recognition criteria for those elements in conceptual framework - Transactions recognized when they occur !! Income earned must be matched against the expenditure incurred in earning it Accrual Concept - correct answer Effects of transactions reognized when they occur - not when cash received/paid