ICAEW ACA Accounting Questions and Answers with complete solution

ICAEW ACA Accounting Accounting - Answer -A way of recording, analysing and summarising transactions of an entity. Statement of Profit and Loss - Answer -It reflects the performance of a business over a period of time. Statement of Financial Position - Answer -It reflects the position of a business at a point in time. Users of Accounting - Answer -Any organisation/business/individual who needs to keep track of their income, expenses, assets and liabilities. Types of Business Entity - Answer -• Sole trader • Partnership • Limited Liability Companies SOFP - Answer -A list of assets and liabilities of the business. SPL - Answer -The revenue and expense of a business for the accounting period. Purpose of SOFP - Answer -To show the total value of the net assets of the business at the end of a period. Purpose of SPL - Answer -To show the amount of profit and loss that the business has made during that period. Stakeholders for financial information - Answer -• Managers/Directors • Owners of the company • Trade contracts • Finance providers •HMRC Capital Expenditure - Answer -Expenditure which results in the acquisition of non -current assets or an improvement or enhancement of their earning capacity (>1yr) (NCA) Revenue Expenditure - Answer -Expenditure which is incurred either for trade purposes (e.g. items for resale) or to maintain the existing earning capacity of non -current assets (e.g repairing) Code of Ethics (IFAC) - Answer -• Professional Behaviour • Objectivity • Professional Competence & due care • Confidentiality • Integrity Business entity concept - Answer -A business is a separate entity from its owner. Capital - Answer -How much the business owes back to the owner. Year -end capital Equation - Answer -Bal. at start of year + net profit + capital inj. - drawings Share capital Equation - Answer -Bal. at start of year + Further investment in shares by new stakeholders Retained Earnings Equation - Answer -Bal. at start of year + Profit - dividends Accounting equation - Answer -Assets = Liability + Capital Cost of Sales/Inventory Equation - Answer -Opening inv. + Purchases - Closing inventory Types of discounts - Answer -• Trade (Bulk Buy) • Early settlement (Prompt)