©EMILLECT 2024/2025 ACADEMIC YEAR. ALL RIGHTS RESERVED
FIRST PUBLISH OCTOBER 2024
ACCA Financial Reporting 2019 (F7) Exam
Study Guide Solutions
Income - ANSWER✔✔Income is increases in economic benefits during the accounting period in the form
of inflows or enhancements of assets or decreases of liabilities that result in increases in equity, other
than those relating to contributions from equity participants.
Expenses - ANSWER✔✔Expenses are decreases in economic benefits during the accounting period in the
form of outflows or depletions of assets or incurrences of liabilities that result in decreases in equity,
other than those relating to distributions to equity participants.
Profits - ANSWER✔✔Profits are increases in equity not resulting from contributions from equity
participants (shareholders).
Losses - ANSWER✔✔Losses are decreases in equity not resulting from contributions from equity
participants (shareholders).
Assets - ANSWER✔✔An Asset is a resource controlled by the entity as a result of past events and from
which future economic benefits are expected to flow to the entity.
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, ©EMILLECT 2024/2025 ACADEMIC YEAR. ALL RIGHTS RESERVED
FIRST PUBLISH OCTOBER 2024
Liabilities - ANSWER✔✔A Liability is a present obligation of the entity arising from past events, the
settlement of which is expected to result in an outflow from the entity of resources embodying
economic benefits.
Equity - ANSWER✔✔Equity is the residual interest in the assets of the entity after deducting all its
liabilities.
IAS 1 : Complete set of financial statements comprise of ? - ANSWER✔✔1. Statement of Financial
position
2. Statement of profit or loss and other comprehensive income
3. Statement of changes in equity
4. Statement of cash flows
5. Accounting policies and explanatory notes
6. Comparative information for the preceding period
IAS States ? - ANSWER✔✔1. All of the financial statements are to be given equal promise
2. The statement of profit or loss and other comprehensive income can be presented
-either as a single statement
- or a profit and loss section, immediately followed by a separate statement of comprehensive income
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, ©EMILLECT 2024/2025 ACADEMIC YEAR. ALL RIGHTS RESERVED
FIRST PUBLISH OCTOBER 2024
IAS 1 requires compliance with a number of accounting concepts - ANSWER✔✔1. Going concern
2. Accrual basis of accounting
3. Materiality and aggregation
4. Offsetting
5. Frequency of reporting
6. Comparative information
Going concern - ANSWER✔✔When an entity's financial statements are prepared in accordance with
international financial reporting standards, the presumption is that the entity is a going concern, ie it will
not cease to trade in the immediate future.
Accrual basis of accounting - ANSWER✔✔Financial statements, except for cash flows information, are
prepared under the accruals concept, ie income and expenses are matched to the same accounting
period.
Materiality and aggregation - ANSWER✔✔Each material class of similar items is to be presented
separately in the financial statements, eg the classification of assets as non-current and current
Offsetting - ANSWER✔✔Generally is not permitted to set off assets and liabilities, or income and
expense against each other in order to show a net figure, eg cash at bank is not netted off against a bank
overdraft
Page 3/19
FIRST PUBLISH OCTOBER 2024
ACCA Financial Reporting 2019 (F7) Exam
Study Guide Solutions
Income - ANSWER✔✔Income is increases in economic benefits during the accounting period in the form
of inflows or enhancements of assets or decreases of liabilities that result in increases in equity, other
than those relating to contributions from equity participants.
Expenses - ANSWER✔✔Expenses are decreases in economic benefits during the accounting period in the
form of outflows or depletions of assets or incurrences of liabilities that result in decreases in equity,
other than those relating to distributions to equity participants.
Profits - ANSWER✔✔Profits are increases in equity not resulting from contributions from equity
participants (shareholders).
Losses - ANSWER✔✔Losses are decreases in equity not resulting from contributions from equity
participants (shareholders).
Assets - ANSWER✔✔An Asset is a resource controlled by the entity as a result of past events and from
which future economic benefits are expected to flow to the entity.
Page 1/19
, ©EMILLECT 2024/2025 ACADEMIC YEAR. ALL RIGHTS RESERVED
FIRST PUBLISH OCTOBER 2024
Liabilities - ANSWER✔✔A Liability is a present obligation of the entity arising from past events, the
settlement of which is expected to result in an outflow from the entity of resources embodying
economic benefits.
Equity - ANSWER✔✔Equity is the residual interest in the assets of the entity after deducting all its
liabilities.
IAS 1 : Complete set of financial statements comprise of ? - ANSWER✔✔1. Statement of Financial
position
2. Statement of profit or loss and other comprehensive income
3. Statement of changes in equity
4. Statement of cash flows
5. Accounting policies and explanatory notes
6. Comparative information for the preceding period
IAS States ? - ANSWER✔✔1. All of the financial statements are to be given equal promise
2. The statement of profit or loss and other comprehensive income can be presented
-either as a single statement
- or a profit and loss section, immediately followed by a separate statement of comprehensive income
Page 2/19
, ©EMILLECT 2024/2025 ACADEMIC YEAR. ALL RIGHTS RESERVED
FIRST PUBLISH OCTOBER 2024
IAS 1 requires compliance with a number of accounting concepts - ANSWER✔✔1. Going concern
2. Accrual basis of accounting
3. Materiality and aggregation
4. Offsetting
5. Frequency of reporting
6. Comparative information
Going concern - ANSWER✔✔When an entity's financial statements are prepared in accordance with
international financial reporting standards, the presumption is that the entity is a going concern, ie it will
not cease to trade in the immediate future.
Accrual basis of accounting - ANSWER✔✔Financial statements, except for cash flows information, are
prepared under the accruals concept, ie income and expenses are matched to the same accounting
period.
Materiality and aggregation - ANSWER✔✔Each material class of similar items is to be presented
separately in the financial statements, eg the classification of assets as non-current and current
Offsetting - ANSWER✔✔Generally is not permitted to set off assets and liabilities, or income and
expense against each other in order to show a net figure, eg cash at bank is not netted off against a bank
overdraft
Page 3/19
