ACCA SBR EXAM
>>>>>> FRAMEWORKS - CORRECT ANSWER✅✅✅
What if not followed IAS or IFRS? - CORRECT ANSWER✅✅✅Not True and Fair
= UNETHICAL
Why PRINCIPLES not RULES? - CORRECT ANSWER✅✅✅Principles harder to
circumvent
Why have a FRAMEWORK? - CORRECT ANSWER✅✅✅Provides guidances for
standards setters
Gives guidance where no standards exist
Helps all parties with intrerpretation
2 x Useful qualities of financial information - CORRECT ANSWER✅✅✅RELEVANCE =
Influences Decisions
FAITHFUL REPRESENTATION = Complete, Neutral, No Errors
What does RELEVANCE offer? - CORRECT ANSWER✅✅✅PREDICTIVE VALUE
CONFIRMATORY VALUE
4 X Qualities of FAITHFUL REPRESENTATION - CORRECT ANSWER✅✅✅TIMELY
UNDERSTANDABLE
VERIFIABLE
COMPARABLE
What are framework criticisms? - CORRECT ANSWER✅✅✅accounts are historic - focus
on timeliness
,Some assets not recognised:
- internal goodwill
Estimates = subjective = reduces comparability
Disclosures = cluttered / generic
Cashflows >>>>>>>>> - CORRECT ANSWER✅✅✅
What are three parts of a cashflow? - CORRECT ANSWER✅✅✅Operations - Day-to-day
operations
Investing - Long term assets
Financing - Equity, Loans
Where do TAXES go? - CORRECT ANSWER✅✅✅Operating Activities
Where does LOAN INCOME go? - CORRECT ANSWER✅✅✅Financing
Where does SALE OF ASSETS go? - CORRECT ANSWER✅✅✅Investing
Describe the INDIRECT METHOD for Operating Activities - CORRECT
ANSWER✅✅✅*Profit before TAX*
Add: Adjust for Finance Costs (Not Ops)
Less: Adjust for Investment Income (Not ops)
---------------------------------
*Profit from Operations*
Add: Depreciation (Not Cash)
Less: Gains on Disposals (Non Cash)
------------------------------------------
,*Operating Profit before working capital changes*
Inventories (-/+)
Receivables (-/+)
Payables (+/-)
----------------------------------------
*Cash generated from Operations*
Less: Taxes Paid
Less: Interest Paid
-----------------------------------------
*Net Cash from Operations*
Method for Investing Activities - CORRECT ANSWER✅✅✅Less: Additions of PPE - Use
T Account
Add: Proceeds of PPE Sale - Use T Account
Add: Interest Received
Add Dividends Received
Less: Purchase of Investments
------------------
*Net Cash from Investment*
Method for Finance Activities - CORRECT ANSWER✅✅✅Add: Proceeds for Share Issue
Add: Proceeds from Long-Term Borrowing
Less: Dividends Paid
---------------------------
*Net Cash from Finance*
, NB: Do NOT include INTEREST PAID (in Operations)
What are Cash and Cash Equivalents? - CORRECT ANSWER✅✅✅Cash on Hand
Cash at Bank
Short Term Investments
------------------
Cash & Cash Equivalents
What is a subsidiary? - CORRECT ANSWER✅✅✅Control
1. Power to DIRECT
>50% voting rights
2. EXPOSURE to variable returns (Equity)
3. Use Power to Affect Returns
Substance > Legal Form
Can appoint Directors
Can make resoluitions
NB Or...
Has contracts with others giving control
Holds < 50% of voting rights, but remainder widely distributed
Holds potential voting rights (eg Convertible)
What is an Associate?
What accounting should be used? - CORRECT ANSWER✅✅✅SIGNIFICANT
INFLUENCE
Power to PARTICIPATE
>>>>>> FRAMEWORKS - CORRECT ANSWER✅✅✅
What if not followed IAS or IFRS? - CORRECT ANSWER✅✅✅Not True and Fair
= UNETHICAL
Why PRINCIPLES not RULES? - CORRECT ANSWER✅✅✅Principles harder to
circumvent
Why have a FRAMEWORK? - CORRECT ANSWER✅✅✅Provides guidances for
standards setters
Gives guidance where no standards exist
Helps all parties with intrerpretation
2 x Useful qualities of financial information - CORRECT ANSWER✅✅✅RELEVANCE =
Influences Decisions
FAITHFUL REPRESENTATION = Complete, Neutral, No Errors
What does RELEVANCE offer? - CORRECT ANSWER✅✅✅PREDICTIVE VALUE
CONFIRMATORY VALUE
4 X Qualities of FAITHFUL REPRESENTATION - CORRECT ANSWER✅✅✅TIMELY
UNDERSTANDABLE
VERIFIABLE
COMPARABLE
What are framework criticisms? - CORRECT ANSWER✅✅✅accounts are historic - focus
on timeliness
,Some assets not recognised:
- internal goodwill
Estimates = subjective = reduces comparability
Disclosures = cluttered / generic
Cashflows >>>>>>>>> - CORRECT ANSWER✅✅✅
What are three parts of a cashflow? - CORRECT ANSWER✅✅✅Operations - Day-to-day
operations
Investing - Long term assets
Financing - Equity, Loans
Where do TAXES go? - CORRECT ANSWER✅✅✅Operating Activities
Where does LOAN INCOME go? - CORRECT ANSWER✅✅✅Financing
Where does SALE OF ASSETS go? - CORRECT ANSWER✅✅✅Investing
Describe the INDIRECT METHOD for Operating Activities - CORRECT
ANSWER✅✅✅*Profit before TAX*
Add: Adjust for Finance Costs (Not Ops)
Less: Adjust for Investment Income (Not ops)
---------------------------------
*Profit from Operations*
Add: Depreciation (Not Cash)
Less: Gains on Disposals (Non Cash)
------------------------------------------
,*Operating Profit before working capital changes*
Inventories (-/+)
Receivables (-/+)
Payables (+/-)
----------------------------------------
*Cash generated from Operations*
Less: Taxes Paid
Less: Interest Paid
-----------------------------------------
*Net Cash from Operations*
Method for Investing Activities - CORRECT ANSWER✅✅✅Less: Additions of PPE - Use
T Account
Add: Proceeds of PPE Sale - Use T Account
Add: Interest Received
Add Dividends Received
Less: Purchase of Investments
------------------
*Net Cash from Investment*
Method for Finance Activities - CORRECT ANSWER✅✅✅Add: Proceeds for Share Issue
Add: Proceeds from Long-Term Borrowing
Less: Dividends Paid
---------------------------
*Net Cash from Finance*
, NB: Do NOT include INTEREST PAID (in Operations)
What are Cash and Cash Equivalents? - CORRECT ANSWER✅✅✅Cash on Hand
Cash at Bank
Short Term Investments
------------------
Cash & Cash Equivalents
What is a subsidiary? - CORRECT ANSWER✅✅✅Control
1. Power to DIRECT
>50% voting rights
2. EXPOSURE to variable returns (Equity)
3. Use Power to Affect Returns
Substance > Legal Form
Can appoint Directors
Can make resoluitions
NB Or...
Has contracts with others giving control
Holds < 50% of voting rights, but remainder widely distributed
Holds potential voting rights (eg Convertible)
What is an Associate?
What accounting should be used? - CORRECT ANSWER✅✅✅SIGNIFICANT
INFLUENCE
Power to PARTICIPATE
