ACCA FA QUESTIONS WITH
COMPLETE SOLUTION
Sole Trader - correct answer ✔✔Owned and operated by one owner who is liable for the
business
Partnership - correct answer ✔✔Two or more owners who share the liability of the business
Limited Liability Company - correct answer ✔✔Separate legal entities
The framework - correct answer ✔✔Presents the main ideas, concepts and principles upon
which all IFRS Standards, and therefore financial statements, are based.
SPL elements - correct answer ✔✔Income
Expenses
SFP elements - correct answer ✔✔Assets
Liabilities
Capital
Classification of expenditure - correct answer ✔✔Asset expenditure (SOFP)
Expenses (SOPL)
Asset - correct answer ✔✔A present economic resource controlled by the entity as a result of
past events
,Asset expenditure - correct answer ✔✔Expenditure likely to increase the future earning
capability of the entity
Liability - correct answer ✔✔A present obligation of the entity to transfer an economic resource
as a result of past events
Capital/Equity - correct answer ✔✔The residual interest in the assets of the entity after
deducting all its liabilities
Income - correct answer ✔✔Increases in assets, or decreases in liabilities, that result in
increases in equity, other than those relating to contributions from holders of equity claims
Expense - correct answer ✔✔Decreases in assets, or increases in liabilities, that result in a
decrease in equity, other than those relating to distributions to holders of equity claims
Fundamental Qualitative Characteristics - correct answer ✔✔1. Relevance
2. Faithful Representation
Enhancing Qualitative Characteristics - correct answer ✔✔1. Comparability
2. Verifiability
3. Timeliness
4. Understandability
Materiality - correct answer ✔✔If an item's omission or misstatement is likely to change the
perception or understanding of the user of that information.
Substance over form - correct answer ✔✔The economic substance of transactions must be
accounted for, and not just their strict legal form.
, Going Concern - correct answer ✔✔Financial statements are presented on the basis that the
entity will continue to trade for the foreseeable future.
The business entity - correct answer ✔✔Financial information is recorded and reported
separately from the owner's personal financial information
The accruals basis of accounting - correct answer ✔✔Transactions are recorded when revenues
are earned and when expenses are incurred. This pays no regard to timing of cash receipts and
payments.
Prudence - correct answer ✔✔The exercise of caution when making judgements under
conditions of uncertainty.
Consistency - correct answer ✔✔Use of the same accounting principles and methods from year
to year.
IFRS Foundation - correct answer ✔✔Body with overall responsibility for development,
publication and promotion of IFRS Standards
IASB - correct answer ✔✔Develops and publishes IFRS Standards.
IFRS IC - correct answer ✔✔Assists on queries relating to IFRS Standards.
IFRS AC - correct answer ✔✔Advises the IASB.
Process to Prepare Financial Statements - correct answer ✔✔1. Transactions occur
2. Effects are recorded in ledger accounts and are balanced off
COMPLETE SOLUTION
Sole Trader - correct answer ✔✔Owned and operated by one owner who is liable for the
business
Partnership - correct answer ✔✔Two or more owners who share the liability of the business
Limited Liability Company - correct answer ✔✔Separate legal entities
The framework - correct answer ✔✔Presents the main ideas, concepts and principles upon
which all IFRS Standards, and therefore financial statements, are based.
SPL elements - correct answer ✔✔Income
Expenses
SFP elements - correct answer ✔✔Assets
Liabilities
Capital
Classification of expenditure - correct answer ✔✔Asset expenditure (SOFP)
Expenses (SOPL)
Asset - correct answer ✔✔A present economic resource controlled by the entity as a result of
past events
,Asset expenditure - correct answer ✔✔Expenditure likely to increase the future earning
capability of the entity
Liability - correct answer ✔✔A present obligation of the entity to transfer an economic resource
as a result of past events
Capital/Equity - correct answer ✔✔The residual interest in the assets of the entity after
deducting all its liabilities
Income - correct answer ✔✔Increases in assets, or decreases in liabilities, that result in
increases in equity, other than those relating to contributions from holders of equity claims
Expense - correct answer ✔✔Decreases in assets, or increases in liabilities, that result in a
decrease in equity, other than those relating to distributions to holders of equity claims
Fundamental Qualitative Characteristics - correct answer ✔✔1. Relevance
2. Faithful Representation
Enhancing Qualitative Characteristics - correct answer ✔✔1. Comparability
2. Verifiability
3. Timeliness
4. Understandability
Materiality - correct answer ✔✔If an item's omission or misstatement is likely to change the
perception or understanding of the user of that information.
Substance over form - correct answer ✔✔The economic substance of transactions must be
accounted for, and not just their strict legal form.
, Going Concern - correct answer ✔✔Financial statements are presented on the basis that the
entity will continue to trade for the foreseeable future.
The business entity - correct answer ✔✔Financial information is recorded and reported
separately from the owner's personal financial information
The accruals basis of accounting - correct answer ✔✔Transactions are recorded when revenues
are earned and when expenses are incurred. This pays no regard to timing of cash receipts and
payments.
Prudence - correct answer ✔✔The exercise of caution when making judgements under
conditions of uncertainty.
Consistency - correct answer ✔✔Use of the same accounting principles and methods from year
to year.
IFRS Foundation - correct answer ✔✔Body with overall responsibility for development,
publication and promotion of IFRS Standards
IASB - correct answer ✔✔Develops and publishes IFRS Standards.
IFRS IC - correct answer ✔✔Assists on queries relating to IFRS Standards.
IFRS AC - correct answer ✔✔Advises the IASB.
Process to Prepare Financial Statements - correct answer ✔✔1. Transactions occur
2. Effects are recorded in ledger accounts and are balanced off
