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Study Guide for Financial Reporting Exams

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Course
ACCA and CPA

Institution
ACCA And CPA

In this study guide, you will be guided in revising for your financial reporting exams, whether it's for your CPA exams, ACCA exams, CIMA exams, other school or college Financial Reporting exams. You will learn standards relating to Property, Plant and Equipment, Borrowing Cost, Intangible Asset...

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Uploaded on August 14, 2024
Number of pages 30
Written in 2024/2025
Type Other
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financial accounting
financial reporting
cpa
accounting standards
gaap
ifrs
accounting
auditing
cpa exams
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advanced accounting
financial reporting standards

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Accounting Standards Revision Guide for Financial Reporting Exams

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1. Other - Study guide for financial reporting exams
2. Other - Consolidated financial statements practice questions and solutions
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UNIT 1: CONCEPTUAL FRAMEWORK & THE REGULATORY FRAMEWORK
LEARNING OUTCOMES
By the end of the lecture, students should be able to:
1. Distinguish between Conceptual framework and GAAP
2. Explain The IASB's Conceptual Framework
3. Explain the objective of general-purpose financial reporting
4. Explain the Underlying assumption
5. Explain Qualitative characteristics of useful financial information
6. Identify the elements of financial statements
7. Explain Recognition of the elements of financial statements
8. Explain the Measurement of the elements of financial statements
9. Explain Fair presentation and compliance with IFRS
10. Explain the need for a regulatory framework
11. Describe setting International Financial Reporting Standards
ACTIVITY
KEY FOCUS FOR FACILITATORS
Activity 1.4 Explain the need for a conceptual framework and the characteristics of useful
information
Activity 1.5 Describe what is meant by a conceptual framework of accounting
Activity 1.6 Discuss whether a conceptual framework is necessary and what an alternative
system might be
Activity 1.7 Discuss what is meant by relevance and faithful representation and describe
the qualities that enhance these characteristics
Activity 1.8 Discuss whether faithful representation constitutes more than compliance with
accounting standards
Activity 1.9 Discuss what is meant by understandability and verifiability in relation to the
provision of financial information
Activity Discuss the importance of comparability and timeliness to users of financial
1.10 statements
Activity Explain Recognition and Measurement
1.11
Activity Define what is meant by 'recognition' in financial statements and discuss the
1.12 recognition criteria
Activity Apply the recognition criteria to (i) Assets and liabilities and (ii) Income and
1.13 expenses
Activity Explain and compute amounts using the following measures:
1.14 (i) Historical cost (ii) Current cost (iii) Net realisable value (iv) Present
value of future cash flows
Activity 1.5 Explain why a regulatory framework is needed, also including the advantages
and disadvantages of IFRS over a national regulatory framework
Activity 1.6 Explain why accounting standards on their own are not a complete regulatory
framework
Activity 1.7 Distinguish between a principles-based and a rules-based framework and
discuss whether they can be complementary

, Activity 1.8 Describe the IASB's standard-setting process, including revisions to and
interpretations of Standards
Activity 1.9 Explain the relationship of national standard setters to the IASB in respect of
the standard-setting process
Activity SOLVE: Case Study 1.1
1.14
Activity SOLVE: Case Study 1.2
1.15
Activity SOLVE: Case Study 1.3
1.16
Activity SOLVE: Case Study 1.4
1.17

CASE STUDY 1.1:
(a) Explain and give an example of the effect on a set of published financial statements if the going
concern convention is held not to apply (5marks)
(b) Explain in general terms what the IASB conceptual framework is trying to achieve.
(5 marks)
CASE STUDY 1.2:
a) The Conceptual Framework for Financial Reporting identifies faithful representation as a
fundamental qualitative characteristic of useful financial information.
Required:
Distinguish between fundamental and enhancing qualitative characteristics and explain
why faithful representation is essential.
(5 marks)
CASE STUDY 1.3:
State three (3) different regulatory influences on the preparation of quoted companies' published
accounts and briefly explain each one's role. Comment briefly on the effectiveness of this
regulatory system.
(10 marks)

CASE STUDY 1.4: THE CONCEPTUAL FRAMEWORK: PRACTICE QUESTIONS

, The IASB's Framework for the Preparation and Presentation of Financial Statements requires
financial statements to be prepared on the basis that they comply with certain accounting
concepts, underlying assumptions and (qualitative) characteristics. Five of these are:
I. Matching/accruals
II. Substance over form
III. Prudence
IV. Comparability
V. Materiality
Required
a) Briefly explain the meaning of each of the above concepts/assumptions.

For most entities, applying the relevant concepts/assumptions for inventories is essential in
preparing their financial statements.
b) Illustrate how each of the concepts/assumptions in (a) may be applied to accounting for
inventory.

UNIT 2: PLANT, PROPERTY AND EQUIPMENT: IAS 16
LEARNING OUTCOMES:
By the end of the lecture, students should be able to:
1. Define and compute the initial Measurement of a non-current asset
(including a self-constructed asset and borrowing costs)
2. Identify subsequent expenditure that may be capitalised, distinguishing
between capital and revenue items
3. Discuss the requirements of relevant accounting standards in relation to
the revaluation of non-current assets
4. Account for revaluation and disposal gains and losses for non-current
assets
5. Compute depreciation based on the cost and revaluation models and on
assets that have two or more significant parts (complex assets)
6. Discuss IAS 16 with IFRS 5
ACTIVITY
Activity 2.9 SOLVE: Case Study 2.1
Activity SOLVE: Case Study 2.2-2.4
2.10
GROUP ACTIVITY BEFORE THE EXAMINATION
Activity REVISE: IAS 16&23
2.11

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