ACCA SBR 2023 Exam Questions with Complete Solutions
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Course
ACCA SBR
Institution
ACCA SBR
ACCA SBR 2023 Exam Questions with Complete Solutions
What if not followed IAS or IFRS? - ANSWER Not True and Fair
= UNETHICAL
Why PRINCIPLES not RULES? - ANSWER Principles harder to circumvent
Why have a FRAMEWORK? - ANSWER Provides guidances for standards setters
Giv...
ACCA SBR 2023 Exam Questions with Complete Solutions What if not followed IAS or IFRS? - ANSWER Not True and Fair = UNETHICAL Why PRINCIPLES not RULES? - ANSWER Principles harder to circumvent Why have a FRAMEWORK? - ANSWER Provides gui dances for standards setters Gives guidance where no standards exist Helps all parties with intrerpretation 2 x Useful qualities of financial information - ANSWER RELEVANCE = Influences Decisions FAITHFUL REPRESENTATION = Complete, Neutral, No Errors What does RELEVANCE offer? - ANSWER PREDICTIVE VALUE CONFIRMATORY VALUE 4 X Qualities of FAITHFUL REPRESENTATION - ANSWER TIMELY UNDERSTANDABLE VERIFIABLE COMPARABLE What are framework criticisms? - ANSWER accounts are historic - focus on timeliness Some assets not recognised: - internal goodwill Estimates = subjective = reduces comparability Disclosures = cluttered / generic Cashflows >>>>>>>>> - ANSWER What are three parts of a cashflow? - ANSWER Operations - Day-to-day operations Investing - Long term assets Financing - Equity, Loans Where do TAXES go? - ANSWER Operating Activities Where does LOAN INCOME go? - ANSWER Financing Where does SALE O F ASSETS go? - ANSWER Investing Describe the INDIRECT METHOD for Operating Activities - 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 c hanges* Inventories ( -/+) Receivables ( -/+) Payables (+/ -) ---------------------------------------- *Cash generated from Operations* Less: Taxes Paid Less: Interest Paid ----------------------------------------- *Net Cash from Operations* Method for Inv esting Activities - 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 - 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 Op erations) What are Cash and Cash Equivalents? - ANSWER Cash on Hand Cash at Bank Short Term Investments ------------------ Cash & Cash Equivalents What is a subsidiary? - ANSWER Control 1. Power to DIRECT >50% voting rights 2. EXPOSURE to v ariable 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? - ANSWER SIGNIFICANT INFLUENCE Power to PARTICIPATE 20-50% Share Capital NB Or... Representation on the board Participation in policy making proc ess Material transaction between the two entities Interchange of managerial personnel Provision of essential technical information Use EQUITY ACCOUNTING -SFP -SPLOCI NB: No NCI for Associates !!!!! What is the treatment for mid -year acquisition? - ANSWE R Remove Retained Earnings before Acquisition What is the treatment for Subsidiary Net Assets? - ANSWER Check reporting Date Equity Shares (reporting date) Share Premium (reporting date) Retained Earnings (Aq date) PUP S - Seller (Reporting date) FV Adj (At Aquisition/Reporting) Make adjustments on Group Statements Pup - Inventory FV - PPE/wherever What is the treatment for Goodwill - ANSWER FV of Consideration NCI at Aq Less: Net assets at Aq Goodwill at Aq (P) Goodwill at Aq (NCI) Less: Impairments to Date -------------------- = GOODWILL When should something be recognised? - ANSWER * Meet the definition of:* -asset/liability -income/expense -equity *Be probable* *Be r eliably measurable* *NB For intangibles:* -Identifiable -Separable (sold separately) Define: Asset Liability Equity Income Expense - ANSWER Asset
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