ACCA f3 financial accounting BPP revision kit 2017

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• DO YOU KNOW? Checklists to test your
knowledge of Financial Accounting topics
• A bank of exam-standard MCQs with answers,
covering the syllabus
• Two mock exams including the FFA/F3 Specimen
exam

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February 2016
£15.00

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FI32RK16 (POL).indd 1-3

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ACCA Approved
Practice & Revision Kit

For exams from 1 September 2016
to 31 August 2017

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Contact us

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Practice & Revision Kit

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One of a suite of products supporting Foundations
in Accountancy FFA Financial Accounting and
ACCA Paper F3 Financial Accounting, for use
independently or as part of a package, this Kit is
targeted at Foundations in Accountancy exams from
1 September 2016 to 31 August 2017 and contains:

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Financial Accounting

Foundations in Accountancy FFA / ACCA Paper F3
Financial Accounting
This Kit provides material specifically for the practice
and revision stage of your studies for Foundations
in Accountancy FFA Financial Accounting and
ACCA Paper F3 Financial Accounting that has been
comprehensively reviewed by the ACCA examining
team. This unique review ensures that the questions,
solutions and guidance provide the best and most
effective resource for practising and revising for the
exam.

Foundations in Accountancy
FFA /ACCA F3

ACCA approved content
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ACCA APPROVED
CONTENT PROVIDER

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Foundations in
Accountancy
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Financial Accounting

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Free access
to our Exam
Success siteks.pk

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For exams from 1 September 2016

to 31 August 2017

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18/02/2016 13:08


ACCA APPROVED

CONTENT PROVIDER
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As the first accredited publisher of ACCA materials, BPP Learning Media has set the benchmark for
producing exceptional study materials for students and tutors alike.

Our Study Texts, Practice & Revision Kits and i-Passes (for exams on demand) are reviewed by the ACCA
examining team and are written by our in-house authors with industry and teaching experience who
understand what is required for exam success.

EXAM SUCCESS SITE

To help maximise your chances of succeeding in your exams, we’ve put together a suite of exclusive ACCA
resources. Our Exam Success site provides you with access to a free digital version of this publication, as
well as extra resources designed to focus your efforts on exams and study methods.

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To access the Exam Success site, please email with the subject line “Access to Exam
Success site - eBook”, including your order reference number and the name of the book you’ve bought (ie
ACCA F5 Study Text) for your access code. Once you have received your code, please follow the instructions
below:

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To access the BPP ACCA Exam Success site for this material
please go to:
www.bpp.com/ExamSuccessSite
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Select the paper you wish to access.

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n Enter the code you received when prompted. You will only

have to do this once for each paper you are studying.

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Foundations inF
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Financial Accounting
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Welcome
to BPP Learning Media's Practice & Revision Kit for F3/FFA. In this re
F
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Practice & Revision Kit, which has been reviewed by the ACCA examination team,
N
we:


Include Do you know? Checklists to test your knowledge and understanding
of topics



Provide you with two mock exams including the Specimen Exam June 2014



Provide the ACCA’s exam answers to the Specimen Exam June 2014 as an
additional revision aid

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FOR EXAMS FROM 1 SEPTEMBER 2016 TO 31 AUGUST 2017

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F3/FFA FOUNDATIONS OF FINANCIAL ACCOUNTING

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First edition May 2011
Fifth edition March 2016

A note about copyright

ISBN 9781 4727 4593 4
Previous ISBN 9781 4727 3534 8
e-ISBN 9781 4727 4638 2

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British Library Cataloguing-in-Publication Data
A catalogue record for this book
is available from the British Library
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We are grateful to the Association of Chartered Certified Accountants
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©
BPP Learning Media Ltd
2016

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CONTENTS

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Contents
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Page

Finding questions
Question index .............................................................................................................................. v
Topic index ................................................................................................................................ viii

Helping you with your revision ......................................................................................................... x
Using your BPP Practice & Revision Kit........................................................................................... xi
Passing the F3/FFA exam ............................................................................................................. xii
Approach to examining the syllabus ............................................................................................... xii
Tackling Multiple Choice Questions............................................................................................... xiii
Using your BPP products..............................................................................................................xiv

Questions and answers
Questions .................................................................................................................................... 3
Answers .................................................................................................................................. 171

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Mock exam 1 – Specimen Exam June 2014

Questions......................................................................................................................... 239

Answers........................................................................................................................... 253

ACCA’s exam answers to Specimen Exam June 2014 ................................................................... 261
Mock exam 2

Questions......................................................................................................................... 271

Answers........................................................................................................................... 285

Review form

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F3/FFA FOUNDATIONS OF FINANCIAL ACCOUNTING

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QUESTION INDEX

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Question index
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Time
allocation

Page

Marks

Mins

Question

Answer

28

34

5

171

26

31

11

171

Part A: The context and purpose of financial reporting
The context and purpose of financial reporting
Questions 1.1 to 1.14
Part B: The qualitative characteristics of financial information
The qualitative characteristics of financial information
Questions 2.1 to 2.13

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Part C: The use of double entry and accounting systems
Double entry bookkeeping

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Questions 3.1 to 3.19

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43

20

173

16

19

27

175

38

46

28

176

Questions 7.1 to 7.19

38

46

34

178

Questions 8.1 to 8.20

40

48

39

180

Questions 4.1 to 4.18

38

46

36

Part D: Recording transactions and events
Sales tax
Questions 5.1 to 5.8
Inventory
Questions 6.1 to 6.19
Tangible non-current assets

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Intangible non-current assets
Questions 9.1 to 9.14

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Accruals and prepayments

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Questions 10.1 to 10.14

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43

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34

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183

40

48

51

185

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31

55

187

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Receivables and payables
Questions 11.1 to 11.20
Provisions and contingencies
Questions 12.1 to 12.13
Capital structure and finance costs
Questions 13.1 to 13.13

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F3/FFA FOUNDATIONS OF FINANCIAL ACCOUNTING

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Question

Answer

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65

189

40

48

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190

30

36

71

193

34

41

75

194

20

24

Part E: Preparing a trial balance
15 mark question: trial balance
Question 14.1
Control accounts
Questions 15.1 to 15.20
Bank reconciliations
Questions 16.1 to 16.15
Correction of errors
Questions 17.1 to 17.17
Suspense accounts

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Questions 18.1 to 18.10

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Part F: Preparing basic financial statements
15 mark questions: preparing basic financial statements
Questions 19.1 to 19.7

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105

126

85

197

32

38

93

206

20

24

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208

18

22

100

208

18

22

102

Incomplete records
Questions 20.1 to 20.16
Company financial statements
Questions 21.1 to 21.10
Disclosure notes
Questions 22.1 to 22.9
Events after the reporting period
Questions 23.1 to 23.9

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Statements of cash flows

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Questions 24.1 to 24.20

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209

60

72

113

211

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65

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Part G: Preparing simple consolidated financial statements
15 mark questions: preparing simple consolidated financial
statements
Questions 25.1 to 25.4
Consolidated financial statements
Questions 26.1 to 26.27

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QUESTION INDEX

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Question

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127

220

22

26

128

221

Mixed bank 1: Questions 29.1 to 29.19

38

46

130

222

Mixed bank 2: Questions 30.1 to 30.20

40

48

136

223

Mixed bank 3: Questions 31.1 to 31.19

38

46

142

226

Mixed bank 4: Questions 32.1 to 32.18

36

43

147

228

40

48

Mixed bank 6: Questions 34.1 to 34.18

36

43

Mixed bank 7: Questions 35.1 to 35.18

Part H: Interpretation of financial statements
15 mark question: interpretation of financial statements
Question 27.1
Interpretation of financial statements
Questions 28.1 to 28.11
Mixed banks

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Mixed bank 5: Questions 33.1 to 33.20

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230

158

232

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233

Mock exam 1 (Specimen Exam June 2014)

100

120

239

253

Mock exam 2

100

120

271

285

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Mock exams

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F3/FFA FOUNDATIONS OF FINANCIAL ACCOUNTING

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Topic Index
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Listed below are the key F3/FFA syllabus topics and the numbers of the questions in this Kit covering
those topics.
If you need to concentrate your practice and revision on certain topics or if you want to attempt all
available questions that refer to a particular subject, you will find this index useful.

Syllabus topic

Question numbers

Analytical procedures

52, 89, 90, 91

Audit documentation

28, 29

Audit evidence

17, 18, 74, 99

Audit planning

8, 9, 18, 26, 30

Audit procedures

78, 79, 88, 101

Audit reports (+ auditor’s opinion)

111, 112, 113, 114, 115, 116, 117, 118, 119, 120

Audit risk

11, 12, 13, 14, 15

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24, 25

Audit strategy

34

Auditor’s responsibilities

5, 6, 97, 98

Bank confirmation letter

88, 96

CAATs

22, 23, 24, 25, 103

Code of Ethics

2,4

Control environment

37, 38, 54

Estimates

76, 77

Ethics

2, 4, 97

Experts

16

Deficiencies in internal control

45

Financial statement assertions

75, 100, 102

Going concern

107, 108, 109

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Independence

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Audit software

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Inherent risk

10, 36, 68

Internal controls

39, 40, 41, 67, 69, 70, 71

Inventory

48, 49, 50, 80, 81, 82, 83, 84

Letter of representation

110, 117

Materiality

19, 20

Non-current assets

60, 66, 92, 95, 61

Objectivity

3

Payables

87, 104

Procurement

55

Provisions

93, 94

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Purchases controls

51, 52, 53, 55, 56

Questionnaires

65

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TOPIC INDEX

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Syllabus topic

Question numbers

Receivables

85, 86, 94

Risk-based approach

14, 15, 43

Sales controls

42, 44, 45, 46, 47

Sampling

19, 31, 33

Segregation of duties

72

Subsequent events

106

Third party confirmations

88, 106

Threats

3, 28, 69

Understanding the entity

27, 32

Wages system

57, 58, 59, 62, 63, 64

Working papers

28, 29

Working papers review

109

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F3/FFA FOUNDATIONS OF FINANCIAL ACCOUNTING

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BPP Learning Media – ACCA Approved Content Provider
As an ACCA Approved Content Provider, BPP Learning Media gives you the opportunity to use revision
materials reviewed by the ACCA examination team. By incorporating the ACCA examination team’s
comments and suggestions regarding the depth and breadth of syllabus coverage, the BPP Learning
Media Practice & Revision Kit provides excellent, ACCA-approved support for your revision.

Selecting questions
We provide signposts to help you plan your revision.


A full question index



A topic index listing questions that cover each part of the syllabus, so that you can locate the
questions that provide practice on key topics, and see the different ways in which they might be
tested.

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Attempting mock exams

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There are two mock exams that provide practice at coping with the pressures of the exam day. We
strongly recommend that you attempt them under exam conditions. Mock exam 1 is the Specimen Exam
June 2014. Mock exam 2 reflects the question styles and syllabus coverage of the exam.

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USING YOUR BPP PRACTICE AND REVISION KIT

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Using youreBPP
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Aim of this Practice & Revision Kit
To provide the practice to help you succeed in the examination for F3/FFA Financial Accounting.
To pass the examination you need a thorough understanding in all areas covered by the syllabus and
teaching guide.

Recommended approach


Make sure you are able to answer questions on everything specified by the syllabus and teaching
guide. You cannot make any assumptions about what questions may come up on your paper. The
examination team aims to discourage 'question spotting'.



Learning is an active process. Use the DO YOU KNOW? Checklists to test your knowledge and
understanding of the topics covered in F3/FFA Financial Accounting by filling in the blank

spaces. Then check your answers against the DID YOU KNOW? Checklists. Do not attempt any
questions if you are unable to fill in any of the blanks – go back to your BPP Interactive Text and
revise first.

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

When you are revising a topic, think about the mistakes that you know that you should avoid by
writing down POSSIBLE PITFALLS at the end of each DO YOU KNOW? Checklist.



Once you have completed the checklists successfully, you should attempt the questions on that
topic. Each section has a selection of MULTIPLE CHOICE QUESTIONS and COMPULSORY
WRITTEN QUESTIONS. Make good use of the HELPING HANDS provided to help you answer
the questions.



There is a mark allocation for each compulsory written question. Each mark carries with it a time
allocation of 1.2 minutes (including time for selecting and reading questions). A 10 mark
question should therefore be completed in 12 minutes.



Twenty percent of the exam consists of Multiple Choice Questions. You should attempt each
bank of MCQs to ensure you are familiar with their styles and to practise your technique. Ensure
you read Tackling Multiple Choice Questions on page xiii to get advice on how best to approach
them.



Once you have completed all of the questions in the body of this Practice & Revision Kit, you
should attempt the MOCK EXAMS under examination conditions. Check your answers against our
answers to find out how well you did.

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F3/FFA FOUNDATIONS OF FINANCIAL ACCOUNTING

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Passing the
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Paper F3/FFA aims to develop your knowledge and understanding of the underlying principles, concepts
and regulations relating to financial accounting. You will need to demonstrate technical proficiency in the
use of double entry techniques, including the preparation of basic financial statements for incorporated
and unincorporated entities, as well as simple consolidated financial statements for group incorporated
entities. You also need to be able to conduct a basic interpretation of financial statements. If you plan to
progress through the ACCA qualification, the skills you learn at F3/FFA will be built upon in papers F7
and P2.
To access Foundations in Accountancy syllabuses, visit the ACCA website
www2.accaglobal.com/students/fia

The exam
You can take this exam as a paper based exam or by computer based exam. All questions in the exam
are compulsory. This means you cannot avoid any topic, but also means that you do not need to waste
time in the exam deciding which questions to attempt. There are thirty-five MCQs in the paper-based
exam and a mixture of MCQs and other types of objective test question (number entry, multiple response
and multiple response matching) in the CBE. This means that the examiner is able to test most of the
syllabus at each sitting, so you need to have revised right across the syllabus for this exam.

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Revision
This Practice and Revision kit has been reviewed by the F3/FFA examining team and contains the
Specimen exam June 2014, so if you just worked through it to the end you would be very well prepared
for the exam. It is important to tackle questions under exam conditions. Allow yourself just the number
of minutes shown next to the questions in the index and don’t look at the answers until you have
finished. Then correct your answer and go back to the Interactive Text for any topic you are really having
trouble with. Try the same question again a week later – you will be surprised how much better you are
getting. Doing the questions like this will really show you what you know, and will make the exam
experience less worrying.

Doing the exam
If you have honestly done your revision you can pass this exam. There are a couple of points to bear in
mind:

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Read the question properly.



Don’t spend more than the allotted time on each question. If you are having trouble with a
question leave it and carry on. You can come back to it at the end.

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Approach to examining the syllabus
F3/FFA is a two-hour paper. It can be taken as a paper based or a computer based exam.
The exam is structured as follows:

No of marks

Section A – 35 compulsory objective test questions of 2 marks each
Section B – 2 compulsory multi-part questions of 15 marks each

xii

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70
30
100

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TACKLING MULTIPLE CHOICE QUESTIONS

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MCQs are part of all Foundations in Accountancy exams and the first three ACCA exams (F1, F2 and

F3). MCQs may feature in the CBE, along with other types of question.
The MCQs in your exam contain four possible answers. You have to choose the option that best
answers the question. The three incorrect options are called distracters. There is a skill in answering
MCQs quickly and correctly. By practising MCQs you can develop this skill, giving you a better chance of
passing the exam.
You may wish to follow the approach outlined below, or you may prefer to adapt it.
Step 1

Skim read all the MCQs and identify what appear to be the easier questions.

Step 2

Attempt each question – starting with the easier questions identified in Step 1. Read
the question thoroughly. You may prefer to work out the answer before looking at the
options, or you may prefer to look at the options at the beginning. Adopt the method
that works best for you.

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Step 3

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You may find that none of the options matches your answer.



Re-read the question to ensure that you understand it and are answering the
requirement



Eliminate any obviously wrong answers



Consider which of the remaining answers is the most likely to be correct and
select the option

If you are still unsure make a note and continue to the next question

Step 5

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Read the four options and see if one matches your own answer. Be careful with
numerical questions as the distracters are designed to match answers that incorporate
common errors. Check that your calculation is correct. Have you followed the
requirement exactly? Have you included every stage of the calculation?

Step 4

Step 6

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Revisit unanswered questions. When you come back to a question after a break you
often find you are able to answer it correctly straight away. If you are still unsure have a
guess. You are not penalised for incorrect answers, so never leave a question

unanswered!

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After extensive practice and revision of MCQs, you may find that you recognise a question when you sit
the exam. Be aware that the detail and/or requirement may be different. If the question seems familiar
read the requirement and options carefully – do not assume that it is identical.

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xiii


F3/FFA FOUNDATIONS OF FINANCIAL ACCOUNTING

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This Kit gives you the question practice and guidance you need in the exam. Our other products can also help
you pass:


Interactive Text introduces and explains the knowledge required for your exam



Passcards provide you with clear topic summaries and exam tips

You can purchase these products by visiting www.bpp.com/learningmedia.

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Questions
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F3/FFA FINANCIAL ACCOUNTING

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QUESTIONS

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Do you know? – The context and purpose of financial reporting

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Check that you can fill in the blanks in the statements below before you attempt any questions. If in doubt,

you should go back to your BPP Interactive Text and revise first.

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

F……..…… r ……..… is a way of recording, analysing and summarising financial data.



Businesses of whatever size or nature exist to make a ………….



P………….. is the excess of ……………… over expenditure. When e…………… exceeds
………………… the business is running at a l…….



A s……… t…………… is a business owned and run by one individual, perhaps employing one or two
assistants and controlling their work.



L ……… l………… status means that the business's debts and the personal debts of the business's
owners (shareholders) are legally separate.



………………… are arrangements between individuals to carry on business in common with a view to

profit. Partnerships are governed by a ………………… …………….



Financial accounting is mainly a method of reporting the …………..… and ………....… of a business.
Financial accounts provide ………… information.




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There are various groups of people who need ………………. about the activities of a business.

Those charged with g……………… of a company are responsible for the preparation of the financial
statements.



The statement of financial position is simply a list of all the a………… owned and all the l……………
owed by a business as at a particular date.



An ……… is a resource controlled by an entity as a result of past events and from which future
economic benefits are expected to flow to the entity.



A ………….... 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.



E…………. is the residual interest in the assets of the entity after deducting all its liabilities.



A statement of profit or loss is a record of ………………… generated and ………………… incurred over
a given period.



Accounting standards were developed to try to address s……………y



The IASB develops …………… …….……. …….……. …….…….



The main objectives of the IFRS Foundation are to:

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…………. a single set of high quality, understandable, enforceable and globally accepted I…..
through its standard-setting body, the I……

–

Promote the …...… and rigours application of those standards

–

Take account of the financial reporting needs of emerging economies and ……… and ………….
………. entities

–

Bring about c……………… of national accounting standards and IFRSs to high quality solutions.

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F3/FFA FINANCIAL ACCOUNTING

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Did you know? – The context and purpose of financial reporting

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Could you fill in the blanks? The answers are in bold. Use this page for revision purposes as you approach
the exam.


Financial reporting is a way of recording, analysing and summarising financial data.



For-profit entities of whatever size or nature exist to make a profit.



Not-for-profit entities exist for the achievement of specific objectives rather than to make a profit.



Profit is the excess of income over expenditure. When expenditure exceeds revenue, the business is
running at a loss.



A sole tradership is a business owned and run by one individual, perhaps employing one or two
assistants and controlling their work.



Limited liability status means that the business's debts and the personal debts of the business's owners
(shareholders) are legally separate.



Partnerships are arrangements between individuals to carry on business in common with a view to
profit. Partnerships are governed by a partnership agreement.



Financial accounting is mainly a method of reporting the financial performance and financial position of
a business. Financial accounts provide historical information.



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There are various groups of people who need information about the activities of a business.



Those charged with governance of a company are responsible for the preparation of the financial

statements.



The statement of financial position is simply a list of all the assets owned and all the liabilities owed by
a business as at a particular date.



An asset is a resource controlled by an entity as a result of past events and from which future economic
benefits are expected to flow to the entity.



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 is the residual interest in the assets of the entity after deducting all its liabilities.



A statement of profit or loss is a record of income generated and expenditure incurred over a given
period.



Accounting standards were developed to try to address subjectivity.



The IASB develops International Financial Reporting Standards (IFRSs).



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The main objectives of the IFRS Foundation are to:

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Develop a single set of high quality, understandable, enforceable and globally accepted
international financial reporting standards (IFRSs) through its standard-setting body, the IASB

–

Promote the use and rigorous application of those standards

–

Take account of the financial reporting needs of emerging economies and small and mediumsized entities (SMEs)

–

Bring about convergence of national accounting standards and IFRSs to high quality solutions.

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QUESTIONS

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1.1

Who issues International Financial Reporting Standards?

A
B
C
D

1.2

1.3

1.4

The IFRS Advisory Committee
The stock exchange
The International Accounting Standards Board
The government

Which groups of people are most likely to be interested in the financial statements of a sole trader?
1
2
3
4

Shareholders of the company
The business’s bank manager
The tax authorities
Financial analysts

A
B
C
D

1 and 2 only
2 and 3 only
2, 3 and 4 only
1, 2 and 3 only

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Which of the following statements is/are true?

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(2 marks)

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A supplier of goods on credit is interested only in the statement of financial position, ie an
indication of the current state of affairs.

2

The objective of financial statements is to provide information about the financial position,
performance and changes in financial position of an entity that is useful to a wide range of users
in making economic decisions.

A
B
C
D

1 only
2 only
Both 1 and 2
Neither 1 or 2

(2 marks)

Which of the following are advantages of trading as a limited liability company?
1

Operating as a limited liability company makes raising finance easier because additional shares
can be issued to raise additional cash.

2

Operating as a limited liability company is more risky than operating as a sole trader because the
shareholders of a business are liable for all the debts of the business whereas the sole trader is
only liable for the debts up to the amount he has invested.

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B
C
D

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1.5

(2 marks)

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1 only
2 only
Both 1 and 2
Neither 1 or 2

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(2 marks)

Which of the following best describes corporate governance?
A

Corporate governance is the system of rules and regulations surrounding financial reporting.

B

Corporate governance is the system by which companies and other entities are directed and
controlled.

C

Corporate governance is carried out by the finance department in preparing the financial
statements.

D

Corporate governance is the system by which an entity monitors its impact on the natural

environment.
(2 marks)

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F3/FFA FINANCIAL ACCOUNTING

1.6

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1.7

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The directors of a company are ultimately responsible for the preparation of financial statements,
even if the majority of the work on them is performed by the finance department.

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2

If financial statements are audited, then the responsibility for those financial statements instead
falls on the auditors instead of the directors.

3

There are generally no laws surrounding the duties of directors in managing the affairs of a
company.

A
B
C
D

1 only
1 and 2 only
1, 2 and 3
1 and 3 only

(2 marks)

Which ONE of the following statements correctly describes the contents of the Statement of Financial
Position?
A
B
C
D

1.8

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Which of the following statements is/are true?

A list of ledger balances shown in debit and credit columns
A list of all the assets owned and all the liabilities owed by a business
A record of income generated and expenditure incurred over a given period
A record of the amount of cash generated and used by a company in a given period

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(2 marks)

Which ONE of the following statements correctly describes the contents of the Statement of Profit or
Loss?

A
B
C
D

A list of ledger balances shown in debit and credit columns
A list of all the assets owned and all the liabilities owed by a business
A record of income generated and expenditure incurred over a given period
A record of the amount of cash generated and used by a company in a given period
(2 marks)

1.9

Which of the following are TRUE of partnerships?
1
2
3

The partners’ individual exposure to debt is limited.
Financial statements for the partnership by law must be produced and made public.
A partnership is not a separate legal entity from the partners themselves.

A
B
C
D

1 and 2 only
2 only
3 only
1 and 3 only

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1.10 Which of the following statements is/are true?

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(2 marks)

1

Directors of companies have a duty of care to show reasonable competence in their management
of the affairs of a company.

2

Directors of companies must act honestly in what they consider to be the best interest of the
company.

3

A Director’s main aim should be to create wealth for the shareholders of the company.

A
B
C
D

1 and 2 only
2 only
1, 2 and 3
1 and 3 only

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(2 marks)

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QUESTIONS

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1.11 Which of the following statements is/are true?
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The IFRS Interpretations Committee is a forum for the IASB to consult with the outside world.

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The IFRS Foundation produces IFRSs. The IFRS Foundation is overseen by the IASB.

3

One of the objectives of the IFRS Foundation is to bring about convergence of national accounting
standards and IFRSs.

A
B
C
D

1 and 3 only
2 only
2 and 3 only
3 only

(2 marks)

1.12 What is the role of the IASB?
A
B
C
D

Oversee the standard setting and regulatory process
Formulate international financial reporting standards
Review defective accounts
Control the accountancy profession

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(2 marks)

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1.13 Which ONE of the following is NOT an objective of the IFRS Foundation?
A

Through the IASB, develop a single set of globally accepted International Financial Reporting
Standards (IFRSs)

B

Promote the use and rigorous application of International Financial Reporting Standards (IFRSs)

C

Ensure International Financial Reporting Standards (IFRSs) focus primarily on the needs of
global, multi-national organisations

D

Bring about the convergence of national accounting standards and IFRSs

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(2 marks)

1.14 Which ONE of the following statements correctly describes how International Financial Reporting
Standards (IFRSs) should be used?
A

To provide examples of best financial reporting practice for national bodies who develop their own
requirements

B

To ensure high ethical standards are maintained by financial reporting professionals
internationally

C

To facilitate the enforcement of a single set of global financial reporting standards

D

To prevent national bodies from developing their own financial reporting standards

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(2 marks)

(Total = 28 marks)

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F3/FFA FINANCIAL ACCOUNTING

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QUESTIONS

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Do you know? – The qualitative characteristics of financial information

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Check that you can fill in the blanks in the statements below before you attempt any questions. If in doubt,
you should go back to your BPP Interactive Text and revise first.

F



In preparing financial statements, accountants follow certain fundamental a………………



The IASB's C………..l f……………k provides the basis for its IFRSs.



The main underlying assumption is ………. ……….



The Conceptual framework states that ………………… characteristics are the attributes that make the
information provided in financial statements useful to users.



The four enhancing qualitative characteristics are …………………, …………………, …………………
and …………………..



Other important qualitative characteristics and concepts include fair …………………, c………………
and the business …………… concept.



A …………… …… between qualitative characteristics is often necessary, the aim being to achieve an
appropriate balance to meet the objective of financial statements.

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