Financial Accounting (FA) is an important subject in the field of accounting that deals with the preparation of financial statements for external users of financial information such as shareholders, investors, creditors, and government agencies. The aim of financial accounting is to provide accurate and reliable financial information to stakeholders, which they can use to make informed decisions.
The subject of financial accounting covers a wide range of topics, including the fundamental principles of accounting, accounting standards and regulations, the preparation of financial statements, and the interpretation of financial information. It also includes topics such as double-entry accounting, financial reporting, bookkeeping, and the use of accounting software.
FA is a core module in the ACCA qualification, and it is essential for students to have a good understanding of the subject if they wish to pursue a career in accounting and finance. Through the study of FA, students will develop a sound knowledge of financial accounting principles and practices, which they can apply in their professional lives.
Overall, financial accounting is a vital component of modern business, and it plays a crucial role in helping organizations to communicate their financial performance and position to stakeholders.
DETAILED SYLLABUS AND EXAM TOPICS
A The context and purpose of financial reporting
1. The context and purpose of financial statements for external reporting
a) Define financial reporting – recording, analysing and summarising financial data.
b) Identify and define types of business entity – sole trader, partnership, limited liability company.[K]
c) Explain the legal differences between a sole trader, partnership and a limited liability company.[K]
d) Identify the advantages and disadvantages of operating as a sole trader, partnership or limited liability company.
e) Define the nature, principles and scope of financial reporting.[K]
2. Stakeholders’ needs
a) Identify the users of financial statements and state and differentiate between their information needs.[K]
3. The main elements of financial statements
a) Describe the purpose of each of the financial statements:[K]
i) Statement of financial position
ii) Statement of profit or loss and other comprehensive income
iii) Statement of changes in equity
iv) Statement of cash flows
b) Identify and define assets, liabilities, equity, income and expenses.[K]
4. The regulatory framework
a) Explain the purpose of the regulatory system, including the roles of the:
i) IFRS Foundation®
ii) International Accounting Standards Board (IASB®)
iii) IFRS® Advisory Council
iv) IFRS Interpretations Committee
v) International Sustainability Standards Board (ISSB™)
b) Explain the role of IFRS Accounting Standards in preparing financial statements.[K]
5. Duties and responsibilities of those charged with governance
a) Explain what is meant by governance specifically in the context of the preparation of financial statements.[K]
b) Describe the duties and responsibilities of directors in the preparation of the financial statements.[K]
B Accounting principles, concepts and qualitative characteristics
1. Key principles and concepts of accounting
a) Define and apply key principles and concepts of accounting:[K]
i) Going concern
ii) Accrual basis
iii) Materiality and aggregation
vii) Duality (dual aspect)
viii) Business entity
ix) Historical cost and current value
x) Substance over form
2. Qualitative characteristics of useful financial information
a) Define and apply the qualitative characteristics of useful financial information:[K]
ii) Faithful representation