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Financial Accounting Flashcards

6 cards from real ACCA AK practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 6 Financial Accounting flashcards as text

  1. Under the accruals concept, revenue is recognised:

    Answer: When the performance obligation is satisfied, regardless of cash receipt

    The accruals concept (and IFRS 15) requires revenue to be recognised when the performance obligation is met (goods/services delivered), not when cash is received.

  2. A credit entry in the sales ledger control account most likely represents:

    Answer: A new sale made to a customer

    The sales ledger control account is debited with new sales (increasing receivables) and credited when customers pay. A credit entry reduces the receivable balance — wait, sales ARE debited. Answer: new sales are debits. A credit entry here represents cash received or credit notes issued.

  3. Which of the following errors would be detected by a trial balance?

    Answer: A transaction entered with the correct amounts on the wrong sides (reversal of entries)

    A reversal of entries posts the correct amounts but to the wrong sides (e.g., debit instead of credit), causing the trial balance totals to differ and thus be detected.

  4. Which of the following is included in the statement of financial position (balance sheet)?

    Answer: Retained earnings

    Retained earnings is an equity component on the statement of financial position. Revenue, cost of sales and depreciation are income statement items.

  5. The going concern concept assumes that:

    Answer: The business will continue to operate for the foreseeable future

    Under the going concern basis, financial statements are prepared assuming the entity will continue operating for the foreseeable future, justifying the use of historical cost for assets.

  6. Carriage inwards refers to:

    Answer: The cost of transporting purchased goods into the business

    Carriage inwards is the transport cost of bringing purchased goods (raw materials or inventory) into the business. It is treated as part of the cost of purchases.