AAT Level 3 FAPS study guide
AAT Level 3 FAPS · Work through your exam, one topic at a time.
Financial Accounting: Preparing Financial Statements (FAPS) is the financial-accounting component of the AAT Level 3 Diploma in Accounting. AAT, the Association of Accounting Technicians, describes itself as the leading professional body for accounting technicians, stating that it provides training for a huge range of accounting and finance roles and that its qualifications are respected by employers worldwide. The AAT Level 3 FAPS study guide has 4 sections and about 1,327 words.
01Principles of Double-Entry Bookkeeping and Accounting Systems
The whole of financial accounting rests on one idea: every transaction has two equal and opposite effects, so the accounting equation - assets = capital + liabilities - stays in balance at all times. Learn the debit and credit rules cold: an increase in an asset or an expense is a debit; an increase in a liability, capital or income is a credit (DEAD CLIC).
329 words, about 2 min02Maintaining and Reconciling Accounting Records
Reconciliation proves that two independently maintained records agree and explains any difference. The examinable reconciliations are the receivables and payables ledger control accounts, the bank reconciliation, the agreement of supplier statements to the payables ledger, and the agreement of inventory records to physical counts.
319 words, about 2 min03Period-End Adjustments, Corrections and Suspense
Period-end adjustments apply the accruals concept: income and expenses belong to the period in which they are earned or incurred, not the period in which cash moves. Four adjustments recur.
350 words, about 2 min04Preparing Financial Statements
For a sole trader the outputs are a statement of profit or loss and a statement of financial position. Build the profit or loss in the standard order: revenue less cost of sales (opening inventory + purchases + carriage inwards − closing inventory) gives gross profit; deduct distribution, administration and finance costs to reach operating profit; add other income; deduct tax where relevant to give profit for the year.
329 words, about 2 min