ACCA FR cheat sheet

The Conceptual Framework's objective is to provide financial information useful to existing and potential investors, lenders and other creditors in decisions about providing resources to the entity.

Fundamental qualitative characteristics are relevance and faithful representation; enhancing characteristics are comparability, verifiability, timeliness and understandability.

An asset is a present economic resource controlled by the entity as a result of past events; a liability is a present obligation to transfer an economic resource as a result of past events.

Recognition requires that an item meets an element definition and that recognition provides relevant and faithfully representative information, subject to the cost constraint.

Measurement bases include historical cost and current value; current value comprises fair value, value in use and current cost.

IAS 1 requires fair presentation, going concern, accrual basis, materiality and aggregation, no offsetting, frequency and comparatives.

IFRS Standards are issued by the IASB and Interpretations by the IFRS Interpretations Committee; EU endorsement can delay application in the EU.

Materiality is entity-specific: information is material if omitting or misstating it could influence decisions of primary users.

Prudence is the exercise of caution under uncertainty; it supports neutrality and does not permit deliberate understatement or overstatement.

IAS 2 measures inventories at the lower of cost and net realisable value; cost includes purchase, conversion and other costs to bring inventory to its present location and condition.

IAS 16 initial cost includes purchase price, directly attributable costs and dismantling estimates; depreciation starts when the asset is available for use and residual value is reviewed at least annually.

IFRS 15 five steps: identify the contract, identify performance obligations, determine the transaction price, allocate the price and recognise revenue when each obligation is satisfied.

IFRS 16 lessees recognise a right-of-use asset and a lease liability at the present value of lease payments; exemptions exist for short-term leases of 12 months or less and low-value assets.

IAS 37 recognises a provision when a present obligation from a past event exists, an outflow is probable and a reliable estimate can be made; material time value requires discounting.

IAS 38 expenses research and capitalises development only when technical feasibility, intention, ability, future benefits, resources and reliable measurement are demonstrated.

IFRS 9 classifies financial assets at amortised cost only if the business model is hold-to-collect and the cash flows are solely payments of principal and interest.

IAS 12 recognises deferred tax on temporary differences using the liability method; a deferred tax asset requires probable future taxable profit.

IAS 36 requires an impairment loss when carrying amount exceeds recoverable amount, which is the higher of fair value less costs of disposal and value in use.

ROCE = PBIT / capital employed; capital employed = total assets - current liabilities = equity + non-current liabilities.

Gross margin = gross profit / revenue; operating margin = operating profit / revenue; ROCE = operating margin x asset turnover.

Current ratio = current assets / current liabilities; quick ratio = (current assets - inventory) / current liabilities.

Inventory days = inventory / cost of sales x 365; receivable days = trade receivables / revenue x 365; payable days = trade payables / cost of sales x 365; cash cycle = inventory days + receivable days - payable days.

Gearing = debt / (debt + equity) or debt / equity; interest cover = PBIT / interest.

EPS = (profit after tax - preference dividends) / weighted average ordinary shares; P/E = market price per share / EPS.

Ratio limitations include historical cost, inflation, differing accounting policies, seasonality, creative accounting and lack of a suitable benchmark.

Group ratios use consolidated figures; non-controlling interest affects equity and profit, and intra-group transactions are eliminated.

ROCE decomposition: profitability (operating margin) multiplied by efficiency (asset turnover).

Consolidated SOFP adds parent and subsidiary assets and liabilities line by line; eliminate the investment against share capital and pre-acquisition reserves, recognise goodwill and eliminate intra-group balances.

Goodwill = consideration transferred + NCI + fair value of previously held interest - fair value of identifiable net assets acquired.

NCI at acquisition is measured at fair value or at the proportionate share of identifiable net assets; the choice affects goodwill and NCI.

Consolidated P&L adds parent and subsidiary income and expenses, eliminates intra-group sales and purchases, removes unrealised profit in inventory, adjusts for fair value depreciation and splits NCI.

Consolidated retained earnings = parent retained earnings + group share of subsidiary post-acquisition retained earnings - goodwill impairment attributable to the group.

IAS 7 cash flows are classified as operating, investing and financing; the indirect method adjusts profit before tax for non-cash items and working capital changes.

IAS 10 adjusting events provide evidence of conditions existing at the reporting date; non-adjusting events are disclosed if material.

Equity method for associates: cost + share of post-acquisition profit - impairment; the associate is not consolidated line by line.

Statement of changes in equity includes total comprehensive income, transactions with owners, changes in share capital and dividends.

Spreadsheet controls include data validation, locked formulas, audit trail, version control, segregation of duties, backup and access rights.

Data analytics types: descriptive (what happened), diagnostic (why it happened), predictive (what will happen) and prescriptive (what should be done).

Big data is described by five Vs: volume, velocity, variety, veracity and value.

Cloud accounting offers real-time access, scalability and subscription pricing, with risks around data security, backup and vendor dependence.

RPA automates repetitive rule-based tasks such as invoice processing and reconciliations; exceptions require human review.

Cyber controls include multi-factor authentication, encryption, access rights, phishing awareness, patch management and backups.

ACCA Code of Ethics principles: integrity, objectivity, professional competence and due care, confidentiality and professional behaviour.

Data protection principles include lawful basis, purpose limitation, data minimisation, accuracy, storage limitation, integrity and confidentiality.

Professional digital communication requires verifying recipients, using approved channels, maintaining confidentiality and retaining records.