ICAB PL Financial Accounting & Reporting cheat sheet

Accounting equation: Assets = Liabilities + Equity; every transaction preserves this equality, so debits always equal credits in amount.

Accrual basis: revenue is recognised when the performance obligation is satisfied and the amount is reliably measurable, not when cash is received; expenses are matched to the revenue they help generate.

Depreciation methods: straight-line = (cost − residual)/useful life; reducing balance = carrying amount × rate; units of production = (cost − residual) × units used/total expected units.

Inventory cost formulas: FIFO assigns oldest costs to cost of sales; weighted average recomputes unit cost after each purchase; LIFO is prohibited under IFRS.

Lower of cost and net realisable value: NRV = estimated selling price − costs to complete − costs to sell; write the inventory down through profit or loss.

Bank reconciliation: adjusted bank balance = statement balance + deposits in transit − unpresented cheques ± bank errors; adjusted cash book = book balance ± unrecorded items.

Straight-line bond discount or premium amortisation = total discount or premium ÷ number of interest periods; interest expense = cash coupon + amortised discount (or − amortised premium).

Statement of cash flows (indirect): start with profit before tax, add back non-cash items, adjust for working capital movements, then deduct tax and interest paid.

Conceptual Framework qualitative characteristics: relevance (predictive value, confirmatory value, materiality) and faithful representation (complete, neutral, free from error); comparability, verifiability, timeliness and understandability enhance them.

IFRS 15 five steps: identify the contract; identify performance obligations; determine the transaction price; allocate it to obligations; recognise revenue when (or as) each obligation is satisfied.

IFRS 16 lessee: recognise a right-of-use asset and a lease liability at the present value of lease payments; subsequent measurement splits interest expense from depreciation of the right-of-use asset.

IAS 37 provisions are recognised only when a present obligation from a past event is probable and can be reliably estimated; a contingent liability is disclosed, not recognised.

IAS 36 impairment: carrying amount above recoverable amount (higher of fair value less costs of disposal and value in use) triggers a loss; goodwill impairment is never reversed.

IAS 12 deferred tax: temporary differences × enacted or substantively enacted tax rate; deferred tax assets are recognised only to the extent future taxable profit is probable.

IAS 21 foreign currency: monetary items are retranslated at the closing rate with differences in profit or loss; non-monetary items at historical cost use the transaction-date rate.

IAS 10 events after the reporting period: adjusting events provide evidence of conditions existing at year end and adjust the figures; non-adjusting events are disclosed only.