Accountancy
Conceptual foundations
Accountancy questions test whether you can move confidently between the accounting equation (Assets = Capital + Liabilities), the double entry, and the financial statements. Candidates must know IAS 1 presentation requirements, the accrual and going-concern bases, and the recognition criteria in the Conceptual Framework. Expect items on IFRS 15 (identify the contract, identify performance obligations, determine the transaction price, allocate it, recognise revenue as obligations are satisfied), IAS 2 (lower of cost and net realisable value), IAS 16 (depreciation methods and subsequent measurement), IAS 37 (provision versus contingent liability), IFRS 9 (expected credit losses on receivables) and IAS 7 (operating, investing and financing cash flows).
Traps examiners rely on
Capital expenditure shown as an expense; a provision recognised where only a contingent liability exists; depreciation treated as a cash inflow rather than a non-cash add-back; confusing discount allowed (expense) with discount received (income); treating an error of principle as a suspense item; forgetting that a revaluation surplus is not a cash flow. Watch classification: interest paid and dividends paid may be presented in more than one IAS 7 category, but the choice must be consistent and disclosed.
Worked example
Inventory cost KSh 500,000. Estimated selling price KSh 620,000; costs to complete and sell KSh 150,000. Net realisable value = 620,000 − 150,000 = KSh 470,000. Because NRV is below cost, carry the inventory at KSh 470,000 and recognise a write-down of KSh 30,000 as an expense.
Rule of thumb: before posting anything, ask whether an asset, liability, income or expense has genuinely arisen - the framework definition, not the cash movement, decides the entry.