Standards
Not just what the rule says, but why it exists and where examiners set their traps.
28 topics
The framework
Bookkeeping basics
- The accounting equationAssets = capital + liabilities, after every transaction.Full write-up
- Double entryEqual debits and credits for every transaction.Full write-up
- The general ledger and T-accountsAn account for every asset, liability, income and expense.Full write-up
- Books of prime entry and the journalDocument → book of prime entry → general ledger.Full write-up
- Accruals and prepaymentsExpense = paid − opening accrual + closing accrual + opening prepayment − closing prepayment.Full write-up
- Bank reconciliationCorrect the cash book, then explain the statement.Full write-up
- The trial balanceEvery balance in two columns; the totals must agree.Full write-up
- Correction of errorsCorrection = the right entry − the entry made.Full write-up
- The suspense accountA temporary parking place for a difference; never in the statements.Full write-up
- Incomplete recordsFind the unknown as the balancing figure in an account where everything else is known.Full write-up
Assets
- Receivables and the allowance for irrecoverable debtsContras and write-offs first, then the allowance on what is left; profit takes only the change in the allowance.Full write-up
- IAS 2 · InventoriesThe lower of cost and NRV, item by item.Full write-up
- IAS 16 · Property, plant and equipmentCapitalise, depreciate, and revalue through the revaluation surplus.Full write-up
- DepreciationCost minus residual value, spread over the useful life.Full write-up
Liabilities and equity
- IAS 37 · Provisions and contingenciesProbable: recognise. Possible: disclose. Remote: nothing.Full write-up
- IFRS 16 · Leases (lessee)The right to use is an asset, the duty to pay is a debt; interest on the debt is a finance cost.Full write-up
- IFRS 9 · Financial instruments and amortised costOpening + interest at the effective rate − cash at the coupon = closing.Full write-up
- IAS 12 · Income taxesCurrent tax is what is paid for this year; deferred tax is what will be paid (or saved) later because of today's differences.Full write-up
Revenue and expenses
Group accounts
Statements and analysis
- IAS 10 · Events after the reporting periodExisted at the reporting date: adjust. Arose later: disclose.Full write-up
- IFRS 18 · Presenting the statement of profit or lossOperating profit first, then investing, then financing, then tax.Full write-up
- IAS 7 · Statement of cash flowsProfit is not cash; this statement shows where the cash went.Full write-up
- IAS 21 · Foreign currency transactionsCash and debts at the closing rate; machines and inventory at the rate they were bought at.Full write-up
- Financial ratiosA figure alone means nothing; the comparison does.Full write-up