Free AAT FAPS Exam Flashcards

It is complete, neutral and free from error in its depiction. Prudence supports neutral judgement under uncertainty; it does not justify deliberately understating assets or profit.

The entity is expected to continue operating rather than liquidate or cease trading. An owner's intention to sell one asset does not alone mean the whole business is no longer a going concern.

Recognise income when earned and expenses when incurred, rather than merely when cash changes hands. Period-end accruals and prepayments align the ledger with the reporting period.

Equipment rises £4,000 and bank falls £4,000. Total assets and capital are unchanged; buying the asset is not itself a £4,000 expense.

Debit. Liabilities, income and capital normally have credit balances. A bank overdraft is a credit balance, even though a positive bank balance is an asset.

Debit purchases £600, debit VAT £120 and credit trade payables £720. The recoverable VAT is not included in purchases cost.

Debit trade payables control £350 and credit trade receivables control £350. Update both personal ledger accounts; no cash moves.

A transaction may be omitted, duplicated or posted differently in the control account and personal ledger. Reconcile to source records before correcting the affected entry; do not insert an unexplained balancing figure.

Purchase price and directly attributable costs of bringing it to the location and condition needed for use. Exclude recoverable VAT, routine repairs, advertising and staff training; apply the stated capitalisation policy.

Track each asset's identity, cost, acquisition date, location, depreciation and disposal. Reconcile its cost and accumulated-depreciation totals with the general ledger.

Carrying amount = £12,000 − £8,000 = £4,000. Proceeds £3,500 − carrying amount £4,000 = £500 loss. Remove both the asset's original cost and its accumulated depreciation.

£10,000 − £3,000 = £7,000. Record the new asset at £10,000 and treat £3,000 as proceeds for the old asset's disposal. FAPS excludes the VAT treatment of part-exchange.

Debit accumulated depreciation £8,000 and credit disposal account £8,000. The separate transfer of original asset cost is debit disposal and credit asset cost.

(£15,000 − £3,000) ÷ 4 = £3,000 per full year. Depreciation allocates depreciable cost; it is not a cash payment or a market valuation.

Year one: £10,000 × 20% = £2,000; opening year-two carrying amount = £8,000. Year two: £8,000 × 20% = £1,600.

£2,400 × 6/12 = £1,200. Follow the question's stated acquisition and disposal policy; do not assume all businesses charge a full acquisition year and no disposal year.

Debit depreciation expense and credit accumulated depreciation. The asset cost account stays at original cost unless a separate transaction changes it.

Reconcile asset-by-asset charges and disposals to supporting entries. Locate the missing or incorrect posting before correcting the ledger or register; agreement alone does not prove that depreciation is correct.

£4,800 − £300 + £500 = £5,000, assuming no prepayments. Opening accrual belongs to the previous period; closing accrual belongs to this period.

£2,400 + £200 − £600 = £2,000, assuming no accruals. The closing prepayment remains an asset for future coverage.

At the lower of cost and net realisable value for each inventory item. Net realisable value is expected selling price less completion and selling costs; gains on one item do not offset another item's write-down.

Debit irrecoverable-debt expense £250 and credit trade receivables £250. A later recovery needs its own entry; do not leave a known irrecoverable balance in receivables merely because an allowance exists.

Required closing allowance = £20,000 × 3% = £600. Increase the allowance by £150: debit allowance expense £150 and credit allowance £150. Net receivables are £19,400.

No. Complete omission, complete reversal, errors of principle and posting to the wrong account on the correct side can all leave debit and credit totals equal.

Debit equipment £900 and credit repairs £900. No suspense entry is needed because both original sides were posted and the trial balance still agreed.

Debit bank £200 and credit suspense £200, assuming the trial-balance difference was placed as a debit suspense balance. Revenue was already correct and must not be credited again.

Debit expense £600 and credit bank £600. Half reverses the wrong posting and half records the intended posting. The original reversal did not create a trial-balance difference.

Its debit asset balance extends to the statement of financial position. The expense balance, after adjustment, extends to the statement of profit or loss.

As an adjustment reducing cost of sales in the profit-or-loss columns and as an asset in the financial-position columns. Follow the supplied layout and avoid counting the same adjustment twice.

A sole trader's. Understand how partnership accounts differ, but completion of a partnership extended trial balance is excluded from the stated FAPS scope.

Net purchases = £40,000 + £2,000 = £42,000. Cost of sales = £8,000 + £42,000 − £9,000 = £41,000. Carriage outward is a selling expense, not inventory acquisition cost.

£70,000 − £41,000 = £29,000. Deduct operating expenses and include other relevant income separately to reach profit for the year.

£29,000 + £1,000 − £18,000 = £12,000. Owner drawings are not an operating expense and do not reduce this profit.

£30,000 + £4,000 + £12,000 − £7,000 = £39,000. This reconciles the owner's interest rather than measuring the bank balance.

Apply the stated repayment terms and classification rules. The portion of a loan due within the next 12 months is normally current; do not classify the entire loan from its original length alone.

They allocate profit between owners under the partnership agreement; they are not employee wage expenses deducted in arriving at partnership profit for the year.

£30,000 − £6,000 − £2,000 = £22,000, assuming no interest on drawings or other appropriations. FAPS supplies interest-on-capital/drawings amounts rather than requiring their calculation.

First partner: £22,000 × 3/5 = £13,200. Second partner: £22,000 × 2/5 = £8,800. Add any separate agreed salary or interest-on-capital allocations to each partner's total share.

Fixed capital accounts record lasting capital contributions or withdrawals. Current accounts record profit allocations, drawings and related appropriations when the fixed-capital method is used.

£2,000 + £8,000 − £6,500 = £3,500 credit, assuming no other entries. A debit closing current-account balance means withdrawals and charges exceed that partner's accumulated credits.

£24,000 ÷ £80,000 × 100 = 30%. The denominator is revenue, not cost of sales; using cost would calculate mark-up instead.

£12,000 ÷ £80,000 × 100 = 15%. Compare movements with gross margin and individual expenses to explain the result.

Capital employed = £40,000 + £20,000 = £60,000. ROCE = profit for the year ÷ capital employed × 100 = 20%. Use the FAPS definition supplied, not an alternative EBIT formula.

£6,000 ÷ £80,000 × 100 = 7.5%. Compare the same expense and revenue definitions across periods before interpreting changes.

Operating expenses relative to revenue and changes in other income. Use the actual figures and context; a ratio movement alone does not prove poor management or fraud.

£48,000 × 1.25 = £60,000. Gross profit is £12,000, so the equivalent gross margin is £12,000/£60,000 = 20%.

Credit sales = £32,000 + £7,000 − £5,000 = £34,000. Adjust separately for returns, discounts, write-offs or contra entries if the question supplies them.

Credit purchases = £25,000 + £6,000 − £4,000 = £27,000. The control-account method reconstructs missing transactions from opening balance, movements and closing balance.

£600 + £4,000 + £300 − £200 = £4,700. Any capital introduced, cash drawings or other receipts would need separate treatment if present.

Cost of sales = £50,000 × 80% = £40,000. Closing inventory = £46,000 − £40,000 = £6,000. Check the assumed margin and investigate discrepancies rather than forcing records to fit.