Financial Accounting (FA/FFA)

Financial
Accounting
(FA/FFA)
Syllabus and study guide

September 2021 to August 2022

Designed to help with planning study and to provide

detailed information on what could be assessed in any
examination session

1 © ACCA 2021-2022 All rights reserved

 Financial Accounting (FA/FFA)

Contents
1. Intellectual levels ............................................................................................................... 3
2. Learning hours and education recognition ......................................................................... 3
3. Qualification structure ....................................................................................................... 3
4. Guide to ACCA examination structure and delivery mode ................................................. 4
5. Guide to ACCA examination assessment .......................................................................... 4
6. Relational diagram linking Financial Accounting (FA/FFA) with other exams..................... 5
7. Approach to examining the syllabus .................................................................................. 5
8. Overall aim of the syllabus ................................................................................................ 5
9. Introduction to the syllabus................................................................................................ 6
10. Main capabilities ............................................................................................................. 6
11. The syllabus .................................................................................................................... 7
12. Detailed study guide........................................................................................................ 8
13. Summary of changes to Financial Accounting (FA/FFA) ............................................... 16

2 © ACCA 2021-2022 All rights reserved

 Financial Accounting (FA/FFA)

1. Intellectual levels

ACCA qualifications are designed to progressively broaden and deepen the knowledge and
skills demonstrated by the student at a range of levels on their way through each
qualification.

Throughout, the study guides assess both knowledge and skills. Therefore, a clear
distinction is drawn, within each subject area, between assessing knowledge and skills and
in assessing their application within an accounting or business context. The assessment of
knowledge is denoted by a superscript K and the assessment of skills is denoted by the
superscript S.

2. Learning hours and education recognition

As a member of the International Federation of Accountants, ACCA seeks to enhance the

education recognition of its qualification on both national and international education
frameworks, and with educational authorities and partners globally. In doing so, ACCA aims
to ensure that its qualifications are recognised and valued by governments and regulatory
authorities and employers across all sectors. To this end, ACCA qualifications are currently
recognised on the educational frameworks in several countries. Please refer to your national
education framework regulator for further information about recognition.

3. Qualification structure

The qualification structure requires candidates who wish to be awarded the ACCA Diploma
in Accounting and Business (RQF Level 4) to pass the Business and Technology (BT)/FBT,
Management Accounting (MA)/FMA and the Financial Accounting (FA)/FFA examinations
and successfully complete the Foundations in Professionalism (FiP) module.

3 © ACCA 2021-2022 All rights reserved

 Financial Accounting (FA/FFA)

4. Guide to ACCA examination structure and delivery

mode
The Foundations examinations contain 100% compulsory questions to encourage
candidates to study across the breadth of each syllabus.

All Foundations examinations are assessed by two-hour computer based examinations.

The pass mark for all FIA examinations is 50%.

5. Guide to ACCA examination assessment

ACCA reserves the right to examine anything contained within any study guide within any
examination session. This includes knowledge, techniques, principles, theories, and
concepts as specified.

For specified financial accounting, audit and tax examinations, except where indicated
otherwise, ACCA will publish examinable documents once a year to indicate exactly what
regulations and legislation could potentially be assessed within identified examination
sessions.

For this examination regulation issued or legislation passed on or before 31st August
annually, will be assessed from September 1st of the following year to August 31st of the
year after. Please refer to the examinable documents for the exam (where relevant) for
further information.

Regulation issued or legislation passed in accordance with the above dates may be
examinable even if the effective date is in the future. The term issued or passed relates to
when regulation or legislation has been formally approved.

The term effective relates to when regulation or legislation must be applied to entity
transactions and business practices.

The study guide offers more detailed guidance on the depth and level at which the
examinable documents will be examined. The study guide should therefore be read in
conjunction with the examinable documents list.

4 © ACCA 2021-2022 All rights reserved

 Financial Accounting (FA/FFA)

6. Relational diagram linking Financial Accounting

(FA/FFA) with other exams

The Foundations in Accountancy suite of qualifications is designed so that a student can

progress through three discrete levels; RQF Level 2, 3, and 4. Students are recommended
to enter Foundations in Accountancy at the level which is most appropriate to their needs
and to take examinations in order, but this is not a mandatory requirement.

7. Approach to examining the syllabus

The syllabus is assessed by a two-hour computer-based examination. Questions will assess

all parts of the syllabus and will test knowledge and some comprehension or application of
this knowledge. The examination will consist of two sections. Section A will contain 35 two-
mark objective test questions. Section B will contain 2 fifteen-mark multi-task questions.
These will test consolidations and accounts preparation. The consolidation question could
include a small amount of interpretation and the accounts preparation question could be set
in the context of a sole trader or a limited company.

8. Overall aim of the syllabus

To develop knowledge and understanding of the underlying principles and concepts relating
to financial accounting and technical proficiency in the use of double-entry accounting
techniques including the preparation of basic financial statements.

5 © ACCA 2021-2022 All rights reserved

 Financial Accounting (FA/FFA)

9. Introduction to the syllabus

The syllabus for Financial Accounting (FA)/FFA introduces the candidate to the
fundamentals of the regulatory framework relating to accounts preparation and to the
qualitative characteristics of useful information. The syllabus then covers drafting financial
statements and the principles of accounts preparation. The syllabus then concentrates in
depth on recording, processing, and reporting business transactions and events. The
syllabus then covers the use of the trial balance and how to identify and correct errors, and
then the preparation of financial statements for incorporated and unincorporated entities.
The syllabus then moves in two directions, firstly requiring candidates to be able to conduct
a basic interpretation of financial statements; and secondly requiring the preparation of
simple consolidated financial statements from the individual financial statements of group
incorporated entities.

10. Main capabilities

On successful completion of this exam, candidates should be able to:

A Explain the context and purpose of financial reporting

B Define the qualitative characteristics of financial information
C Demonstrate the use of double-entry and accounting systems
D Record transactions and events
E Prepare a trial balance (including identifying and correcting errors)
F Prepare basic financial statements for incorporated and unincorporated entities.
G Prepare simple consolidated financial statements
H Interpretation of financial statements

Relational diagram of main capabilities:

6 © ACCA 2021-2022 All rights reserved

 Financial Accounting (FA/FFA)

8. Receivables and payables

11. The syllabus
9. Provisions and contingencies
A The context and purpose of financial
reporting 10. Capital structure and finance costs

1. The scope and purpose of financial E Preparing a trial balance

statements for external reporting
1. Trial balance
2. Users’ and stakeholders’ needs
2. Correction of errors
3. The main elements of financial reports
3. Control accounts and reconciliations
4. The regulatory framework (legislation
and regulation, reasons and limitations, 4. Bank reconciliations
relevance of accounting standards)
5. Suspense accounts
5. Duties and responsibilities of those
charged with governance. F Preparing basic financial statements

B The qualitative characteristics of 1. Statements of financial position

financial information
2. Statements of profit or loss and other
1. The qualitative characteristics of comprehensive income
financial information
3. Disclosure notes
C The use of double-entry and
accounting systems 4 Events after the reporting period

1. Double-entry book-keeping principles 5. Statements of cash flows

including the maintenance of accounting
records and sources of accounting 6. Incomplete records
information
G Preparing simple consolidated
2. Ledger accounts, books of prime entry, financial statements
and journals
1. Subsidiaries
D Recording transactions and events
2. Associates
1. Sales and purchases
H Interpretation of financial statements
2. Cash
1. Importance and purpose of analysis of
3. Inventory financial statements

4. Tangible non-current assets 2. Ratios

5. Depreciation 3. Analysis of financial statements

6. Intangible non-current assets and

amortisation

7. Accruals and prepayments

7 © ACCA 2021-2022 All rights reserved

 Financial Accounting (FA/FFA)

12. Detailed study guide b) Understand the role of International

Financial Reporting Standards.[K]

A The context and purpose of 5. Duties and responsibilities of those

financial reporting charged with governance

1. The scope and purpose of, financial a) Explain what is meant by governance
statements for external reporting specifically in the context of the
preparation of financial statements.[K]
a) Define financial reporting – recording,
analysing and summarising financial b) Describe the duties and responsibilities
data.[K] of directors and other parties covering
the preparation of the financial
b) Identify and define types of business statements. [K]
entity – sole trader, partnership, limited
liability company.[K]
B The qualitative
c) Recognise the legal differences characteristics of financial
between a sole trader, partnership and a information
limited liability company.[K]
1. The qualitative characteristics of
d) Identify the advantages and financial information
disadvantages of operating as a limited
liability company, sole trader or a) Define, understand and apply qualitative
partnership.[K] characteristics:[K]
i) Relevance
e) Understand the nature, principles and ii) Faithful representation
scope of financial reporting.[K] iii) Comparability
iv) Verifiability
2. Users’ and stakeholders’ needs v) Timeliness
vi) Understandability
a) Identify the users of financial statements
and state and differentiate between their b) Define, understand and apply
information needs.[K] accounting concepts:[K]
i) Materiality
3. The main elements of financial ii) Substance over form
reports iii) Going concern
iv) Business entity concept
a) Understand and identify the purpose of v) Accruals
each of the main financial statements.[K] vi) Prudence
vii) Consistency
b) Define and identify assets, liabilities,
equity, revenue and expenses.[K]
C The use of double-entry and
4. The regulatory framework accounting systems
a) Understand the role of the regulatory 1. Double-entry book-keeping principles
system including the roles of the IFRS including the maintenance of
Foundation (IFRSF), the International accounting records
Accounting Standards Board (IASB®),
the IFRS Advisory Council (IFRS AC) a) Identify and explain the function of the
and the IFRS Interpretations Committee main data sources in an accounting
(IFRIC®).[K] system.[K]

8 © ACCA 2021-2022 All rights reserved

 Financial Accounting (FA/FFA)

b) Understand and record sales and

b) Outline the contents and purpose of purchase returns.[S]
different types of business
documentation, including: quotation, c) Understand the general principles of the
sales order, purchase order, goods operation of a sales tax.[K]
received note, goods despatched note,
invoice, statement, credit note, debit d) Calculate sales tax on transactions and
note, remittance advice, receipt.[K] record the consequent accounting
entries.[S]
c) Understand and apply the concept of
double-entry accounting and the duality e) Account for discounts allowed. [S]
concept.[K]
(f) Account for discounts received.[S]
d) Understand and apply the accounting
equation.[S] 2. Cash

e) Understand how the accounting system a) Record cash transactions in ledger

contributes to providing useful accounts.[S]
accounting information and complies
with organisational policies and b) Understand the need for a record of
deadlines.[K] petty cash transactions.[K]

f) Identify the main types of business 3. Inventory

transactions e.g. sales, purchases,
payments, receipts.[K] a) Recognise the need for adjustments for
inventory in preparing financial
2. Ledger accounts, books of prime statements.[K]
entry and journals
b) Record opening and closing inventory.[S]
a) Identify the main types of ledger
accounts and books of prime entry, and c) Identify the alternative methods of
understand their nature and function.[K] valuing inventory.[K]

b) Understand and illustrate the uses of d) Understand and apply the IASB
journals and the posting of journal requirements for valuing inventories.[S]
entries into ledger accounts.[S]
e) Recognise which costs should be
c) Identify correct journals from given included in valuing inventories.[S]
narrative.[S]
f) Understand the use of continuous and
d) Illustrate how to balance and close a period end inventory records.[K]
ledger account.[S]
g) Calculate the value of closing inventory
using FIFO (first in, first out) and AVCO
D Recording transactions and (average cost) – both periodic weighted
events average and continuous weighted
average.[S]
1. Sales and purchases
h) Understand the impact of accounting
a) Record sale and purchase transactions concepts on the valuation of inventory.[K]
in ledger accounts.[S]
i) Identify the impact of inventory valuation
methods on profit and on assets.[S]

9 © ACCA 2021-2022 All rights reserved

 Financial Accounting (FA/FFA)

4. Tangible non-current assets d) Illustrate how depreciation expense and

accumulated depreciation are recorded
a) Define non-current assets.[K] in ledger accounts.[S]

b) Recognise the difference between e) Calculate depreciation on a revalued

current and non-current assets.[K] non-current asset including the transfer
of excess depreciation between the
c) Explain the difference between asset revaluation surplus and retained
and expense items.[K] earnings.[S]

d) Classify expenditure as asset f) Calculate the adjustments to

expenditure or expenses charged to depreciation necessary if changes are
profit or loss.[S] made in the estimated useful life and/or
residual value of a non-current asset.[S]
e) Prepare ledger entries to record the
acquisition and disposal of non-current g) Record depreciation in the statement of
assets.[S] profit or loss and statement of financial
position.[S]
f) Calculate and record profits or losses on
disposal of non-current assets in the 6. Intangible non-current assets and
statement of profit or loss including part amortisation
exchange transactions.[S]
a) Recognise the difference between
g) Record the revaluation of a non-current tangible and intangible non-current
asset in ledger accounts, the statement assets.[K]
of profit or loss and other
comprehensive income and in the b) Identify types of intangible assets.[K]
statement of financial position.[S]
c) Identify the definition and treatment of
h) Calculate the profit or loss on disposal “research costs” and “development
of a revalued asset.[S] costs” in accordance with IFRS®
Standards.[K]
i) Illustrate how non-current asset
balances and movements are disclosed d) Calculate amounts to be capitalised as
in financial statements.[S] development expenditure or to be
expensed from given information.[S]
j) Explain the purpose and function of an
asset register.[K] e) Explain the purpose of amortisation.[K]

5. Depreciation f) Calculate and account for the charge for

amortisation.[S]
a) Understand and explain the purpose of
depreciation.[K] 7. Accruals and prepayments

b) Calculate the charge for depreciation a) Understand how the matching concept
using straight line and reducing balance applies to accruals and prepayments.[K]
methods.[S]
b) Identify and calculate the adjustments
c) Identify the circumstances where needed for accruals and prepayments in
different methods of depreciation would preparing financial statements.[S]
be appropriate.[K]

10 © ACCA 2021-2022 All rights reserved

 Financial Accounting (FA/FFA)

c) Illustrate the process of adjusting for l) Classify items as current or non-current

accruals and prepayments in preparing liabilities in the statement of financial
financial statements.[S] position.[S]

d) Prepare the journal entries and ledger 9. Provisions and contingencies

entries for the creation of an accrual or
prepayment.[S] a) Understand the definition of “provision”,
“contingent liability” and “contingent
e) Understand and identify the impact on asset”.[K]
profit and net assets of accruals and
prepayments.[S] b) Distinguish between and classify items
as provisions, contingent liabilities or
8. Receivables and payables contingent assets.[K]

a) Explain and identify examples of c) Identify and illustrate the different

receivables and payables.[K] methods of accounting for provisions,
contingent liabilities and contingent
b) Identify the benefits and costs of offering assets.[K]
credit facilities to customers.[K]
d) Calculate provisions and changes in
c) Understand the purpose of an aged provisions.[S]
receivables analysis.[K]
e) Account for the movement in
d) Understand the purpose of credit provisions.[S]
limits.[K]
f) Report provisions in the final accounts.[S]
e) Prepare the bookkeeping entries to write
off an irrecoverable debt.[S] 10. Capital structure and finance costs

f) Record an irrecoverable debt a) Understand the capital structure of a

recovered.[S] limited liability company including: [K]
i) Ordinary shares
g) Identify the impact of irrecoverable ii) Preference shares (redeemable and
debts on the statement of profit or loss irredeemable)
and on the statement of financial iii) Loan notes.
position.[S]
b) Record movements in the share capital
h) Prepare the bookkeeping entries to and share premium accounts.[S]
create and adjust an allowance for
receivables.[S] c) Identify and record the other reserves
which may appear in the company
i) Illustrate how to include movements in statement of financial position.[S]
the allowance for receivables in the
statement of profit or loss and how the d) Define a bonus (capitalisation) issue
closing balance of the allowance should and its advantages and
appear in the statement of financial disadvantages.[K]
position.[S]
e) Define a rights issue and its advantages
j) Account for contras between trade and disadvantages.[K]
receivables and payables.[S]
f) Record and show the effects of a bonus
k) Prepare, reconcile and understand the (capitalisation) issue in the statement of
purpose of supplier statements.[S] financial position.[S]

11 © ACCA 2021-2022 All rights reserved

 Financial Accounting (FA/FFA)

g) Record and show the effects of a rights b) Understand how control accounts relate
issue in the statement of financial to the double-entry system.[K]
position.[S]
c) Prepare ledger control accounts from
h) Record dividends in ledger accounts given information.[S]
and the financial statements.[S]
d) Perform control account reconciliations
i) Calculate and record finance costs in for accounts receivable and accounts
ledger accounts and the financial payable.[S]
statements.[S]
e) Identify errors which would be
j) Identify the components of the highlighted by performing a control
statement of changes in equity.[K] account reconciliation.[K]

f) Identify and correct errors in control

E Preparing a trial balance accounts and ledger accounts.[S]

1. Trial balance 4. Bank reconciliations

a) Identify the purpose of a trial balance.[K] a) Understand the purpose of bank

reconciliations.[K]
b) Extract ledger balances into a trial
balance.[S] b) Identify the main reasons for differences
between the cash book and the bank
c) Prepare extracts of an opening trial statement.[K]
balance.[S]
c) Correct cash book errors and/or
d) Identify and understand the limitations of omissions.[S]
a trial balance.[K]
d) Prepare bank reconciliation
2. Correction of errors statements.[S]

a) Identify the types of error which may e) Derive bank statement and cash book
occur in bookkeeping systems.[K] balances from given information.[S]

b) Identify errors which would be f) Identify the bank balance to be reported

highlighted by the extraction of a trial in the final accounts.[S]
balance.[K]
5. Suspense accounts
c) Prepare journal entries to correct
errors.[S] a) Understand the purpose of a suspense
account.[K]
d) Calculate and understand the impact of
errors on the statement of profit or loss b) Identify errors leading to the creation of
and other comprehensive income and a suspense account.[K]
statement of financial position.[S]
c) Record entries in a suspense account.[S]
3. Control accounts and reconciliations
d) Make journal entries to clear a suspense
a) Understand the purpose of control account.[S]
accounts for accounts receivable and
accounts payable.[K]

12 © ACCA 2021-2022 All rights reserved

 Financial Accounting (FA/FFA)

F Preparing basic financial under and overprovision of tax in the

statements prior year.[S]

1. Statements of financial position f) Understand the interrelationship

between the statement of financial
a) Recognise how the accounting position and the statement of profit or
equation, accounting treatments (as loss and other comprehensive income.[K]
stipulated within sections D, E and
examinable documents) and business g) Identify items requiring separate
entity concept underlie the statement of disclosure on the face of the statement
financial position.[K] of profit or loss.[K]

b) Understand the nature of reserves.[K] 3. Disclosure notes

c) Identify and report reserves in a a) Explain the purpose of disclosure

company statement of financial notes.[K]
position.[S]
b) Draft the following disclosure notes:[S]
d) Prepare a statement of financial position i) Non current assets including tangible
or extracts as applicable from given and intangible assets
information using accounting treatments ii) Provisions
as stipulated within sections D, E and iii) Events after the reporting period
examinable documents.[S] iv) Inventory

e) Understand why the heading retained 4. Events after the reporting period
earnings appears in a company
statement of financial position.[K] a) Define an event after the reporting
period in accordance with IFRS
2. Statements of profit or loss and other Standards.[K]
comprehensive income
b) Classify events as adjusting or non-
a) Prepare a statement of profit or loss and adjusting.[S]
other comprehensive income or extracts
as applicable from given information c) Distinguish between how adjusting and
using accounting treatments as non-adjusting events are reported in the
stipulated within section D, E and financial statements.[K]
examinable documents.[S]
5 Statements of cash flows (excluding
b) Understand how accounting concepts partnerships)
apply to revenue and expenses.[K]
a) Differentiate between profit and cash
c) Calculate revenue, cost of sales, gross flow.[K]
profit, profit for the year, and total
comprehensive income from given b) Understand the need for management
information.[S] to control cash flow.[K]

d) Disclose items of income and c) Recognise the benefits and drawbacks

expenditure in the statement of profit or to users of the financial statements of a
loss. [S] statement of cash flows. [K]

e) Record income tax in the statement of d) Classify the effect of transactions on

profit or loss of a company including the cash flows.[S]

13 © ACCA 2021-2022 All rights reserved

 Financial Accounting (FA/FFA)

e) Calculate the figures needed for the i) Fair value adjustments at acquisition
statement of cash flows including:[S] on land and buildings (excluding
i) Cash flows from operating activities depreciation adjustments)
ii) Cash flows from investing activities ii) Fair value of consideration
iii) Cash flows from financing activities transferred from cash and shares
(excluding deferred and contingent
f) Calculate the cash flow from operating consideration)
activities using the indirect and direct iii) Elimination of intra-group trading
method.[S] balances (excluding cash and goods
in transit)
g) Prepare statements of cash flows and iv) Removal of unrealised profit arising
extracts from statements of cash flows on intra-group trading
from given information.[S] v) Acquisition of subsidiaries part way
through the financial year
h) Identify the treatment of given
transactions in a company’s statement d) Calculate goodwill (excluding
of cash flows.[K] impairment of goodwill) using the full
goodwill method only as follows: [S]
6. Incomplete records
Fair value of consideration X
a) Understand and apply techniques used Fair value of non-controlling interest X
in incomplete record situations: [S] Less fair value of net assets at
i) Use of accounting equation acquisition
ii) Use of ledger accounts to calculate (X)
missing figures Goodwill at acquisition X
iii) Use of cash and/or bank summaries
iv) Use of profit percentages to calculate e) Describe the components of and
missing figures. prepare a consolidated statement of
profit or loss or extracts thereof
including: [S]
G Preparing simple i) Elimination of intra-group trading
consolidated financial balances (excluding cash and goods
statements in transit)
ii) Removal of unrealised profit arising
1. Subsidiaries on intra-group trading
iii) Acquisition of subsidiaries part way
a) Define and describe the following terms through the financial year
in the context of group accounting: [K]
i) Parent 2. Associates
ii) Subsidiary
iii) Control a) Define and identify an associate and
iv) Consolidated or group financial significant influence and identify the
statements situations where significant influence
v) Non-controlling interest exists. [K]
vi) Trade / simple investment
b) Describe the key features of a parent-
b) Identify subsidiaries within a group associate relationship and be able to
structure. [K] identify an associate within a group
structure. [K]
c) Describe the components of and
prepare a consolidated statement of c) Describe the principle of the equity
financial position or extracts thereof method of accounting for Associate
including: [S] entities [K]

14 © ACCA 2021-2022 All rights reserved

 Financial Accounting (FA/FFA)

H Interpretation of financial
statements
1. Importance and purpose of analysis
of financial statements

a) Describe how the interpretation and

analysis of financial statements is used
in a business environment.[K]

b) Explain the purpose of interpretation of

ratios.[K]

2. Ratios

a) Calculate key accounting ratios: [S]

i) Profitability
ii) Liquidity
iii) Efficiency
iv) Position

b) Explain the interrelationships between

ratios.[K]

3. Analysis of financial statements

a) Calculate and interpret the relationship

between the elements of the financial
statements with regard to profitability,
liquidity, efficient use of resources and
financial position.[S]

b) Draw valid conclusions from the

information contained within the
financial statements and present these
to the appropriate user of the financial
statements. [S]

15 © ACCA 2021-2022 All rights reserved

 Financial Accounting (FA/FFA)

13.Summary of changes to Financial Accounting (FA/FFA)

ACCA periodically reviews its qualification syllabuses so that they fully meet the needs of
stakeholders including employers, students, regulatory and advisory bodies and learning providers.
There have not been any significant additions, deletions or amendments to the 2021/22 study
guide from the 2020/21 study guide.

Amendments to FA/FFA from September 2021

Section and subject area Syllabus content

D4 Tangible non current assets Wording updated in c), d) to
replace ‘capital and expenses’ with
‘asset’ or ‘asset expenditure’ and
expenses’
F1 Statements of financial position Clarified ‘reserves’ by inserting
‘equity’ to b) and c) to make
terminology more consistent with
IFRS

16 © ACCA 2021-2022 All rights reserved