ACCA P2

THIS SECTION provide you with all materials falling under corporate reporting subject (ACCA P2) AND THEIR RELATED PRACTICE QUESTIONS.

3 requirements of IFRS 8 on identification of reportable segments.

1 Comment / ACCA F7, ACCA P2, financial accounting / By

IFRS 8 reporting segments seeks to assist the user of financial statements gain a clearer understanding of the performance of the business by requiring disaggregation of the reported financial information into segments.

Definition of reportable segment.

IFRS 8 requires an entity to report financial and descriptive information about its reportable segments. Reportable segments are operating segments or aggregation of reporting … Read the rest

5 components of the set of financial statements

3 Comments / ACCA F7, ACCA P2, financial accounting / By

Financial statement are report prepared by management of the entity to provide information to owners of the entity and other users about the financial position and financial performance of the entity.



The following are components of a set of financial statements:

  • statement of financial position; This is the statement which shows how much is
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6 Limitation of financial accounting.

7 Comments / ACCA F7, ACCA P2, financial accounting / By

Financial accounting is the process of recording, summarizing and reporting the myriad of transactions resulting from business operations over a period of time.

The following are limitation associated with financial accounting:



  • Financial accounting is historical in nature. Financial accounting present financial statement at the end of the period which normally covers the year in length
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What is meant by associate in consolidated financial statements?

5 Comments / ACCA F7, ACCA P2, financial accounting / By



An associate is an entity over which the investor has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee, without having control or joint control over these policies.



 Significant influence is normally assumed to exist if the investor own between … Read the rest

5 disadvantages of consolidated financial statements

5 disadvantages of consolidated financial statements.

2 Comments / ACCA F7, ACCA P2, financial accounting, IFRS 10 / By

Consolidated financial statements are the “Financial statements of a group in which the assets, liabilities, equity, income, expenses and cash flows of the parent (company) and its subsidiaries are presented as those of a single economic entity”. 



The following are shortcomings of consolidated financial statements:

Unprofitable companies are set off against

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Four (4) factors that contribute to depreciation of fixed asset.

5 Comments / ACCA F7, ACCA P2, financial accounting / By
Depreciation is the allocation of the Depreciable amount of an asset over its estimated useful life. This allocated amount is charged against the income statement/Profit and Loss Account.

Factors that contribute to depreciation of a Fixed asset are:

  • Physical deterioration/Expected physical wear and tear.
  • Obsolescence/Economic factors.
  • Depletion (Natural resources such as mines)
  • Legal limit/Time factor.
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