Summary notes for AAT Level 3's exam: Financial Accounts Preparation (FAPR)
Clear and condensed notes covering each aspect of the exam which were used to pass first time.
Chapter 1 - Organisations and their final accounts 2
Types of organisations 2
Companies Act 2006 3
Limited Liability Partnerships (LLPs) 4
Professional ethics 4
Code of Ethics for Accountants 4
Data protection 5
Chapter 2 - Incomplete records 5
Balancing Trial Balance errors 5
Imbalancing Trial Balance errors 5
VAT - Value added tax 5
Cost structure 6
Accounting Equation 6
Drawings 6
Chapter 3 - Accounts for sole traders 6
Preparing final accounts 6
Statement of Profit or Loss 6
Statement of financial position 7
Chapter 4 - Accounts for partnerships 7
Partnership Agreements 7
Differences to sole traders 7
Appropriation accounts 8
Current accounts 8
Capital accounts 8
Financing section 8
Partner changes 9
Goodwill 9
Chapter 5 - Introduction to limited company accounts 9
The regulatory framework 9
Generally accepted accounting practice (GAAP) 10
Accounting principles 10
Publishing the accounts 11
IAS 1 Presentations of Financial Statements 11
IAS 16 Property, Plant and Equipment 12
IAS 2 Inventories 12
Elements of the financial statements 12
, FAPR - Final Accounts Preparation
Chapter 1 - Organisations and their final accounts
Types of organisations
- Sole traders = a business owned and managed by one person
- Partnerships = a business owned and managed by two or more people
- Limited liability partnership = a business owned by two or more people but partners
have limited liability
- Companies = a business that is a separate legal entity from its owners
- Not-for-profit = a business which is not conducted primarily to make a profit
Partnership advantages over sole trader Sole trader advantages over partnership
- more than one person giving funds - no conflicting ideas/ less disagreements
- different areas of expertise on offer - don’t need to pay off people to retire
- more partners can invited to further - no partnership agreement/ act to follow
increase capital or expertise
- more ideas and ways to solve problems
Unincorporated Incorporated
No legal distinction b/w business and The company is a separate legal entity but
owner owners are shareholders
Sole traders and partnerships Soletraders (Public limited PLC or private
limited LTD) or partnerships (Limited liability
LLP)
Can enter into contracts, acquire assets and
incur liabilities in its own right
The owners must meet the claims against Owners are only liable for their investment
the business incase of bankruptcy
Not legally required to produce or file Must prepare and file annual accounts for
annual accounts CH and send to shareholders
Need to keep records to complete tax
returns
Owners are taxed personally Taxed in it’s own right so it will show up on
the financial statements
Public limited company = raise capital from the public on the stock exchange
Private limited company = cannot raise capital from the general public
Sole traders and partners
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