Maintaining Financial Records (FA2)

Maintaining
Financial
Records (FA2)
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

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 Maintaining Financial Records (FA2)

1.Relational diagram linking Maintaining Financial

records (FA2) 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. However, entry is possible at
any point. Students are recommended to enter Foundations in Accountancy at the level
which is most appropriate to their needs and abilities and to take examinations in order, but
this is not a requirement.

2.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 include both computational and non-computational elements.
The examination will consist of 50 two-mark questions.

3.Overall aim of the syllabus

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

4.Introduction to the syllabus

The syllabus for FA2, Maintaining Financial Records, introduces the context and purpose of
maintaining financial records with reference to accounts preparation.

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 Maintaining Financial Records (FA2)

The syllabus then concentrates in depth on the double-entry system and on recording,
processing, and reporting business transactions and events, including the specific
accounting for non-current assets.

The syllabus covers the use of the extended trial balance and how to identify and correct
errors, including the reconciliation of the control accounts, and the posting of period end
adjustments.

The syllabus also covers the preparation of final accounts for sole traders and for
partnerships.

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 Maintaining Financial Records (FA2)

5.Main capabilities

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

A Explain generally accepted accounting principles and concepts

B Outline the principles and process of basic bookkeeping

C Prepare journals and ledger accounts

D Record transactions and events

E Prepare a trial balance (including identifying and correcting errors)

F Reconcile the control accounts and cash book

G Extend the trial balance, process year end adjustments and prepare final accounts

H Account for partnerships.

RELATIONAL DIAGRAM OF MAIN CAPABILITIES

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 Maintaining Financial Records (FA2)

6.The syllabus 5. Accruals and prepayments

A Generally accepted accounting 6. Receivables, payables and provisions

principles and concepts
7. Capital and finance costs
1. The key accounting principles and
characteristics E Preparing a trial balance and
correcting errors
2. Maintaining financial records
1. Trial balance
3. The regulatory framework
2. Correction of errors
B The principles and process of basic
bookkeeping F Reconciliations

1. The elements of financial statements 1. Control account reconciliations

2. Books of prime entry and the flow of 2. Bank reconciliation

accounting information in the production
of financial statements G Extending the trial balance

C The preparation of journals and 1. Preparation of the extended trial

ledger accounts balance

1. Preparation of journals from the books 2. Preparation of the final accounts,

of prime entry including incomplete records

2. Preparation of ledger accounts H Partnerships

D Recording transactions and events 1. Partnership agreement

1. Sales and purchases 2. Partnership accounting records

2. Cash and bank 3. Partnership financial statements and

change in partnership
3. Inventory

4. Tangible non-current assets and

depreciation

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 Maintaining Financial Records (FA2)

b) Describe the meaning of assets,

7.Detailed study guide liabilities and capital in an accounting
context.[K]
A Generally accepted
accounting principles and c) Describe the components of final
concepts accounts for a sole trader.[K]

1. The key accounting principles and 2. Books of prime entry and the flow of
characteristics accounting information in the
production of financial statements
a) Explain the principles of accounting.[K]
(i) Going concern a) Explain the purpose and use of books of
(ii) Accruals prime entry and ledger accounts.[K]
(iii) Consistency
(iv) Double entry b) Identify reasons for closing off accounts
(v) Business entity concept and producing a trial balance.[K]
(vi) Materiality
(vii) Historical cost c) Explain the process of preparing a set of
(viii) Prudence final accounts from a trial balance.[K]

b) Explain the qualitative accounting C The preparation of journals

characteristics relating to.[K] and ledger accounts
(i) Relevance
(ii) Faithful representation 1. Preparation of journals from the
(iii) Comparability books of prime entry
(iv) Verifiability
(v) Timeliness a) Explain and illustrate the dual aspect
(vi) Understandability convention.[S]

2. Maintaining financial records b) Prepare journals to record transactions

in an appropriate format.[S]
a) Explain the importance of maintaining
financial records for internal and 2. Preparation of ledger accounts
external use.[K]
a) Explain the purpose and use of ledger
b) Describe the type of accounting records accounts.[K]
that a business should maintain and the
main uses of each.[K] b) Post journals and other entries into the
appropriate ledger account.[S]
3. The regulatory framework
c) Balance the ledger accounts carrying
a) Describe the main requirements of down and bringing down balances as
accounting standards in relation to appropriate.[S]
syllabus area D.[K]
D Recording transactions and
B The principles and process events
of basic bookkeeping
1. Sales and purchases
1. The elements of financial statements
a) Record sale and purchases transactions
a) Explain the meaning of the accounting in ledger accounts.[S]
equation.[K]
b) Record sales and purchase returns.[S]

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 Maintaining Financial Records (FA2)

c) Account for trade and settlement b) Report cash and bank balances in the
discounts.[S] final accounts.[S]

d) Identify sources of information on sales 3. Inventory

tax and explain the relationship between
the entity and the relevant government a) Recognise the need for adjustments for
agency.[K] inventory when preparing financial
statements.[K]
e) Explain the general principles of the
operation of a sales tax including: [K] b) Record opening and closing inventory.[S]
(i) requirements for registration
(ii) main information to be included on c) Identify and apply the alternative
business documentation, methods of valuing inventory.[K]
(iii) types of taxable supplies and their
classification for sales tax d) Explain and apply the IASB
(iv)accounting and payment of sales tax requirements for valuing inventories.[S]
(v) penalties for late returns or late
payment of e) Recognise which costs should be
sales tax. included when valuing inventories.[K]

f) Explain the different methods of f) Explain the use of continuous and

accounting for and reporting of sales period end inventory records.[K]
tax.[K]
g) Calculate the value of closing inventory
g) Identify and obtain sales tax data from using FIFO (first in, first out) and AVCO
the accounting system.[S] (average cost) - both periodic weighted
average and continuous weighted
h) Calculate sales tax on inputs and average.[S]
outputs.[S]
h) Identify the impact of inventory valuation
i) Record the consequent accounting methods on profit, assets and capital,
entries and calculate the sales tax due including: [S]
to/from the business.[S] (i) periodic weighted average
(ii) continuous weighted average
j) Compute the main components of a (iii) FIFO
sales tax return.[S]
i) Report inventory in the final accounts. [S]
k) Communicate effectively with the
relevant tax authority about sales tax 4. Tangible non-current assets and
matters including potential adjustments, depreciation
errors or omissions.[S]
a) Define non-current assets.[K]
l) Calculate the cash flow impact on the
business of the payment of sales tax b) Recognise the difference between
and the potential impact on the business current and non-current assets.[K]
of any changes in legislation for sales
tax.[S] c) Explain the difference between asset
and expense items.[K]
2. Cash and bank
d) Classify expenditure as asset
a) Record cash and bank transactions in expenditure or expenses charged to
ledger accounts.[S] profit or loss..[S]

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 Maintaining Financial Records (FA2)

e) Explain the impact of misclassification of b) Identify and calculate the adjustments

asset expenditure as expenses and vice needed for accruals and prepayments
versa on the statement of profit or loss when preparing financial statements.[S]
and the statement of financial position.
[K]
c) Illustrate the process of adjusting for
accruals and prepayments when
f) Prepare journal and ledger entries to preparing final accounts.[S]
record the acquisition and disposal of
non-current assets (including part d) Prepare the journal entries and ledger
exchange).[S] entries for the creation of an accrual or
prepayment.[S]
g) Calculate and record profits or losses on
disposal of non-current assets in the e) Identify the impact on profit, net assets
statement of profit or loss including part and capital of accruals and
exchange transactions and scrapping of prepayments.[K]
assets.[S]
f) Report accruals and prepayments in the
h) Explain the purpose of depreciation.[K] final accounts.[S]

i) Calculate the charge for depreciation 6. Receivables, payables and

using straight line and reducing balance provisions
methods.[S]
a) Explain and identify examples of
j) Identify the circumstances where receivables and payables.[K]
different methods of calculating
depreciation would be appropriate.[K] b) Prepare the bookkeeping entries to write
off an irrecoverable debt.[S]
k) Illustrate how the depreciation expense
and accumulated depreciation are c) Record an irrecoverable debt
recorded in ledger accounts.[S] recovered.[S]

l) Explain the purpose and function of an d) Identify the impact of irrecoverable

asset register.[K] debts on the statement of profit or loss
and on the statement of financial
m) Prepare the non-current asset register position.[S]
accounting for all or part of the
following:[S] e) Calculate the movement in the
(i) Acquisition including authorisation allowance for receivables and the
(ii) Part exchange and cash non-current closing balance.[S]
asset purchases
(iii) Depreciation f) Prepare the bookkeeping entries to
create and adjust an allowance for
n) Identify and resolve any discrepancies receivables.[S]
relating to the accounting records for
non-current assets.[S] g) Illustrate how to include movements in
the allowance for receivables in the
o) Report non-current assets and statement of profit or loss and how the
depreciation in the final accounts.[S] closing balance of the allowance should
be reported in the statement of financial
5. Accruals and prepayments position.[S]

a) Apply the matching concept to accruals h) Account for contras between trade
and prepayments.[S] receivables and payables.[S]

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 Maintaining Financial Records (FA2)

i) Explain the nature of provisions and c) Identify and explain the action required
liabilities.[K] to correct errors including clearing any
suspense accounts.[K]
j) Distinguish between a provision and
liability.[S] d) Prepare correcting journal entries.[S]

k) Account for provisions and liabilities.[S] e) Record correcting entries in the

ledgers.[S]
l) Report provisions and liabilities in the
final accounts.[S] f) Demonstrate how the final accounts are
affected by the correction of errors.[S]
7. Capital and finance costs
F Reconciliations
a) Distinguish between capital injected by
the business owner(s) and third parties 1. Control account reconciliations
for an unincorporated business.[K]
a) Explain the purpose of reconciliation of
b) Explain the accounting equation the receivables and payables ledger
including the impact of changes in control accounts.[K]
capital.[K]
b) Identify errors in the ledger control
c) Prepare the capital ledger account for accounts and list of balances.[S]
an unincorporated business.[S]
c) Make correcting entries in the ledger
E Preparing a trial balance and control accounts.[S]
correcting errors
d) Prepare a reconciliation between the list
1. Trial balance of balances and the corrected ledger
control accounts.[S]
a) Explain the purpose of the trial
balance.[K] e) Identify the control account balance to
be reported in the final accounts.[K]
b) Distinguish between errors which will be
detected by extracting a trial balance f) Prepare a reconciliation between a
and those which will not.[S] supplier’s statement and the supplier’s
account in the payables ledger.[S]
c) Calculate and explain the impact of
errors on the statement of profit or loss 2. Bank reconciliation
and the statement of financial position.[S]
a) Explain the purpose of reconciliation
d) Identify the limitations of the trial between the bank ledger account and
balance.[K] the corresponding bank statement.[K]

e) Prepare the initial trial balance.[S] b) Identify errors and omissions in the bank
ledger account and bank statement.[K]
2. Correction of errors
c) Identify timing differences.[K]
a) Explain the purpose of, and reasons for,
creating a suspense account.[K] d) Make the correcting entries in the bank
ledger account.[S]
b) Identify different types of bookkeeping
error including those that result in
suspense accounts. [K]

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 Maintaining Financial Records (FA2)

e) Prepare the reconciliation between the d) Describe the circumstances which lead
bank statement balance and the to incomplete records.[K]
corrected bank ledger account.[S]
e) Describe the methods of constructing
f) Identify the bank balance to be reported accounts from incomplete records.[K]
in the final accounts.[K]
f) Prepare the final accounts or elements
G Extending the trial balance thereof using incomplete record
techniques such as: [S]
1. Preparation of the extended trial (i) Mark ups and margins
balance (ii) Ledger accounts to derive missing
figures
a) Explain the process of extending the (iii) Manipulation of the accounting
trial balance.[K] equation

b) Record the correction of errors on the H Partnerships

extended trial balance.[S]
1. Partnership agreement
c) Explain and record post trial balance
adjustments on the extended trial a) Define a partnership.[K]
balance:[S]
(i) Accruals and prepayments b) Explain the purpose and content of a
(ii) Depreciation partnership agreement.[K]
(iii) Provisions
(iv) Closing inventory c) Explain, calculate and account for
(v) Allowance for receivables appropriations of profit: [S]
(vi) Irrecoverable debts (i) Salaries of partners
(vii) Non current asset transactions (ii) Interest on drawings
(iii) Interest on capital
d) Extend and complete the extended trial (iv) Share of residual profit (the amount
balance including calculating the final of profit available to be shared
reported profit or loss. [S] between the partners in the profit or
loss sharing ratio, after all other
e) Prepare the opening trial balance for the appropriations have been made)
next accounting period.[S]
2. Partnership accounting records
2. Preparation of the final accounts,
including incomplete records a) Explain the difference between partners’
capital and current accounts.[K]
a) Explain the process of preparing a set of
final accounts from a trial balance.[K] b) Prepare the partners’ capital and current
accounts.[S]
b) Explain the format and purpose of the
statement of profit or loss and statement 3. Partnership financial statements and
of financial position for a sole trader.[K] change in partnership

c) Prepare the final accounts for a sole a) Prepare the final accounts for a
trader from: [S] partnership.[S]
(i) The extended trial balance or
(ii) Directly from ledger accounts or b) Explain and account for the admission
(iii) Trial balance of a new partner including the treatment
of any goodwill arising.[S]

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 Maintaining Financial Records (FA2)

Note: Candidates will not be expected to

calculate the value of goodwill

8.Summary of changes to Maintaining Financial Records

(FA2)

ACCA periodically reviews it qualification syllabuses so that they fully meet the needs of
stakeholders such as employers, students, regulatory and advisory bodies and learning
providers.

Amendments to FA2 from September 2021

Section and subject area Syllabus content

D4 Tangible non current assets and Wording updated in c), d) and e)
depreciation

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