Acca aaa s21 Notes

September 2021 to June 2022 exams
Watch free ACCA AAA lectures 
68

---

Only on 
OpenTuition
you can find: Free ACCA notes 
•
Free ACCA lectures 
•
Free ACCA tests 
•
Free ACCA tutor support 
•
The largest ACCA community
(8)
A company has changed the way in which it values inventory from the FIFO to the weighted 
average cost basis and has also changed its depreciation rate on machinery from 20% to 15%.
‣
Inventory: a change in accounting policy, so a retrospective treatment of the change is 
needed. Last year’s comparatives and opening inventory values need to be brought up to 
date with respect to the new approach. A disclosure note is required.
‣
Depreciation: a change of accounting estimate, so a prospective change. The current carrying 
amount will be depreciated over the remaining useful life of the asset. A disclosure note 
should be included if the change is material.
3.2. Business risk
(1)
A company has started selling goods on the Internet.
‣
A risk that the web site, sales processing, goods despatch etc do not work properly.
‣
Not clear if new receivables will be created or if payment is taken before despatch, so a credit 
(bad debt/default) risk.
‣
Potential data security problems.
(2)
A company has started to export goods.
‣
Loss of goods in transit
‣
Irrecoverable (bad) debts
‣
Will goods be popular abroad?
(3)
The finance director has recently left and at period end, has not been replaced.
‣
Lack of supervision and control in the finance department.
‣
Can the financial statements and other management accounting information be prepared 
properly and on time.
(4)
A company has failed to file its tax return on time.
‣
Fines, penalties and perhaps a tax investigation started.
(5)
An employee was badly injured carrying on his duties.
‣
Fines, damages
‣
Health and safety investigation
‣
Potential industrial action
‣
Loss of reputation/bad publicity
(6)
A computer virus disrupted the IT system for two days. All seems fine now.
‣
Loss of business during that period.
‣
Loss of accounting information.
‣
Has the accounting system really recommenced without loss or corruption of data?