Financial Accounting Mcqs - PDF

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					F3 Financial Accounting




                          1
Hello, I am Nicola Ventress the Examiner for paper F3 Financial
Accounting.




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F3 Financial Accounting

This presentation aims to cover:

• a review of past exam performance

• areas where students do well

• areas that students find difficult

• areas to focus on in the future




                                       3
         REVIEW OF
        PAST EXAMS

First of all, I’d like to look at exam performance over the past 3
examination sittings, looking at pass rates and particular areas that need
improvement.




                                                                             4
     Pass rates
     100

      90

      80

      70     67

      60
                                      48                          50
      50

      40

      30

      20

      10

       0
           Dec-07                    Jun-08                      Dec-08




Pass rates for December 2007 overall were good at 67%. However, there
was a dramatic fall in June 2008 down to 48%. This has picked up a little
in December 2008 with an overall pass rate of 50%.
The June and December 2008 results were disappointing and highlight
that the preparation and technique for sitting the exam is a key factor . We
will look at this later.
80% of candidates sit the International paper so this tends to drive the
pass rate. The remaining 20% of candidates sit the UK paper and other
variants.




                                                                               5
                         WHAT WAS
                         DONE WELL?




This section of the presentation looks at the syllabus areas where students
performed well.




                                                                              6
         WHAT WAS DONE WELL?

         Areas of the syllabus were answered well such as:

         • double entry bookkeeping

         • documentation of accounting transactions

         • preparation of control accounts

         • non-current asset transactions

         • recording and valuation of inventory

         • accounting concepts / qualitative characteristics

         • events after reporting date and basic provisions




From reviewing the three exams that have been set so far, there has been
an obvious trend in the syllabus areas where students have performed
well.
Typically, these tended to be in the basic areas of the syllabus such as:
• double entry bookkeeping
• documentation of accounting transactions
• preparation of control accounts
• non-current asset transactions
• recording and valuation of inventory
• accounting concepts / qualitative characteristics
• events after reporting date and basic provisions
Many of these areas are core to the syllabus, especially recording
transactions, control accounts and non-current assets. These syllabus
areas were consistently answered well by all candidates.




                                                                            7
                         WHAT WASN’T
                         DONE WELL?




Here we will look at areas of the syllabus that were not answered well.




                                                                          8
        WHAT WASN’T DONE WELL?


        Areas that were consistently answered badly included:

        • Suspense accounts and errors

        • Partnership accounts

        • Statements of cash flows

        • Intangible assets

        • Provisions




There were a number of syllabus areas that weren’t answered well and
this seemed consistent across all three sittings of the paper so far.
It seems to be the more complex areas of the syllabus that causes
problems, for example, suspense accounts and errors are always difficult
for students to understand. However, topics such as partnerships and
statements of cash flows are key areas and the failure to score well in
these questions suggest that the topics have not been studied thoroughly
enough.


Syllabus areas such as intangible assets and provisions can be difficult
and the failure of students to score well in this areas suggests that the
area has not been studied to the level required. Students were able to
identify basic provisions but found it difficult when application of the
knowledge to a scenario was required.


Students seem to find application of topics difficult. For example, they are
able to calculate a basic accrual or prepayment, but score badly in
questions that require them to assess the impact of the adjustment on
profit or net assets.




                                                                               9
               LESSONS
               LEARNED

This section will consider ways to improve performance in the F3 exam.




                                                                         10
         LESSONS LEARNED

         Students must study the breadth of the syllabus

         Practice questions

         Attempt full questions in the following areas:

             • accounts preparation

             • partnerships

             • statements of cash flows

         Don’t forget theoretical aspects of syllabus e.g. Framework




One of the reasons students fail the paper is their lack of coverage of the
breadth of the syllabus.
Certain syllabus areas such as accounts preparation, partnerships and
statements of cash flows can be difficult for students to prepare for in a
MCQ exam as they are not going to be examined as a full question.
However, they lend themselves well to MCQs as a particular aspect can be
pulled out and examined, such as accruals / prepayments or
appropriations of profit. For this reason, it is advisable that students
practice “full” questions on these topics so that they can deal with the
subject in its entirety. This will also be advantageous as they move up to
paper F7 Financial Reporting.
F3 underpins a great deal of the work in F7 and certainly, if double entry
bookkeeping and the preparation of financial statements including
statements of cash flows is not studied in sufficient detail in F3, it will make
F7 a more challenging paper than it already is!




                                                                                   11
                          WHAT TO
                          FOCUS ON?




This section looks at specific areas for students to focus on.




                                                                 12
        WHAT TO FOCUS ON?




        • All areas of syllabus!

        • Questions practice

        • Review of Examiner’s reports




A MCQ / CBE exam by nature can cover all aspects of the syllabus and
this is how the exam is set. Students who have missed out parts of the
syllabus in their revision will miss out on the opportunity to gain marks on
the questions set on those syllabus areas.
There is no substitute for practising MCQ questions and there are various
sources available.
Additionally, the Examiner’s report for each exam sitting publishes and
discusses 3 of the questions from the latest exam. The questions chosen
are the ones where performance was particularly poor and should serve as
a guide to students as to the style and standard of question and the
potential pitfalls within the questions.




                                                                               13
                          HOW TO
                          IMPROVE?




This section looks at specific recommendations for students to improve
their performance.




                                                                         14
        HOW TO IMPROVE?

        Focused question practice - combination of MCQ and full
        questions

        Ensure accounting standards in syllabus are reviewed -
        especially changes in accounting policy, intangible assets,
        non-current assets and provisions.

        Pay attention to trickier areas - errors, suspense accounts,
        discounts, partnerships and cash flow.

        More question practice!




The issues identified in the review of exam performance are those that
need to be addressed in improving performance.


The key is to cover the breadth of the syllabus and pay attention to areas
that students typically find difficult as highlighted earlier.


There are not many accounting standards in the syllabus but the areas
that tend to be overlooked include changes in accounting policy,
recognition and amortisation of intangible assets, revaluation of non-
current assets and provisions.


There is a possibility that students think this paper is going to be very easy
as it consists entirely of MCQs. However, as a professional exam paper, it
should be challenging even though it is set at the first stage.




                                                                                 15
        TYPICAL ERRORS
         Students should ensure that they:

         • Read the question carefully and do what the question asks
         for

         • Finish the question and be careful not to select the distracter
         that represents the penultimate stage of the calculation

         • Pay attention to the number of years or months in a
         calculation

         • Do not always assume the financial year end is December,
         the question will always state the year end very clearly

         • Check dates of revaluations to assess whether the asset
         needs to be depreciated first or not




The following are typical of errors that students make in answering MCQ
questions. Students should ensure that they:
• Read the question carefully and do what the question asks for.
• Finish the question and be careful not to select the distracter that
represents the penultimate stage of the calculation.
For example, a question may ask for the expense for irrecoverable debts
in the period. This may be made up of the movement in the allowance and
specific debts that have been written off. Students often only calculate the
movement in the allowance and then choose that as their answer but have
failed to complete the question.
• Pay attention to the number of years and months in a question.
 There are no method marks in a MCQ question so this can result in the
question being answered incorrectly
• Do not always assume the financial year end is December, the question
will always state the year end very clearly
• Check the dates of revaluations to assess whether the asset needs to be
depreciated first or not.




                                                                               16
             FOCUS ON
              FUTURE
              EXAMS
This section looks at future F3 papers




                                         17
WHAT’S NEW?




              18
        WHAT’S NEW?


        Currently, no new standards to be examined

        Recent changes have included IAS 1 and terminology
        changes in INT paper

        Students must know the treatment of revaluation gains in the:

        • Statement of comprehensive income (INT)

        • Statement of total recognised gains and losses (UK)




At present, there are no new standards that have been issued that will
affect the F3 paper.


IAS 1 has had an impact on the INT paper and students should already be
aware of the terminology changes that have taken place.


One further point is that students are expected to deal with the statement
of comprehensive income, albeit in a very simple format. The only area of
the syllabus that is affected is the treatment of revaluation gains on the
revaluation of a non-current asset. The tax effect is outside of the syllabus.
In the UK paper, this means that the Statement of Total Recognised Gains
and Losses may be examined in an equivalent question so students must
understand the content of this statement.




                                                                                 19
WILL THINGS
CHANGE?




              20
        WILL THINGS CHANGE



        Changes in accounting standards have a minor effect on this
        paper

        Exam format of 40 2-mark questions and 10 1-mark questions
        will continue

        Exam paper will continue to examine entire syllabus




There are no changes foreseen to the paper as it stands.
Both the paper based and CBE exam will continue to examine the breadth
of the syllabus and students must be prepared for this.




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