HOW DO YOU PASS THE FINANCIAL ACCOUNTING EXAMINATION?

The answer in general to the above question is to study hard with particular reference to the study manual for this subject provided by ABE. However, to be more specific, as a candidate for the examination, you should ensure that: You have studied the certificate level material relating to financial accounting included in Introduction to Accounting. It is essential that you are familiar with this basic material, as the Diploma level subject Financial Accounting (FA) builds on this basic material. You must understand double entry bookkeeping to be able to tackle several questions on the FA examination. You have worked through, in a mock examination situation, previous examination papers for this subject. All the past Questions and Answers are available on the Members Area of the ABE website under the Tuition Resources section; these are a valuable learning tool. Check your answers against the suggested answers and revise those items again where you made mistakes. You are aware that all FA examinations include a compulsory question that requires the preparation of an Income Statement and Statement of Financial Position (Balance Sheet) from a trial balance and additional notes. To tackle this question you must understand double entry bookkeeping and know what a trial balance is. It is also generally the case that one of the additional notes in the question will require you to make adjustments for the depreciation of noncurrent assets for the year. You must determine from the note whether the depreciation is to be calculated using straight line or reducing balance, and apply the appropriate technique correctly. Remember the depreciation balance that appears in the trial balance will be that charged for previous years. So, you will need to add the additional charge that you calculate and which you will charge in the Income Statement to the trial balance figures in order to give the total depreciation charge that will appear in the Balance Sheet. One very simple technique that helps when tackling this compulsory question is to identify, on the trial balance given, those items that should appear in the Income Statement and those that should appear in the Balance Sheet. You are aware that most FA examinations also include questions on group accounts (preparation of consolidated balance sheets), preparation of cash flow statements and interpretation of financial performance using ratio analysis. It is therefore imperative that you are familiar with these types of questions. Again, there are plenty of practice questions in the study manual and in past Questions and Answers. When tackling interpretation questions using ratio analysis you must interpret the result of the ratio. Stating that, for example, the current assets ratio has increased or decreased is not good enough. Interpretation is required such as The increase in the current ratio shows that the entity has more resources available within its working capital and, at the point in time of the balance sheet, is not displaying any liquidity problems. However, the entity must

ensure that the ratio remains at a comfortable level and that current assets are not idle. When tackling numerical questions, such as the compulsory question, you show all your workings. If you need to complete several calculations to arrive at the final total, for example, if you are calculating administration expenses to be charged in an Income Statement, it is possible to gain marks for your workings even if parts of the calculation are incorrect. Students will be allocated marks on a positive basis; this means that where a student has made a correct point/calculation/assumption, marks will be awarded. Negative marking will not be used; this means that where a student has made an incorrect calculation/point/assumption, they will not lose a mark. Students should also note that where calculations are carried through to support other calculations, they will not be penalised twice. If a question requires a specific format e.g. report style, then marks will be awarded for this style. Thus, for example, if the question requires analysis of the financial position and performance of an enterprise in report style then the ratios that will need to be calculated will be best shown in an appendix to the report. You are aware that the paper generally includes discursive questions as well as numerical ones. These discursive questions may test understanding and application of International Accounting Standards, the principles of accounting, audit, financing of entities etc. It is, therefore, essential that you have taken time to study the full syllabus of FA. You are aware that the question paper requires you to complete 4 questions, each of which is worth 25 marks, in 3 hours. It is therefore essential that you use your examination time wisely. Take approximately 10 minutes at the beginning of the examination to read the question paper carefully and decide which questions to answer. You can, if you wish and feel confident, tackle question 1, the compulsory question, before deciding which of the other questions to answer. Remember though, that the question is allocated 25 marks, as are the other questions you have to tackle, and therefore allocate your examination time appropriately. After devoting 10 minutes to reading the paper and deciding on your questions, you will then have about 40 minutes for each question and 10 minutes left at the end to review your answers.

The key to passing this examination is to study the full syllabus, tackle lots of questions in a mock examination situation, review your answers and learn from your mistakes. If you cannot understand some elements or why your answers are not correct then ask your tutors.

Careful preparation before entering the examination room is the key to success.