ACCA Expert Tips and Technique - F4-F9 papers

ACCA F4 Tips & FAQs

• When remembering cases try to use word association to help you match up names and facts. For example:
  • Sigsworth – the son was not worthy of inheriting from his mother because he had murdered her.
  • Hochester v De La Tour – courier was aware the tour was not going ahead.
• To learn the courts structure draw yourself a chart of the court then add arrows up to indicate the route of appeals and arrows down to indicate judicial precedence.

FAQs

Q. What is the difference between a Limited Partnership and a Limited Liability Partnership (LLP)?
A. A Limited Partnership was formed under the 2007 Act and allowed partnerships to have at least one unlimited partner. An LLP is governed by the 2000 Act and under this all partners have limited liability, restricted to the amount of capital invested.

Q. What is the difference between revocation of an offer and rejection of an offer?
A. Revocation is where the offeror (the person making the offer) takes back his offer. For example, someone who is offering for sale a car, changes their mind. Rejection of an offer is where the offeree (the person to whom the offer is made) does not accept the offer. For example, they decide not to buy the car.

Q. Is it necessary, in respect of cases quoted in my answer, to give the full name, facts and date of the case?
A. The name is not usually essential (although some, e,g, Salomon v Salomon & Co.Ltd, should never be forgotten). In most answers it is sufficient to say 'in a decided case.......' and then give an outline of the facts. Sometimes the facts are not necessary if the legal principle behind the decision is discussed. I would not expect students to remember the date of cases.

Q. Do I need to know all of the cases?
A. No, there isn’t a need to learn all of the cases - just the ones that are the most important; these will have been highlighted as part of your Kaplan courses – so make a note of them as you go along for revision references.

ACCA F5 Tips & FAQs

• Read the requirements carefully before launching into a full analysis of the scenario given, then do a brief technical download of the tools / knowledge you will need to answer the question. You can then go through the scenario more efficiently by annotating and extracting the information to complete the question. For example, if being asked to restate a profit statement using an Activity Based Costing approach you will know that you need to replicate information that’s being given in the question and that will be your starting point as far as displaying your answer. From a technical point of view you also will know that the question must give information about cost pools and cost drivers – look for them to perform cost driver rate calculations.
• Show your workings. Even if you make a mistake at the start of the question, you can still earn method marks.
• Manage your time carefully and make sure you give sufficient time to the written elements as well as the calculations. This paper is roughly 50% calculations and 50% words; although the majority of the papers to date have awarded more than 50% for written elements, so please don't ignore those!
• Have a positive mindset. Focus on how much of a question you know and think you’ve got right rather than just focusing on the bits you don’t know.
• Variances are a very common topic - every exam has some and you need to be happy with all the basic and advanced variances. They are all set methods and you just need to practice questions.
• Performance evaluations are another question type that may come up - very hard to learn a set method as each one is different. The important thing is to read the question carefully and make sure you link your analysis to the scenario. The examiner does not like students who simply quote from the textbook, writing information that is not relevant to the question. The examiner also likes you to have an opinion – has the company done well or not? Clearly state your opinion and reasons why.
• Do not ignore the discussion aspects on F5 - they are vitally important and are what separates F2 from the higher level F5 paper, and also separate students who pass from those who fail. For every number you calculate and method you use you need to know what it means and what has caused it. If you can apply basic common sense to most of the discussion aspects you will be fine.
• If you are struggling then ask your tutor and / or look back over your F2 notes as most methods were seen previously in F2.

FAQs

Q. If there's a linear programming question and I need to draw a graph, will I be given graph paper?
A. Yes.

Q: Will we be examined on a topic which appeared in the previous exam?
A: Yes, it is possible, although maybe in a different context: e.g.: in one paper a question asked for pricing strategies relevant for an established brand, whereas in the exam 6 months later the question asked for pricing strategies which would be relevant for the launch of a new product.

Q. What is the percentage breakdown of the paper between written and numbers?
A. 50/50.

Q. If I get a calculation wrong at the beginning of a question will I lose all the marks for my subsequent answer?
A. No. Each mistake is penalised only once; then follow through marks are given based on your incorrect answer.

Q. If I get to the exam late will the ACCA give me extra time?
A. No the exam finish time will not be extended for late comers.

Q. Where will I write my answers to the questions?
A. ACCA provide exam booklets to each student and additional booklets are provided if required.

Q. Do I need to show my workings?
A. Yes, definitely - but only in section B. There are many calculations in F5 and it is very easy to make an error on one calculation and then carry that mistake forward through the rest of your answer. If no workings are shown then the marker has no scope to award any marks at all. If workings are shown then you will simply lose the marks for the one initial calculation error.

Q. Can I pass by just learning the calculations?
A. No, the F5 exam can sometimes be as much as a 50:50 split with regards marks available for both the calculations and discussion aspects. Being able to write around the numbers calculated is vitally important. The good news is, the situations you will find in the questions, and the questions tend to be quite similar. For example, a question on variances and assessing the performance of a production director will usually centre around them having made very poor/good decisions so the discussion of this shouldn’t be too difficult.

ACCA F6 Tips & FAQs

• Make sure you read the tax rates and allowances in the exam. You may find they prompt you to remember things. For example, as high emission cars only receive a 8% WDA for capital allowances it may remind you that high emission leased cars with CO2 of > 130g/km have a restriction in taxed adjusted profit computations of 15%.
• The badge of trade to determine if someone is self employed can be remembered using the mnemonic SOFIRM and FAST:
  • Subject matter of the transaction
  • Ownership period
  • Frequency of the transactions
  • Improvements and marketing
  • Reasons for sale
  • Motive (profit)
  • Finance
  • Acquisition (method of)
  • Similar transactions

FAQs

Q. Why don’t I include all NS&I interest in the income tax computation?
A. National Savings Certificates are exempt from income tax and should be noted as such and excluded from the computation. NS&I easy Access Accounts and NS&I Investment Accounts are paid gross and should be included in the computation as the amount received.

Q. What are the core areas I need to learn?
A. You can find this at the front of the Kaplan Complete Text or on the ACCA website, but generally these are Income tax, corporation tax, capital gains tax, VAT and inheritance tax.

Q. How much work do I need to do?
A. Enough for you to feel confident on the day, I always say you don’t want to feel you’ve let yourself down due to a lack of work as that is one thing you can control!

Q. Where can I find good practice questions?
A. Use the Kaplan Exam Kit, complete the revision mock and attend a Kaplan Question Based Day.

Q. Where can I access relevant articles?
A. They are all on MyKaplan or the ACCA website. Ensure you look at articles updated for the current Finance Act.

Q. Are proformas important?
A. Proformas are vital to success in this exam. The examiner will be expecting you to use the correct layout for each question. If he has to search through your question paper for the answers, this will not improve his disposition. For adjustment of profit, ensure you put '0' if the amount is allowable.

Besides which, proformas give you the student, an easy way to remember the key elements of each individual tax. My advice? Write the individual pro-forma on a separate piece of paper, and adorn your room with them. Seeing them every day, will help cement the format in your minds.

Q. Do I need to remember all the loss section names?
A. In short, no. The examiner has stated no section numbers are required at all for loss relief. Explain what you are doing with the loss relief.

Q. Can I not revise one of the taxes if I don’t like it?
A. No! The introduction of multiple choice questions into the F6 exam means that the exam now contains 21 separate questions and you can expect all of the taxes on the F6 syllabus to be tested at each sitting. The easiest way to pass is to ensure that you have revised all areas of the syllabus prior to sitting your exam. However, please remember that a pass mark is 50%, so even if you do not feel as confident in some areas you may still pass the exam even with poor marks in some syllabus areas.

ACCA F7 Tips & FAQs

Exam technique

• Expect not to finish any question. When you run out of time for that question, stop and move on to the next. Not finishing a question is not something to feel bad about, it’s just part of your technique for passing the exam.
• Be prepared that your statement of financial position or cashflow may not balance. If it doesn’t, leave it and get on with the rest of the paper – don’t worry about it now. (If it does balance, well done!)

Q1) Groups consolidation

• For the groups consolidation question (Q1) you will benefit from having the proforma/standard workings of your final answer set up first. For example if the question requires a consolidated SFP then drawing up the SFP with open brackets beside those numbers that do not need a standard working can get all the easy adding across 100% of the Parent and subsidiary figures. The other headings can have the standard working number written beside them instead. A couple of lines would need to be left for each section of the SFP in case other things come up in the additional information.
• In addition to this setting up the standard workings can also be done. The subsidiaries’ share capital figures and the year end retained earnings can be put into these without reading any of the additional information. In addition to this the parents retained earnings figure can also be put into W5 (Retained earnings) without reading any additional narrative.
• With all of the proformas and standard workings set up, it means that you are able to tackle the issues in the order that they are presented in the question. It also allows you to deal with both sides of any adjustments as everywhere is set up to make the adjustments. It hopefully prevents non-balancing accounts and means that each issue only has to be addressed once; thus helping with time management. Also if you run out of time, you will get full credit for all that you have already done provided everything is referenced through.
• A similar process can be applied to the income statement equivalent of setting up final answer and workings to help tackle the issues that come up.

Q2) Single company financial statements

• Single company financial statements (question 2). As with the groups question, it may be possible to get the proforma of the final answer set up, particularly if the data in the question is set up with the draft financial statements rather than the trial balance. If possible it then means that open brackets can be used and the draft figures placed in them, ready for adjustments as they arise. Generally speaking there are often more adjustments required for cost of sales figure in the income statement and the PPE figure in the SFP. As such I would suggest these are likely to need separate workings rather than just a bracket beside the final answer.
• If there is a topic/adjustment that you are unsure of, come back to it. You are better to get the adjustments that you are comfortable with done first. It is easy to get bogged down and waste time on a difficult adjustment at the expense of doing an easier one that appears later in the question.

Q3) Performance appraisal

• With a performance appraisal question you may be asked to calculate ratios or prepare a statement of cash flow or both. When calculating ratios, if you are unsure of a particular calculation always have a go, as even if the calculation is incorrect you will be awarded merit for your discussion of the incorrect number in the written section of the question. It also really helps the marker if you note your formula down so that your working is clearly identified.
• When preparing a statement of cash flow set up you proforma immediately and begin to get the easy marks in the cash flow such as finding the movement in the cash and cash equivalent balance, and finding the movements on basic shares and loans. You will also find the operating activities section familiar and useful for scoring marks. If there are any cash items that you are unfamiliar with come back to these at the end after you have dealt with the items that you can do.
• Finally, when appraising the performance of a company ensure that you always refer to the scenario provided to ensure maximum credit is awarded.

FAQs

Q. What are the core areas I need to learn?
A. As this is a compulsory paper the entire syllabus is examinable. However, you will always find common traits at Q1 – Q3 in that you will be required to prepare a consolidation, single entity financial statements and some form of performance appraisal including the calculation of ratios/statement of cash flow.

Q. How much work is necessary to pass this paper?
A. You will need to ensure that you have practised enough questions to feel comfortable with both the examiner style and the content of the questions. There are always familiar elements to every question.

Q. How should I present my answers?
A. As neatly as possible! The examiner often complains of difficult to read or illegible answers. Make sure you answer each question on a separate page. Always present your answer first and include all supportive workings behind this (i.e. set up your proforma consolidation and include the 5 standard workings behind).

Q. How do you treat PUP adjustments between a parent and subsidiary?
A. For transactions between a parent and subsidiary, you always reduce the inventory on the SFP. The opposite entry will be to reduce the selling company's reserves, so if the selling company is the parent, reduce W5, for the subsidiary reduce W2 (SFP and post-acquisition column).

Q. How do you treat PUP adjustments between a parent and associate?
A. For transactions between a parent and associate, you always reduce the group reserves on W5. The opposite entry will depend on which company is holding the inventory. If the parent is holding the inventory, and therefore the inventory is included on the group SFP, the inventory on the SFP should be reduced. If the associate is holding the inventory, you should reduce the investment in associate W6.

Q. Sometimes my non-current asset revaluation doesn’t agree to the answer. How do you treat a revalued asset in the financial statements?
A. When revaluations are examined (normally at question 2) a common mistake is made by candidates. This mistake is in the incorrect identification of the date the revaluation took place. If the revaluation takes place at the start of the year you must revalue the asset immediately and depreciate the revalued amount over the remaining useful economic life. If the revaluation takes place at the end of the year then a full years depreciation should be charged based on the assets depreciation policy and then the revaluation should be performed at the year end.

ACCA F8 Tips & FAQs

• Never let anyone tell you it’s all about common sense – make sure you also do the required learning. You MUST know:
  1. The ethical principles – not vaguely but precise
  2. The controls present at each stage of the sales purchases and payroll cycle
  3. The key substantive tests for each balance sheet area
  4. Risk, Planning
  5. Completion Reports
• You must learn the ISAs – not the numbers, but the objectives and key provisions of each ISA. Nearly 30% of the last exam was testing pure rote-learned knowledge.
• This examiner wants QUALITY not QUANTITY – she sometimes gives 1.5 marks for a well-explained point.
• Look at the past exams – many of the model answers were in columnar format. Long windy paragraphs are not an option.
• Time allocation is as important in this exam as it is in the others – 1.8 minutes per mark.

FAQs

Q. What are the core areas I need to learn?
A. You can find this at the front of the Kaplan Essential Notes or on the ACCA website, but generally these are Ethics, Risk, Audit Evidence, Planning, Systems, Completion and Opinions.

Q. How much work do I need to do?
A. Enough for you to feel confident on the day, I always say you don’t want to feel you’ve let yourself down due to a lack of work as that is one thing you can control!

Q. Where can I find good practice questions?
A. Use the Kaplan Exam kit, do revision, final assessment and the mock exam and attend a Kaplan Question Based Day.

Q. How much do I need to write?
A. Enough to answer the question, without adding unnecessary information.

Q. Where can I access relevant articles?
A. They are all on MyKaplan or the ACCA website.

Q. How should I present my answers?
A. Each paragraph should only be a few lines, then leave a space between each paragraph. For certain requirements you can present in a column format. Your script should be clear and concise.

Q. If I read and learn all the information in the text book will I pass?
A. Knowledge alone is insufficient if you want to pass this paper. Past and present examiners have stated that the key to passing F8 is to apply knowledge of auditing and assurance to scenario information. Many students fail to read the requirements and simply write down ‘everything they know’ about the topic in the hope that it will achieve the required marks. This will not work.

Q. Do I have to write in full sentences?
A. It is common in F8 requirements to be asked to explain or discuss issues. This requires candidates to write in simple clear English to ensure they gain maximum credit in the exam. This means writing full sentences. Keeping paragraphs short (i.e. 3-4 lines) will assist in making your points stand out for the markers.

Q. Why are the global pass rates traditionally lower than other papers?
A. F8 is a comprehensive auditing paper which examines high level planning, risk and completion issues together with the detail of auditing procedures. Many students, particularly those who do not work in audit, can often find the issues hard to understand. This, combined with the highly discursive (written) nature of the paper makes this exam a tricky one.

Q. Do I have to use a ‘column format’ approach to certain questions?
A. Some students find it difficult to write clearly if a two or three column approach is used on an exam script. Our advice is to use the method with which you feel more comfortable. The easier it is for the markers to identify separate points in your answer the greater the chance there is of being awarded the maximum credit.

Q. Do I have to use a ‘column format’ approach to certain questions?
A. Some students find it difficult to write clearly if a two or three column approach is used on an exam script. Our advice is to use the method with which you feel more comfortable. The easier it is for the markers to identify separate points in your answer the greater the chance there is of being awarded the maximum credit.

ACCA F9 Tips & FAQs

FAQs

Q. What does a Positive NPV tell us?
A. A positive NPV shows that the return on the project is greater than the required return to the investors (cost of capital). A positive NPV means that shareholder wealth would increase if the project is undertaken.

Q. Will a tax rate of 30% be used in the exam for NPV calculations?
A. Any tax rate could be used in the exam so you should be prepared to apply. The examiner often uses 25% AS WELL AS 30%.

Q. Do I need to know the hedging calculations?
A. Yes, you may be required to calculate the outcome of a forward contract and/or money market hedge calculations but you will not be required to do futures or options calculations.

Q. Do I need to know the WACC formulas?
A. The WACC formula is provided in the exam but you will need to remember the cost of debt and cost of equity calculations. Gordon’s growth formula and CAPM will also be provided in the exam.

Q. How do I approach a WACC questions?
A. Approach the questions by identifying the information provided to calculate the cost of equity and cost of debt. If you are given a dividend payment then you may need to use the DVM model to calculate the cost of equity and if given a beta then it will be the CAPM model. Have a look at the balance sheet to identify all the debt sources of finance (irredeemable or redeemable) and calculate the cost of debt for the different types of debt given. Finally, calculate the market value of equity and debt and apply the WACC formula.

Q. Will there be lots of written parts in the exam?
A. The exam is roughly about 40% calculations and 60% written but could vary from one exam to the next.

Q. How many hours study do I need to pass the F9 exam?
A. The F9 exam is quite technical so you would need to study hard from tuition phase to revision phase.

Q. What are the most important areas?
A. There are 6 of them:

1. NPV
2. Cost of capital
3. Working capital
4. Business valuations
5. Sources of finance and financial ratios
6. Foreign currency/interest rate management

In particular, NPV will be tested every time and underpins the entire syllabus.

Q. Should I just focus on the numbers?
A. Only if you don’t want to pass. Although the numbers are important, approx half of the marks are for the written elements. In the June 2010 paper more than 40% of the marks were available for writing more of a response to scenario.