ACCA Expert Tips and Technique - P1 - P7 papers

ACCA P1 Tips & FAQs

• Read all the articles - available on MyKaplan or the ACCA website.
• Read daily newspapers to look at current issues (ie for Corporate Social Responsibility issues, agency problems in companies, etc).
• Use the reading time to decide which of the optional questions to answer. When answering read the requirements first and the full scenario – ALL parts of it! Make sure you are strict with your your timing!

FAQs

Q. Are the professional marks important?
A. Each P1 paper offers 4-6 marks for displaying professional skills, which can easily be the difference between a pass and a fail. The marks are available for both format and the tone and style of your answer, where you may have to prepare a speech or write a letter on behalf of the Board addressing specific concerns. Take a look at the Article of 24 August 2009 for more guidance and some great hints on style. This can be found on MyKaplan or the ACCA website.

Q. Should I attempt the 50 mark case study first?
A. You can attempt questions in any order and it is a personal preference based on the subject matter in each question. My advice is usually to start off with a question you are confident with. The case study covers most of the main syllabus areas and given that it is 50% of the exam I would recommend that this is the first question you should attempt otherwise you will be thinking about it whilst doing the other questions.

Q. Do I need to understand the detailed provisions of the UK Corporate Governance Code to answer questions?
A. The examiner has stated that the only code that will specifically be mentioned in the exam will be Sarbanes Oxley (SOX). The P1 text has included the knowledge required for SOX . The knowledge of other codes is not specifically examinable. However the P1 text is based on the UK Corporate Governance Code e.g. Board of Director’s, NEDS, committees.

Q. I don’t really understand what the question is asking me to do. I understand the syllabus but when it comes to doing questions I get a bit lost?
A. The examiner has highlighted the importance of the verb hierarchy in P1. If you do not understand what a verb means then it is likely that you will go off down the wrong track when writing their answer. The trick is to first identify the number of verbs in the question. E.g. if the Q states ‘Identify and explain the risks facing X Ltd and evaluate their impact on the company’ then there are 3 things to do in this question: Identify, explain and evaluate. This should be the basic structure for your answer. If all the verbs are not “actioned” then easy marks will be wasted.

Q. What’s the best way to study P1? I read through the text and understand although it is really boring. I then forget what I have read!
A. While we appreciate that it is a relatively dry area, you are advised to “read round the subject”. In class Kaplan tutors attempt to bring the subject alive by using real life examples , such as the failures in internal controls that have caused such disasters as the BP oil spill and the collapse of Barings Bank. You should keep up to date as far as possible with what’s going on in the business world and attempt to relate the syllabus areas to these real life scenarios.

Also, question practice, as ever, is the key to success. Kaplan interim, final assessments and revision mocks are vital revision tools. Reading the examiner’s articles are a must. The fixed tests on MyKaplan are invaluable.

Q. How much do I need to write for a 25 mark question?
A. There is no magic answer here. Again, the key to answering the question is reading the requirement very carefully (REMEMBER RTFQ! - Read the Full Question). If you understand what the verbs are in the question and structure your answers around the verbs, then you will have a higher quality answer. Remember, it’s not how much you write, it’s what you write. In other words it’s quality, not quantity. Make sure that you explain points by referring to the scenario.

Q. How much if at all should I use the scenario in my answers? There seems to be so much to read in the case study.
A. You should always remember that the scenario is there to help, not hinder. Continued question practice prior to the exam will improve your technique in picking the relevant points out the scenario and enhance the quality of your answers. Obviously, knowledge of the syllabus is required. The key to answering the questions is to apply syllabus knowledge to the scenario and (usually) identifying issues in the scenario. e.g. non compliance with good governance requirements.

Q. Is layout important?
A. Yes, layout is vital. P1 is a very wordy paper, and the examiner wants to ensure that you have a good grasp of the theories behind the questions, but also that you can successfully apply the theories to given scenarios. Therefore, it is very easy to get lost within a question if your layout and approach to a question is poor. A good approach is to apply 3 rules in your answer:

• Introduction - this should be very short, but can help you get over any ‘writers block’. It might include a read back of the question, or a definition of the subject matter (for example, if the question asks for the roles of NED’s, start by very quickly defining what an NED is).
• Theory - this section will show the examiner that you actually understand the issue being questioned, again, as with the introduction, this should really be kept short, it can be a section quote from the code, or a reference to an author (Cadbury or Greenbury et al).
• Application - This will be the main bulk of your answer and should relate directly to the scenario. This is often the most difficult section of the answer, but should be made easier by the use of the introduction and theory sections.

In addition remember the golden rules of written questions:

• Plenty of white space
• Headings as required
• Short punchy meaningful paragraphs

Q. I don’t like ethics as a subject. Can I avoid it?
A. In short, no. Ethics makes up around 30% of the exam weighting (although it is difficult to be exact). This is generally split between the optional 25 mark question in part B, with some marks appearing in the compulsory case study. So even if you choose not to attempt an ethics-based question in Part B (which by the way, then makes the entire exam compulsory – so let’s hope the other two questions are OK!) it will still likely form a part of question 1.

ACCA P2 Tips & FAQs

• Do not ignore ethics it appears in every section A question and could have up 10 marks.
• Always apply your 5 standard workings when doing CSFP. This will help ensure easy marks are picked up and it is easier for the marker to follow what you have done.
• Do not ignore the current issue question. Often it contains numerical aspects of an accounting standard you are familiar with as well as the current issue. E.g. reviewing the use of FV and the new rules on financial assets in IFRS9.
• Practise as many questions as possible across the syllabus, and don’t only concentrate on consolidation. Practice writing out pro-formas so you can do this quickly and efficiently on exam day.
• Use the reading time effectively – decide which question you are not going to attempt from Section B and then read the Section A question.
• If you need help with Accounting Standards, read Clare Finch’s guide to IFRS.
• If you struggle with Groups, read Tom Clendon's guide to Group accounts.
• Consolidation is hugely important but you can’t pass the exam on this alone – a significant number of marks in the consolidation tests your understanding of other accounting standards.
• Don’t overrun your time on part A of question 1. There are often easier marks available in pasts B & C.
• If you can’t do something ignore it and move on – time is very tight and there is no point staring at a blank piece of paper if you really don’t know what to do.
• In addition to consolidation the examiner is particularly keen on:
  • Revenue Recognition
  • Financial Instruments
  • Pensions
  • Deferred Tax
• The examiner writes articles that are published on accaglobal.com - search for "Graham Holt".
• An understanding of the Accounting framework is vital in being able to discuss any issues surrounding an accounting standard or proposed change to that standard.
• Unlike F7, there are very few marks, if any, for simple figures in the Consolidation exercise. Marks are concentrated on the adjustments and detailed computations of key group issues, like Goodwill, NCI etc. Make sure your workings are clear and fully explain any adjustments you make to comply with relevant IFRS.
• Do not treat the Consolidation exercise as being all 50 marks of question 1. It will typically be 35 so allocate the correct time to it and the other elements in Q1.
• In scenario style questions in section B, be sure to state the relevant accounting standard for any advice that you give, together with the relevant rules from the standard and then subsequently state the advice on correct treatment of facts in the scenario. Don't be tempted to jump straight to a statement of the correct treatment as marks will not be maximised by doing this. Read articles and read around the subject.
• Do not add up the accounts.
• Start each question on a fresh page.
• BE NEAT in the exam.
• Time management (or lack of it!) is the most common reason for failure.
• Read the examiners’ comments on the ACCA website.

FAQs

Q. What is the most commonly tested area in P2?
A. Groups and ethics. Ethics are always part of the 50 mark question section A. They are easy marks and often the same scenario is repeated in different sittings. E.g looking at the behaviour of directors. Students often run out of time on section A at the expense of picking up these easy marks.

Q. How much of F7 is assumed knowledge for the P2 exam?
A. Groups ( if you know you struggled with this you will need to review your F7 notes), some accounting standards such as IAS 37, IAS 38, IAS 16.

Q. How do you deal with complex consolidation questions?
A. The key is to concentrate on the basics and the easiest numbers first, and then worry about the complicated adjustments. You can pass the exams without being able to do the most difficult parts of questions.

For more study help, read our article on learning from answers

Q. Which questions should I do and in which order?
A. Use your reading time to decide this. Leave your least favourite question until last. Attempt the question you are most comfortable with first. If you start with the compulsory 50 mark question then watch your time!

Q. What does it mean to have to 'explain the accounting treatment?'
A: Well it doesn't mean just list a bookkeeping journal. You need to do this and much more at this level.

Follow the principles used in all accounting standards that is, Recognition, Measurement and Presentation (RMP). For recognition explain which element of the framework we are dealing with. What is being described in the question - an asset or an expense? Then state how you would initially measure the value of it. So, would you capitalise attributable costs too? Then state how measurements changes subsequently maybe because of depreciation or impairment. Finally note where in the accounts you show the amounts measured.

Q. I never have time to complete the paper. What should I do?
A: Don't despair, it is the same for everyone. Allocate time to each question and stick to it strictly. You will get the easier parts of questions done this way and stand the best chance of passing. Look, if you were lost in a strange city trying to find your hotel you wouldn't keep wandering around, you would get a taxi! So, when time's up on one question, get a taxi straight away onto the next one!

Q. What is likely appear in question 1 of the June 2011 exam?
A. We cannot tell, as we’ve not seen the exam, but my thoughts are…GROUPS - statement of position with a foreign sub with ethics and related party transactions with lots of accounting adjustments.

Q. What could come up in questions 2 and 3 of the June 2012 exam?
A. Again, we’ve not seen the exam, but we think it might be…ACCOUNTING STANADARDS - a mixed bunch of applying accounting standards - deferred tax, financial instruments, the new topic of reconstructions of an insolvent company would probably be examined in Q2 or Q3, foreign currency (possible hedging again) impairment including some obscure aspects.

Q. What may be in the current issue question?
A. Might be revenue recognition, international issues, or developments on the homework. Candidates who are well prepared on this area can score very well.

ACCA P3 Tips & FAQs

• Embed your knowledge on the core models from Johnson and Scholes (the examiner based this paper on their work).
• When answering questions, write answers like you are writing to your senior management. Make it as professional as possible. Marks are allocated to this in section A.
• Do not start writing answers straightaway. Take a minute to think about the structure and presentation of the answers.
• It is important with this level to remember that writing lots of knowledge and theory will not get you through the exam. The key is application to the material and expanding the relevance to the scenario.
• I suggest watching the news / reading the papers, but with a critical eye. For instance when you see that a business has launched a new product or moved into a new market think about the theories you have learnt that may be relevant. In this case it could be:
  • Porter’s generic strategies
  • Ansoff
  • Bowman’s clock

  Then apply those theories to the real life situation – understand why they have created this product/why they have gone into this market. With practice you will find it easier to apply the theories to the scenario.

  And of course you can do this for other areas of the syllabus.
• There is nothing worse for a marker than getting a script which is just a page of writing. Try to think about making your script easier to read for the marker. Headings and Sub-headings along with a bit of space will help. Then use your paragraph to explain the point you are making.
• If it is easy for the marker to see the points being made this can make the difference between pass and fail for a borderline script, include application, plus relevance within your statement, avoid listing.
• If you use the word ‘and’ in your answer, are you making two separate points? If yes, maybe you need to split your paragraph into two headings / sub-headings.
• There are 3 professional marks which will constitute professionalism, presentation and layout.
• Know the theory and apply it.
• Create mindmaps of the key knowledge, then learn these.
• Do practice questions under timed conditions and if possible, get them marked.
• Make sure you’ve read all the current examiner articles, available on MyKaplan or the ACCA website.
• Get good business awareness – read a quality newspaper.
• Use the reading time to select questions, and get frameworks for answer plans.
• Do a section B question first.
• Don’t focus on the numbers – do not spend more than 15 minutes on them per question.
• Watch the clock – allocate your time efficiently - don’t overrun.
• Layout your answers in a way that the marker can clearly read and understand.
• Read the question carefully!

FAQs

Q.Do I need to learn all of the models?
A. Yes, you need to know the models in order to apply them to the scenario. You should know how to draw them (although a diagram is unlikely to gain any marks it can be a useful structure for a plan) but more importantly how to apply them to case.

Q. How to I get business awareness?
A. Read a quality newspaper, watch the news and listen to BBC Radio 4.

Q. What models should I use in the exam question?
A. Always start with common sense and then see if you can turn a common sense answer towards application of a model. For example, an issue for most businesses is competition. This means using 5 forces and see if the case study gives a clue to whether there is a threat of new entrants and if there are barriers to entry in place.

Q. How do I start answering a question?
A. Always start with identifying what the question is asking of you and not what you know!

ACCA P4 Tips & FAQs

• P4 is a technical paper with some complex calculations sometimes but DO NOT think of the exam as numbers-only. There are plenty of discursive parts which are usually easier than the calculations and easy marks can be picked up by applying commercial awareness and common sense.
• Analyse the individual requirements of the question. If you can do the wordy bits first then do so as you will not get bogged down in them like you will with the calculation elements.
• Do not expect to finish a question. You must stick to time, especially on the calculations which are very easy to over-run on. The exam is extremely time pressured and the secret to passing is to have a go at every part of every question, not to try and get 100% on every question – to do that you would need about 7 hours!
• If you are not sure what to do with a particular figure in a question, ignore it and move on – state assumptions, you haven’t got time to worry about it!
• If you get a Black-Scholes question, always list out the input variables as your first stage and assign the relevant values to them – there will be about 2-3 marks usually for doing this.
• Practice as many questions as possible but do as many as possible to time. You must get used to doing the questions in the time available and not spending too long on them.
• Practice as many questions as possible across the syllabus, and don’t only concentrate on what you consider to be the core areas.
• Choose carefully on section B of the paper – it is very limited choice but nonetheless it will be critical.
• Do not put down unnecessary workings; because as it will cost you heavily in lost time.
• If there is a calculation that you are unable to complete – for e.g. a WACC which prevents you from going on to do the NPV, then just make a reasonable assumption and estimate a WACC which you have been unable to calculate, this will then allow you to progress the calculation and get on to the often more generously rewarded discursive parts of the question.
• Look out for examinable articles - two in particular for June 2011:
  • 24 August - The new examiner Shishir Malde gives his approach for the P4 paper
  • 23 September - Another article by the new examiner Shishir Malde on Risk Management
  • January/February article

FAQs

Q. Having calculated an NPV, if the question then asks you to “advise the Board” what do you talk about to get the marks other than whether the NPV is + or -?
A. Remember the an NPV is only a financial appraisal and there may be a host of other issues to consider such as the following:

• Risks – are there any significant risks associated with the project? What could go wrong?
• Ethics/Stakeholders - Are there any potential stakeholder conflicts?
• Strategy – Is the project a good fit with the organisations present strategy and objectives?
• Real options – Are there any choices or flexibility within the project?
• Alternatives – Any other uses for the capital?

In addition to the above, consider the numbers:

• How certain are the cashflows?
• Is the cost of capital suitable? (Risk?)

Q. What are the common topics that always come up?
A. Two key topics are always NPV appraisal and capital structure, particularly CAPM and Betas. You will not pass if that is all you know but you will struggle to pass if you do not know them!

Q. Where do I begin on a NPV question?
A. This area is frequently examined and you will be under extreme time pressure to do as many calculations as possible within the allotted time. Having read the question – you will either start on cash flows or the discount rate (see below). To maximise your mark earning potential group the cash flows under three headings, operating, capital and working capital – and deal with the tax accordingly – impacts on operating / capital flows but not working capital. If the question requires the calculation of an MIRR then when you use a proforma for your cash flows split them between the investment phase and return phase which will then allow you to use the MIRR formula or any other method recognised.

Q. How do I calculate a cost of capital?
A. If it is an NPV calculation and you are required to calculate a risk adjusted WACC then following four steps will be required:

1. Ungear the equity beta of the proxy company supplied to find the asset beta
2. Regear the asset beta to reflect the financial gearing of the investment
3. Use the equity beta to find the Ke(g) using CAPM
4. Feed Ke(g) into CAPM along with a post tax Kd

Q. How do I approach an APV question?
A Remember we use APV when we don’t know the post project gearing, typically because the finance has changed.

1. We evaluate the investment decision at an ungeared Ke found be degearing an asset beta of the proxy co / industry we are investing in.
2. We then calculate the present value of the finance flows using the pre tax cost of borrowing / debt - the main finance flows being the cost of raising the finance (tax relief on the debt) and the present value of the tax shield.

Q. How do I use currency futures to hedge against an adverse rate of exchange movement?
A. Remember the critical step is to identify the currency of the futures contract, and having established this, then what we do with that currency in the currency market, we do exactly the same in the futures market. So if we have a $ receivable and a $ futures contract, then we would be selling our $ from the customer in the currency market and therefore we would create the hedge by selling $ futures.

Q. Do I use an interest rate futures to hedge against an adverse movement in the rate of interest?
A. It is just a case of remembering that whenever we are concerned about rate rises because we are looking to borrow at some point in the future the we hedge by selling interest rate futures, or if we were looking to invest at some point in the future and we are concerned about rate falls then we hedge by buying interest rate futures.

ACCA P5 Tips & FAQs

• Answer the wordy bits first, provided they don't depend on calculations you've not yet done. This paper awards approx 70% of the marks for discussion, and 30% for calculations.
• Watch your time management when doing the calculations. Although they are not technically complicated, they can be time consuming. Lots of practice before the exam means you should be reasonably efficient at these parts in the exam, although you may well take more time than the 1.8 minutes per mark you should theoretically allow. However, if you realise it is taking too long, make up some numbers, move on and use those figures as the basis of your discussion as you'll get the follow through marks on that basis.

FAQs

Q. Are there any guaranteed topics?
A: No. Although there is usually an optional (Section B) question on "current developments in performance management".

Q. Why do questions sometimes appear ambiguous in terms of what is required as an answer, i.e. that they aren't obvious link to one of the chapters in our notes?
A: Although we have to sub-divide our notes into chapters to create discrete topics, in reality businesses are dealing with a variety of the aspects of performance management at a time. At this level of the ACCA qualification you are expected to be able to connect the wider implications of performance management so, to mimic reality, a single question will require you to draw on a number of topics across various chapters.

ACCA P6 Tips & FAQs

• Expect not to finish every 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. However, you should attempt all parts of every question.
• Think about all the taxes – if students are asked generally for the tax implications of a transaction, most think IT,IHT,CGT,CT but very few think NIC,SDLT. Always tell the examiner which tax you are talking about – answers are often a muddle of CGT and IHT in particular. Put a heading CGT, write about this then put a new heading IHT.
• You must accept that this paper is a step up from F6 and that the examiner is looking for more than just a set of rules that you have committed to short term memory. Think tax planning – it is what in the real world clients would pay most for after all.
• Review the question requirement carefully - often students miss key requirements or answer the question they would like to answer because they skim over the requirement. The examiner often puts actual requirements in the body of the question.
• Consider presentation of your answer - there will be 4 marks for communication and presentation so you ensure you write in proper sentences and paragraphs and use headings. Be prepared to support your calculations with explanations, they don't have to be complex. The examiner is looking for communication as much as complex analysis - this is a paper that cannot be passed on calculations only. You will have to write reports letters and memoranda.
• Practise as many questions as possible across the syllabus. It is absolutely vital that you become familiar with the examiner’s terminology and presentation.
• Use the reading time effectively - identify the main content of the compulsory section and decide which optional questions to attempt.
• Don’t miss out on easy marks. The questions will often have several elements. Make sure you leave sufficient time to attempt any easier parts. They may be at the end of the question. Some questions can be attempted out of sequence, so do the easy parts first.
• Key areas of the syllabus include for example: inheritance tax, corporation tax and groups, sole trader/partnership losses, employment income, all aspects of capital gains tax relief and overseas aspects of income tax and capital gains tax. Expect computational and written questions on all of the above.
• Most questions will involve written elements and marks are often lost because of the lack of information.
• Never be afraid to state the obvious as long as it is relevant to the question.
• The questions in the compulsory section will often be lengthy. Time allocation is important. When you run out of time on a question, stop and move on to the next.
• Read the examiner’s articles that have been updated for the new Finance Act.

FAQs

Q. Do I need to retain knowledge of F6?
A. Yes - the examiner has indicated that there are not enough new areas in P6 to enable him to just test P6 material so expect F6 material to be examined frequently.

Q. Will the IHT questions focus on Trusts?
A. Trusts are not a core area of IHT for P6 - they are primarily examined without numbers as detailed knowledge is not expected. The examiner has written an article on trusts.

Q. Is the exam unduly time pressured?
A. Very much so - all ACCA exams are time pressured but particularly at the option level. The examiner will expect you to use common sense shortcuts to explain the tax treatment.

Q. The syllabus is enormous – how can I possibly learn it all?
A. Don’t rely on just last minute revision – start work ASAP. Practice as many questions as you can – we learn best by making our own mistakes. Accept that you are aiming to pass and that you don’t need to know absolutely everything for this to happen.

Q. Is presentation important? Can I abbreviate?
A. Yes – if your answer cannot be read, it will gain no marks, and a badly presented paper does not give a good impression to the marker. However, standard abbreviations such as DTR for double tax relief are fine.

ACCA P7 Tips & FAQs

FAQs

Q. What can be left out of the syllabus?
A. Concentrate on the core areas – these are the ones that are regularly examined; your Kaplan tutor will help you to identify what they are. But your strategy should be study breadth not depth; it is much better to have a working knowledge of the whole syllabus rather than just 6 topics in lots of depth.

Q: How do I know what the examiner wants?
A: Pay attention to the verbs in the question to start with. 'Explain' requires you to state an answer with some facts as examples to support it. So, if the question was, 'Explain the evidence you would seek when auditing provisions', then an answer may be, ' External advice from a solicitor to prove existence and valuation.