F3 Financial Accounting

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

Accounting.

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

REVIEW OF
PAST EXAMS
First of all, Id like to look at exam performance over the past 3
examination sittings, looking at pass rates and particular areas that need
improvement.

Pass rates
100
90
80
70

67

60
50

48

50

Jun-08

Dec-08

40
30
20
10
0
Dec-07

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.

WHAT WAS
DONE WELL?

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

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.

WHAT WASNT
DONE WELL?

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

WHAT WASNT 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 werent 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.

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

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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
Dont 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!

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WHAT TO
FOCUS ON?

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

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WHAT TO FOCUS ON?

All areas of syllabus!

Questions practice
Review of Examiners 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 Examiners 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.

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HOW TO
IMPROVE?

This section looks at specific recommendations for students to improve

their performance.

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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 noncurrent 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.

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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.

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FOCUS ON
FUTURE
EXAMS
This section looks at future F3 papers

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WHATS NEW?

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WHATS 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.

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WILL THINGS
CHANGE?

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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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