Microsoft Word F2 fma exam report doc

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Examiner’s report 

F3 Financial Accounting 

For CBE and Paper exams covering January to June 2014 

Examiner’s report – F3/FFFA Jan-Jun 2014 

 

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General Comments 

There were two sections to the examination paper and all of the questions were compulsory.  Section A consisted 

of 35 multiple choice questions (two marks each) which covered a broad range of syllabus topics. Section B had 

two longer questions (15 marks each) testing the candidates’ understanding and application of financial 

accounting skills in more depth. This is the first examiner’s report since the introduction of the new exam format 

and question types. 

 

The following paragraphs report on each section and focus on some of the key learning points. 

 

Section A 

 

It was pleasing to see that the majority of candidates attempted all of the questions.  Candidates preparing for 

the next examination of FFA/F3 are advised to work through the sample questions discussed here and to carefully 

review how each of the correct answers were derived. The following two questions are reviewed with the aim of 

giving future candidates an indication of the types of questions asked, guidance on dealing with exam questions 

and to provide a technical debrief on the topics covered by the specific questions selected. 

 

Sample Questions for Discussion 

 

Example 1  

A company has prepared its bank reconciliation at 31 March 2014 taking the following information into account: 

 

                                                                                                                          $ 

Outstanding 

lodgements 

        5,000 

Unpresented cheques 

 

 

 

 

 

 

 

 

2,800   

Bank charges shown in the bank statement but not  

recorded in the cash book 

 

                                                                     125 

 

The adjusted cash book balance per the bank reconciliation was a debit balance of $1,060 

 

What was the balance as shown on the bank statement at 31 March 2014? 

 

A  $1,140 debit 

B  $1,140 credit 

C  $1,265 debit 

D  $1,265 credit 

To correctly answer this question, candidates need to start with the adjusted cash book balance and reconcile it 

to the bank statement.  Unfortunately, there are no shortcuts to this type of question and so candidates are 

advised to attempt a full answer before looking at the multiple choice options available.  

The cash book balance of $1,060 debit per the bank reconciliation process already takes into account the bank 

charges of $125.  The outstanding lodgements are amounts that have been sent to the bank but have not been 

recorded on the bank statements yet.  The unpresented cheques are those cheques paid to suppliers but have not 

been banked yet.  

 

Correct answer is A calculated as follows:  

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Examiner’s report – F3/FFA Jan--Jun 2014 

 

 

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        $ 

Adjusted cash book balance per bank reconciliation           

     1,060  

Outstanding lodgements               

 

 

 

    (5,000) 

Unpresented cheques                                                       

     2,800 

Balance overdrawn at the bank                                         

   (1,140) 

 

In the books of the bank and on the bank statement, an overdraft will appear as a 

debit balance. 

 

Example 2 

 

Candidates also need to formulate an organised approach to questions by carefully considering all of the 

information they have been given and where it fits in their approach to the solution.  This example, provided 

candidates with a scenario that relates to receivables and required them to calculate the receivables expense: 

On 31 March 2014, the balance on the receivables control account of P Company is $425,700.  The 

bookkeeper has identified that the following adjustments for receivables are required: 

 

Irrecoverable debt recovered   $2,000 

Specific allowance   $2,400 

 

It was decided that a further allowance for receivables of 2% should be made based on past events.  The 

allowance for receivables on 1 April 2013 was $1,900. 

 

What was the receivables expense for the year ended 31 March 2014? 

 

A $6,966 

B $8,866 

C $8,966 

D $10,866   

 The following step by step approach might help candidates to organise themselves and improve their exam 

technique (step by step approaches can be used to answer questions on many different topics in the syllabus):  

 

Step 1:  Adjust the receivables control account for the specific allowance 

 

 

 

 

 

 

 

 

 

$ 

 

Balance on the receivables control account:    

                

  425,700  

Less the specific allowance already made                             

     (2,400) 

Adjusted receivables control account balance                             423,300 

 

Step 2: Use the adjusted receivables control account balance to calculate the further allowance for receivables, 

using the given rate of 2%. 

$423,300 x 2% =  $8,466 

 

Step 3: Calculate the total allowance for receivables: $2,400 + $8,466 = $10,866  

 

 

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Examiner’s report – F3/FFA Jan--Jun 2014 

 

 

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Step 4: The question states that the allowance for receivables at the 1 April 2013 was $1,900. The receivables 

expense for the year ended 31 March 2014 is therefore:  $10,866 less $ 1,900 (the prior year end allowance) 

less the $2,000 irrecoverable debt that was recovered.   

 

The correct answer is $6,966 i.e. A  

 

Section B 

 

Section B type questions will test the preparation of basic financial statements (including Statements of cash 

flows) for single entities (single companies or sole traders) and or simple consolidated financial statements. The 

standard of answers in section B was generally good and the majority of candidates attempted both questions.  

The following comments explain how candidates might be able to improve their performance and are categorised 

into those comments that relate to paper exams, CBE exams and both. 

 

Comments relating to both CBE and paper exams: 

Single entity questions. 

Candidates should ensure that they have a good understanding of double entry book-keeping and how an 

adjustment made in the statement of profit or loss might impact elsewhere (for example in the statement of 

financial position).   

 

Basic consolidation questions 

A thorough understanding of consolidation techniques is also required, including the calculation of key figures 

such as goodwill, non-controlling interests and retained earnings.  Common errors included: 

 

  In valuing the goodwill, deducting the fair value of the non-controlling interest from the consideration 

instead of adding it on.   

  Not adjusting for intra-group balances. Amounts owed between the parent and subsidiary should be 

eliminated from receivables and payables in the consolidated statement of financial position. 

  Not adjusting for intra-group transactions. Intra-group sales should be eliminated from revenue and cost 

of sales in the consolidated statement of profit or loss. 

  Incorrectly adding together the equity share capital of the parent and subsidiary. The share capital in the 

consolidated statement of financial position should be only that of the parent. 

  Incorrect treatment of bank balances presented in a trial balance. Where the balance included in the trial 

balance is a credit, this represents a bank overdraft and this should be included in current liabilities. 

  Errors in calculating reducing balance method depreciation, forgetting to adjust for the accumulated 

depreciation. 

 

Comments relating to CBE exams: 

Candidates should read the question carefully and follow the instructions contained therein.  For example, some 

questions will tell you to use $’000 or $m.  Others will give you instructions to ignore brackets or signs when 

entering negative numbers. Note also that where a pro-forma answer shows headings such as “Less: cost of 

sales”, that no minus sign or brackets should be put round the figure as the heading already indicates that the 

figure is negative. In questions requiring the preparation of statements of cash flows, all figures should be entered 

as positive and there are drop down lists for candidates to indicate whether the figure is positive or negative. 

 

 

 

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Examiner’s report – F3/FFA Jan--Jun 2014 

 

 

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Comments relating to paper exams: 

Candidates’ answers often lacked clear logical workings.  Therefore, candidates are reminded that, if they show 

their workings and get the answer wrong they can still gain some marks.  However, when the answer is wrong 

and there are no workings then no credit can be given for the method applied.  Candidates should also ensure 

that they are familiar with the layout of the key financial statements.  Please ensure that your writing is legible.   

 

Conclusion 

Overall, performance was encouraging but many candidates might still be able to improve their marks by 

focusing on their exam technique.