Rather like an electrician needs to know how to change a light bulb, it is essential for an accountant to know their numbers.
ACCA examiners are continuously surprised at the number of basic mistakes made by candidates in two key areas. Firstly, an inability to do calculations correctly. Secondly, a poor understanding of commonly used accounting ratios.
These are fundamental requirements for all ACCA students. As you work hard at learning complex subjects across the ACCA syllabus, remember not to neglect the basics!
Let's look at these in a bit more detail...
1. Know your calculations
In previous ACCA F2 sittings, the examiners were disappointed to see that a high proportion of incorrectly answered questions were calculation based. Areas in which candidates struggled included some basic calculations such as calculating sales volume and sales price variances. Obviously it’s a fundamental requirement in an accountancy exam to demonstrate numerical ability!
This is what the examiners had to say:
“Common problems with section B questions include the inability to calculate and explain sales volume and sales price variances.” - ACCA F2 Examiner's Report – December 2015
“Calculation questions accounted for approximately 46% of section A questions, and as usual were answered worse than the narrative based questions. Seven out of the 10 worst answered section A questions were calculation based in the January to June 2015 diet.” - ACCA F2 Examiner's Report – June 2015
“Calculation questions approximate 40% of section A questions, and as usual were answered worse than the narrative based MCQs. Seven out of the 10 worst answered section A questions were calculation based in the period.” - ACCA F2 Examiner's Report – December 2014
So, it goes without saying that it's really important that you are able to answer calculation questions. If you have any doubts in this area make sure you focus your revision time on perfecting calculations. It will be hard to pass if you don’t master it!
2. Know your ratios
In the ACCA F2 exam, students are expected to have a good understanding of the commonly used accounting ratios. However in recent reports, examiners identified that some students were unprepared for ratio related questions. Remember, they are an important part of the syllabus so having a good understanding of ratios will be key to getting that pass!
Here’s how examiners commented on candidates’ knowledge of ratio analysis in previous reports:
“ROCE is a very important ratio in performance measurement and candidates must know its definition if they want to pass.” - ACCA F2 Examiner's Report – December 2015
“A significant minority of candidates did not know which ratios measured liquidity and which measured gearing.” - ACCA F2 Examiner's Report – June 2014
“Return on capital employed should not be calculated by any profit figure divided any asset figure. Its formal definition is operating profit divided by ordinary shareholder’s funds plus non-current liabilities.” - ACCA F2 Examiner's Report – June 2014
If you have any doubt in your ability to calculate ratios, these comments from examiners should be a big warning that you need to brush up! Make sure that you know not only how to calculate ratios, but also what they mean!
This is just some of the points addressed in our ACCA F2 Examiners' Guide. See what others issues have been identified by going to - ACCA F2 Examiners' Guides