Article for ACCA Students with exemptions

ACCA examinations (F1, F2, F3 and F4)?

Are you worried for later exams that you might not have covered everything at university, even though you are exempt?

Below are details of which topics are examined again in later examinations and which you should therefore make sure you are happy with.

Paper F1 – Accountant in Business

Although this paper does underpin the later examinations P1 and P3, you will learn what is needed for these two papers when you come to study for them.
The background knowledge that you will have from University is sufficient – there is no need to study this paper if you are exempt.

Paper F2 – Management Accounting

This paper leads directly to Papers F5 and F9 and a great deal of the syllabus is assumed knowledge for these later papers – especially for F5.

The best way of making sure that you are familiar with all the important topics is to download the Course Notes from Opentuition and work through them.

In theory, all of the topics in F2 can be tested again in later papers.

Process Costing (Chapters 6, 7, 8 and 9 of the Course Notes) is unlikely and you should pay less attention to this area.

Variance Analysis (Chapter 16 of the Course Notes) is extremely important. It is always very likely to be asked in Paper F5. When you study for F5 you will cover additional variance analysis also, but it is vital that you are happy with the ‚basic‘ variance analysis in Paper F2.

This is the most important of the first four papers in terms of needing the knowledge for later exams. Paper F5 in particular has an enormous syllabus which includes most of Paper F2.

Paper F3 – Financial Accounting

This paper leads directly to Paper F7 and most of the syllabus is assumed knowledge for F7.

As with Paper F2, the best way of making sure that you have covered everything is to download the Course Notes from Opentuition and work through them.

If you are exempt from Paper F3 then you should certainly find the chapters on basic bookkeeping (chapters 1 to 7) easy. However, depending which language you studied in at University you might not be aware of some of the terminology, and if this is the case do work through the chapters properly.

Accounting for Limited Companies (chapter 11) and Statements of Cash Flows (chapter 12) are extremely important as an introduction to Paper F7 and you must make sure that you are completely happy with these.

You should look quickly at the other chapters also – especially those relating to Accounting Standards – with the exception of Partnership Accounting (chapter 21). Partnership Accounting is not examined again at later papers and therefore you do not need to spend any time on this.

Paper F4 – Corporate and Business Law

None of the later papers examine law directly, and although the later accounting and auditing papers assume an awareness that there are laws relating to accounting and auditing you will already have sufficient knowledge from your studies at University (assuming that you are exempt from F4!).

There is therefore no need to study anything from this paper.

The objective of IFRS 5 is to specify how assets that both qualify for, and are treated as, ‘held for sale’ should be presented and disclosed within a set of financial statements.  The standard also deals with discontinued operations.

A non-current asset (or disposal group) that is held for sale must be up for sale in its present condition and the sale must be highly probable.  In order for the sale to be classed as ‘highly probable’, there must be certain characteristics present.

These are as follows:

• Management must be committed to a plan to sell the asset.
• There must be an active programme of seeking a buyer.
• The asset (or disposal group) must be available for immediate sale.
• The sale is highly probable.
• The sale is expected to complete within one year of the asset being classified as held for sale.

Where an asset (or disposal group) is classified as held for sale, then depreciation of such an asset or disposal group must cease as soon as it is classified as held for sale.  The asset (or disposal group) should be carried in the statement of financial position (balance sheet) at the lower of the carrying amount in the statement of financial position (balance sheet) and fair value less costs to sell.  Fair value is essentially how much could be received by knowledgeable and willing persons in exchange for the asset in an arm’s length transaction.

Discontinued Operations

A discontinued operation is a part of an entity that has either been disposed of or is classified as held for sale (e.g. a division of a manufacturing plan).

A discontinued operation should:

• Represent a separate major line of business or geographical area of operations;
• Be part of a single co-ordinated plan to dispose of a separate major line of business or geographical area of operation; or
• Be a subsidiary acquired exclusively with a view to resale.

Where an entity has a discontinued operation, that component of the entity’s operations and cash flows must be clearly distinguished both operationally and for financial reporting purposes from the rest of the entity.

For financial reporting purposes, the revenue, expenses, pre-tax profit or loss and the income tax expense of the discontinued operation should be separately presented on the face of the statement of comprehensive income (income statement) or in the notes to the financial statements.