ACCA paper f7 financial reporting exam kit

• Enhanced tutorial answers packed with specific key answer tips, technical tutorial notes and exam technique tips from our experienced tutors.. vi KAPLAN PUBLISHING ONLINE ENHANCEMENTS

Professional Examinations

Paper F7

Financial Reporting

EXAM KIT

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British Library Cataloguing-in-Publication Data

A catalogue record for this book is available from the British Library

Published by:

Kaplan Publishing UK

Unit 2 The Business Centre

Molly Millar’s Lane

Wokingham

Berkshire

RG41 2QZ

ISBN: 978-1-78415-229-1

© Kaplan Financial Limited, 2015

Printed and bound in Great Britain

The text in this material and any others made available by any Kaplan Group company does not amount to advice on a particular matter and should not be taken as such No reliance should be placed on the content as the basis for any investment or other decision or in connection with any advice given to third parties Please consult your appropriate professional adviser as necessary Kaplan Publishing Limited and all other Kaplan group companies expressly disclaim all liability to any person in respect of any losses or other claims, whether direct, indirect, incidental, consequential or otherwise arising in relation to the use of such materials

All rights reserved No part of this examination may be reproduced or transmitted in any form or

by any means, electronic or mechanical, including photocopying, recording, or by any information storage and retrieval system, without prior permission from Kaplan Publishing

Acknowledgements

The past ACCA examination questions are the copyright of the Association of Chartered Certified Accountants The original answers to the questions from June 1994 onwards were produced by the examiners themselves and have been adapted by Kaplan Publishing

We are grateful to the Chartered Institute of Management Accountants and the Institute of Chartered Accountants in England and Wales for permission to reproduce past examination questions The answers have been prepared by Kaplan Publishing

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CONTENTS

Page

Section

3 Answers to Objective Test Questions – Section A 159

Specimen exam

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Key features in this edition

In addition to providing a wide ranging bank of real past exam questions, we have also included

in this edition:

• An analysis of all of the recent examination papers

• Paper specific information

• Our recommended approach to make your revision for this particular subject as effective

as possible This includes step by step guidance on how best to use our Kaplan material (Complete text, pocket notes and exam kit) at this stage in your studies

• Enhanced tutorial answers packed with specific key answer tips, technical tutorial notes and exam technique tips from our experienced tutors

• Complementary online resources including full tutor debriefs and question assistance to point you in the right direction when you get stuck

You will find a wealth of other resources to help you with your studies on the following sites:

Our Quality Co-ordinator will work with our technical team to verify the error and take action to ensure it is corrected in future editions

format, this is indicated in the end column of the index below with the mark (A)

The specimen paper is included at the end of the kit

KEY TO THE INDEX

PAPER ENHANCEMENTS

We have added the following enhancements to the answers in this exam kit:

Key answer tips

All answers include key answer tips to help your understanding of each question

Tutorial note

All answers include more tutorial notes to explain some of the technical points in more detail

Top tutor tips

For selected questions, we 'walk through the answer' giving guidance on how to approach the questions with helpful ‘tips from a top tutor’, together with technical tutor notes

These answers are indicated with the 'footsteps' icon in the index

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ONLINE ENHANCEMENTS

Timed question with Online tutor debrief

For selected questions, we recommend that they are to be completed in full exam conditions (i.e properly timed in a closed book environment)

In addition to the examiner’s technical answer, enhanced with key answer tips and tutorial notes

in this exam kit, online you can find an answer debrief by a top tutor that:

• works through the question in full

• points out how to approach the question

• how to ensure that the easy marks are obtained as quickly as possible, and

• emphasises how to tackle exam questions and exam technique

These questions are indicated with the 'clock' icon in the index

Online question assistance

Have you ever looked at a question and not know where to start, or got stuck part way through? For selected questions, we have produced 'Online question assistance' offering different levels of guidance, such as:

• ensuring that you understand the question requirements fully, highlighting key terms and the meaning of the verbs used

• how to read the question proactively, with knowledge of the requirements, to identify the topic areas covered

• assessing the detail content of the question body, pointing out key information and explaining why it is important

• help in devising a plan of attack

With this assistance, you should then be able to attempt your answer confident that you know what is expected of you

These questions are indicated with the 'signpost' icon in the index

Online question enhancements and answer debriefs will be available on MyKaplan at:

www.MyKaplan.co.uk

INDEX TO QUESTIONS AND ANSWERS

Page number Question Answer Past exam

SECTION A-TYPE QUESTIONS

Conceptual framework/International Financial Reporting

SECTION B-TYPE QUESTIONS

CONCEPTUAL FRAMEWORK/FINANCIAL STATEMENTS

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PREPARATION OF SINGLE COMPANY FINANCIAL STATEMENTS

Page number Question Answer Past exam

INDEX TO QUESTIONS AND ANSWERS

BUSINESS COMBINATIONS

Page number Question Answer Past exam

ANALYSING FINANCIAL STATEMENTS

Page number Question Answer Past exam

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ANALYSIS OF PAST EXAM PAPERS

The table summarises the key topics that have been tested in F7 exams to date A much wider range of topics will now be examined following the introduction of multiple choice questions

Jun

10 Dec 10 Jun 11 Dec 11 Jun 12 Dec 12 Jun 13 Dec 13 Jun 14 Specimen 14 Dec 14

Group financial statements

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EXAM TECHNIQUE

• Use the allocated 15 minutes reading and planning time at the beginning of the exam:

– read the questions and examination requirements carefully, and

– begin planning your answers

See the Paper Specific Information for advice on how to use this time for this paper

• Divide the time you spend on questions in proportion to the marks on offer:

– there are 1.8 minutes available per mark in the examination

– within that, try to allow time at the end of each question to review your answer and address any obvious issues

Whatever happens, always keep your eye on the clock and do not over run on any part of any question!

• If you get completely stuck with a question:

– leave space in your answer book, and

– return to it later

• Stick to the question and tailor your answer to what you are asked

– pay particular attention to the verbs in the question

• If you do not understand what a question is asking, state your assumptions

Even if you do not answer in precisely the way the examiner hoped, you should be given some credit, if your assumptions are reasonable

• You should do everything you can to make things easy for the marker

The marker will find it easier to identify the points you have made if your answers are legible

It is essential to include all your workings in your answers

Many computational questions require the use of a standard format:

e.g statement of profit or loss and other comprehensive income, statement of financial position and statement of cash flow

Be sure you know these formats thoroughly before the exam and use the layouts that you see

in the answers given in this book and in model answers

• Multiple-choice questions:

Decide whether you want to attempt these at the start of the exam or at the end

No credit for workings will be given in these questions; the answers will either be correct (2 marks) or incorrect (0 marks)

Read the question carefully, as the alternative answer choices will be given based on common mistakes that could be made in attempting the question

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PAPER SPECIFIC INFORMATION

THE EXAM

FORMAT OF THE EXAM

The exam will be in TWO sections, and will be a mix of narrative and computational answers

Section A will be 20 multiple choice questions, each worth 2 marks Section B will consist of two

15 mark questions and one 30 mark question

Number of marks

Section A: Twenty 2-mark multiple choice questions 40 Section B:

Question 3: Single company or group preparation of financial statements 30

_

100 _ Total time allowed: 3 hours plus 15 minutes reading and planning time

Note that:

• The F7 will have both a discursive and computational element The multiple choice questions will therefore include a mix of calculation-based and explanations-based questions

• There is likely to be a longer discussion element in either question 1 or 2 of section B

• Question 3 will require the preparation of a set of financial statements, either for an individual company or group

PASS MARK

The pass mark for all ACCA Qualification examination papers is 50%

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READING AND PLANNING TIME

Remember that all three hour paper based examinations have an additional 15 minutes reading and planning time

ACCA GUIDANCE

ACCA guidance on the use of this time is as follows:

This additional time is allowed at the beginning of the examination to allow candidates to read the questions and to begin planning their answers before they start to write in their answer books

This time should be used to ensure that all the information and, in particular, the exam requirements are properly read and understood

During this time, candidates may only annotate their question paper They may not write anything

in their answer booklets until told to do so by the invigilator

• Use the planning time to make notes on the large questions This will involve noting where

items should go in the financial statements, or the double entries needed based on adjustments given in the narrative

• Write down on the question paper next to the mark allocation the amount of time you should spend on each part Do this for each part of every question

• Decide the order in which you think you will attempt each question:

This is a personal choice and you have time on the revision phase to try out different approaches, for example, if you sit mock exams

A common approach is to tackle the multiple choice questions first, so they are out of the way and dealt with

Others may prefer to tackle the longest questions first, as they will take longer than the individual questions in section A

Whatever your approach, you must make sure that you leave enough time to attempt all questions fully and be very strict with yourself in timing each question

PAPER SPECIFIC INFORMATION

• For each question in turn, read the requirements and then the detail of the question

carefully

Always read the requirement first as this enables you to focus on the detail of the question with the specific task in mind

For computational questions:

Highlight key numbers/information and key words in the question, scribble notes to yourself on the question paper to remember key points in your answer

Jot down proformas required if applicable

For multiple choice questions:

Read the question extremely carefully All of the choices given are likely to be potential answers people could get if one or more errors are made, so take your time on these

For longer questions:

Spot the easy marks to be gained in a question and parts which can be performed independently of the rest of the question For example laying out basic proformas correctly, answer written elements not related to the scenario etc

Make sure that you do these parts first when you tackle the question

Don’t go overboard in terms of planning time on any one question – you need a good measure of the whole paper and a plan for all of the questions at the end of the 15 minutes

By covering all questions you can often help yourself as you may find that facts in one question may remind you of things you should put into your answer relating to a different question

• With your plan of attack in mind, start answering your chosen section with your plan to

hand, as soon as you are allowed to start

Always keep your eye on the clock and do not over run on any part of any question!

DETAILED SYLLABUS

The detailed syllabus and study guide written by the ACCA can be found at:

www.accaglobal.com/students/

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KAPLAN’S RECOMMENDED REVISION APPROACH

QUESTION PRACTICE IS THE KEY TO SUCCESS

Success in professional examinations relies upon you acquiring a firm grasp of the required knowledge at the tuition phase In order to be able to do the questions, knowledge is essential However, the difference between success and failure often hinges on your exam technique on the day and making the most of the revision phase of your studies

The Kaplan complete text is the starting point, designed to provide the underpinning knowledge

to tackle all questions However, in the revision phase, pouring over text books is not the answer

Kaplan Online knowledge check tests help you consolidate your knowledge and understanding

and are a useful tool to check whether you can remember key topic areas

Kaplan pocket notes are designed to help you quickly revise a topic area, however you then need

to practice questions There is a need to progress to full exam standard questions as soon as possible, and to tie your exam technique and technical knowledge together

The importance of question practice cannot be over-emphasised

The recommended approach below is designed by expert tutors in the field, in conjunction with their knowledge of the examiner and their recent real exams

The approach taken for the fundamental papers is to revise by topic area

You need to practice as many questions as possible in the time you have left

OUR AIM

Our aim is to get you to the stage where you can attempt exam standard questions confidently, to time, in a closed book environment, with no supplementary help (i.e to simulate the real examination experience)

Practising your exam technique on real past examination questions, in timed conditions, is also vitally important for you to assess your progress and identify areas of weakness that may need more attention in the final run up to the examination

In order to achieve this we recognise that initially you may feel the need to practice some questions with open book help and exceed the required time

The approach below shows you which questions you should use to build up to coping with exam standard question practice, and references to the sources of information available should you need to revisit a topic area in more detail