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ACCA June exam tips - F5 to F9

18 May 2018

BPP provides its insight into the June exam for papers F5 to F9, with the usually warnings!

The exam will be approximately 40% calculation and 60% discussion, so its not sufficient to be able to perform all the calculations. Interpretation and application are crucial, especially in section C.
In section C expect to be tested on budgetary systems, planning and operational variances, mix and yield variances and evaluation of the company performance (either as a whole or on a divisional basis).
You are strongly advised to plan answers to section C questions before starting to write.
Always refer to the scenario in your answer.

Section A: expect a couple of the OTs to be devoted to the administration of income tax and corporation tax.
You also have to be comfortable with quite a lot of other stuff too, including:
*Due dates for payment of income tax (including payment on account).
*Due dates for the payment of corporation tax (including instalments for large companies).
*Filing dates for the income tax and corporation tax returns.
*Penalties and interest for late payments and returns.
Also likely to be tested in section A of the exam are:
*VAT rules on registration, impairment loss (bad debt) relief, and the SME schemes relating to cash accounting, annual accounting and flat-rate schemes.
*IHT due to lifetime transfers both in the donor’s life and on death.
*Statutory residence tests for individuals.
*Identification of groups of companies for corporation tax loss reliefs and gains.
*Trading loss reliefs for both companies and sole traders,
At least 50% of your revision time has to be spent answering section C questions.
Remember to learn your income tax and corporation tax pro formas.
Calculations which require no more than 2/3 entries into your calculator can be included on the face of your proformas (eg time apportioning a salary). Calculations that are more complicated (eg company car benefits) need separate workings which are properly referenced (W1, W2, etc) and have a heading.
Aim for as many sentences as there are marks with each sentence containing something technical.
Keep your paragraphs to no more than 3 sentences long.
The two longest questions will focus on income tax and corporation tax. They are likely to include the following:
*Employment benefits.
*Property income.
*Relief for pension contributions.
*Adjustments to profit to arrive at trading income for both companies and sole traders – in past questions you had to correct errors in computations.
*Capital allowance computations.

Section A
Expect several questions on consolidation and interpretation of financial statements.
A few questions on non-core areas – inflation & specialised entities.
Section B
Two 20 marks – one covering interpretations and the other preparation of financial statements.
One Q is likely to be in the context of a single company and one in the context of a group.
Accounts prep Qs may include extracts or stand alone calculations or full statements of P&L and other comprehensive income and/or statement of financial position.
May include a short separate part, eg with a statement of changes in equity, statement of cash flows extract, earnings per share calculations or linked written topic.
A consolidation Q would include one subsidiary and often an associate with adjustments, eg fair values, deferred/contingent consideration, PUP on inventories/PPE, intragroup trading and balances, goods/cash in transit.
A single entity Q could be preparation from a trial balance or restatement of given financial statements with the usual adjustments for depreciation, revaluation and current/deferred tax (including deferred tax on revelations) plus a mixture of adjustments on other syllabus areas, eg leases, substance over form issues, financial instruments (change in fair value or amortised cost), share issues government grants, inventory valuation, revenue recognition or construction contracts.

Section A
Expect questions to focus on syllabus areas A and E.
Section B
The majority of marks in each question will test syllabus areas B, C and/or D.
In Q16 and Q18 expect:
*Audit planning.
*Audit risk (identification and explanation of audit risks from a scenario and explanation of the auditor’s response to each risk).
*Internal audit.
*Internal controls (identification and explanation of deficiencies in internal control and the recommendation of suitable internal controls or description of tests of control).
*Audit procedures (both substantive procedures and tests of control).
When presenting your answers try to use a tabular format in your solutions where relevant – you will score better!

Section A
Likely that a good number of these questions will test your understanding of financial management and objectives – ratio analysis, the concept of shareholder wealth.
Also expect questions on the economic environment and financial institutions – financial intermediation, fiscal and monetary policies.
Another area likely to be tested here is efficient market hypothesis.
Section B
Common tested areas are:
*Working capital management – the operating cycle, the impact of a change in credit period or accepting a factor’s offer.
*Business or security valuations – methods of valuation.
*Financial risk management – currency risk and interest rate risk.
Section C
These two questions will focus mainly on syllabus sections C, D and E.
That’s working capital management, investment appraisal (NPV with inflation & tax), and Business finance (evaluation of options or cost of capital).

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