home  news  study zone  career advice  pq awards  free mag  advertise  contact  nq mag
PQ magazine is for part qualified accountants.

Read the latest web issue here – if you like what you see sign up today

Study Zone


CIMA F1: a numbers game

Lee-Anne Shema explains how you can to pass the Financial Reporting and Taxation paper

December 2015

• Pass rate: 73%
• Technical difficulty: 8/10
• Weighting of calculations: 65% (approx)
• Weighting of discursive
elements: 45% (approx)
• Exam technique: 9/10

The syllabus .
The F1 exam builds on the knowledge acquired in Certificate level, in particular C02. F1 covers the regulation and preparation of financial statements. F1 will provide the competencies required to produce financial statements for individual entities and for groups using appropriate IFRS. This knowledge will be used as a basis for more complex adjustments and group structures as you go on to F2. In addition, F1 gives insight into how to effectively manage cash and working capital, with the final part of the syllabus focusing on the basic principles of business taxation and the application of these principles.
The knowledge you gain in F1 will be developed further in F2 and F3 and as such you should ensure you have a good understanding of all of the areas of the syllabus before moving on.
The syllabus is broken down into four areas:
A: Regulatory environment for financial reporting and corporate governance (10%): This introduces students to the idea of regulations for financial reporting and requires students to explain and understand the need for regulation in financial reporting when dealing with incorporated entities. Students should be able to demonstrate an understanding of the roles and structures of key bodies such as the IFRS foundation, the IASB, the IFRS Advisory Council, the IFRS Interpretations Committee and the IOSCO. This area also incorporates the duties of the external auditor and the introduction of the audit report. Students will also need to have a good grasp of the key principles of corporate governance and the need for corporate governance regulation. They will be expected to understand the approaches to corporate governance in primary markets around the world, in particular the US and UK.

B: Financial accounting and reporting (45%): This part builds on your knowledge from C02 and will be used as a base to build upon when moving on to F2. An understanding of this area of the syllabus is fundamental to students when preparing for the F1 exam but also when preparing for the case study.

Students will need to demonstrate a good understanding of and be able to generate appropriate accounting entries for each of the examinable adjustment IFRS/IAS such as:
• IFRS 5 – Non-Current Assets Held for Sale and Discontinued Operations.
• IAS 21 – The Effects of Changes in Foreign Exchange Rates.
• IAS 12 – Income Tax.
• IAS 19 – Employee Benefits.
• IAS 16 – Property Plant and Equipment.
• IAS 23 – Borrowing Costs.
• IAS 38 – Intangible Assets.
• IAS 40 – Investment Property.
• IAS 20 – Government Grants.
• IAS 36 – Impairment of Assets.
• IAS 2 – Inventories.
• IAS 10 – Events After the Reporting Period.

Students also need to be able to produce a set of consolidated statements in accordance with IFRS 10 and IAS 28.
Although they will not be asked to produce a set of financial statements a working knowledge is required of producing single company and consolidated financial statements both for individual elements being tested in OT and in preparation for the case study.

C: Management of working capital, cash and sources of short-term finance (20%):
F1 requires that students should be able to describe the sources of short-term finance available to an entity as well as opportunities for cash investment to be made when available. Students should also demonstrate an understanding of how to evaluate the working capital position of an entity with supporting calculations such as analysis of trade receivable days, trade payable days and inventory holding period ratios. It is likely that the calculation of these ratios will form part of the OT exam.

D: Fundamentals of business taxation (25%): This area covers taxation both in the theoretical and computational sense. Students need to be able to discuss the types of taxation that apply to an incorporated entity, including the main features of direct and indirect taxation. They should demonstrate an understanding of the differences between tax avoidance and tax evasion. PQs will also be required to produce computations for corporate income tax as well as for capital tax and should ensure that they are able to do both.

Sitting the F1 exam
The F1 exam, as with all objective test exams, is a mixture of multiple choice, multiple response, drag-and-drop style questions and selecting from drop-down menus. Students will also be required to type in numerical answers.

Sitting the F1 exam .
Before the exam: Practise as many questions as you can prior to the exam. Practise them under exam conditions, to time and without notes. Not only will this ensure that you have learnt and understood the syllabus and how different topics might be tested, it will give you the confidence to tackle the questions on the day. As with so many things in life, practise makes perfect! The OT questions are notorious for having one word in the question that will change your entire thought process, so you must prepare yourself for the way the questions will be asked.
Revise the whole syllabus: All of the syllabus learning outcomes will be tested in the OT exam. It is therefore imperative that you study the whole syllabus and do not selectively learn.
During the exam: Read the question first and read it carefully – there are a range of different types of questions and it is easy to assume that the question says something when it actually requires the opposite. For example, you may assume the question asks you to select the statements that are true when it actually asks you to select the statements that are false.
Timing: You have 90 minutes to answer 60 questions, 1.5 minutes per question. Some questions will take a little longer but this should balance out with those that can be answered more quickly. However, it is important to make sure that you keep on track throughout the exam. Checking the clock to make sure that you have answered another batch of 10 in no more than 15 minutes is a way of doing this.
Flag for review: The software enables you to ‘flag’ questions for review at a later stage. As you work through the questions and come across ones that you are not entirely sure about or perhaps you have lost your way in the calculations and are wasting too much time, flag them for review. You can then revisit these questions quickly and easily at the end. Particularly with calculation questions, try not to erase the workings you have done previously from your ‘whiteboard’ notepad so that you don’t have to waste time re-doing them later.
Guess! There is no negative marking and so if you are unsure of the answer at least guess. A good way to do this with multi-choice questions is to eliminate any answers that you know are not correct and then make a choice from the remaining two or three that you do have.
• Lee-Anne Shema, F1 Content Specialist, Kaplan Financial

[«all Studies]
preload preload preload preload
Subscribe to RSS