How I Passed F7 Finanacial Reporting

I’ll start out by admitting that on my second attempt I passed but I didn’t do excellent on the paper. Also, I would also say that you might not be in the same situation as me. You may be working, while I didn’t have work at the time I attempted F7 on both occasions so I had plenty of time to study. Also, you might be more intelligent or more talented than me at accounting so you might be able to pass without much help. But if you do need some additional help and advice, then please read through my blog post. This is what I did to pass the F7 paper on my second attempt.

Renewed/Reviewed My Knowledge

I knew from my last experience, that I needed refresh my knowledge on the basics. Now I could go back to my notes from my college days but I found out how much some aspects of financial reporting and such has changed. So I had to buy a new book. So I asked my teacher to recommend a good book or accounting author. So I ended up buying “Financial Accounting IFRS Edition” by Weygandt, Kimmel, and Kieso. I didn’t read the whole thing, but I read enough to refresh my memory on the basics and it will be a good and quick source of reference for the future.

Read the Whole Book at least Once

I actually read my book twice, the first time at my first attempt and second at my second. The reasons for reading the whole text once is obvious but I think most people won’t have the time to read the whole thing.

Figured Out That the Whole is More Important than Individual Parts

I got question 2 pretty much incorrect because I didn’t realise that to pass it that I needed to be knowledgeable in most of the chapters. Chapter 3 and 4 basically teaches how to do question 2 but if you notice question 2 has additional notes to it and that’s where most of the difficulties of solving question 2 comes from.

If you look at the photo above, certain chapters teaches how to deal with certain aspects like chapter 4 deals with non-current assets and chapter 17 deals with tax. What I failed to realise in my first attempt is that these chapters (marked in green) would come as little bits for question 2 as additional notes. I thought that they would just come as theory or little problems to solve for question 4 and 5. Many times they do but they are also included in question 2.

Proper Scheduling

I actually made a schedule, wrote it down, hung it up, and followed it (for the most part). I put in my schedule, what chapters I would study on certain days and what days I would do my revision and practice. Besides the obvious reasons why schedules are important I other reasons why it was good. I could tell when I was doing well or behind schedule. It felt good when I would finish my chapters early in the day and spent the rest just relaxing.

But I want to emphasize, that I didn’t have a mad schedule where I would spend hours and hours of my day just studying. I only spent, on average 2 hours a day studying. Scheduling made it possible that I would get the proper amount of work done without going crazy from cramming in too much info in a few days. But then i also want to emphasize that I didn’t always follow my schedule. As with any person, distractions will come. Like in November of last year, a new videogame came out called Uncharted 3. Now i think most people would tell you to hold off or just do your distractions for only a little bit a day. But for me I couldn’t do it. Mostly because I don’t want the game in the back of my mind while studying or for me to rush my studying to get to gaming. So what I usually do if a distraction like this comes is to get it out of my system. I took a few days as a break just to get it out of mind until I got bored with it so I could refocus myself on my studies. But of course you should only do this if you’ve got plenty of time.

When I did F7 in my first attempt, I took the first 2 weeks of May to study F7. But when it was a week before the test (in June), I had almost forgotten all the things I studied back in May. So I had to re-study everything in a week. I didn’t want this to happen again in my second attempt so I made my schedule where I would alternate between two subjects. I was doing F7 and F6 for Dec 2011 so on one day I would do F6, the next F7, the one after that F6 and so on. What this did was keep both subjects fresh in my mind.

Understood Ratios

The key to getting question 3 analysing financial statements is using the correct ratios rather than just putting in as many as you can. So how do you know which ones to put down? Well understanding each ratios. Some ratios are useful to certain people while not so useful or useless to others. So when answering this question you have to know your audience and what that audience is looking for. Once you realise this, knowing what ratios to put is easy and how to answer what questions they have in the analysis part is easy as well.

Presentation is Key

Shakespeare might be brilliant and all but he wrote for a certain audience. How the heck am I supposed to know what “To be or not to be” means? So when your writing for your test you should remember that you’re not writing it for yourself or your poetry class, your writing it for the examiner. So making it understandable is key. When the examiner is checking your paper, their not looking if the numbers are correct, they’re looking to see if you understand what your writing down. They know that your under time pressure and mistakes in calculation will happen. So if your handwriting is unintelligible, your format is in jumbles, and your workings make no logical sense you might as well be writing in ancient Egyptian, because the examiner has lots of papers to check and won’t bother deciphering it.

Now you can use the presentation style that the book teaches you but I suggest designing your own. This way, you can answer the question in the way you are comfortable with. But like I said before, you have to make it understandable. So design it so that other people can understand it. Now this is another reason why practicing questions is important. Your not only practicing to understand how to solve the question but to also practice the format that you or the book has designed.

Made my own Guides

One way I can remember and understand things better is to write them down. For F7 I made handy guides for each of the questions. Now I didn’t rely solely on the guides for my studying and if you want to use them I suggest you also don’t rely on them solely. What I did was design my guide after attempting a question. I would change my guide from what i read from the book and also from other questions i did. I would always update my guide after doing a question and I only used it when doing questions until eventually I didn’t need the guide anymore for answering a question. If you would like access to my guides, they are available below.

• Question 1 Consolidated Financial Statements guide
• Question 2 Single Company Accounts
• Question 3 Analysing Financial Statements
• Question 3 Cash Flow Statement
• Question 4 or 5 Earnings per shares

Now like I said before, don’t rely heavily on my guides if you want to use them. Below are the reason why you shouldn’t rely on them and make your own:

• You might not understand my format and get frustrated trying to understand them
• You might not fully understand them and get a certain aspect wrong
• I am not a teacher and something might be fundamentally wrong with something like a formula in the guide
• The laws are ever-changing, so how something is treated back in 2011 might be treated differently in 2012 and so on

Practice, Practice, Practice!

I’ll be honest and say i didn’t practice all the questions in my revision and practice kit or in the past exam papers. Even the ones I scheduled to do i didn’t because I was feeling lazy. But every question you do is a big help. You learn more from practice and making mistakes on questions then you do memorizing stuff from the book.

Conclusion

You don’t have to follow everything I did to pass F7. How you study should be up to you and what you feel comfortable with. But I just wanted to pass on the knowledge I gained from doing this paper to other students who need help.

Why I Failed F7 Financial Reporting on my 1st Attempt

I am told that the F7 Paper is the 2nd most difficult paper for the ACCA (Association of Chartered Certified Accountants) and it is pretty difficult. In fact, it is so difficult that I failed it on my first attempt. I was actually surprised that i failed the F7 paper because I haven’t failed any tests during my time in college and I mostly got good grades.

Anyway, this post is about why I failed the test. So this is basically a “what not to do” tips for anyone going to take the F7 paper.

I Didn’t Renew/Review My Knowledge

Because I took my F7 paper more than 2 years after I graduated college, my knowledge of the basics and all of accounting had not been renewed or updated. So basically, I was studying it like I didn’t know anything or very little about accounting. So I was learning something more advance without remembering my basics. Like a baby chick trying to fly when their wings haven’t grown feathers.

So if you’ve got a gap in between your studies, brush up on some of your old accounting notes.

The Whole is More Important then its Individual Parts

The F7 paper has 5 questions.

• Question 1 deals with the Consolidated Financial
• Question 2 deals with Single Company Accounts
• Question 3 deals with cashflow statements and/or analysing financial statements
• Question 4 and 5 deals on other areas

Now any book, website, teacher etc teaching F7 can tell you that. Even I knew that the first time going into the F7 papers. But I didn’t treat it properly.

Now here’s a scan from the book I used from BPP Learning Media

The first time I treated it like this. Q1 is only chapter 8, 9, and 10. Q2 is only chapters 3 & 4, Q3 is only chapter 21 for cashflow and chapter 19 and 20 for analysis. While 4 and 5 were the rest.

The picture below is how I should have treated it.

I didn’t treat Question 2 with the respect it deserved. In the past I assumed that it only consisted of 2 chapters when in reality it consisted mostly of those two chapters and parts of other chapters. So if you want to pass question 2 you have to know how all the rest of the chapters marked in green affect the company accounts.

Bad Scheduling

While doing F7 for the first time I only had to do one other paper which was F4 Corporate and Business Law. Now the way I scheduled my study time was really good for F4 but bad for F7. I scheduled my test like this. In May, the first two weeks were dedicated to F7 study where all I did was read the chapters and answer the questions given at the end of the chapter. The last two weeks were for F4 and I did the same thing. My F4 paper I think was on the 7th while F7 was on the 14th. So I had a one week gap for each test and spend it reviewing and practicing questions. Unfortunately for me, after finishing my F4 paper when doing my review for F7, I forgot almost everything I had studied for it. So instead of practicing I had to read everything all over again in a week because it was like all the things I studied for F4 pushed out all my F7.

Memorised the Ratios Instead of Understanding Them

I got the wrong impression when it says on the question paper that ratios get a certain amount of points. So I wrongly thought “how many ratios should I put?” rather than “what ratios should I put?.” In that mindset, you’ll put up many useless ratios that do not add to what the question is asking. So your just basically wasting your time if your more concerned about the amount of ratios put in rather than putting in the correct ratios.

Focused more on Theory and Not Practice

In theory its easy talking to a beautiful woman, it’s just like talking to anyone else. But in practice, it might not be so easy. Like they say “easier said than done.” And just like the test, you have to practice the questions rather than remembering the rules for dealing with the questions. Which is what I failed to realise when I did the test. Even though I might give the excuse that I didn’t schedule it correct, that’s not a good excuse for me not practicing as many questions as I could. I barely even touched the Practice and revision kit.

Conclusion

They say you learn more from your mistakes then from your successes. And I did learn from my mistakes and passed my F7 paper in the second attempt. So if you’re doing the F7 paper or are planning on doing it then please learn from my mistakes. In the future, I’ll be writing on what I did to pass the F7 papers.