Accounting exam: examiners commentary

The Accounting exam aims to ensure that students have a solid understanding of double entry accounting techniques and can apply their principles in recording transactions, adjusting financial records and preparing non-complex financial statements. This is important as those embarking on the ICAEW CFAB or ACA qualification need to demonstrate that they have obtained a thorough proficiency in the basic techniques of accounting. The exam is also designed to ensure students understand core principles and master techniques required for the ACA Professional Level Financial Accounting and Reporting exam.

The exam contains one long form question which requires the preparation of single company financial statements; either a statement of profit or loss and statement of financial position or a statement of cash flows, using a pro forma template; and which contributes 40% of the available marks. The remaining 60% of the marks are from 24 multiple-choice questions. These questions cover the areas of the syllabus in accordance with the weightings set out in the specification grid.

Although there have been few major changes to the syllabus for a number of years, there are usually some minor changes each year, resulting in the addition of new, or expansion of existing topics. Examples include ethics, an introduction to sustainability standards and the financial reporting topics of intangible assets, impairment and provisions.  

There are always questions on these new or expanded topics in the Accounting exams.  Recent exam results suggest that students do not always have knowledge of or fully understand these new topics, and this is particularly evident where these topics lend themselves to non-numerical questions. In preparation for the exam, students should ensure they have covered the topics specified above thoroughly and worked through all questions relating to these in the ICAEW Question Banks. Note that any additional financial reporting topics, such as intangible assets, impairment and provisions, could be incorporated into a long form question.

For 2023, one minor change is the learning materials have removed an element of the partnership accounts syllabus – accounting for interest on drawings, loans by partners and interest on loans has been removed.

The introduction of the assumption of computerised accounting systems has removed a tranche of questions that dealt with manual bookkeeping and errors that could occur in manual systems. However, there is still a significant focus in the exam on double entry and understanding the errors that could occur in computerised systems – particularly the impact of errors on profit, the corrections needed via double entry and the impact of these corrections on profit.  This is probably the most challenging area of the exam for students where there will be a number of questions which can draw on almost any part of the syllabus. It is an area where students should spend adequate time by working through as many practice questions as possible.

Students should also ensure they fully understand and can deal with questions involving total cash at bank, payables and receivables accounts in the nominal ledger, and reconciliations to bank transaction reports and supplier statements.

Although the majority of questions in the exam are based on accounting for UK plcs, there are still a significant number of questions which require understanding of accounting by sole traders and companies which apply UK GAAP. Students should ensure they are familiar with UK formats of financial statements and understand transactions involving sole trader’s capital.