How to master Financial Accounting long-form questions
Sitting Financial Accounting (FA) long-form, and wondering how to tackle the question? Stephanie Pentland shares the five key steps that you should use for success.
The FA long-form questions are marked out of 16 and account for 40% of the final exam. You will be presented with a trial balance (TB), and this will be accompanied by notes that indicate what needs to be done to finalise the financial statements.
You will be creating journals from these notes one at a time, and adjusting the TB figures, which are then transferred into a pro-forma profit and loss (P/L) and balance sheet (B/S).
The following five-step approach should be used:
Review TB and the related notes, identifying all line items which are affected by the notes.
Calculate any necessary workings and create the journal entry.
Post the journal entry using amounts from your TB and transfer the final figure to the related pro-forma line items, and tick these on the TB to show that they are transferred.
Post any line items which the notes do not affect, directly from the TB, and tick these on the TB to show that they are transferred.
Complete the pro-forma financial statements by casting your numbers, and don’t forget to add your profit (or deduct your loss) to opening retained earnings in the TB. You need this to get your statement of financial position to balance.
Things to remember:
- Always round your answer to the nearest pound.
- Anything can come up in the long-form question – it’s the same technical content as you need for the multiple-choice questions!
- Don’t forget to fill in the retained earnings figure by taking the opening retained earnings on the TB and adding your profit (or deducting your loss). This is always worth one mark!
- Get plenty question practice: make sure you have attempted your module 16 workshop exercises (WSE), sample paper and revision paper, and ensure you have revisited your progress test 2 (PT2) and mock exam.