What is Absorption Costing and Marginal Costing?

Absorption Costing and Marginal Costing

What is absorption costing and marginal costing?

In managerial accounting, there are two different ways to calculate and assign manufacturing costs to products and services: absorption costing and marginal costing. Both methods have advantages and disadvantages that should be considered when making business decisions.

Marginal costing

Marginal costing is a managerial accounting technique that focuses on variable costs and traces them directly to products and services. The pure main advantage of marginal costing is that it is simpler to compute product costs since only variable costs need to be considered. The main disadvantage of marginal costing is that it may lead to sub-optimal decision-making since it excludes fixed costs from product costs.

Absorption Costing

Under absorption costing, all manufacturing costs are assigned to products while under marginal costing, only variable manufacturing costs are assigned to products. The major advantage of absorption costing is that it provides a more accurate picture of the true cost of products. The major disadvantage of absorption costing is that it is more complex to compute product costs since all manufacturing costs must be considered.

The Special difference between Marginal costing & Absorption Costing

The difference between the two methods is that absorption costing includes all manufacturing costs in product cost, including fixed overhead. while marginal costing only includes variable costs. In other words, fixed manufacturing overhead is irrelevant to decision-making under marginal costing but relevant under absorption costing.
Absorption costing is a method of inventory valuation that assigns all manufacturing costs, including fixed overhead, to products. Marginal costing is a managerial accounting technique that focuses on variable costs and traces them directly to products and services.

Which method should be used depends on the purpose of the analysis. For example, marginal costing is often used for short-term decisions because it focuses on variable costs which are more easily controlled in the short term. In contrast, absorption costing may be used for long-term decisions because it includes all manufacturing costs and provides a more accurate picture of the true cost of products.

Here are some further key differences between the two methods:

Under absorption costing, fixed manufacturing overhead is considered a product cost while under marginal costing, it is considered a period cost.

Under absorption costing, all manufacturing costs are assigned to products while under marginal costing, only variable manufacturing costs are assigned to products.

The fundamental advantage of marginal costing is that it is simpler to compute product costs since only variable costs need to be considered.
The primary disadvantage of marginal costing is that it may lead to sub-optimal decision-making since it excludes fixed costs from product costs.

The prime main advantage of absorption costing is that it provides a more accurate picture of the true cost of products. The main disadvantage of absorption costing is that it is more complex to compute product costs since all manufacturing costs must be considered.

Which method should be used depends on the purpose of the analysis. For example, marginal costing is often used for short-term decisions because it focuses on variable costs which are more easily controlled in the short term. In contrast, absorption costing may be used for long-term decisions because it includes all manufacturing costs

When would you use each type of cost?

Absorption costing is used when inventory levels are low and marginal costing is used when inventory levels are high.

What are the benefits of using absorption costing?

Absorption costing is a method of allocating manufacturing overhead costs to inventory. This means that all manufacturing costs, including both direct and indirect costs, are assigned to products.

The benefits of absorption costing include its ability to provide accurate financial information for decision-making purposes, and its compliance with generally accepted accounting principles (GAAP).

What are the benefits of using Marginal costing?

Marginal costing is a method of allocating manufacturing overhead costs to inventory in which only direct costs are assigned to products. This means that only costs that can be directly traced to the production of a product are included in the cost of that product.

  • Allows for decision-making: Marginal costing can be used as a tool for decision-making. It can help managers to identify which products are the most profitable and which ones are losing money.
  • Improves pricing strategies: With marginal costing, businesses can develop more accurate pricing strategies. This information can help businesses to better understand how their products compare to others on the market and find ways to optimize their prices.
  • Helps with planning and forecasting: Marginal costing can help businesses to plan for the future and forecast demand. This information can be used to make production plans and set sales targets
  • Reduces waste: By understanding which products are the most profitable, businesses can focus on these products and reduce waste. This can help to improve margins and the bottom line.
  • Makes better use of resources: Marginal costing can help businesses to make better use of their resources. By understanding which products are more profitable, businesses can allocate their resources more efficiently and minimize waste.

Performance Management Detailed Study Notes

Financial Management Introduction

Financial Management:

The Management of the finances of an organization in order to achieve the financial objectives of the organization.

The usual assumption of financial management for the private sector is that the objective of the company is to maximize shareholder wealth.

  • And the process of Financial Management involves 3 key areas,
    • Investing Decision
    • Financing Decision
    • Dividend decision
  • So FM all course topics relate to either one of these areas
  • Key Objective: Maximize the shareholder wealth, Wealth can be maximized from two things
    • From Dividend
    • Capital gain (Increases the value of share)

Investing Decision: Means in which project you are going to invest, How do you pick up the project, how you prioritize projects

Financing Decision: if the project was picked, that project you are gonna do, now where are you from going to finance this, is it from equity financing? or debt financing?

Dividend Decision: how much dividend is to be given to shareholders.

Dividend Decision is very important, our objective is to keep share price high, share price depends on the Economic condition of the company, Political Environment, some kind of future threats, Economic boom, Economic depression, Legality…… Future Expectation

If a company gives a lot of dividends to their shareholders it means the company doesn’t have Retain Earnings, if a company doesn’t have to Retain Earnings then the company cant invest if the company cant invest means the company can’t grow if company cant grow means the company cant earn the profit.

On the other hand, if the company does not give dividend at all, So the company gives the message to the market, The management NEED cash, they want to invest somewhere, probably they want to grow so if the company grows the share price will go up

These are both extreme cases, so the company needs to adjust dividends in between, that is why said above Dividend Decision is an important decision area of Financial Management Because will impact the share prices.

Financial Planning-Financial control-Financial decisions

To achieve its objectives, Whether for a profit-seeking or not for profit organization, Financial management can be divided into three main functions

  • Financial Planning
  • Financial control
  • Financial decisions
  1. Financial Planning: The Financial manager will need to plan to ensure that enough funding is available at the right time to meet the needs of the organization for short, medium, and long-term capital.
    • Short term: funds may be needed to pay for inventory or to smooth out changes in receivables, payables, and cash, Here the financial manager is ensuring that working capital requirements are met.
    • Medium or long term: The organization may have planned purchases of non-current assets such as plants and equipment. The financial manager will analyze financial data to determine which uses of funds best meet the organization’s financial objectives, Is project A or Project B better? Should a new asset be bought or leased?
  2. Financial control: The control function of the financial manager becomes relevant for funding that has been raised.
    • Are the various activities of the organization meeting its objectives?
    • are assets being used efficiently?
  3. Financial decisions: The Financial manager makes decisions relating to financing, investing, dividends and risk
    • Investments in assets must be financed somehow, for example, through loans or share capital.
    • How should those funds be used?
    • Should some parts of the organization be closed?
    • How much profit should be paid back to investors (dividends) to attract investors, but leave enough finance in the company?
    • How can risks such as foreign currency risks be managed?

Financial Accounting Vs Management Accounting

Financial Accounting: Reports to shareholders on historic information and performance of the organization.

Management Accounting: Reports internally on both historic performance and future plans. Financial management is ensuring adequate funds are in place and controlled to ensure stakeholders’ objectives are met where possible, the main Financial Management function provides information on, for example, projected cash flows to aid the effective management of finance.

How To Pass ACCA PM

How To Pass ACCA PM

How To Pass ACCA PM

Total 3 hours for the exam + 15 minutes of reading time

Overall, approximately 50% of the exam involves calculations, and approximately 50% is written.

How To Pass ACCA PM (Performance Management) ”Previous known as F5′

One of the toughest paper in Skills level, Part 2 for students because of two reasons, One student don’t know how to do theoretical commentary in the questions, another reason is a poor presentation by the students and the third reason is Examiner is strict.

Performance Management requires to clear your concepts and writing skills,

After each class at least once practice the questions, Calculation part, as well as theoretical parts(commentary) Practicing commentary parts as well

First, write the theory(Commentary) yourself and then look at the examiner’s solution to find how much of your answer is similar or near to similar to the Examiner’s solution.

How To Pass ACCA PM – Practice maximum MCQs and 4 to 5 questions at least from past papers Computation and commentary part

The examiner wants QUALITY not QUANTITY

Performance Management (PM) Pass Rate

43%39%42%38%41%
Sep 2018 Dec 2018 Mar 2019 Jun 2019 Sep 2019

How to pass Finance Reporting (FR)

How To Pass ACCA FR

How To Pass ACCA FR = (Finance Reporting) ‘Previously known as F7’

Finance Reporting Overview

FR is an advanced-level paper of FA(F3). if you have passed FA with good marks then FR not going to create many problems for you, but definitely the skill and difficulty level will be raised.

Finance Reporting is a mixture of theoretical as well as calculation, and the main thing to know is to pass this paper understanding IAS / IFRS is very important to pass it.

If you are lacking in IAS/IFRSS concepts it will lead to failure, So you just need to learn it

Just after every class make points from them and have a look at them, then practice questions.

Watch the Solutions of 20 marks questions to learn how to do excel on questions, how to do the presentation of your questions so that you can learn how to present your answer in Excel well which can help you score well on allotted MCQs marks

Mainly this is a numeric focused paper with a very less part of the theory

The main thing to know is to pass this paper understanding IAS / IFRS is very important to pass it.

If you are lacking in IAS/IFRSS concepts it will lead to failure, So must take classes from ACCA-approved learning partners in your area.

Learn how to solve the MCQs in the allotted time and how to save your time in MCQs

Learn how to use Microsoft Excel in questions, and how to do the presentation of your questions so that you can learn how to present your answer in Excel impressively which can help you to score good marks in FR.

How To Pass ACCA FR – Keep practicing the questions from past papers

Capabilities Required To Pass FR

  1. The conceptual and regulatory framework for financial reporting
  2. Accountings for transactions in Financial Statements
  3. Preparation of Financial Statements
  4. Analysis and interpretation of Financial Statements

Keys to Success

  • Understand the basics well, Include assumed knowledge
  • Full coverage of the syllabus
  • Do not try to get the answer 100% correct, focus on the easier parts more
  • Question Practice to get experience and learn time management skills

The examiner wants QUALITY not QUANTITY

FR Pass Rate

51%51%47%50%46%
Sep 2018Dec 2018Mar 2019June 2019Sep 2019

Investment appraisal

investment appraisal ACCA FM

Investment appraisal is a number of methods used to classify the attractiveness of an investment.

Investment appraisal ACCA
Investment appraisal ACCA Financial Management ACCA

Investment appraisal actually from Investment decision, Which project has to finance, the Business has to make the investment, And you have to pick up which project I best for investment

  • Capital expenditure results in the acquisition of non-current assets or an improvement in their earning capacity.
  • It is not charged as an expense in the statement of profit or loss; it appears as a non-current asset in the statement of financial position.
  • Capital expenditure and income arising from it usually occur in different accounting periods, so special techniques are needed to evaluate it.
  • The underlying motive is generally to assess the impact on shareholder wealth

Investment appraisal for Commercial organizations

Investment by commercial organizations might include investment in:

  • Plant and machinery
  • Research and development
  • Advertising
  • Warehouse facilities

Investment by the commercial sector is generally based on financial considerations alone.

Investment appraisal for Not For-profit organizations

Evaluation of investment by not for profit organizations is more challenging:

  • Most not-for-profit organizations’ investments are not made with the intention of earning a financial return.
  • As well as considering financial costs and financial benefits, social costs and social benefits are important.
  • The cost of capital that is applied to project cash flows by the public sector will be
  • one that is determined by the government.

Capital Rationing

It is a situation in which limited funds are available to invest in positive NPV Projects

Budget limits or constraints can arise from:

  • Soft capital rationing, where constraints are imposed internally by management. ( Eg via a capital expenditure budget.)
  • Hard capital rationing, where constraints are imposed by external factors,
  • such as restrictions on the amount of external financing available.

Soft Capital Rationing Vs Hard Capital Rationing

Soft Capital Rationing Hard Capital Rationing
It is a situation in which limited funds are available to
invest in a positive NPV project because of
internal Factor’s
It is a situation in which limited funds are available to
invest in a positive NPV project because of
External Factors
Management may be reluctant to issue further shares
because of dilution in the control of existing
shareholders.
The company can not raise further funds by issuing shares
because stock prices are depressed in the stock exchange
Management may be unwilling to issue further share
because of dilution in EPS (Earning per share)
There may be a restriction on bank lending due to
government controls
The company has the policy to finance all new projects only
from Retain Earnings.
The lending institution may consider your company too
risky for further lending
Management may not raise further debts because of fixed
the commitment of interest payments
The cost of funds for arranging a new loan is too high

Both types of constraints mean that investment has to be carefully planned to ensure the best use of funds.


Capital Budgeting Cycle

  1. Idea generation
  2. Project Screening
    • Availability of funds
    • Link to the strategic objective
    • Government Rejection/Mandatory
  3. Financial Analysis
    • Initial Method
      Simple payback period
      ARR
    • Advanced Method
      NPV
      Discounted Payback period
      IRR
  4. Non-Financial Analysis
    • Political factors
    • Ethical issues
    • investment issues
    • social issues
    • Legal issues
  5. Approval (e.g From the board of directors)
  6. Implementation e.g Project Manager
  7. Ongoing Monitoring
  8. Post completion

Why Project screening – a qualitative analysis

  • What is the purpose of the project?
  • Does it ‘fit’ with the organization’s long-term objectives?
  • Is it a mandatory investment eg to comply with laws?
  • What resources are required eg money, labor?
  • Do we have the necessary management expertise?
  • Does the project expose the organization to high risk?
  • How long will the project last?
  • What factors are key to their success?
  • Have all possible alternatives been considered?

Financial analysis during Investment appraisal

Will use the preferred investment appraisal techniques.

  1. What cash flows/profits arise from the project and when?
  2. Has inflation been considered in the estimates?
  3. What are the results of the financial appraisal?
  4. What risk analysis has been done and its results?
  5. How have non-tangible benefits been assessed?

Intangible costs and benefits during Investment appraisal

In addition to easily quantified financial benefits there might also be important intangible, non-quantifiable effects:

  • Greater customer satisfaction (eg because of a computerized sales and delivery service).
  • Better recognition because of an improved website.
  • Improved staff morale from working with higher-quality assets or better systems.
  • Better decision-making from better information systems.

Hard to quantify does not mean ‘not important’

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Financial Management
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  • Inflation
  • Taxation
  • Working capital
  • Relevant/irrelevant cashflows
  • Fixed appraisal horizon

Working Capital Cash Management

Reasons for holding cash

Various reasons for holding cash, Discuss and apply the use of relevant techniques in Cash Management, Including

  1. Preparing a cash flow forecast to determine future cash flows and cash balances.
  2. Assessing the benefits of centralized treasury management and cash control.
  3. Cash management models, such as the Baumol Model and the Miller-Orr Model.
  4. Investing in the short term

Calculate the level of working capital investment in current assets and discuss the key factors determining this level, Including

  • The length of the working capital cycle and terms of trade
  • An organizations policy on the level of investment in current assets
  • The industry in which the organization operates

Key factors in determining working capital funding strategies, Including

  1. The distinction between permanent and fluctuating current assets
  2. The relative cost and risk of short term and long term finance
  3. The matching principle
  4. The relative costs and benefits of aggressive, conservative, and matching funding policies

Key factors in determining working capital funding strategies, Including

  • the distinction between permanent and fluctuating current assets
  • The relative cost and risk of short term and long term finance
  • The matching principle
  • The relative cost and benefits of aggressive, conservative, and matching funding policies
  • Management attitude to risk, Previous decisions,s and organization size
  1. Permanent Current assets: Which are used permanently in business
  2. Fluctuating Current asset: Aditional working capital which is needed in peak seasons, like in seasonal business need to change working capital, E.g Icecream Business

The Nature of Cash

Cash is King

  • Cash is ready money in the bank Or in the business, unlikely inventory and receivables. it can be used to pay Wages, Rent, and suppliers.
  • Having good profits does not necessarily mean that a business has enough cash.
  • Monitoring cash inflows and outflows to ensure that there is enough cash is one of the most important management tasks for the business
  • Ultimately it is a lack of cash when its needed that causes a business to fail

Reasons for Holding Cash

There are three reasons or motives for holding cash

  1. Transaction Motive: To meet the day to day transactions of running a business
  2. Precautionary Motive: As a safety net for unexpected events such as a large customer failure, An overdraft facility or line of credit will also provide this safety, Whatever you need to keep a little bit extra in the pocket
  3. Speculative Motive; To take advantage of opportunities. E.g Bulk buy discounts or investments in a new line of business when the opportunity arises. Like can pay suppliers to get the extra discount, Extra opportunities

Cash Flow Problems

Cash flow problems can arise for the following reason

  • Making losses: This can eventually lead to failures.
  • Inflation: Asset costs increase and will be expensive to replace.
  • Growth: Cash is needed to provide inventory and fund receivables as the business grows (Overdrafting)
  • One-Off item of expenditure: Foe example Tax, Dividends, Legal costs.

Cash Flow Forecasts

Cash flow forecasts or cash flow budgets are the key tool when managing cash.

  1. They should include both revenue and capital flows
  2. Careful attention needs to be paid to the timing of a receipt or payment
  3. They should be based on the budgeted statement of profit or loss and the statement of financial position.
  4. Essentially we are producing a bank statement in advance.

Cash Flow Forecasts- Timings

  • Correct timings of receipts from customers and payments to suppliers are essential
  • In the exam, these calculations are not difficult but they are repetitive, and initially, care is needed to get started correctly
  • It is essential to provide clear workings both to help your accuracy and so that a member can follow what you have done
Cash Flow Forecasts
Cash Flow Forecasts

Not every aspect of the statement or profit or loss amount will have cash flow consequences. Similarly, some SOFP items will affect the cash flow forecast, Like in the table below some examples of Non-Csh items

Non cash expenses list
Non-cash expenses list Non-cash items

Dealing with Cash Shortages

  • Postpone capital expenditures
  • Try to accelerate inflows (e.g Discounts)
    • Take longer credit(but don’t upset suppliers)
    • Re-Negociate loan payments
    • Reduce or postpone dividend payments
  • Liquidate inventory by having a sale
  • Try to sell surplus assets, For example, sell vehicles to a fleet management company and rent them back (Lease and buyback)
  • Finance- Re-schedule loan, Reduce dividends, Rais loan/equity finance if time allows

Cash Flow Forecast and Un-Certainty

  1. The cash flow forecast depends on estimating future Sales, Purchases, Cash receipts, and Cash payments
  2. These are inherently un-certain ) which Means sales can be next year 2M or 5M or 8M)
  3. Review cash forecasts regularly and use the latest and most accurate data available
  4. Examine the sensitivity of cash balance to assumptions about the timing and amount of cash flows
  5. Ensure sufficient contingent funds are available
  6. Questions can assign probabilities to certain flows occurring

Question for Cash Flow Forecast and Un-Certainty

Question

Cash Flow Forecast and Un-Certainty
Cash Flow Forecast and Un-Certainty cash management working capital

Answer

Cash Management
cash flow forecast and uncertainty
cash management working capital

Treasury Management

A large organization will have a separate specialized treasury department typically to manage. (Where the company has all funds, its called treasury fund management, They collect every cash in one place and manage from there)

  • Liquidity ( They assure sufficient cash is available)
  • Short term investment
  • Borrowings
  • Foreign exchange risk (Risk Management Topic)
  • Specialized areas such as forward contracts and futures (like derivatives, Forward, Future options)

Advantages of Centralising the Treasury Functions

  • Precautionary motive accomplished on a group basis
  • Profit center motivation
  • Borrowing needs pooling to get better rates
  • Foreign currency risk assessed on a group basis matches inflows and outflows
  • Overdrafts & surplus can be netted off
  • Cash pooled to get better returns
  • Expertise

Dis-advantages

  • Better matching to local assets
  • Greater autonomy for local managers (they feel more powerful)
  • Better matching to local market needs
  • Opportunities for Fast, Specialised solutions

Cash Management Model’s

1-Baumol Cash Management Model

The Baumol Model considers a business needing a certain amount of cash per time period and works out the most economical way you raise the cash. (This model is the same as EOQ. Here use cash quantity instead inventory etc)

  • If a lot of cash is raised in one go then there will be a high cost of servicing that cash (e.g Intrest), even though it might not all be needed immediately
  • If cash is raised frequently in small amounts then the transaction cost will be high
  • The model is analogous to the economic order quantity model for inventory where there is a compromise between high holding costs and high ordering costs
baumol cash management model working capital
Baumol cash management model working capital

Where

  • Q= The amount to be borrowed/drown down each time
  • C= The cost of raising the cash e.g the cost o selling securities to receive cash
  • S= Amount of cash used in each time period
  • i= Intrest cost of holding cash or cash equivalent

Problems with Baumo Model

  • Future cash needs are unlikely to be constant
  • The cost of holding cash is likely to change frequently as interest rates fluctuate
  • The cost of holding cash is likely to fluctuate with the amount of cash on deposit i.e large deposits attract higher interest
  • No account is taken of keeping buffer (safe) cash

2-Miller-Orr Cash Management Model

The Miller-or Cash Management Model seeks to control the limits between the cash balance move

  • Too much cash wastes money(It should be earning a return)
  • Too little risk of running out of cash so increases the risk
  • The cash balance is adjusted by buying and selling securities (Or moving cash to and from deposit accounts).
Miller orr cash management model working capital cash management

Cash is allowed to fluctuate between the upper and lower limits. When a limit is reached securities are bought or sold to restore cash to the return point. The Spread is the difference between the upper or lower limit and is given by:

  1. Set the lower limit e.g based on Calculation, Precautionary motive, and Experience
  2. Estimate the variance of the cash flows (Varience= the square of the standard deviation)
  3. Find interest rate and the transaction cost
  4. Calculate the SPREAD
  5. The return point is the lower limit plus 1/3 of the spread
  6. The upper limit is the lower limit plus the spread

The variance or stander deviation will be supplied in any question along with the other variables.

Note; This model does not set the lower limit for cash fluctuations, Also interest rate is usually the daily interest rate

Example


Investing Surplus Cash

Companies with a more modest amount should be investing surplus cash to earn interest.

  • Leave enough in a current or short term deposit to ensure adequate liquidity
  • Look for a return commensurate with the risk
  • Avoid capital losses (Means losses on investment)
  • Think carefully about the term and how long it might take to realize any investment
  • Are international markets attractive?
  • Do some investments require a minimum amount

Where to invest surplus cash

  • Short term investments such as bank deposits, Tradeable investments,s or listed share
  • Money market landing
  • Certificates of deposit
  • Treasury Bills

Working Capital Funding Strategies

  1. Working capital can be funded by a mixture of
    • Short term funding
    • Long term funding
  2. The business should be aware of the distinction between fluctuating and permanent assets
  3. Permanent current assets are the amount requires to meet long term minimum needs
  4. Fluctuating current assets are the current assets that vary according to normal business activity
  5. A permanent asset should be funded by long term capital fluctuating assets can be funded by short term capital
  6. Policy A: Conservative approach —> Most finding is long-term with little reliance on short-term finance, Despite asset often falling below what the permanent funding supports. (This policy is Safe but Wasteful)
  7. Policy B: Aggressive approach –> Most funding is short-term, long term capital cover non-current assets but most funding of current asset, even permanent current asset relies on short term source. (This policy is Risky but Profitable)
  8. Policy C: Balance approach —> Permanent current assets and non-current assets are funded by long term capital, Fluctuating current assets are funded by short term capital (Such as Overdraft)

Other Factors

Working capital Cash Management is also affected by:

  • Industry Norms: For example what the normal receivables and payables periods are for the industry, straying too far from these might make the company un-competitive
  • Industry type: Erratic sale implies more working capital is a need for the bad times
  • The manufacturing: Long term manufacturing time implies a high amount of work in the capital
  • Management issue: For example attitude to Risk, Quality of the information system e.g if PPR buffer inventories may be needed

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Financial Management

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FA FFA F3

ACCA Financial Accounting MA FFA F3

ACCA Financial Accounting FA FFA F3

Books & Revision Kits

FA/FFA/F3 is a basic paper in Financial Accounting,
The aim of this paper is to provide basic knowledge of Financial Accounting to students.

Basic how-to know of IAS/IFRS, basic calculations of accounting standers, as well basic knowledge of all five Financial statements,

  • Balance sheet
  • Statement of cash flow
  • Income statement
  • Statement of cash flow
  • Statement of changes in equity

ACCA F3 FFA FIA AFD

Exams:

This paper consists of 100 Marks questions which all are compulsory. So need to study every single topic area of the syllabus in all aspects.

This exam consists of 2 parts
A) 70 Marks total( 35 OTQs – each question 2 marks)
B) 2 Multi-task questions (15 marks each)
The passing marks are 50%

FA1 F3 F7 P2 FA SBR

The aim of this paper is to develop an understanding of the basic concepts of Financial Accounting and give the basic knowledge of double-entry accounting systems

Also

  • This paper covers the basic method of account preparation
  • Accounting cycle of accounting, Recording, Processing, and reporting transaction of a business
  • How to prepare and use trial balance and how to identify either if this inst equal, with a different technique
  • Also teach students how to inter prate Financial Statements, Individual Financial statements & Consolidation
  • What is the purpose of Financial Reporting
  • Qualitative and Quantitative analysis
  • Double-entry accounting system
  • Recording of business transactions

FA Pass Rate

As this is a basic paper so not normal students pass this paper easily with doing normally practice and with average study efforts, The average pass rate of this paper is around 70%

Dec 2017Jun 2018Dec 2018Jun 2018Dec 2019
71%71%72%72%71%

ACCA MA FFA F3. Financial Accounting ACCA/FIA, Purpose of this paper is to provide basic knowledge of financial accounting, this is a basic paper of FR and SBR

ACCA MA (Management Accounting)

ACCA Management Accounting MA / FMA / F2

ACCA MA (Management Accounting)

ACCA MA F2 Notes ¬ FIA ¬ This paper is the same in FIA and ACCA each and everything (FMA)


ACCA MA Syllabus 2021

1Accounting for management
2Sources of data
3Cost classification
4Cost behavior
5Presenting information
6Accounting for materials
7Accounting for labor
8Accounting for overheads
9Absorption and marginal costing
10Job, batch, and service costing
11Process costing
12Process costing, joint products, and by-products
13Alternative costing principles
14Forecasting
14Budgeting
16The budgetary process
17Making budgets work
18Capital expenditure budgeting
19Methods of project appraisal
20Standard costing
21Cost variances
22Sales variances and operating statements
23Performance measurement
24Applications of performance measurement
  
  

Books & Revision Kits

NATURE, SOURCE, AND PURPOSE OF MANAGEMENT INFORMATION


ACCA MA Paper Pattern

  • Section A:
    • 35 objective questions for two marks each ( 70 Marks)
  • Section B:
    • Three multi-task questions (MCQs) for 10 marks each.

Accounting for management:

ACCA Management Accounting MA / FMA / F2, MA is the Knowledge Level paper of ACCA, Provides the basic level of knowledge of Management Accounting, This is a basic level paper of FM(F5) and AFM(P5)

ACCA is a professional qualification with the aim to produce professional accountants worldwide

Relational diagram linking Management Accounting (MAFMA) with other exams
Relational diagram linking Management Accounting (MAFMA) with other exams

The aim of this paper is to provide knowledge & understanding of Management Accounting to assist Management.


MA/F2 Pass Rate

Dec 2017Jun 2018Dec 2018Jun 2018Dec 2019
65%67%64%66%64%

AB / FAB / F1

ACCA Accountant in Business AB / FAB / F1

ACCA Accountant in Business AB / FAB

Previously known as F1 / FAB — FIA ¬ AB ACCA Notes, FAB

This paper is the same in FIA & ACCA

Books & Revision Kits


AB Paper Pattern

  • Section A:
    • 46 Questions, Each worth 1 or 2 marks.
    • 76 Marks in total.
  • Section B:
    • 6 Questions, Each worth 4 marks
    • 24 marks in total
  • The time allowed: 2 hours
  • Pass Marks: 50%

The aim of the FB paper:

To understand

  • Businesses, Stockholders, External environment
  • Organization structure, Corporate governance
  • Use of technology, Audit, Reporting, Internal control
  • Leadership, Recruiting, Developed
  • Personal Effectiveness and Organisational behavior

AB is a theoretical paper and considers a difficult paper in FIA/AFD

however, this paper can be passed easily

  1. Revise the topic on a daily basis
  2. If you are taking classes – memories of your lessons day today
  3. Attempt all classed tests with proper preparations and discuss mistakes with teachers
  4. Practice past papers as much as you can, practice makes perfect
  5. Attempt specimen exams, Click Here to get specimen exams
  6. solve all tests of understanding from Kaplan’s book
  7. solve questions from the Kaplan kit as many as you can
  8. Read examiner reports to get the idea of where students make mistakes in common, Examiner Report consider this as part of your syllabus 🙂

Exam dates are flexible and held every month mostly, so you can choose which date suits you.

If English is not your native language then try to improve it, surely this will help you in to your ACCA journey

Spend more time with your books, search resources from the ACCA website that will help you a lot

AB/FAB Pass Rate

Dec 2017Jun 2018Dec 2018Jun 2018Dec 2019
77%83%83%85%82%

ACCA AB / FAB / F1. This paper is called F1/AB in ACCA and also known as FAB in FIA, the content of this paper in ACCA and FIA is the same

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