Dfs -tips post

Londina

If all of us could put all the tips available for DFS in this post, it would be useful for everybody, save time to go through the other post!

*a new chief assessor has been appointed, so paper layout and content could be different
*section 2 is 30% of the paper, but need to be competent 70% (usual percentuage) on it
*main things on section 2:
-element of financial statements
-accounting equation and how the elements fit into the equation
-ratios and meaning of it
-set up clear conclusion of any analysis report

lucy1988

Oh great a new assessor, i bet it will be completely different!!!!

renae

NO WAY...ive JUST found a pattern to the papers for section 2.......... if you rotate 3 papers....ie
Dec 08
June 07 SAME QUESTIONS

June 08
Dec 06 SAME QUESTIONS

Dec 07
June 06 SAME QUESTIONS

So, I was gona just learn the Dec 07 paper..................PANTS!!!:mad2:

Buy hey, maybe the old guy gave him tips on how to save time writing the papers?? I may still take the gamle?????????

Pigpen

new assessor ? O M G :ohmy:

I was just beginning to feel positive too :crying:

lucy1988

I noticed that aswel, they repeat the written questions every other year. Im still going to practice December 2007. Hopefully it will be the same!

^Joe

LOL, Keep calm there won't be a massive difference in papers IMO.

70% is a big percentage though lol.

Section 1:- Just double check everything really, simple. If it balances, winner!

Section2:- Say wether the increase/decrease is a good or bad thing, and explain why!

Just take your time and you'll be fine.

Londina

It's a certain Donald MacAskill, before it was Ian Dennis.

Here an article from Donand about DFS, maybe some hints about what he require us to do!

http://www.aat.org.uk/servlet/file/DFS_and_written_tasks.doc?ITEM_ENT_ID=11245&download=1

lucy1988

You need to get most questions right in section 2 as it is only 30% and there will only be a few.

renae

in that article, he states 'There may be no short cut to revising the relevant international accounting standards (IAS),... not that there ISN'T ANY!!

I'm gona go for the dec 07 theory...no time for anything else!!!!!!

Pigpen

Oh well - too late now - altho when they changed the assessor for Pev or was it PCR last year it caused chaos - Glad to say I passed.

The point is we are being tested on our knowledge and application of that, not how many past papers we have memorised, I reckon thats why they change the assessor from time to time - If you read there reports they always say there is too much evidence of students rote learning past papers

Still scared though :eek:

lucy1988

Does anyone know what a Business Combination which can try and explain it as simple as possible so i can try and remember???

Thanks

Pigpen

"" The bringing together of seperate entities or businesses into one reporting entity"

Liliana

Has anyone seen been able to read the above link??? I can't open it!!!!

lucy1988

I cant either, can someone copy and paste what it says because i cant download it.

cs_1988

Surely it would have been the old cheif when the paper was written??

Liliana

Here we go, panic over!!!!
DFS (unit 11) and written tasks

Introduction

AAT students are like accounting students all over the world and at all levels of accounting: they like figures but are less fond of words. From National Certificate students to taught Masters, calculations are fine but sentences are not.

Many questions in accounting exams allocate about three quarters of the available marks to calculations. The balance is then a written – or ‘discursive’ as it’s often called – part which usually requires a comment on what has been calculated. Many students simply ignore this written part. They manage to pass, though, because they achieve the required 50% of the marks.

However, AAT’s exams are different, especially at Technician level. DFS stands for Drafting Financial Statements, but the range statement and all the available information make it quite clear that this unit is really about both drafting and interpreting financial statements.

Section 1 of the paper deals with the drafting of financial statements and Section 2 is about calculating relevant ratios and commenting on the implications of the results achieved.

Even if they get every single practical exercise correct, students cannot pass this unit on that alone. An attempt must also be made at the written tasks if a successful outcome is to be achieved.

When students who are unhappy with their exam result (or simply want detailed feedback) decide to go through the enquiries and appeals procedure, the most common reason why a student is “surprised at the outcome” proves to be those scripts in which most calculations have been attempted successfully but the answers to the written parts of the task are either poor or totally non existent.

Is this because they find the language used in unit 11 quite ‘heavy going’ or difficult? Or do students think that the way in which some of the model answers are written is a bit ‘off-putting’, especially for those students whose first language is not English?

Having said that, the front cover of the published answers always reminds tutors and students that “The model answers may, in parts, be longer than would be expected of candidates in the exam. The fuller version is given for teaching purposes.”

So let’s look at a few sample answers that may not be ‘perfect’ or exactly as those published online but nevertheless attract full or part credit.

More to come!!!

Liliana

Some examples from past papers

Example 1

In task 2.1 of the December 2007 exam the net profit for the company rose from 7.5% to 9.5% and many candidates calculated this correctly. They were then asked to comment on the performance indicating whether each ratio had improved or deteriorated; they also needed to suggest ways of improving the ratio in the future.

Some sample answers to the ‘comment’ part of the task were:

“The net profit rose from 7.5% to 9.5%.”
“The net profit grew from 7.5% to 9.5%.”
“The net profit rose by 2%.”
“The net profit increased by 2%.”
“Net profit was worse than last year.”

None of these answers attracted any credit. The highest number of marks for this type of task will be achieved by those students who can say what has happened, why it has happened and what it means for the company.
The model answer published on the AAT website is:

“The net profit ratio has improved which indicates that more net profit is being generated from sales. This could be due to either an increase in the sales margins or a decrease in expenses, or both. Since the margins have deteriorated, this must be the result of a decrease in expenses and this can be confirmed by the expenses ratio which has gone down.”

A shorter version of the above answer but one which would still score highly is:

“The net profit has improved by 2% from last year and, since the gross margin has fallen, this must be due to a drop in expenses. This can be shown by looking at the fall in administration expenses from last year”.




Example 2

The main problem area for most candidates who don’t quite make the competence level for Section 2 is task 2.2, which is surprising, since it almost always deals with fundamental accounting concepts from the framework statement (Framework for the Preparation and Presentation of Financial Statements). At December 2007, this task asked candidates to:

(a) Set out the accounting equation and define the elements in the equation.
(b) Explain how the profit for the year affects the elements in the accounting equation

Many candidates gave the first answer correctly as: Assets – Liabilities = Equity, but left it at that. These students obviously knew the accounting equation but could not explain each element of it, nor could they describe the effect of profit on the elements in the equation. Such an answer would attract only a very small proportion of the marks for this section.

A number of students explained assets as “something we own” and liabilities as “something we owe”. Whilst some credit is given for this, it still leaves the student well short of the published model answers which are:

(i) “An asset is a resource controlled by an entity as a result of past events and from which future economic benefits are expected to flow to the entity.”

(ii) “A liability is a present obligation of the entity arising from past events, the settlement of which is expected to result in the outflow from the entity of resources embodying economic benefits.”

(iii) “Equity is the residual interest in the assets of the entity after deducting all its liabilities.”

(b) “The profit for the year increases the equity in the accounting equation and this is matched by an increase in the net assets of the business that amount to the difference between the other elements in the equation, namely, the assets minus the liabilities.”

However, it is not necessary to use the exact language of the Framework. An example of an answer to (iii) that would achieve some of the available credit is:

“Equity is what is left over when the assets of a business have the liabilities deducted. Equity is made up of share capital, share premiums and bank loans, less dividends that may need to be paid to shareholders.”

An example of an answer to (b) that would achieve some of the available credit is:

“Profit is part of the ‘assets’ and ‘equity’ elements of the accounting equation. If profits increase, so does equity and if profits decrease, so does the equity figure.”

More to come!!!

Liliana

Example 3
Task 1.6 at the June 2007 sitting asked candidates to prepare – from the reconciliation given in the data – a report for the company directors to explain the change in net cash from operating activities between 2006 and 2007.

The published report is as follows (note the headings for which credit is also given). The main points that would gain marks have been emboldened.

“To: The Directors of Goramsee Ltd
From: AAT student
Subject: Comments on cash from operating activities
Date: 20 June 2007

This report comments upon the change in net cash from operating activities between 2006 and 2007 in Goramsee Ltd.

Although the profit from operations has increased considerably in the year from £5,721,000 to £6,938,000, the net cash from operating activities has declined from £6,708,000 in 2006 to £6,680,000 in 2007. This means that a smaller amount of cash was received by the company from its operating activities than in the previous year. It would have been expected that the cash from operations would increase if profit from operations had increased.

Although more was paid out in income taxes for the period, the increase was relatively small at only £38,000 and would be due to increased profit from operations. The increase in interest paid of £140,000 was due to the increase in the loan during the year and this would have reduced the cash from operating activities.

The major factors in the decrease in cash were the changes in working capital. The inventories balance increased by £1,176,000 thus reducing cash from operations. It is unclear why this has happened and is substantially more than the modest increase in 2006. It might be due to a change in the company’s inventories holding policy. It may also suggest that there are problems with inventories control or that slow moving goods remain in inventories for a longer period of time.

Trade receivables have also increased significantly in 2007. This reduced the cash from operations by £873,000. Again, this increase is much greater than in 2007. This may be due to variation in the credit terms allowed to customers or due to the fact that trade receivables are, on average, taking much longer to pay their debts. It is possible that credit control is deteriorating and trade receivables are not being chased for the amount owing to the company.

Trade payables have actually reduced between the two years. It may be that the decrease is due to a change in the credit policy of suppliers, but it might also indicate that the company is paying trade payables too quickly and not taking full advantage of the credit terms allowed by suppliers.

It is important to address the issues raised in this report since the decline in net cash flow from operating activities means that cash has to be found from other sources. If you have any queries over matters raised in my report, do not hesitate to contact me.

AAT Student”

It is not difficult to spot how many times the words ‘due to’ feature in this report. It is important to give reasons or possible reasons for what is happening rather than just quote the figures given in the data.

Here’s an example of an answer that does not make enough of the above points for a candidate to be considered competent in this particular task. However, the marks awarded here could make the difference between ‘competent’ and ‘not competent’ when the whole section is taken into account!

“As you will see from the reconciliation of operating profit to net cash inflow for 2006 and 2007, there has been a slight decrease of £28,000 in net cash. This loss is nothing to worry about in terms of cash flow. Although in 2007 there was an increase in gains on disposals of £348,000 from 2006, there have been other costs incurred as well, such as an increase in both trade inventories of £1,074,000 and in trade receivables of £788,000. I would suggest the company looks at credit control procedures as soon as possible. Also I would not suggest holding a large amount of inventory as you do. Inventory is the least liquid asset and is hard to dispose of.”

Almost there!!!!

Liliana

Summary

So the message is clear: the written questions have to be attempted to pass the exam. There may be no short cut to revising the relevant international accounting standards (IAS), but their exact wording does not have to be repeated in the exam. It is much more important for students to show that they understand the concepts, so their own words are perfectly acceptable provided they convey the meaning of the Standards or the Framework.

Don’t worry about spelling and grammar – just write! And, if in doubt, keep it short and clear. If nothing is written then a mark of zero is guaranteed. If an attempt is made, the result may also be zero but it may not be and those few marks may be the difference that changes a ‘not competent’ outcome into a ‘competent’ one.

Donald MacAskill BA ACMA MPhil Cert Ed(FE) FHEA
April 2008

Donald MacAskill is a lecturer in the School of Accounting, Economics and Statistics at Napier University Business School, Edinburgh and Chief Assessor for Drafting Financial Statements (DFS)

Done!!!

lucy1988

Thank you.

cs_1988

I REALLY REALLY hope the the exam is similar to Dec 07, it's such a sexy paper!

Ampsie

The main point he seems to be making is in the summary - that we've GOT to be able to back everything up and explain it in writing. Which is something my tutor said as well.
I just hope he doesn't put a load more questions in specifically about the standards because my brain has gone dead on them!

Oh well - fingers crossed!

Ampsie
trying not to be worried!
:001_smile:

Pigpen

cs_1988 wrote: »

I REALLY REALLY hope the the exam is similar to Dec 07, it's such a sexy paper!

mmmmmmmm - I think you have been working too hard haven't you :ohmy:

lala2009

LOL cs1988!!!!!!!!!!!

renae

yep...here we come dec 07 retake......hey I worked out that pev was the same as dec 06 and used that theory yesterday....and would never had been able to answer the lifecycle part if I hadn't!:thumbup:

Guru

So the lesson to be learnt is - revise the syllabus, know the important stuff, and try all questions.

I know it'll be chaos on here tomorrow, but it would be nice to think that a group of professional people about to complete a major qualification weren't going to run around like headless chickens saying "OMG, OMG, OMG, that was soooooooo hard!!!!!!!!" for 3 days.

Believe in yourselves - if you weren't capable you wouldn't have got this far.

cs_1988

Lol, I just hate the written parts, and because their your own words, you dont know how well/badly they would be marked,

I've considered doing a Michael Scofields Prison break tatoo, with all the DFS answers ias Standards hidden within the patterns,

..... I'm losing it, arent i?

Liliana

Yeap totally!!!!
Lol cs1988

CelticStar

cs_1988 wrote: »

Lol, I just hate the written parts, and because their your own words, you dont know how well/badly they would be marked,

I've considered doing a Michael Scofields Prison break tatoo, with all the DFS answers ias Standards hidden within the patterns,
..... I'm losing it, arent i?

Lol at this idea but now you've put Wentworth Miller into my head when really it needs to be full of accounting standards. :blushing:

renae

thats the definition of an asset done, just liability & equity to go.......recon that will be enough.
If thats not asked, I may just write a note saying that the 'accounting equation is SO IMPORTANT in every way, and the definitions are.....' who knows, they make just think ive gone mental & be to concerned about my state to fail me???????

Ampsie

cs_1988 -

[HTML]I've considered doing a Michael Scofields Prison break tatoo, with all the DFS answers ias Standards hidden within the patterns[/HTML]

If i start to feel stressed in the exam tomorrow i'm going to remember that to make me smile and calm down!!!

Ampsie