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How to answer

multiple-cHoice questions

Exams for all papers in the Foundationsin Accountancy qualification andPapers F1, F2 and F3 in the ACCAQualification, whether computerbased or paper based, will comprisemultiplechoice questions (MCQs).

Answering MCQs successfully requiresyou to develop a range of skills andexam techniques.

Taking the steps set out below willhelp you to maximise your marks inthese papers.

PrePare to PassAs with any assessment, the golden rulefor success is to prepare thoroughly. It isnot unusual for ACCA examiners reportsto note that some candidates were notadequately prepared for the exam. Inmany cases, candidates attempt tocompensate for inadequate preparationby question spotting, or concentratingon a small number of pet topics.These approaches to preparationare extremely risky and are alwaysstrongly discouraged by examiners forgood reason.

As each MCQ relates to a specificissue within the syllabus, each examwill include broad coverage of thesyllabus. This means that to maximiseyour chances of success you must havestudied the whole syllabus.

You may be lucky enough to find thata particular MCQ is on a topic which

was part of your most recent studies,but this will not be the case with thevast majority of the questions youwill face.

As well as studying topics rightacross the syllabus, it is important toattempt past exams and examstandardquestions. Examples of MCQs areavailable on ACCAs website. Visitwww2.accaglobal.com/students/

fia/exam/ for Pilot Papers for thepaperbased exams in the Foundationsin Accountancy suite of qualificationsand for Papers F1, F2 and F3 visitwww2.accaglobal.com/students/acca/exams/ and select the relevantpaper (the Pilot Papercan be locatedon the past exam papers link). Visitwww.iassessserver.com/index02.html to access the demo questionsfor computerbased exams. It is alsorecommended that you practiselongform questions, to develop adeeper understanding of the issuesrelating to each topic in the syllabus.

Of course, it is essential that you useall of the questions carefully and followup on all of your answers. Whether aquestion was answered correctly orincorrectly during exam preparation, it willprovide an opportunity to enhance yourunderstanding of the topic. By reflectingon why a specific option is correct,you can improve your understanding,while reflecting on why the otheroptions are wrong can help to overcomemisunderstanding and eliminateconfusion. When attempting questionsas part of your preparation, it is useful

to remember that the key purpose of theexercise is to enhance your understanding

not just to get the right answer.When reviewing each option, it is

important to ensure that you understandexactly what the underlying point is and to make sure that you reflect on thisto enhance your learning.

read the questionThe amount of time, effort, anddiscussion that is put into each questionbefore it appears in an exam is likelyto surprise most candidates. Everyquestion is subjected to a number of

rigorous reviews as it progresses froman idea in the writers mind to the exampaper. These reviews mean that youneed to read the question extremelycarefully, remembering that thewording has been chosen deliberately.This is intended to ensure that thequestion is unambiguous and does notmislead candidates.

An example of the need to read thequestion carefully might be the way inwhich a question communicates costinformation. It is not unusual for aquestion to relate to a production periodof, say, three months, but for fixed coststo be stated as an annual figure. To getthe correct answer, candidates musthave recognised this fact. This is notan attempt to catch candidates out,but rather an attempt to ensure thatcandidates can apply the technique ina reallife situation, where informationmust be clearly understood and isfrequently communicated in this way.

A further aspect is to recognise thatthe answer will be based on the dataincluded in the question. There aretwo aspects to this. First, in order toensure that questions are not too long,

the data may have been simplified.To some candidates, this may seemto be unrealistic when compared to areallife situation. A particular exampleof this is the way in which the labourcost is described in many questions.More often than not, direct labour isdescribed as a variable cost, with noreference to the cost of laying off staff.For a candidate who has experience ofstaff rationalisation, this assumptionwill be totally unrealistic. While a longerquestion may provide the opportunityto critically examine the underlying

assumptions, this is not possible inan MCQ and the question should beanswered on the basis of the dataprovided. Second, only the data includedin a question is required to obtain theanswer. That means you should notwaste time wondering about additionaldata, or inferring additional data intothe question.

relevant to all foundations in accountancy PaPers and accaqualification PaPers f1, f2 and f3

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An example of this could be aquestion which tests the ability tocalculate the closing balance on a ledgeraccount. The question may give detailsof transactions during a period and aclosing prepayment, but there may be

no reference to an opening prepayment.In such cases, you can assume that thiswas nil. As already noted, the writerwill have sought to keep the questionas short as possible by omittingunnecessary words such as the openingprepayment was nil or there was noopening prepayment.

It is imperative that the prompt (theactual question that is to be answered)is read carefully. For example, a questionmay give information on receivables,irrecoverable debts, and requiredallowances for receivables. Here theprompt could require any of thefollowing to be calculated: the movement on the allowance the closing receivables allowance the charge to the income statement or the net value of receivables to

be reported on the statement offinancial position.

Rather than actually reading and notingthe prompt, some candidates assumethat they know what it is. This is usuallyon the basis of a question they haveseen previously. More often than not,this approach leads to the wrong option

being selected.

thinkIt is a common fallacy that MCQsare easy. This is based on the factthat one of the options is the correctanswer. Therefore, the argument goes,all you have to do is make the correctselection. While it is fair to say thatsome questions may be easy, that isusually because you have preparedthoroughly. Hopefully, this will happenin some questions, but it is more likelythat the answer will not be obvious. A

question from the Pilot Paperfor PaperFAB/Paper F1, Accountant in Businessillustrates this:

saMPle question 1ABC Co has a system which recordsdetails of orders received and goodsdispatched, invoices customers andallocates remittances to customers.

What type of system is this?

A Management information systemB Decision support systemC Knowledge management systemD Transaction processing system

Even a casual reading of the questionwill highlight that the word systemis a key word. It is used in the stem(the initial statement which describesthe system), the prompt (the actualquestion) and in each of the choices.

This means that unless care is takento read the question and think carefullyabout what is being asked, it would beeasy to become confused. A furtherproblem is that all four of the systemsin the choices are examples of systemsthat might be utilised in an organisation.

To select the correct answer, the bestapproach is to consider what each ofthe four systems is intended to achieve.

A management information systemis intended to provide information tomanagers. Information is processeddata, which is useful for makingdecisions. In this case, the stemrefers to data (as it is unprocessed information would not be an individual

order, but the total value of orders fora particular product or from a specificcustomer). Therefore, A is not correct.

A decision support system isintended to do exactly what the namesuggests provide information to assistmanagers to make decisions. Onceagain the system relates to information.As we have already decided that thestem refers to data, B cannot be thecorrect answer.

Choice C presents a potentialproblem. A knowledge managementsystem is intended to create, capture,store and share information. The stemnotes that the system records detailsof orders (capture) and invoices

customers (creates). This may createconfusion for the illprepared candidate.However, a wellprepared candidate willnote that, once again, the issue is thatinformation is relevant to a knowledgemanagement system. On that basis,choice C is incorrect.

D is the correct choice because atransaction processing system dealswith data which is processed tocreate information.

From, this we can see that a candidatewho is clear about the differencebetween data and informationwill be able to answer this questionwithout undue difficulty, but very clearthinking, and application of knowledge,is needed.

It is essential that, having read thequestion carefully, you think aboutyour response, and that your answeris the result of a considered choice.This is because of the way in which theincorrect options have been constructed.In ACCA exams, MCQs have one correctoption and three incorrect options.The incorrect options are referred toas distractors. This term is usedbecause in writing the question, the

examiner attempts to identify themost common mistakes made bycandidates and uses these as a basisfor the incorrect options. This can beillustrated by a question taken from thePilot Paperfor Paper FMA/Paper F2,Management Accounting.

as each Mcq relates to a sPecific issue withinthe syllabus, each exaM will include broadcoverage of the syllabus. this Means that toMaxiMise your chances of success you Musthave studied the whole syllabus.

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saMPle question 2Information relating to two processes(F and G) was as follows:Process Normal loss Input Output

as % of input (litres) (litres)F 8 65,000 58,900G 5 37,500 35,700

For each process, was there anabnormal loss or an abnormal gain?

Process F Process G

A Abnormal gain Abnormal gainB Abnormal gain Abnormal lossC Abnormal loss Abnormal gainD Abnormal loss Abnormal loss

solutionEach process must beconsidered separately.

Process F Normal loss is 8%, thusexpected output is 92%of input.Input was 65,000 litres.Thus expected output was59,800 litres.Actual output was58,900 litres.

As actual output was lessthan expected, there was anabnormal loss.

That means that choices A and B areincorrect. However, a common mistakeby candidates is to assume that theperformance in both processes is thesame. Making this mistake leads tothe selection of choice D.

Process G Normal loss is 5%, thusexpected output is 95%of input.Input was 37,500 litres.Thus expected output was35,625 litres.Actual output was35,700 litres.

As actual output was morethan expected, there was anabnormal gain.

Thus the correct choice is C.

Another common mistake in questionssuch as this is to mix up the values forexpected output and actual output. Welllaidout workings and a logical approachcan help to overcome this problem.

work out your answerAs the incorrect answers are basedon common mistakes, it followsthat attempting to guess the correctanswer is not likely to be productive.Rather it is essential that you use yourunderstanding of the topic to work outyour answer. This will prevent you frombeing distracted by incorrect options.

saMPle question 3 (taken froM the

Pilot PaPerfor PaPer fa2)At 30 November, Charles is owed atotal of $72,660 by his customers. Hisreceivables allowance brought forwardfrom the previous year end is $11,700.He estimates that his receivablesallowance should be equivalent to 15%of the amounts due from customers.

What value should be included inthe income statement for receivablesexpense for the year to 30 November?

A $801 debitB $10,899 debitC $801 creditD $10,899 credit

sThe receivables allowance should beequivalent to 15% of the amounts duefrom customers ($72,660 x 15% =$10,899).

If a candidate completes thiscalculation and then reviews the choices,there is a danger that, because $10,899is included in two of the choices, one orother of those choices will be selected.

This ignores the fact that the amountto be included in the income statement

is the movement in the allowance which has fallen from $11,700 to$10,899, or $801. A reduction in theallowance will be a credit in the incomestatement, thus the answer is C.

This illustrates that, for questionswhich require calculations, coveringup the options while you work out youranswer can be a productive strategy.Of course, with questions which donot require calculations, the possibleanswers need to be considered inturn. However, this still requires youranswer to be worked out, not randomly

selected. These questions might requirea decision on which one of two or morestatements are correct, or which oneof a number of statements is correct.In such cases, the best approach is toconsider each statement in turn, anddecide whether or not it is correct. Onceagain, the fact that incorrect options aredistracters must be borne in mind.

eliMinate incorrect answersThis approach is likely to be mosteffective in discursive questions whichrequire the correct combination ofstatements to be selected. Consider aquestion which offers three statements,and requires the correct combination ofcorrect statements to be selected. Theideal way to answer this is to considereach statement in turn, and decide if itis correct or not. Often, candidates will

find that they can quickly identify oneincorrect statement. On that basis, it ispossible to eliminate the options whichinclude that statement.

A question from the Paper F2,Management Accounting Pilot Paperillustrates this point.

saMPle question 4Which TWO of the following statementsrelating to relevant cost concepts indecision making are correct?(1) Materials can never have an

opportunity cost whereas labour can(2) The annual depreciation charge is

not a relevant cost(3) Fixed costs would have a relevant

cost element if a decision causes achange in their total expenditure

(4) Materials already held in inventorynever contribute to relevant cost

A 1 and 3B 1 and 4C 2 and 3D 3 and 4

sIn this case, a little thought will confirm

that statement 1 is incorrect. Thoroughpreparation will mean that you know thatmaterials can often have an opportunitycost. Once this decision has been made,choices A, and B can be eliminated,leaving either C or D as the correctchoice. As statement 3 in included inboth of these choices, it does not needto be considered. The question nowrequires a decision on whether choice 2or choice 4 is correct.

Both of these relate to issues in whichmany candidates experience difficulty.How a particular candidate will progress

from this point will depend on theknowledge they have brought into theexam as this will be the basis of theirdecision regarding statements 3 and 4.

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Lets consider statement 3 first. Thekey issue is that a cost is relevant if thedecision leads to a future incrementalcash flow. Statement 3 effectively saysthis in the phrase a change in theirtotal expenditure. A candidate whorecognises this will thus select choiceC if they are confident about theirunderstanding of statement 3. If thereis any doubt, or to provide reassurance,statement 4 can then be considered.

In this case, wellprepared candidateswill recognise that if materials alreadyheld in inventory can be sold, usingthem will have a relevant cost thebenefit foregone by using them ratherthan selling them. Thus statement 4is incorrect and choice 3 is thecorrect answer.

other PointsThere are some other points on whichyou need to make decisions in order tomaximise your marks. For each of these,the exam room is the wrong place tomake the decision. It is essential thatyou have prepared thoroughly and havedecided on your own approach to eachof the following: Above all else, remember that you

should not allow yourself to becomeso stuck on a question so that yourun out of time. Generally speaking,exams are drafted so that the timespent on each part of a question isin proportion to the marks allocated.With MCQs, however, it may be thatsome candidates will find somequestions are more straightforwardthan others, and can therefore be

answered more quickly. For thatreason, it may be better to considerthe time allocation for a group of,say, five MCQs, rather than for eachquestion individually.

As there is no penalty for an incorrectanswer in ACCA exams, there isnothing to be gained by leaving anMCQ unanswered. If you are stuck ona question, as a last resort, it is worthselecting the option you considermost likely to be correct, and movingon. Make a note of the question, so ifyou have time after you have answered

the rest of the questions, you canrevisit it. If you are sitting a paperbased exam,

you must remember to record youranswers to MCQs on your CandidateRegistration Sheet(CRS), as thisis the only way you can obtain themarks you deserve for all your efforts.Workings for MCQs are not marked,nor are answers written in scriptbooklets as opposed to on the CRSs.

conclusionFrom this discussion, you can seethat MCQs are not an easy option.Maximising your marks when attemptingMCQs requires: sound preparation studying across the syllabuspractising as many different types of

question as possibledeveloping your own strategy for

different types of question

thinking clearly in the examworking out your answers structuring your approach to

the paperanswering all the questions.

Taking this approach does notmake answering MCQs easy, but itshould mean that you get the marksyou deserve.

k pprepare thoroughly think clearlywork out your answer structure your approachanswer all of the questions.

Ronnie Patton is examiner for FIAPaper FA2

exaMPles of Mcqs are available on accaswebsite. visit www2.accaglobal.coM/studentsfia/exaM/ for Pilot PaPers for thePaPerbased exaMs in the fia qualification

and for PaPers f1, f2 and f3 visit www2.accaglobal.coM/students/acca/exaMs/ andselect the relevant PaPer.

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