Financial

Accounting
(FA1)
September 2024-
August 2025
Examiner’s report
The examining team share their observations from the
marking process to highlight strengths and weaknesses
in candidates’ performance, and to offer constructive
advice for those sitting the exam in the future.

Contents
General Comments...................................................................... 2
Example 1 ....................................................................................... 2
Example 2 ....................................................................................... 3
Example 3 ....................................................................................... 4
Example 4 ....................................................................................... 5
Example 5 ....................................................................................... 6
Example 6 ....................................................................................... 8
Conclusion ..................................................................................... 8

Examiner’s report – FA1 September 2024 – August 2025 1

General Comments

The intention of this report is that, when considered alongside previous reports, candidates at
future sittings will have a valuable resource to maximise their chances of success. The most
effective way to use these reports is to review both the technical content of each question and
the approach to answering it, bearing in mind that different questions may require slightly
different strategies.

This computer-based examination consists of 50 compulsory multiple-choice questions, each

worth two marks.

This report discusses six questions that some candidates found challenging.

Example 1

Dhru's bank general ledger account at 31 March 20X9 has a debit balance of $16,500. A cheque
issued for $200 and an electronic payment of $450 are not yet showing on the bank statement.

What is the correct, reconciled bank balance?

A. $16,500
B. $16,750
C. $16,250
D. $17,150

The correct answer is A.

The question states that both the cheque and the electronic payment have not yet appeared on
the bank statement. Therefore, these are reconciling items and do not require any adjustment
to the bank general ledger account.

Options B, C and D are incorrect. Neither the issued cheque nor the electronic payment
requires an adjustment in the bank general ledger. Furthermore, the adjustments proposed
also reflect incorrect signage in each of the option choices.

Each of the other three options have been calculated incorrectly as follows:

B. $16,750 ($16,500 – 200 + 450)

C. $16,250 ($16,500 + 200 – 450)
D. $17,150 ($16,500 + 200 + 450)

Both the cheque and the electronic payment would reduce the bank balance. Had an
adjustment to the bank general ledger been required these should have been deducted from
the debit balance.

Examiner’s report – FA1 September 2024 – August 2025 2

Example 2

Anastasia uses a basic computerised accounting package which automatically creates a

temporary suspense account for imbalanced manual journal entries.

The balance in the suspense account is $500 (credit).

One of the errors discovered was $300 of cash expenses credited to the bank general ledger
account without a corresponding debit entry.

After correction of this error, what is the remaining balance on the suspense account?

A. $200 Dr
B. $200 Cr
C. $800 Dr
D. $800 Cr

The correct answer is D.

This is an example of an error of omission to one side of the double entry. When recording
financial transactions, every debit entry must be matched with a corresponding credit entry.

The cash expenses were incorrectly recorded as Dr Suspense, Cr Bank, instead of Dr Expense,
Cr Bank. To correct this error, Anastasia would need to record the following journal entry:

Dr Expense $300
Cr Suspense $300

The balance on the suspense account can therefore be calculated as follows:

$ $

Balance b/fwd 500

Error of omission 300

Balance c/fwd 800

800 800

Balance b/fwd 800

Options A and B are both incorrect as the adjustment to the suspense has incorrectly been
deducted.

Option C is also incorrect as the adjustment would result in a credit balance remaining on the
suspense account.

Examiner’s report – FA1 September 2024 – August 2025 3

Example 3

Ozlem has calculated her payroll figures for July as follows:

$
Net pay 21,450
Employer’s state benefit contributions 4,230
Employee’s state benefit contributions 3,880
Income taxes deducted 5,360
Employee’s pension contributions 5,200

What is Ozlem's wages expense for the month of July?

A. $21,450
B. $26,810
C. $35,890
D. $40,120

The correct answer is D.

The wages expense is the gross cost to the employer which includes net pay, employer’s
contributions and deductions made from the employee’s salary (because they are part of gross
wages before deductions).

Ozlem’s wages can therefore be calculated as follows:

$
Net pay 21,450
Employer’s state benefit contributions 4,230
Employee’s state benefit contributions 3,880
Income taxes deducted 5,360
Employee’s pension contributions 5,200
40,120

Option A is incorrect as this simply includes the net pay that the employee receives (gross
salary – employees state benefit contributions - income taxes - employee pension
contributions).

Option B has been calculated incorrectly as $21,450 + $5,360, so state benefit and pension
contributions have been ignored.

Option C is incorrect as the employers state benefit contributions have been ignored.

Examiner’s report – FA1 September 2024 – August 2025 4

Example 4

Which of the following is true regarding the trade receivables general ledger account?

A. It shows the total of all customer balances

B. The allowance for irrecoverable debt is credited to it
C. It presents a detailed listing, then summarised for each individual customer
D. It is a credit balance

The correct answer is A.

The trade receivables general ledger account represents the total amount owed to the entity by
all credit customers.

Option B is incorrect – an allowance for receivable is recorded in a separate ledger account.

Option C is incorrect - the trade receivables general ledger is a summary of the total balances
owed by all credit customers. A detailed listing would be presented in an aged receivable
analysis.

Option D is incorrect – the balance on the trade receivables general ledger account represents
amounts owed to the entity and therefore, would be recognised as an asset (debit balance).

Examiner’s report – FA1 September 2024 – August 2025 5

Example 5

Tarek has an amount of $24,680 showing on the sales general ledger account. Sales returns are
not recognised in a separate general ledger account. The following transactions were
accounted for incorrectly:

(1) A credit sales invoice totalling $2,260 was found to have been entered in the
accounting software as $2,620
(2) A credit note totalling $210 issued to a customer was accounted for as a credit sale
(3) An electronic bank transfer from a credit customer totalling $320 was not recognised
(4) Cash sales totalling $160 were omitted as the proceeds were used for the cash
purchase of office stationery

What is the balance on Tarek’s sales general ledger account after correcting the errors?

A. $24,680
B. $24,270
C. $24,060
D. $24,380

The correct answer is C.

To answer this question, candidates should review each of the four transactions and determine
whether correcting each one would increase, decrease, or have no impact on the balance of
the sales general ledger account.

Transaction (1) – This is a transposition error; the sale has been overstated by $360 ($2,620
minus $2,260). Rectifying this error would reduce the balance of the sales general ledger
account.

Transaction (2) – The credit note has been incorrectly recorded as a sale. A credit note would
ordinarily reduce the balance of the sales general ledger account. As it has been mistakenly
treated as a sale, the sales general ledger account should be reduced by $420 – to reverse the
original error of $210 and then to correctly record the credit note.

Transaction (3) – An electronic bank transfer from a credit customer would not impact the sales
ledger. The receipt from the customer would be recorded as a debit to the bank account and a
credit to the trade receivables general ledger account.

Transaction (4) – The omission of the cash sale is an error that results in an understatement of
sales. The sale should be recorded, regardless of the fact that the cash proceeds were later
used to purchase office stationery. Correcting this error will lead to an increase in the balance
of the sales general ledger account.

Examiner’s report – FA1 September 2024 – August 2025 6

The corrected balance on the sales general ledger account can now be calculated as:

$
Balance per the sales general ledger account 24,680
Adjustments:
Transaction (1) (360)
Transaction (2) (420)
Transaction (3) -
Transaction (4) 160
24,060

Option A is incorrect as the adjustment for the cash sale in transaction (4) has not been
adjusted.

Option B is incorrect, as the adjustment for the credit note in transaction (2) has only
accounted for the $210. This merely reverses the original error and results in the credit note
remaining unrecorded.

Option D incorrectly includes the bank transfer from the credit customer.

Examiner’s report – FA1 September 2024 – August 2025 7

Example 6

James had net assets at 1 January 20X7 of $34,000. At 31 December 20X7 the net assets were
$37,000. During the year ended 31 December 20X7, $5,000 new capital was introduced.

What was the profit or loss of James for the year ended 31 December 20X7?

A. $2,000 Profit
B. $2,000 Loss
C. $8,000 Profit
D. $8,000 Loss

The correct answer is B.

To answer this question, candidates are advised to use the change in net assets adjusted for
the capital introduced. The profit or loss for James will be the balancing amount and can be
calculated as follows:

$
Net assets b/fwd 34,000
+ capital introduced 5,000
39,000
Loss for the year (balancing amount) (2,000)
Net assets c/fwd 37,000

Option A is incorrect as the $2,000 represents a loss not a profit.

Options C and D are miscalculated – they incorrectly use the formula $37,000 + $5,000 -
$34,000.

Conclusion

Candidates must ensure that they study and prepare thoroughly for all areas of the syllabus. As
examination questions may be drawn from any part of the syllabus, a broad and well-rounded
understanding is essential. Comprehensive preparation will enable candidates to approach the
exam with confidence and respond effectively to questions across all syllabus areas.

It is equally important that candidates read each question carefully. Often, marks are lost not
from a lack of knowledge, but from misreading or misunderstanding the question. Taking the
time to understand exactly what is being asked can significantly improve exam performance.

Examiner’s report – FA1 September 2024 – August 2025 8