Does anyone here feel that he is spending too much time on FSA? It seems to me my approach is studying to be an accountant rather than an analyst. I do not have financial accounting background so i am finding myself memorising all the financial ratios, balancing balance sheet and income tax, calculating cash flow, ammortisation figures, income expenses figures for financial liabilites and capital leases and also memorising the difference between GAAP and IFRS for the past few week. Am i doing the wrong way or should i just concentrate on the financial statement effects instead?
FSA is a big portion of the L1 exam here is my really quick $.02 Memorize and know the formulas… all of them. Don’t memorize the effects on formulas in a FIFO or Lifo, or Capitalizing or Operating Lease envirornment but be able to diagram your way out. Write out your ratios and determine the effect. If the question is on the effect of debt vs. equity, diagram that formula out and figure out which situation increases debt, or increases equity and the overall effect on that ratio. For Lifo and Fifo, diagram out and practice using a small chart. Plot out COGS, EI, Sales, etc. for each with the same variables and see what you end up with. I wrote a silly chart on last Decembers exam and it helped. (Takes all of 15 seconds to draw out), and you can answer any question on EI, profit margin, or COGS representativeness. Know how to do all calc’s regarding amortization. Know Operating vs. Capital Leases. Know the B/S, Income Statement, and Cash Flows down pat. Unfortunately for a lot the accounting aspect doesn’t come that easy. It wasn’t a piece of cake for me at L1 but with enough practice you can really ace that section and help get that L2 invitation. It takes a lot of time to go through FSA but it’s really worth it.