I am taking CFA Level 1 exam this December. My problem is that I am an engineer with almost zero knowedge of accounting. I am finding it hard to digest accounting concepts given in my Schweser Study Notes. Additionally, what gives me nightmares is the weigtage of 20% for this section. I have already spent a lot on CFA registration and Schweser Study notes :-(. I wish to pass this exam at my first go.
Was wondering if anyone could guide me on how to go about Financial Reporting and Analysis section. Any pointers to some good free CFA Material will be much appreciated.
there is no good substitute than learning the concepts. Since you are from engineering background its impliedthat you will face LOTSof difficultitesin other sections too. I recomend you not to use Schweser notes as Schweser notes are published keeping in view the assumption that candidiate has some basic knowledge. Go for CFA curriculum books.
remember if you get basic accounting concepts that is asset, liabilities, equities, income and expenses and the rules associated with these accounting heads, debit and credit rules you will be done with 30% of ur FRA section.
Reading the CFAI Books only once might not be enough for tough topics suchs as FRA, Ethics and Equity (given ur background and the weight of them in the exam). I suggest u read the CFAI books once, then read Schweser study notes on those 3 topics, Schweser is pretty concise and super clear. Finish studying the theory as fast as u canso you can jump right into mock exam taking (which is the best way to review for the actual exam).
Warning: Theres this dreaded FRA reading on deffered tax assets & liabilities. It’s impossibly hard, especially if u come from a non accounting background. Don’t freak out if its too hard, it usually has little weight on the exam. Some prep instructors go as far as suggesting u dont even bother studying it at all.
The rest of the exam is easy (in terms of difficulty). The challenge lies in the quantity not the quality (at least in L1).
Financial Statement is like sketeton of business and accounting is like the biology of how everything works. If you want to be a phsician who makes diagnosis, you must understand the fundamentals.
Honestly, i would suggest going on youtube and find some basic accounting lectures - just to get familiarized with Financial Statements and see how numbers get debit and credit from income statement to balance sheet. If you don’t understand a terminology, you can go to investopedia and they may have more simplified definitions. It may take you only a couple days or a couple weeks, but if you’re keen on doing the CFA program, it’s something you MUST know - definite a mandatory!
John Harris’ Accounting Workshops will surely clear up any problems you have but, considering you said you’ve spent a lot already, it may not be an option. I believe it’s either $399 or $499 but I took him for L2 and he made challenging concepts a breeze, turning my weaknesses into strengths.
No shortcuts. Accounting is a different language, one that you must dilgently attempt to learn in order to do well on any exam that test financial reporting concepts. You probably should purchase an entry level financial accounting text book off Ebay or Amazon and do the practice problems at the end of each section.
Bad advice. Financial statement ANALYSIS is totally different from financial statement PREPARATION.
Accounting textbooks are all about financial statement PREPARATION. That is, they tend to focus on journal entries and debits and credit and general ledgers and trial balances–all of which are totally unnecessary to understand accounting from an analyst’s point of view.
Hmm… i don’t know, i think an actual accounting textbook is a bit too much (and too dry - who has the time anyway?) but like i said, some videos on basic accounting should do the trick.
I do think that one needs to understand how the numbers travel from one statement to another though. Afterall, it’s essential to know for L2 with all the free cash flow calculations, ratios and accounting income adjustments. It’s more intuitive if you know how the numbers are generated, IMHO.
Hello Friends, I am humbled to see so many expert advise. Based on your expert advice i have come to the following conclusions -
CFA curriculum books are overwhelming to start with so i guess the starting point should be Schweser Notes
Since Schweser notes are crisp and assumes some knowledge of accounting, i wish to use the free videos available on the web. As advised by Sheikh79, i went to elan guides to see the free material but that was not of much help as they were very limited.
I looked at the course on Udemy as advised by pass123456 https://www.udemy.com/cfa-level-1/ and enrolled for this course for free using coupon code CFA
They have introduced accounting starting with a basic case study. I looked at it for an hour and guess I feel a bit more confident to take the next leap. I also look forward to the other set of their videos.
Thank you Greenman72 for this awesome advise regarding financial statement “analysis” rather than “preparation”.
Overall - No CFA curriculum books, Notes from Schweser and FREE Video tutorials from the Udemy LInk.
Me to Engineering backgroud, I started with Finacial reporting and Analysis. it took little time but it heps a lot when you read other volumes. I am Pittsburgh based and planning to take Level I test in Dec. Are you in Pitts.
Purchase either the Schweser or Elan videos (most people on here would agree that the Elan Videos are superior). They are a great help in understanding FRA. Do not spend to much time on Income tax as it is only oging to give you a headache, just learn the basics of it. I would concentrate mostly on the difference of IFRS vs US GAAP as I found it was mostly emphasized in the CFA text and Scheweser notes.
I was in a similar position, i have a non finance academic background but most of the other topics I had some experience with on the job, accounting really stuck out for me in level 1.
Be prepared to spend a disproportionate amount of time - even with it’s big weighting - mastering the accounting readings.
plan to do multiple read throughs of schweser, do the schweser end of chapter questions, the cfai eoc’s and blue boxes and hit the qbank for accounting hard. make some flash cards and regularly refresh the material. spend a lot of the final month on this topic.
also, it’s worth noting that a good grasp of FRA in level 1 will certainly give you a head start for level 2.
For me, accounting really takes time to grasp. It took me a few college classes 3 CFA tests(twice on lvl 2) and I still get confused sometimes. I think it comes down to undetstanding the + and - to an account and what it means. Remember the basic accounting equation A = L + E. Think of E as a liability too as the company owes that to the shareholders. I know there is a lot more to it too such as LIFO, FIFO, depreciation etc. Those concepts will come as you do more practice.
