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Hi All
I have been reading the Q’s & A’s on ACCA website for December exam, I have noticed something very worrying on Question 3 of F8 paper.
The question clearly says
“Explain FIVE potential indicators that Mercury Motoring Co is NOT a going concern.”
Unless I am mistaken this suggests the answer would be indicators that mercury is just a normal company and is not a going concern.
However, the answers suggest that the question has asked you to identify indicators that ARE a going concern???
“Up to 1 mark per explanation of why this could indicate going concern problems”
I am very confused, has anyone else noticed this error or is it just me going crazy??
@ Vicky same thing for me, I’ve just posted the below but cannot see it anywhere on the forum so I’m re posting again
Hello Sir, I scored 47 in Dec 2015,
While checking on my answers I found especially for question 3 that the answer is completely the opposite to what I answered, yet I’m still confused. The question asked about FIVE potential indicators that Mercury Motoring Co is NOT a going concern. Note that the word “NOT” is in capital letters, so what I wrote is why the company can still be alive business wise. For eg I wrote that the supplier is THREATENING to sue but not ACTUALLY suing. I also talked about current ration falling to 0.9 for a first time which is not so alarming as it’s not an acid ratio there might be reasons like inventory etc, I also suggested an extension facility from the bank. To sum up, I tried to find all the positive things for which the company might still fare well and have a chance not to collapse. However on seeing the ACCA answer I was shocked to see that the answers are all geared towards a going concern perspective which means that it answers in fact the question that Mercury Motoring Co is a going concern (without the NOT), I would appreciate your comments on this.
In my opinion it is clear…
The definition of “going concern” is
“the assumption that the company will survive for the next years”.
I hope there’s no doubt… otherwise just read about what going concern is in your books…
So… NOT a “going concern” is just the opposite.
“the assumption that the company will NOT survive for the next years”.
I, myself, am no native speaker… but is it really so difficult to understand?
@nzeadall
I guess now you know what was the main issue of your fail. It’s like No. 3 from my post on other topic – not answering the question set.So from markers perspective it is 0 / 5 marks. Although the answer was great it was for a different question.
Don’t worry your english and knowledge is very good it’s just about being more alert to question requirements and answering specifically what question asks for and nothing more.
My understaning is that a going concern is stil a viable business as it can pay its debts and libialities etc.
However the question asks why is this not a going concern.
As quite clearly from the question the business is struggling and therefore is not a going concern as it looks like it wont be able to pay debts/ liabilities.
So question asks you to show why it is struggling.
Havent got the question in front of me so i could be wrong though
I am looking at this question right now and confused by it too. As by stating the factors that show the company is struggling I thought that this means it could potentially be a going concern and therefore don’t know why the word NOT is in there.
For anybody that thinks their English isn’t good, I am English and I believe that this question is misleading/doesn’t make any sense.
Also, if I scored 47 on this paper and found this out afterwards I would be very annoyed. I hope that nothing like this happens when I sit the paper on Monday.
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