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ACCA·ModuleAS

Applied Skills

Applied Skills is the second level of the ACCA qualification, covering six papers: LW (Corporate and Business Law), PM (Performance Management), TX (Taxation), FR (Financial Reporting), AA (Audit and Assurance), and FM (Financial Management). These exams are 3 hours each and contain a mix of MCQs and constructed response questions. They are session-based, available in March, June, September, and December. You need 50% to pass each paper.

Questions
9,490
Units
6
Topics
38

What’s in it.

6 units

Sample questions

3 of many

A few questions from this module, with the answer and a full explanation. The complete bank is available when you start practising.

  1. Which of the following best describes how an ERP system supports real-time performance management?

    • By generating external reports for regulators that demonstrate the organisation's real-time compliance status
    • By integrating data from all functional areas into a single database, enabling managers to access up-to-date information across the organisation without waiting for data transfers between separate systems
      Correct answer
    • By using artificial intelligence to automatically identify and correct performance problems without human intervention
    • By providing what-if analysis and simulation tools that allow managers to model future performance scenarios
    Explanation

    An ERP system supports real-time performance management through integration. Because all functional areas (finance, operations, HR, supply chain, sales) share a single database, data entered in one area is immediately available to all others. This means managers can access current, consistent data across the entire organisation in real time, rather than waiting for batch data transfers between separate systems. For example, a sales order entered by the sales team is immediately visible to production planning, inventory management, and the finance department.

  2. How does the nominal value of a share differ from its market value?

    • The nominal value is always higher than the market value
    • There is no difference — both terms refer to the same price
    • The nominal value is the fixed face value stated in the company's constitution, while the market value is the price at which the share trades, which fluctuates based on supply and demand
      Correct answer
    • The market value is set by the company while the nominal value is set by the stock exchange
    Explanation

    Nominal value (also called par or face value) is fixed and represents the minimum issue price. Market value fluctuates based on the company's performance, investor sentiment, and market conditions. A share with a nominal value of £1 might trade at £10 on the market. The two are entirely independent: nominal value is a legal concept (no shares below it), while market value is an economic concept (determined by the market).

  3. What is the dividend decision in financial management?

    • Deciding how to report dividends in the financial statements
    • Deciding how much of the company's profit to distribute to shareholders as dividends versus retaining for reinvestment in the business
      Correct answer
    • Deciding the interest rate to pay on corporate bonds
    • Deciding how to invest the company's cash in financial markets
    Explanation

    The dividend decision involves determining the proportion of profit that should be paid out to shareholders as dividends and the proportion that should be retained within the business for reinvestment. This is a key financial management decision because it affects the amount of internal financing available (retained earnings), the signal sent to the market about the company's prospects, and shareholder satisfaction. Dividend policy theories (such as Modigliani-Miller dividend irrelevance and the signalling hypothesis) are important topics in ACCA FM.

Frequently asked questions

3 questions
What papers are in ACCA Applied Skills?

Applied Skills has six papers: LW (Corporate and Business Law), PM (Performance Management), TX (Taxation), FR (Financial Reporting), AA (Audit and Assurance), and FM (Financial Management). You must pass all Applied Knowledge papers before sitting Applied Skills exams.

When can I sit Applied Skills exams?

Applied Skills exams are session-based, running in March, June, September, and December each year. LW is an exception, as it is available on demand as a computer-based exam, similar to Applied Knowledge papers.

Do Applied Skills exams include MCQs?

Yes, Applied Skills exams contain a mix of MCQs and constructed response questions. The MCQ component typically makes up 30-40% of the exam marks. Practising MCQs is essential for building the technical knowledge tested in both question formats.