Syllabus
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Unit 1: Real World Accounting
Topic 1: Accounting for a service business — cash, accounts receivable, accounts payable and no GST
Unit 1: Real World Accounting > Topic 1: Accounting for a service business — cash, accounts receivable, accounts payable and no GST
- Describe where people invest their money
- Describe a business entity, including sole trader, partnership and company (private and public)
- Describe shareholder
- Describe elements of accounting, including assets, liabilities, owner’s/share equity, revenue and expenses
- Describe financial statements including Statement of Profit or Loss, Statement of Financial Position and Statement of Cash Flows
- Describe net profit and net loss
- Describe net cash from operations
- Explain why people invest their money in a business
- Explain the ownership structure of a sole trader, partnership and company
- Explain how accounting information is used by investors (owners/shareholders) and other stakeholders
- Explain the role of an accountant, an auditor and the accounting profession
- Analyse the differences between the accounts (assets, liabilities, owner’s/share equity, revenue and expenses) of a public company and a sole trader
- Analyse and interpret different forms of investment compared with owning and running a business
- Create sentence and paragraph responses that communicate descriptions, explanations, analyses and interpretations relating to entities to business owners and other stakeholders
- Describe a service business
- Describe sole trader
- Describe a business with cash, accounts receivable and payable (not registered for GST)
- Describe unlimited liability
- Describe legal entity
- Describe monetary principle
- Describe going concern principle
- Describe accounting entity concept
- Describe accounting equation
- Describe net worth
- Describe transaction analysis
- Describe double entry
- Describe source documents evidencing cash and credit transactions (including electronic documents)
- Describe accounting records including general journal, ledger (with a chart of accounts) and trial balance
- Explain why assets are assumed to be of a debit nature
- Explain how debits and credits are deduced for increases/decreases in the elements of the accounting equation
- Explain the steps in the accounting process and their relationship to each other
- Explain the steps to check an unbalanced trial balance
- Explain the interrelationship between assets, liabilities and owner’s equity in the accounting equation
- Explain the interrelationship between revenue and expenses, and the accounting equation
- Apply transaction analysis and the double entry accounting principles (handwritten and/or spreadsheet) to record transactions in the general journal for a service business, including; owner contributes capital in the form of cash, buying and selling assets (book value) for cash, selling a service for cash and on credit, buying supplies for cash and on credit, paying expenses, e.g. rent, electricity, phone/internet, petrol, etc, owner withdraws cash (drawings), correction of errors
- Apply accounting principles and processes (handwritten and/or spreadsheet) for a service business to process general journal entries to the general ledger using columnar and T format ledger accounts, calculate the balance of ledger accounts, prepare a trial balance
- Apply computerised accounting processes for a service business to set up a service business, select and edit a chart of accounts, enter a range of transactions (see above) using the general journal function, generate reports including the transaction journal, ledger and trial balance, generate reports including the transaction journal, ledger and trial balance
- Analyse and interpret for a service business the application of accounting concepts and principles in ledger accounts, individual ledger accounts, a trial balance for any inconsistencies and errors
- Create sentence and paragraph responses that communicate descriptions and explanations for a service business to other stakeholders
- Create sentence and paragraph responses that communicate analyses and interpretations for a service business to business owners
Topic 2: End-of-month reporting for a service business — no GST
Unit 1: Real World Accounting > Topic 2: End-of-month reporting for a service business — no GST
- Describe accounting period concept
- Describe Statement of Profit or Loss
- Describe Statement of Financial Position
- Describe Statement of Cash Flows
- Describe end-of-month reporting
- Describe net profit ratio
- Describe return on owner’s equity
- Explain the relationship between profit and the accounting equation
- Explain the relationship between income and revenue
- Explain the relationship between profit and net cash flow from operations
- Explain the interrelationships between assets, liabilities and owner’s equity
- Explain the interrelationships between expenses, revenue and profit
- Explain the interrelationships between the elements of the accounting equation and the Statement of Financial Position
- Explain the interrelationships between the profit or loss determined in the Statement of Profit or Loss and the owner’s equity section of the
Statement of Financial Position
Unit 1: Real World Accounting > Topic 2: End-of-month reporting for a service business — no GST > Statement of Financial Position
- Apply accounting principles and processes (handwritten and/or spreadsheet) for a service business to calculate net profit or loss from a list of revenues and expenses, prepare a Statement of Profit or Loss (simple classification) from a trial balance, calculate capital from a list of assets and liabilities, prepare a Statement of Financial Position (simple classification) from a trial balance, prepare a Statement of Cash Flows from a cash at bank account
- Apply computerised accounting processes for a service business to generate end-of-month financial statements
- Analyse and interpret the similarities and differences between the various accounts that comprise assets, liabilities, owner’s/share equity, revenue and expenses for a sole trader and a public company
- Analyse and interpret for a service business the Statement of Profit or Loss relating to monthly performance, the Statement of Financial Position relating to assets and liabilities, the return on owner’s equity in comparison with alternative investments relating to net worth
- Evaluate the impact of a change relating to end-of-month reporting for a service business to make decisions and propose recommendations about future performance — changes may include new staff, increases in rent costs, purchase of assets or new suppliers
- Create sentence and paragraph responses that communicate descriptions and explanations of accounting concepts, principles and processes relating to end-of-month reporting to business owners or other stakeholders of a service business
- Create paragraph responses that communicate analyses, interpretations, evaluations, decisions and recommendations to business owners or other stakeholders of a service business
- Create a 1–2 page letter of advice that communicates analyses, interpretations, evaluations, decisions and recommendations about monthly profitability and performance to the business owner of a service business
Unit 2: Management effectiveness
Topic 1: Accounting for a trading GST business
Unit 2: Management effectiveness > Topic 1: Accounting for a trading GST business
- Describe a trading business
- Describe types of accounts for a trading business, including accounts receivable, accounts payable and inventories
- Describe perpetual inventory system
- Describe inventory costing methods, including weighted average and first in first out (FIFO)
- Describe Goods and Services Tax (GST) and classifications for calculating GST
- Describe source documents evidencing credit transactions and their purpose
- Describe control accounts and subsidiary ledgers
- Describe the cash (banking), sales, purchases and inventories functions of a computerised accounting package
- Describe internal controls
- Describe internal administrative and accounting controls used by a business, including credit accounts (accounts receivable and accounts payable) and inventories
- Explain the difference between taxable supplies, GST-free supplies and input-taxed supplies
- Explain why control accounts and subsidiary ledgers are used to control accounts receivable, accounts payable and inventories
- Explain the impact of not implementing internal controls for credit accounts and inventories
- Explain the computerised accounting processes used to determine costs of goods sold and value of stock on hand
- Explain the implications of GST on the recording of transactions in a business
- Explain the implications of credit transactions on the accounting process
- Explain the interrelationships between subsidiary ledgers, the general ledger and control accounts
- Apply transaction analysis, double entry principles and accounting processes (handwritten and/or spreadsheet) for a trading GST business to record transactions in the general journal incorporating GST, perpetual inventories, accounts receivable and accounts payable, process general journal entries to the general ledger, report the ledger accounts in the trial balance
- Apply computerised accounting processes for a trading GST business with perpetual inventories to record transactions incorporating GST, accounts receivable, accounts payable and inventories, generate reports, including accounts receivable, accounts payable and inventory reports, and trial balance
- Analyse and interpret for a trading GST business the application of accounting concepts and principles in ledger accounts, individual ledger accounts, an aged accounts receivable report, inventory reports, accounting processes relating to the recording and controlling of accounts receivable, accounts, payable and inventories
- Evaluate proposed changes to accounting practices to make decisions and propose recommendations to improve management effectiveness for a trading GST business relating to control of accounts receivable, accounts payable and inventories
- Synthesise and solve goal-oriented problems (using forward processing, handwritten and/or spreadsheet) relating to accounting for a trading GST business, e.g. the goal may be to determine the end-of-month cash at bank balance and GST
- Create sentence and paragraph responses that communicate descriptions and explanations to business managers and owners of a trading GST business
- Create paragraph responses that communicate analyses, interpretations, evaluations, decisions and recommendations to business managers and owners of a trading GST business
Topic 2: End-of-year reporting for a trading GST business
Unit 2: Management effectiveness > Topic 2: End-of-year reporting for a trading GST business
- Describe gross profit and net profit
- Describe liquidity
- Describe accrual accounting
- Describe accounting period concept
- Describe the end-of-year reporting process for determining profit
- Describe balance day adjustments and their purpose
- Describe closing entries
- Describe reversing entries
- Describe turnover of inventories
- Describe turnover of accounts receivable
- Explain the relationship between the going concern principle and accounting period concept
- Explain the relationship between gross profit and net profit
- Explain the relationship between control of inventories and the effect on profitability and liquidity
- Explain the relationship between control of credit accounts and the effect on profitability and liquidity
- Explain the relationship between low inventory turnover ratio and high inventory turnover ratio
- Explain the relationship between low accounts receivable turnover ratio and high accounts receivable turnover ratio
- Explain the relationship between the Statement of Profit or Loss and the Statement of Financial Position
- Explain the effect of closing and reversing entries
- Explain the effect of non-payment by accounts receivable
- Explain the effect of non-payment to accounts payable
- Explain the effect of a low gross profit figure
- Explain the effect of a net loss in the Statement of Profit or Loss
- Explain the effect of significant drawings by the owner
- Explain the effect of low inventory turnover ratio
- Explain the effect of low accounts receivable turnover ratio
- Apply accrual accounting principles and processes (handwritten and/or spreadsheet) for a trading GST business to record balance day adjustments (no calculations) for prepaid expenses, accrued expenses, unearned revenue and accrued revenue, record closing entries, prepare an adjusted trial balance, prepare the Statement of Profit or Loss (simple classification), prepare the Statement of Financial Position (simple classification)
- Apply ratio formulae (handwritten and/or spreadsheet) for a trading GST business to calculate profitability ratios, including gross profit, net profit and return on owner’s equity, liquidity ratios, including turnover of inventories and turnover of accounts receivable
- Apply computerised accounting processes for a trading GST business to record balance day adjustments, generate end-of-year reports and financial statements
- Apply spreadsheet features and spreadsheet functions for a trading GST business to prepare end-of-year financial statements (Statement of Profit or Loss and Statement of Financial Position), graph gross profit and net profit, graph individual and total revenue and expenses, graph individual and total assets, liabilities and owner’s equity
- Analyse and interpret for a trading GST business the application of accounting concepts and principles in ledger accounts, individual ledger accounts
- Analyse and interpret financial data and information for a trading GST business relating to management effectiveness; financial data and information may include ledger accounts; the Statement of Profit or Loss with vertical analysis (extract or in full); the Statement of Financial Position with vertical analysis (extract or in full); or other information relating to accounts receivable, accounts payable and inventories
- Evaluate proposed changes to accounting practices for a trading GST business to make decisions and propose recommendations regarding profitability, liquidity
- Synthesise and solve goal-oriented problems (using forward processing, handwritten and/or spreadsheet) relating to accounting for a trading GST business, e.g. the goal may be to determine the gross profit ratio and net profit ratio for the financial year
- Create sentence and paragraph responses that communicate descriptions and explanations to business managers and owners of a trading GST business
- Create paragraph responses that communicate analyses, interpretations, evaluations, decisions and recommendations to business managers and owners of a trading GST business
- Create an extended response (e.g. a two-page business report), including the use of graphs, that communicates explanations, analyses, interpretations, evaluations, decisions and recommendations to business managers and owners of a trading GST business
Unit 3: Monitoring a business
Topic 1: Managing resources for a trading GST business
Unit 3: Monitoring a business > Topic 1: Managing resources for a trading GST business
- Describe depreciation and the methods, including straight-line (prime cost) and diminishing balance (diminishing value)
- Describe accumulated depreciation (negative asset account)
- Describe historical cost principle
- Describe the accounting and administrative controls used to internally control non-current assets, including purchase, maintenance and sale, the controls used for security and privacy of technology
- Explain data as a vital resource
- Explain accounting processes to record the purchase, depreciation and disposal of non-current assets
- Explain the difference between capital expenditure and other expenditure
- Explain the importance of internally controlling non-current assets and technology
- Explain the role of the asset register in internally controlling non-current assets
- Explain the impact of cloud computing on business data and information
- Explain the impact of outsourcing accounting processes
- Explain the impact of security of business data and information
- Explain the impact of fraud and theft on accounting and administrative practices, both internal and external to the business
- Explain the relationship between historical cost principle and accumulated depreciation
- Explain the relationship between asset and negative asset accounts (non-current assets and accumulated depreciation)
- Apply accounting principles and processes (handwritten and/or spreadsheet) for a trading GST business to calculate and record purchase of non-current assets, including capital expenditure and other expenditure, depreciation for a non-current asset using straight-line and diminishing balance methods (including annual, half-yearly and quarterly calculations), disposal of a non-current asset and recognition of gain or loss on sale
- Apply accounting principles and processes (handwritten and/or spreadsheet) for a trading GST business to report, account balances for non-current assets in the Statement of Profit or Loss and Statement of Financial Position
- Apply spreadsheet features and spreadsheet functions for a trading GST business to set up a spreadsheet template, including headings, labels, formatting of data (text, numbers and dates); formulae for calculations; and input and reporting areas calculate for at least one non-current asset — depreciation using both depreciation methods; and historical cost, accumulated depreciation and net value of the non-current asset at the end of each period, graph depreciation for the life of at least one non-current asset
- Analyse and interpret financial data and information for a trading GST business, including issues with outsourcing accounting processes, issues with managing data, issues with internal controls (non-current assets and technology)
- Evaluate for a trading GST business control measures to secure business data and information to make decisions and propose recommendations for improvement, internal control practices to make decisions and propose recommendations regarding the management of resources, internal control practices to make decisions and propose recommendations to prevent fraud both internal and external to the business
- Create sentence and paragraph responses that communicate descriptions and explanations to the business managers and owners of a trading GST business
- Create paragraph responses that communicate analyses, interpretations, evaluations, decisions and recommendations to business managers and owners of a trading GST business
- Create a business report that communicates explanations, analyses, interpretations, evaluations, decisions and recommendations to the business managers of a trading GST business
Topic 2: Fully classified financial statement reporting for a trading GST business
Unit 3: Monitoring a business > Topic 2: Fully classified financial statement reporting for a trading GST business
- Describe general purpose financial statements
- Describe the classifications used in the fully classified Statement of Profit or Loss and the Statement of Financial Position
- Describe comparative financial statements
- Describe accounting concepts (accounting period and accounting entity) and principles (monetary, going concern and historical cost) that underpin the preparation of financial statements
- Describe balance day adjustments and their purpose
- Describe bad debts
- Describe provision for doubtful debts (negative asset account)
- Describe profitability ratios, including gross profit ratio, net profit ratio, return on owner’s equity and return on total assets
- Describe liquidity ratios, including current ratio, quick ratio, turnover of accounts receivable and turnover of inventories
- Explain the limitations of the Statement of Profit or Loss and the Statement of Financial Position
- Explain the qualitative characteristics (relevance (including materiality), reliability, comparability and understandability) of financial information that guide the preparation of general-purpose financial statements
- Explain the relationship between asset and negative asset accounts (accounts receivable and provision for doubtful debts)
- Explain the relationship between the Statement of Profit or Loss and the Statement of Financial Position
- Analyse and interpret for a trading GST business the Statement of Profit or Loss with horizontal and ratio analysis relating to performance
- Analyse and interpret for a trading GST business the Statement of Financial Position with horizontal and ratio analysis relating to performance
- Analyse and interpret for a trading GST business the return on owner’s equity in comparison with alternative investments relating to net worth
- Evaluate for a trading GST business the effectiveness of accounting practices to make decisions and propose recommendations regarding monitoring business performance
- Evaluate for a trading GST business the effectiveness of accounting practices to make decisions and propose recommendations regarding liquidity
- Synthesise and solve goal-oriented problems (using backward processing and forward processing) relating to fully classified financial statement reporting for a trading GST business, e.g. the goal may be to report the profitability and net worth of the business
- Create sentence responses that communicate descriptions and explanations to the business manager or owners of a trading GST business
- Create paragraph or extended responses that communicate analyses, interpretations, evaluations, decisions and recommendations to the business manager or owners of a trading GST business
Unit 4: Accounting — the big picture
view_agenda query_statsTopic 1: Cash management
view_agenda query_statsUnit 4: Accounting — the big picture > Topic 1: Cash management
- Apply accounting principles and processes (handwritten and/or spreadsheet) to prepare a bank reconciliation statement
- Apply accounting principles and processes (handwritten and/or spreadsheet) to prepare a cash budget including statement of estimated receipts from accounts receivable, statement of GST payable and receivable
- Apply spreadsheet features and spreadsheet functions to prepare a cash budget including input and report areas, what-if analysis
- Apply computerised accounting processes for a trading GST business to record transactions, carry out a bank reconciliation, record balance day adjustments, generate end-of-period reports and financial statements, implement end-of-year processes to ready accounts for a new financial year, record or process reversing entries
- Analyse and interpret for a trading GST business the similarities and differences between a cash budget and a Statement of Cash Flows
- Analyse and interpret for a trading GST business cash and accounts receivable data and information relating to the management of cash resources
- Analyse and interpret for a trading GST business a cash budget relating to the future liquidity of the business
- Evaluate for a trading GST business to make decisions and propose recommendations, relating to the effectiveness of internal control practices regarding cash management
- Evaluate for a trading GST business to make decisions and propose recommendations, relating to alternative projects and their impact on cash resources
- Evaluate for a trading GST business to make decisions and propose recommendations, relating to alternative proposed changes to accounting practices impacting the cash budget
- Synthesise and solve goal-oriented problems relating to cash management for a trading GST business
- Create sentence and paragraph responses that communicate analyses, interpretations, evaluations, decisions and recommendations relating to cash management to business managers or owners of a trading GST business
- Create a business report that communicates analyses, interpretations, evaluations, decisions and recommendations relating to cash management to business managers or owners of a trading GST business
Topic 2: Complete accounting process for a trading GST business
view_agenda query_statsUnit 4: Accounting — the big picture > Topic 2: Complete accounting process for a trading GST business
- Describe balance day adjustments
- Describe correction of errors
- Describe inventory adjustments and reasons for inventory adjustments
- Describe closing and reversing entries
- Explain the steps in the complete accounting process
- Explain the relationship between balance day adjustments and reversing entries in accrual accounting
- Explain the relationship between net profit based on accrual accounting and net cash from operating activities
- Apply accounting principles and processes (handwritten and/or spreadsheet) for a trading GST business to record transactions in the general journal and general ledger, calculate and record transactions, record reversing entries
- Apply accounting principles and processes (handwritten and/or spreadsheet) for a trading GST business to prepare a fully classified Statement of Profit or Loss and Statement of Financial Position
- Synthesise and solve goal-oriented problems relating to the complete accounting process for a trading GST business,
Topic 3: Performance analysis of a public company
view_agenda query_statsUnit 4: Accounting — the big picture > Topic 3: Performance analysis of a public company
- Describe types of ratios, including profitability, liquidity and stability
- Describe types of analysis, including ratio, vertical, horizontal and trend
- Describe industry benchmarks
- Explain the differences between accounting for a sole trader and accounting for a public company
- Explain the ratios used to measure profitability, liquidity and stability, and the extra specific ratios only applicable to companies profitability ratios, liquidity ratios, stability ratios, extra specific ratios for companies
- Explain the factors that complicate the comparison of financial statements over a period of time
- Explain the benefits of using vertical, horizontal, trend and ratio analysis
- Explain how the results obtained from ratio analysis will be useful for internal and external stakeholders
- Explain how benchmarking within an industry can be used when analysing and interpreting performance
- Explain the interrelationships between a fully classified Statement of Profit or Loss, Statement of Financial Position and Statement of Cash Flows
- Apply accounting principles and processes to calculate the following ratios: profitability ratios, liquidity ratios, stability ratios, extra specific ratios for companies
- Analyse and interpret for a public company the Statement of Profit or Loss using horizontal, vertical, ratio and trend analysis relating to profitability
- Analyse and interpret for a public company the Statement of Financial Position using horizontal, vertical, ratio and trend analysis relating to profitability, liquidity and stability
- Analyse and interpret for a public company the Statement of Cash Flows using trend analysis relating to stability and liquidity
- Evaluate for a public company the performance against industry benchmarks to make decisions and propose recommendations regarding the future operations and direction of the business
- Evaluate for a public company the proposed changes to accounting practices to make decisions and propose recommendations regarding the future operations and direction of the business