Course
Overview:
The Accounting
0985 / IGCSE (9-1) course is designed to provide students with a comprehensive
understanding of accounting principles and practices. As a core component of
the O Levels curriculum, this course equips students with the essential skills
needed to manage, analyze, and interpret financial information, laying a solid
foundation for further studies in accounting, finance, or business.
Course
Objectives:
- Master
Basic Accounting Principles:
- Understand the fundamental principles of
accounting, including the double-entry system, accounting equation, and
the concepts of revenue recognition and expense matching.
- Learn how to prepare and interpret key financial
statements such as balance sheets, income statements, and cash flow
statements.
- Develop
Practical Skills:
- Gain hands-on experience with T accounts and
postings to record various business transactions accurately.
- Learn how to balance T accounts, ensuring that
debits and credits are correctly applied, and the accounting equation
remains balanced.
- Analyze
Financial Information:
- Develop the ability to analyze financial statements
to assess business performance, financial health, and make informed
decisions.
- Explore the management of assets and liabilities,
and understand their impact on the business’s financial position.
- Apply
Accounting Concepts to Real-World Scenarios:
- Apply theoretical knowledge to practical scenarios,
including the recording of transactions, preparation of financial
statements, and analysis of financial data.
- Understand the role of accounting in various
business contexts, and how it supports effective management and
decision-making.
Content overview
<!--[if !supportLists]-->1.
<!--[endif]-->The fundamentals of accounting
This section introduces the subject by explaining the difference between
book-keeping and accounting. The
role of accounting in providing information and the purposes of measuring
business profit and loss are also
explored. Basic accounting terms and the accounting equation are
introduced.
<!--[if !supportLists]-->2.
<!--[endif]-->Sources and recording of data
The core topic of this section
is the double-entry system of book-keeping and how this is applied in the
preparation of ledger accounts. The division of the ledger is considered.
Business documents and their use as sources of information are also included.
Consideration is given to the procedures for processing information in books of
prime entry.
<!--[if !supportLists]-->3.
<!--[endif]-->Verification of accounting records
This section concentrates on
the use of trial balances, bank reconciliation statements and control accounts
as means of verifying accounting records. The procedures for the correction of
errors are also covered.
<!--[if !supportLists]-->4.
<!--[endif]-->Accounting procedures
Within this section, consideration is given
to the importance of distinguishing between capital and revenue expenditure and
receipts. Non-current assets are further explored in terms of accounting for
depreciation and disposals. Procedures to record adjustments for accruals and
prepayments, irrecoverable debts, provision of doubtful debts and the recovery
of debts written off are included. Inventory valuation, and its impact on
financial statements, is also covered.
<!--[if !supportLists]-->5.
<!--[endif]-->Preparation of financial statements
The focus of this section is the preparation of financial statements,
including year-end adjustments, for different types of businesses (sole
traders, partnerships and limited companies). Consideration is also given to the
financial statements of clubs and societies and manufacturing businesses. The
procedures employed when only incomplete records are available are also
covered.
<!--[if !supportLists]-->6.
<!--[endif]-->Analysis and interpretation
This section introduces the
calculation and the interpretation of the main accounting ratios. The use of
ratios in inter-firm comparison is also included. Consideration is also given
to the uses of accounting information by interested parties. The limitations of
accounting statements are also explored.
<!--[if !supportLists]-->7.
<!--[endif]-->Accounting principles and policies
The main accounting principles are introduced together with how they are
applied in accounting records and statements. Consideration is also given to
the influence of international accounting standards and the selection of
accounting policies.
Course
Content:
<!--[if !supportLists]-->1.
<!--[endif]-->The fundamentals of accounting:
<!--[if !supportLists]-->1.1.
<!--[endif]-->The purpose of accounting
<!--[if !supportLists]-->o
<!--[endif]-->understand and explain the difference between
book-keeping and accounting
<!--[if !supportLists]-->o
<!--[endif]-->state the purposes of measuring business profit
and loss
<!--[if !supportLists]-->o
<!--[endif]-->explain the role of accounting in providing
information for monitoring progress and decision-making.
<!--[if !supportLists]-->1.2.
<!--[endif]-->The accounting equation
<!--[if !supportLists]-->o
<!--[endif]-->explain the meaning of assets, liabilities and
owner’s equity
<!--[if !supportLists]-->o
<!--[endif]-->explain and apply the accounting equation
<!--[if !supportLists]-->2.
<!--[endif]-->Source and Recording of Data
2.1. The double entry system of
book-keeping
<!--[if !supportLists]-->o
<!--[endif]-->outline the double entry system of book-keeping
<!--[if !supportLists]-->o
<!--[endif]-->process accounting data using the double entry
system
<!--[if !supportLists]-->o
<!--[endif]-->prepare ledger accounts
<!--[if !supportLists]-->o
<!--[endif]-->post transactions to the ledger accounts
<!--[if !supportLists]-->o
<!--[endif]-->balance ledger accounts as required and make
transfers to financial statements
<!--[if !supportLists]-->o
<!--[endif]-->interpret ledger accounts and their balances
<!--[if !supportLists]-->o
<!--[endif]-->recognize the division of the ledger into the
sales ledger, the purchases ledger and the nominal (general) ledger.
2.2. Business documents
<!--[if !supportLists]-->o
<!--[endif]-->recognize and understand the following business
documents: invoice, debit note, credit note, statement of account, cheque,
receipt
<!--[if !supportLists]-->o
<!--[endif]-->complete pro-forma business documents
<!--[if !supportLists]-->o
<!--[endif]-->understand the use of business documents as
sources of information: invoice, credit note, cheque counterfoil, paying-in
slip, receipt, bank statement.
2.3. Books of prime entry
<!--[if !supportLists]-->o
<!--[endif]-->explain the advantage of using various books of
prime entry
<!--[if !supportLists]-->o
<!--[endif]-->explain the use of and process accounting data
in the books of prime entry: cash book, petty cash book,
<!--[if !supportLists]-->o
<!--[endif]-->sales journal, purchases journal, sales returns
journal, purchases returns journal and the general journal
<!--[if !supportLists]-->o
<!--[endif]-->post the ledger entries from the books of prime
entry
<!--[if !supportLists]-->o
<!--[endif]-->distinguish between and account for trade
discount and cash discounts
<!--[if !supportLists]-->o
<!--[endif]-->explain the dual function of the cash book as a
book of prime entry and as a ledger account for bank and cash
<!--[if !supportLists]-->o
<!--[endif]-->explain the use of and record payments and receipts
made by bank transfers and other electronic means
<!--[if !supportLists]-->o
<!--[endif]-->explain and apply the imprest system of petty
cash.
<!--[if !supportLists]-->3.
<!--[endif]-->Verification of accounting records
3.1. The trial balance
<!--[if !supportLists]-->o
<!--[endif]-->understand that a trial balance is a statement
of ledger balances on a particular date
<!--[if !supportLists]-->o
<!--[endif]-->outline the uses and limitations of a trial
balance
<!--[if !supportLists]-->o
<!--[endif]-->prepare a trial balance from a given list of
balances and amend a trial balance which contains errors
<!--[if !supportLists]-->o
<!--[endif]-->identify and explain those errors which do not
affect the trial balance: commission, compensating, complete
<!--[if !supportLists]-->o
<!--[endif]-->reversal, omission, original entry, principle.
3.2. Correction of errors
<!--[if !supportLists]-->o
<!--[endif]-->correct errors by means of journal entries
<!--[if !supportLists]-->o
<!--[endif]-->explain the use of a suspense account as a
temporary measure to balance the trial balance
<!--[if !supportLists]-->o
<!--[endif]-->correct errors by means of suspense accounts
<!--[if !supportLists]-->o
<!--[endif]-->adjust a profit or loss for an accounting period
after the correction of errors
<!--[if !supportLists]-->o
<!--[endif]-->understand the effect of correction of errors on
a statement of financial position.
3.3. Bank reconciliation
<!--[if !supportLists]-->o
<!--[endif]-->understand the use and purpose of a bank statement
<!--[if !supportLists]-->o
<!--[endif]-->update the cash book for bank charges, bank
interest paid and received, correction of errors, credit transfers,
<!--[if !supportLists]-->o
<!--[endif]-->direct debits, dividends, and standing orders
<!--[if !supportLists]-->o
<!--[endif]-->understand the purpose of and prepare a bank
reconciliation statement to include bank errors, uncredited
<!--[if !supportLists]-->o
<!--[endif]-->deposits and unpresented cheques.
3.4. Control accounts
<!--[if !supportLists]-->o
<!--[endif]-->understand the purposes of purchases ledger and
sales ledger control accounts
<!--[if !supportLists]-->o
<!--[endif]-->identify the books of prime entry as sources of
information for the control account entries
<!--[if !supportLists]-->o
<!--[endif]-->prepare purchases ledger and sales ledger
control accounts to include credit purchases and sales, receipts and payments,
cash discounts, returns, irrecoverable debts, dishonored cheques, interest on
overdue accounts, contra entries, refunds, opening and closing balances (debit
and credit within each account).
<!--[if !supportLists]-->4.
<!--[endif]-->Accounting procedures
4.1. Capital and revenue expenditure and
receipts
<!--[if !supportLists]-->o
<!--[endif]-->distinguish between and account for capital
expenditure and revenue expenditure
<!--[if !supportLists]-->o
<!--[endif]-->distinguish between and account for capital
receipts and revenue receipts
<!--[if !supportLists]-->o
<!--[endif]-->calculate and comment on the effect on profit of
incorrect treatment
<!--[if !supportLists]-->o
<!--[endif]-->calculate and comment on the effect on asset
valuations of incorrect treatment.
4.2. Accounting for depreciation and disposal of non-current
assets
<!--[if !supportLists]-->o
<!--[endif]-->define depreciation
<!--[if !supportLists]-->o
<!--[endif]-->explain the reasons for accounting for
depreciation
<!--[if !supportLists]-->o
<!--[endif]-->name and describe the straight-line, reducing
balance and revaluation methods of depreciation
<!--[if !supportLists]-->o
<!--[endif]-->prepare ledger accounts and journal entries for
the provision of depreciation
<!--[if !supportLists]-->o
<!--[endif]-->prepare ledger accounts and journal entries to
record the sale of non-current assets, including the use of
<!--[if !supportLists]-->o
<!--[endif]-->disposal accounts.
4.3. Other payables and other receivables
<!--[if !supportLists]-->o
<!--[endif]-->recognize the importance of matching costs and
revenues
<!--[if !supportLists]-->o
<!--[endif]-->prepare ledger accounts and journal entries to
record accrued and prepaid expenses
<!--[if !supportLists]-->o
<!--[endif]-->prepare ledger accounts and journal entries to
record accrued and prepaid incomes
4.4. Irrecoverable debts and provision for doubtful debts
<!--[if !supportLists]-->o
<!--[endif]-->understand the meaning of irrecoverable debts
and recovery of debts written off
<!--[if !supportLists]-->o
<!--[endif]-->prepare ledger accounts and journal entries to
record irrecoverable debts
<!--[if !supportLists]-->o
<!--[endif]-->prepare ledger accounts and journal entries to
record recovery of debts written off
<!--[if !supportLists]-->o
<!--[endif]-->explain the reasons for maintaining a provision
for doubtful debts
<!--[if !supportLists]-->o
<!--[endif]-->prepare ledger accounts and journal entries to
record the creation of, and adjustments to, a provision for
<!--[if !supportLists]-->o
<!--[endif]-->doubtful debts
4.5. Valuation of inventory
<!--[if !supportLists]-->o
<!--[endif]-->understand the basis of the valuation of
inventory at the lower of cost and net realisable value
<!--[if !supportLists]-->o
<!--[endif]-->prepare simple inventory valuation statements
<!--[if !supportLists]-->o
<!--[endif]-->recognize the importance of valuation of
inventory and the effect of an incorrect valuation of inventory on
<!--[if !supportLists]-->o
<!--[endif]-->gross profit, profit for the year, equity and
asset valuation
<!--[if !supportLists]-->5.
<!--[endif]-->Preparation of financial statements
5.1. Sole traders
<!--[if !supportLists]-->o
<!--[endif]-->explain the advantages and disadvantages of
operating as a sole trader
<!--[if !supportLists]-->o
<!--[endif]-->explain the importance of preparing income
statements and statements of financial position
<!--[if !supportLists]-->o
<!--[endif]-->explain the difference between a trading
business and a service business
<!--[if !supportLists]-->o
<!--[endif]-->prepare income statements for trading businesses
and for service businesses
<!--[if !supportLists]-->o
<!--[endif]-->understand that statements of financial position
record assets and liabilities on a specified date
<!--[if !supportLists]-->o
<!--[endif]-->recognize and define the content of a statement
of financial position: non-current assets, intangible assets, current assets,
current liabilities, non-current liabilities and capital
<!--[if !supportLists]-->o
<!--[endif]-->understand the inter-relationship of items in a
statement of financial position
<!--[if !supportLists]-->o
<!--[endif]-->prepare statements of financial position for
trading businesses and service businesses
<!--[if !supportLists]-->o
<!--[endif]-->make adjustments for provision for depreciation
using the straight line, reducing balance and revaluation methods
<!--[if !supportLists]-->o
<!--[endif]-->make adjustments for accrued and prepaid
expenses and accrued and prepaid income
<!--[if !supportLists]-->o
<!--[endif]-->make adjustments for irrecoverable debts and
provisions for doubtful debts
<!--[if !supportLists]-->o
<!--[endif]-->make adjustments for goods taken by the owner
for own use
5.2. Partnerships
<!--[if !supportLists]-->o
<!--[endif]-->explain the advantages and disadvantages of
forming a partnership
<!--[if !supportLists]-->o
<!--[endif]-->outline the importance and contents of a
partnership agreement
<!--[if !supportLists]-->o
<!--[endif]-->explain the purpose of an appropriation account
<!--[if !supportLists]-->o
<!--[endif]-->prepare income statements, appropriation
accounts and statements of financial position
<!--[if !supportLists]-->o
<!--[endif]-->record interest on partners’ loans, interest on
capital, interest on drawings, partners’ salaries and the division of the
balance of profit or loss
<!--[if !supportLists]-->o
<!--[endif]-->make adjustments to financial statements as
detailed in 5.1 (sole traders)
<!--[if !supportLists]-->o
<!--[endif]-->explain the uses of and differences between
capital and current accounts
<!--[if !supportLists]-->o
<!--[endif]-->draw up partners’ capital and current accounts
in ledger account form and as part of a statement of financial position.
5.3. Limited companies
<!--[if !supportLists]-->o
<!--[endif]-->explain the advantages and disadvantages of
operating as a limited company
<!--[if !supportLists]-->o
<!--[endif]-->understand the meaning of the term limited
liability
<!--[if !supportLists]-->o
<!--[endif]-->understand the meaning of the term equity
<!--[if !supportLists]-->o
<!--[endif]-->understand the capital structure of a limited
company comprising preference share capital, ordinary share capital, general
reserve and retained earnings
<!--[if !supportLists]-->o
<!--[endif]-->understand and distinguish between issued,
called-up and paid-up share capital
<!--[if !supportLists]-->o
<!--[endif]-->understand and distinguish between share capital
(preference shares and ordinary shares) and loan capital (debentures)
<!--[if !supportLists]-->o
<!--[endif]-->prepare income statements, statements of changes
in equity and statements of financial position
<!--[if !supportLists]-->o
<!--[endif]-->make adjustments to financial statements as
detailed in 5.1 (sole traders)
5.4. Clubs and societies
<!--[if !supportLists]-->o
<!--[endif]-->distinguish between receipts and payments
accounts and income and expenditure accounts
<!--[if !supportLists]-->o
<!--[endif]-->prepare receipts and payments accounts
<!--[if !supportLists]-->o
<!--[endif]-->prepare accounts for revenue-generating
activities, e.g. refreshments, subscriptions
<!--[if !supportLists]-->o
<!--[endif]-->prepare income and expenditure accounts and
statements of financial position
<!--[if !supportLists]-->o
<!--[endif]-->make adjustments to financial statements as
detailed in 5.1 (sole traders)
<!--[if !supportLists]-->o
<!--[endif]-->define and calculate the accumulated fund
5.5. Manufacturing accounts
<!--[if !supportLists]-->o
<!--[endif]-->distinguish between direct and indirect costs
<!--[if !supportLists]-->o
<!--[endif]-->understand direct material, direct labour, prime
cost and factory overheads
<!--[if !supportLists]-->o
<!--[endif]-->understand and make adjustments for work in
progress
<!--[if !supportLists]-->o
<!--[endif]-->calculate factory cost of production
<!--[if !supportLists]-->o
<!--[endif]-->prepare manufacturing accounts, income
statements and statements of financial position
<!--[if !supportLists]-->o
<!--[endif]-->make adjustments to financial statements as
detailed in 5.1 (sole traders)
5.6. Incomplete records
<!--[if !supportLists]-->o
<!--[endif]-->explain the disadvantages of not maintaining a
full set of accounting records
<!--[if !supportLists]-->o
<!--[endif]-->prepare opening and closing statements of
affairs
<!--[if !supportLists]-->o
<!--[endif]-->calculate profit or loss for the year from
changes in capital over time
<!--[if !supportLists]-->o
<!--[endif]-->calculate sales, purchases, gross profit, trade
receivables and trade payables and other figures from
<!--[if !supportLists]-->o
<!--[endif]-->incomplete information
<!--[if !supportLists]-->o
<!--[endif]-->prepare income statements and statements of
financial position from incomplete records
<!--[if !supportLists]-->o
<!--[endif]-->make adjustments to financial statements as
detailed in 5.1 (sole traders)
<!--[if !supportLists]-->o
<!--[endif]-->apply the techniques of mark-up, margin and
inventory turnover to arrive at missing figures
<!--[if !supportLists]-->6.
<!--[endif]-->Analysis and interpretation
6.1. Calculation
and understanding of accounting ratios
<!--[if !supportLists]-->o
<!--[endif]-->Gross margin
<!--[if !supportLists]-->o
<!--[endif]-->Profit margin
<!--[if !supportLists]-->o
<!--[endif]-->Return on capital employed (ROCE)
<!--[if !supportLists]-->o
<!--[endif]-->Current ratio
<!--[if !supportLists]-->o
<!--[endif]-->Liquid (acid test) ratio
<!--[if !supportLists]-->o
<!--[endif]-->Rate of inventory turnover (times)
<!--[if !supportLists]-->o
<!--[endif]-->Trade receivables turnover (days)
<!--[if !supportLists]-->o
<!--[endif]-->Trade payables turnover (days)
6.2. Interpretation of accounting ratios
<!--[if !supportLists]-->o
<!--[endif]-->prepare and comment on simple statements showing
comparison of results for different years
<!--[if !supportLists]-->o
<!--[endif]-->make recommendations and suggestions for
improving profitability and working capital
<!--[if !supportLists]-->o
<!--[endif]-->understand the significance of the difference
between the gross margin and the profit margin as an indicator of a business’s
efficiency
<!--[if !supportLists]-->o
<!--[endif]-->explain the relationship of gross profit and
profit for the year to the valuation of inventory, rate of inventory
<!--[if !supportLists]-->o
<!--[endif]-->turnover, revenue, expenses, and equity
6.3. Inter-firm comparison
<!--[if !supportLists]-->o
<!--[endif]-->understand the problems of inter-firm comparison
<!--[if !supportLists]-->o
<!--[endif]-->apply accounting ratios to inter-firm comparison
6.4. Interested parties
<!--[if !supportLists]-->o
<!--[endif]-->owners
<!--[if !supportLists]-->o
<!--[endif]-->managers
<!--[if !supportLists]-->o
<!--[endif]-->trade payables
<!--[if !supportLists]-->o
<!--[endif]-->banks
<!--[if !supportLists]-->o
<!--[endif]-->investors
<!--[if !supportLists]-->o
<!--[endif]-->club members
<!--[if !supportLists]-->o
<!--[endif]-->other interested parties such as governments,
tax authorities, etc.
6.5. Limitations of accounting statements
<!--[if !supportLists]-->o
<!--[endif]-->historic cost
<!--[if !supportLists]-->o
<!--[endif]-->difficulties of definition
<!--[if !supportLists]-->o
<!--[endif]-->non-financial aspects
<!--[if !supportLists]-->7.
<!--[endif]-->Accounting principles and policies
7.1. Accounting principles
<!--[if !supportLists]-->o
<!--[endif]-->matching
<!--[if !supportLists]-->o
<!--[endif]-->business entity
<!--[if !supportLists]-->o
<!--[endif]-->consistency
<!--[if !supportLists]-->o
<!--[endif]-->duality
<!--[if !supportLists]-->o
<!--[endif]-->going concern
<!--[if !supportLists]-->o
<!--[endif]-->historic cost
<!--[if !supportLists]-->o
<!--[endif]-->materiality
<!--[if !supportLists]-->o
<!--[endif]-->money measurement
<!--[if !supportLists]-->o
<!--[endif]-->prudence
<!--[if !supportLists]-->o
<!--[endif]-->realization
7.2. Accounting policies
<!--[if !supportLists]-->o
<!--[endif]-->comparability
<!--[if !supportLists]-->o
<!--[endif]-->relevance
<!--[if !supportLists]-->o
<!--[endif]-->reliability
<!--[if !supportLists]-->o
<!--[endif]-->understandability
Lectures: 7 Topics , 27 Sub Topics
Duration:
Language: English
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