PETERHOUSE SCHOOL BUSINESS STUDIES & ACCOUNTING DEPARTMENT

ACCOUNTING SCHEMES OF WORK 5TH and 6th FORM 2017

Resources

1-Cambridge International AS and A level Accounting: H Randall & D Hopkins

2-Cambridge International AS and A level Accounting : Ian Harrison (2015)

3-Advanced Accounting For A2 : 2nd Edition : Ian Harrison

4- IG SCE and O Level Accounting Woodbook by Catherine Coucom and Past exam papers

Syllabus Topic Timing/ Work to be covered (Objectives) Reference texts

Week
5th Form Term 1: 1 To understand and explain the difference between book-keeping and accounting HR &DH (3-9)
2017  Define assets, capital and liabilities CC
The purpose of  Use these terms to form the accounting equation drawing up a Balance Sheet in horizontal format IH
accounting: Assets,  Start with the introduction of capital to prepare the first Balance Sheet
Capital, Liabilities Follow this with a series of transactions and the impact on the Balance Sheet.
Sources and 2 &3  The first transaction should be for starting up a business. Debit Cash/Bank, Credit Capital HR &DH (9-14)
recording of data:  There are two main approaches to double entry CC
Rules of double- o Debit - Receiving IH
entry o Credit - Giving
 Relating to increases/decreases in assets capital and liabilities
 Develop to prepare ledger accounts for assets and liabilities
 Define purchases, sales, purchase returns and sales returns
 Record transactions for goods
 Distinguish between cash and credit transactions
 Prepare ledger accounts for expenses and revenues
 Define drawings and record in the ledger accounts :Explain stages for balancing accounts
Syllabus Topic Timing/ Work to be covered (Objectives) Reference texts
Week
Books of prime 4 Give particular attention to the following: HR& DH (21-23)
Entry  the cash book is the only book of prime entry that is also part of the double entry system CC
 students must know how the double entry is completed from the books of prime entry.
 Sales , purchases:, sales returns, purchases returns ,petty cash and the journal
IH
 journal entries
The 5 Give particular attention to the following: HR &DH (23-24)
classification of  ledger accounts are either personal or impersonal accounts
accounts and  impersonal accounts are either real accounts (for assets), or nominal accounts (for revenue
division of the or expenses)
ledger.  explain how and why the ledger is divided into sections.
The trial balance, 6 &7  Explain the purpose of the Trial Balance in the preparation of the final accounts HR& DH (25-28)
Income  From a set of ledger accounts prepare a Trial Balance
statements & B/S  Limitation of Trial balance/ types of errors
 Preparation of the Trial Balance from ledger account exercises, covered earlier in the course
 Define cost of sales, gross profit and net profit
 Explain layout of the Trading and Profit and Loss Account
 At this stage preparation may be to horizontal or vertical layout
 The use of correct title: ‘for the year ended”
 Explain layout of the Balance Sheet At this stage preparation may be to horizontal or vertical layout
 The use of correct title: ‘as at’

Recognising 8  Why it is necessary to have generally accepted rules for Accounting HR&DH (42-46)
Accounting  Outline the concepts of going concern, accruals, prudence, consistency, cost, materiality,
Concepts business entity, money measurement, realisation and dual aspect, Substance over form
Syllabus Topic Timing/ Work to be covered (Objectives) Reference texts
Week
Capital and 8  Define capital expenditure IH (16), HR &DH 23
Revenue  Define revenue expenditure
Expenditure
 Explain the treatment of revenue expenditure in the Profit and Loss Account
 Explain the treatment of capital expenditure in the Balance Sheet
 Discuss the effects on the final accounts due to incorrect treatment of capital and
revenue expenditure
 Apply and explain the concepts of going concern, accruals and materiality
 The treatment of delivery, installation, maintenance and legal fees
Accruals and 9 & 10  Explanation of accruals and prepayments for expense accounts HR&DH (47-51)
Prepayments
 Preparation of ledger accounts including opening balances for expenses accrued and
prepaid
 Explanation of accruals and prepayments for revenue accounts
 Preparation of ledger accounts including opening and closing balances for revenues accrued
and prepaid
 Prepare Profit and Loss Account extracts for expenses and revenues
 Prepare Balance Sheet extracts for accruals and prepayments
Provision for 10 & 11  Define depreciation and explain why depreciation is provided for in the final HR& DH (52-58)
Depreciation accounts
The Causes of  Explain the terms cost, useful life and residual value
Depreciation  Discuss the causes of depreciation
 Methods of Calculating Depreciation ( Straight line , Reducing, Revaluation and use of Asset
 Accounting Entries for Depreciation: Preparation of ledger accounts for fixed assets, depreciation and
disposals
 Depreciation and Accounting Concepts: Apply and explain the accounting concepts of going
concern, accruals, prudence, consistency, cost and materiality to depreciation
 Problems involved in Accounting for Depreciation: Selection of appropriate method for different types of
fixed assets
 Estimating the useful life and residual value of a fixed asset Determination of the cost of a fixed asset
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Syllabus Topic Timing/ Work to be covered (Objectives Reference texts
Week
Bad Debts: 12  Explain bad debts, including calculations and preparation of ledger accounts and Profit and HR&DH (61-66)
Provision for Loss Account extracts
Doubtful Debts  Questions may include debtor’s accounts fully written off as bad debts and debtor accounts
where a proportion of the debt is recovered and the remainder written off as a bad debt
 Explain provisions for doubtful debts: bad debts recovered
 Discuss the factors used in determining the provision for doubtful debts
 Calculations may include specific and general provisions
 Calculations for the creation, increase and decrease of the provision for doubtful debts
 Prepare ledger accounts for the provision for doubtful debts and Profit and Loss Account extract.
 Prepare Balance Sheet extracts showing net debtors.
 Explain and use information from an Aged Debtors Schedule
 Discuss steps to help prevent bad debts
 Evaluation of credit control policies, apply concept of prudence, consistency , materiality
Preparation of 13  This section covers the preparation of financial statements taking into account adjustments Past papers
financial such as accruals ,prepayments, bad debts, provision of bad debts, provisions of depreciation
statements etc
 Income statements ( Trading & Profit and loss a/c)
 , statements of financial position
Bank 14  understand the use and purpose of a bank statement HR&HD (67-71)
reconciliation  update the cash book for bank charges, bank interest paid and received, correction of errors,
credit
Statements
 transfers, direct debits, dividends, and standing orders
 understand the purpose of, and prepare, a bank reconciliation statement to include bank
errors,
 uncredited deposits and unpresented cheques.

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Syllabus Topic Timing/ Work to be covered (Objectives Reference texts
Week
5th Form Term  Identify and explain those errors not affecting the Trial Balance HR&HD (81-88)
2: 2017 1 o Preparation of journals to correct errors not affecting the Trial Balance
Suspense  Prepare journal entries to correct errors which affect the Trial Balance
accounts: o Preparation of the Suspense Account
Types of Errors
 Preparation of statements of revised profit
 Preparation of revised Balance Sheets/Balance Sheet extracts
 Apply and explain relevant accounting concepts

Control 2  Explain the sub division of the ledger HR& DH (72-80)

accounts  Identify and explain books of original entry :cash book, sales, purchases, sales returns and
purchase returns
 This would include the Schedule of Debtors and Schedule of Creditors
 This would include the Schedule of Debtors and Schedule of Creditors
 Preparation of reconciliation statements of account balances and schedule of debtors or
creditors control
 Explain advantages of Control Accounts
Incomplete 3  Explanation of mark up, margin and stock turnover HR &DH (89-98)
Records  Calculations of mark up, margin and stock turnover to arrive at missing figures
 Calculations for sales and purchases; Control accounts
 Explain a statement of affairs
 Preparation of statement of affairs to calculate opening capital
 Calculate profit/loss from change in capital over time
 Preparation of final accounts from incomplete records
Syllabus Topic Timing/ Work to be covered (Objectives Reference texts
Week
 HR & HD (108-113)
Interpretation and 5 &6  Discuss the use of ratio analysis in appraising profitability and liquidity HR &DH (223-225)
analysis  Calculation of ratios to assess profitability and liquidity
 Profitability ratios:
 Gross profit ratio (margin)
 Mark up
 Net profit ratio (percentage)
 Return on capital employed
 Expenses to sales ratio
 Liquidity ratios; Current ratio
 Liquid (acid test) ratio
 Efficiency ratios; non-current asset turnover
 Trade receivables turnover (days)
 Trade payables turnover (days)
 Inventory turnover (days)
 Inventory turnover (times)
 identify and discuss the limitations of accounting information.
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 identify and discuss the differing requirements for information of user groups including:
management, employees, potential investors, creditors, government, public and
environmental bodies; and communicate the information required by these different
stakeholder groups
Syllabus Topic Timing/ Work to be covered (Objectives) Reference texts
Week

Valuation of 9  Methods of inventory valuation: FIFO & AVCO HR&DH (120-127)

inventory  Calculate closing stock under different methods of stock valuation
 Preparation of Trading Accounts under different methods of stock valuation
 Discuss the characteristics of different methods of stock valuation
 The difference between perpetual and periodic methods
 understand the different characteristics, and the appropriateness, of using FIFO,
AVCO and LIFO (Detailed calculations of the value of inventory using LIFO
 Explain the principle of cost and net realisable value : IAS2
 Stock is always valued at the lower of cost and net realisable value
 Calculations of closing stock when stock taking takes place after the financial year
end

Cost-Volume-Profit- 10 &11  Cost Behaviour :Explain different types of costs HR &DH (276-279
Analysis  Explain the concept of contribution
 Explain break-even, contribution to sales and margin of safety
 Prepare graphs for break-even and contribution to sales
 Explain the contribution concept for the calculation of profit
 Calculations for break-even, contribution to sales, margin of safety and profit
 Evaluation of cost-volume-profit data
 Discuss the advantages and limitations of cost-volume-profit analysis
 Discuss the significance of non-financial factors
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Syllabus Topic Timing/ Work to be covered (Objectives) Reference texts
Week
Marginal (variable) 12  Explain the purpose and uses of marginal costing for decision making HR &DH (279-288)
costing  Prepare marginal cost statements
 Discuss the limitations of marginal costing for decision making
  Uses of marginal costing : Pricing policy, accepting an order below normal selling price; make of
buy decisions; making use of scarce resources
 The valuation of inventory using marginal and absorption costing
 The use of sensitivity analysis
Cost 13  Explain different types of costs and overheads HR&DH (255-268)
Classification  Explain methods to absorb overheads
Allocation and  Explain allocation and apportionment
Apportionment  Calculation of overhead absorption rates using different methods
=Absorption  Re-apportion of overheads between service and production departments
costing  Calculation of overhead absorption rates following re-apportionment
 Calculations to account for under and over absorption of overheads
 Calculations of job costs using overhead absorption rates
 Discuss the usefulness of absorption costing
 Costing Applications: Job; Explanation of job and batch costing
 Calculations for costing statements
Job, unit and :31  Ensure students understand the differences between job, unit and batch operations and RH (266-2269)
batch costs  How the costs of each type are calculated. including the calculation of the value of inventory.
 Students should select different types of businesses and say which type of costing is
appropriate to each. May a business find it necessary to adopt more than one type of
costing?
 the accurate calculation of costs for each system of production
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5th Form Term 3 : 1  explain the need for a business to plan for the future HR & DH (289-294)
2017  explain why organisations prepare budgets and the benefits they bring to the planning process IH (382-390)
The application of  explain the advantages and disadvantages of budgetary control, including both financial and non-
financial factors. New
accounting to
business planning
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Accounting for 2  Partnership Agreement :Explain the provisions of the Partnership Act 1890 Section 24 HR &DH (127-135)
Partnerships  Explain the Appropriation Account
 Preparation of Trading and Profit and Loss and Appropriation Accounts incorporating adjustments
 Explanation of Capital and Current Accounts
 Preparation of Capital and Current Accounts
  Explanation of Balance Sheets
 Preparation of final accounts incorporating adjustments

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Syllabus Topic Timing/ Work to be covered (Objectives) Reference texts
Week
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Partnership 3  Explain the concept of goodwill HR & DH (136-156)
Changes:  Explain the accounting entries to record goodwill
Goodwill;  Change in profit sharing ratio; Admission of a partner and retirement
Revaluation  Preparation of the accounting entries to record goodwill
Retirement  Questions may require goodwill to be written out or remain in the books
Dissolution  Explain the principles of the revaluation of assets
 Preparation of the accounting entries to record revaluations
 Apportionment of profit
 retirement of an existing partner and the dissolution of a partnership- New
Limited 4  Explain main types of share capital in a limited company HR &DH (158-172)
companies  Describe other types of finance available to a limited company
 prepare an income statement, statement of financial position
 Prepare simple cash flows statement for a limited company from full or incomplete
accounting records
 describe the distinction between capital and revenue reserves
 explain the different types of shares a company may issue
 prepare ledger accounts to record the issue of the different types of shares, including bonus
and rights issues
 prepare a statement of changes in equity.
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Syllabus Topic Timing/ Work to be covered (Objectives) Reference texts
Week
6th Form Term 1: A2
2017

Manufacturing 1  distinguish between direct and indirect costs HR &DH ( 114-119)
Accounts  distinguish between direct material, direct labour, prime cost and factory overheads
 understand and make adjustments for work in progress
 calculate factory cost of production
 prepare manufacturing financial statements: income statements and statements of financial
position

 Calculation of manufacturing profit and accounting entries

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Clubs and 2 &3  Different terms are used in the accounts of clubs and societies compared to business HR &HD ( 99-107)
societies organisations
 distinguish between receipts and payments accounts and income and expenditure
accounts
 prepare receipts and payments accounts
 prepare accounts for revenue-generating activities, e.g. refreshments, subscriptions
 prepare income and expenditure accounts and statements of financial position
 calculate the accumulated fund.
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 HR (157-173)
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Syllabus Topic Timing/ Work to be covered (Objectives) Reference texts
Week

Ian 2 (84-107)
Business purchase 4  The difference between purchase of business and purchase of assets of the business HR( 200-208)
and merger  Goodwill arising on the purchase of business
 Realisation A/C –Sale of Business A/C in the books of the seller and Purchase of
business A/C in the books of the purchaser
 The preparation of the Statement of Financial Position following the purchase of
business
 How to calculate return on investment in the new business.
 evaluate and discuss the advantages and disadvantages of the proposed merger.


Cash flow 6 &7  explaining how cash inflows and outflows are found by the comparison two Balance Sheets HR (174-188)
statements  the form of cash flow statements and the contents of the headings IAS 7:
 Operating Activities,
 Investing Activities –purchase and sale of fixed assets
 Financing Activities –Issue of shares, loans and redemptions of shares or loan
 the correct treatment of non-cash items in the Profit and Loss Account
 the distinction between profitability and liquidity
 the preparation of cash flow statements for companies, sole traders and partnerships.
 the preparation of Balance Sheets from cash flow statements
 statements of total recognised gains and losses.
Published 8  Principles governing the disclosure requirements of company annual reports covering: HR (209-211)
company accounts  The Directors’ Report;
 Income statement (statement of comprehensive income);
 Statement of financial position;
 Statement of cash flows;
 (e) Statement of changes in equity (total recognised gains and losses).
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International 9& 10  IAS 1 Presentation of financial statements HR (201-223)
Accounting  IAS 2 Inventories (not long-term contracts)
Standards -IAS  IAS 7 Statement of cash flows
 IAS 8 Accounting policies
 IAS 10 Events after the reporting period
 IAS 16 Property, plant and equipment
 IAS 18 Revenue
 IAS 23 Borrowing costs
 IAS 33 Earnings per share
 IAS 36 Impairment of assets
 IAS 37 Provisions, contingent liabilities and contingent assets
 IAS 38 Intangible assets
Auditing and 11 • explain the role of the auditor Ian H (426-30)
stewardship of • explain and discuss the role of directors and their responsibilities to shareholders
limited companies (stewardship)
• discuss the importance of a true and fair view in respect of financial statements.
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Consignment and 12  Distinguish between consignments and joint ventures and the environment in which they Ian H (422-426)
Joint venture operate.
 prepare ledger accounts for consignment transactions, including the calculation of closing
accounts inventory valuation
 prepare ledger accounts for joint ventures
 Calculate the profit for joint ventures.
Syllabus Topic Timing/ Work to be covered (Objectives) Reference texts
Week

Term 2 : 6th Form : A2

2017

Computerised 1  Discuss the process of computerising the accounts of a business. Ian H (430-434)
accounting  discuss the advantages and disadvantages of introducing a computerised accounting
systems system
 discuss the process of computerising the business accounts
 discuss ways in which the integrity of the accounting data can be ensured during the
transfer to a computerised accounting system

Company 2  Students will recognise the various sources from which companies’ activities are financed. RH (245-151)
Financing  Describe the various sources of finance and their suitability and limitations; CIE papers Nov
 the need to finance long term investment from long term sources. Explain “window dressing”. 2001 Q1 & 9706/04
 Students should examine companies’ published accounts and note how long term June
requirements have been financed from long term sources. 2003 Q1(d)
 What are they? What short term sources are being utilised?
Investment ratios 2 &3  After the ratios have been calculated, they must be interpreted in order to judge the RH(226-243)
Interpretation performance of the business. CIE papers 9706/04
and  You need to be able to prepare and comment on simple statements showing the June
analysis 2003 Q1 (b)(c), 9706/04
comparison of results for different years. Nov
 Investment ratios :Gearing, Income gearing, Earning per share, PER, Dividend cover 2003 Q1
,Dividend per share , Dividend yield etc and Limitation of ratios
Activity based 4 &5  understand and discuss the application of activity based costing and identify and explain its Ian H (442-446)
costing (ABC uses and limitations. Candidates should be able to:
 use ABC to: – apportion overheads – calculate the total cost of a unit – calculate the value of
inventory – demonstrate the effect of different methods of overhead absorption on profit
 apply ABC costing techniques to make business decisions and recommendations using
supporting data
Syllabus Topic Timing/ Work to be covered (Objectives) Reference texts
Week

Budgeting:34 6  How budgets differ from forecasts RH (289-294)

 How budgets help management to plan and control.
 The factors to be considered in the preparation of budgets
 How to prepare sales, production ,purchasing ,and expenditure budgets

Budgeting :34 7  How to prepare cash budgets, Debtors and creditors budgets RH(294-300)
 How to prepare a master budget
 What do they understand by the term ‘flexible budget’ and why are these often necessary?
 They should explain how they would flex ‘semi-variable’ expenses.
Investment 8&9  What is investment appraisal ? ,Additional benefits, incremental costs, sunk costs, RH (313-3210
Appraisal opportunity costs
 How to calculate the Accounting rate of return ( ARR) and How to calculate the pa back
period
 How to calculate net present value (NPV) and How to calculate internal rate of return ( IRR)
 Give particular attention to
 sunk costs and opportunity costs :ensuring that students understand that ARR is the only
technique based on profitability, while payback, NPV and IRR are calculated on incremental
cash flows
 the irrelevance of inflation in this topic to the concept of the time value of money
(discounting is based on the cost of capital, not the rate of inflation) sensitivity of each
technique to variations in revenue and costs.

Standard Costing 10 & 11  Explain the purpose of standard costing HR (300-312)

 Explain the stages involved in setting up a standard costing system
 Discuss types of standards
 Calculate variances: Calculations should show adverse or favourable
 Explain reason for variances
  How to flex a budgets
 How to calculate sales, materials and labour variances : Calculation of sales volume and
price variances; materials usage and price variances; labour efficiency and rate variances.
 How to reconcile the actual and budgets profits
 Recognise the possible causes of variances

6th Form Term 3

:2017
Recap on
Standard costing

Revision