NATIONAL 5 Accounting

Transcription

1 MADRAS COLLEGE FACULTY OF TECHNOLOGIES DEPARTMENT OF BUSINESS AND ENTERPRISE NATIONAL 5 Accounting Course Information Name:

2 ACCOUNTING NATIONAL 5 COURSE AIMS AND STRUCTURE The course aims to enable learners to: develop an awareness of the important function accounting performs in industry and society; develop accuracy in the preparation, presentation, interpretation and analysis of accounting information and apply a systematic approach to solving financial problems; apply relevant accounting concepts and techniques when preparing financial information; develop an awareness of a range of sources of finance available to organisations and when to use the most appropriate ones; apply information technology in accounting-related tasks. There are 2 areas of study: Financial Accounting Management Accounting FINANCIAL ACCOUNTING Candidates will develop skills, knowledge and understanding to prepare, interpret and analyse financial accounting information by using relevant accounting concepts and techniques. The information produced should be suitable for stakeholders to assess their organisation s current financial position. Candidates should be able to provide evidence of their ability to prepare financial statements in accordance with international accounting standards, their understanding of key financial accounting terms, and analysis of financial performance using accounting ratios. MANAGEMENT ACCOUNTING Candidates will develop skills, knowledge and understanding of internal accounting information, and will be able to prepare a range of statements using basic accounting techniques. The information produced should be suitable for management to make decisions about the future planning and control of the business. Candidates should be able to provide evidence of their ability to prepare cash budgets and a range of straightforward cost statements, their understanding of key management accounting terms, and knowledge of their application to management decision making. 2

3 COURSE ASSESSMENT QUESTION PAPER 2 hours 130 marks The question paper gives candidates the opportunity to demonstrate: Preparing and presenting a range of accounting statements Selecting accounting information to determine business revenues, costs and profits Evaluating business success on the basis of accounting information Preparing, interpreting and analysing accounting information Using accounting techniques to facilitate decision-making Applying knowledge and understanding of accounting concepts and theories Section A 2 x 35 mark questions drawn from any area of the course. These questions will be mainly computational in nature, with up to 10 marks for theory in each question. Section B 4 x 15 mark questions drawn from any area of the course, including theory, but will be predominantly computational in nature. ASSIGNMENT 2 hours 50 marks Candidates will work through a series of tasks to prepare accounting information from up to 3 topics from across the course content. Candidates will need to make use of analytical techniques in order to analyse an organisation s financial position and/or make recommendations for the future. All tasks will be completed in one sitting using spreadsheet software. Homework You should expect homework once a week. This could be in the form of: Completing work started in class Reading over notes from each lesson s work Practice questions to reinforce work covered in class Revision questions Questions similar to the external question paper Achieving Success is Your responsibility We hope that you will enjoy the National 5 Accounting course and go on to be successful in the final course assessment. In order to achieve this goal we must work in partnership. You will work with up-to-date materials and will be given help and support throughout the course. We hope you will approach your work with a mature attitude and determination to succeed. Always ensure that your work is well structured and neatly presented. 3

4 Self-Assessment Checklist Financial Accounting Role of the Financial Accountant Duties, scope and responsibilities of the Financial Accountant. Business Documents Function of various business documents used in buying, selling and payment: Invoices, credit notes and statements of account. Completion of business documents from appropriate sources including the calculation of VAT, trade discount and cash discount. Preparing Ledger Accounts Record financial transaction in the ledger using double entry. Entries may be recorded using narrative statements or from information contained in business documents eg invoices. Prepare a Trial Balance from a list of balances or from ledger accounts. Features of a Sole Trader Advantages and disadvantages Sources of finance available to a sole trader with associated advantages and disadvantages Financial Statements of a Sole Trader Preparation of an Income Statement and Statement of Financial Position in accordance with current accounting practice. Calculate and apply adjustments at year end for: provision for straight-line depreciation provision for bad debts (creation only) payables and receivables (of expenses only) closing inventory Explain why businesses need to account for year-end adjustments and describe the effect of adjustments on profit for the year and the statement of financial position. Define terms shown in the financial statements eg assets and liabilities. 4

5 Correction of Errors in Ledger Accounts Purpose and limitations of a trial balance Types of errors not disclosed by the trial balance Correction of errors and the effect on gross profit and profit for the year Sources of Finance Describe sources of finance available to a sole trader. Describe the uses, advantages and disadvantages of these sources of finance. Ratio Analysis Calculation and interpretation of the following ratios: Profitability Ratios gross profit ratio profit for the year ratio return on equity invested Liquidity Ratios current ratio acid test ratio Efficiency Ratios rate of inventory turnover average inventory expenses ratio trade receivables collection period trade payables payment period non-current asset to turnover ratio Comment on performance: Over a number of years With similar firms/competitors Against the industry average Make suggestions for improving each type of ratio or reasons why results differ. Benefits and limitations of calculating accounting ratios. 5

6 Management Accounting Role of the Management Accountant Duties, scope and responsibilities of the Management Accountant. Classification and calculation of costs Identify, classify and describe fixed, variable, direct and indirect costs. Direct Costs Materials Preparation of inventory record cards. Valuing issue of stock using First In First Out (FIFO) and Last In First Out (LIFO) bases. Direct Costs Labour Calculate labour hours and wages: time rate, piece rate, flat rate, bonus and overtime. Indirect Costs Overheads Distinguish between costs centres and cost units, and production and service cost centres. Prepare an Overhead Analysis Statement to include: allocation of overheads. apportionment of overheads calculated using floor area, number of employees, value of fixed assets, labour hours, machine hours, metered consumption, Kilowatt (Kw) hours. re-apportionment of services cost centres to production cost centres where the basis of apportionment is given. Preparation of Job Cost Statements Job cost statements which include: calculation of direct materials, labour and expenses calculation of overheads from given rate calculation of profit using mark-up calculation of selling price to include VAT 6

7 Break-even Analysis Use of break-even analysis techniques including: Interpretation of break-even charts. Calculate: - Contribution (unit and total) - break-even point (in units and sales value) - profit/loss for given output - output required to achieve given profit - margin of safety (in units and sales value) Analyse the impact on break-even point of changes to selling price, unit variable costs or fixed costs. Calculate changes required in selling price/contribution to maintain/improve existing profit levels. Management Decision-Making Using contribution analysis, calculate maximum profit under the constraint of a limiting factor: Identify examples of limiting factors Calculate contribution per limiting factor Decide on order of priority for production Calculate total contribution Calculate maximum profit after deducting fixed costs Budgeting Preparation of cash budgets for a period of up to 3 months taking account of: time delays in receipts from trade receivables (customers) or payments to trade payables (suppliers) cash/credit sales values purchase of non-current assets Interpret a cash budget and outline possible courses of action, including ways of improving cash flow. Benefits of preparing a cash budget. Using spreadsheets Be able to use formulae for the following functions: Add (SUM), subtract, multiply and divide percentages copy relatively linking between different worksheets Produce value and formula printouts with/without the following displayed: gridlines row and column headings 7