Syllabus Content
1.0 DOUBLE ENTRY SYSTEM
Within the following areas, candidates should be able to:
1.1 The Double Entry System
• Explain the accounting entity, money measurement and historical concept
• Analyse business transactions using the accounting equation:
Assets=Liabilities+Owners’ Equity
• Process accounting data using the double entry system
1.2 Source Documents
• Name and state the use of an invoice, credit note,debit note, payment voucher, cheque counterfoil, receipt and bank statement as documentary evidence of business transactions
• Recognize the stewardship function of accounting for business units
• Questions will not require knowledge of document details
1.3 Books Of Prime Entry
The General Journal
• Identify the dual effects of recording business transactions in the general journal
• Enter those transactions, including correction of errors, that cannot be recorded in any special journal
• Write relevant explanatory narration for each entry.
Special Journals
• Process accounting data in Sales Journal,Purchase Journal, Sales Return Journal Purchases Return Journal
The Cash Book
• Recognize its dual function both as a book of prime entry and as a ledger for bank and cash
• Draw up a reconciliation of the cash book with the bank statement in respect of the following: unrepresented cheques, bank charges, direct debits, standing orders, credit transfers, dividends, correction of errors, dishonoured cheques and uncredited deposits
• Explain the use of the imprest system as a control over petty cash
The Ledger
Prepare ledger accounts using the “T” account format
• Post transactions from books of prime entry to the ledger accounts
• Balance the ledger accounts as required
• Interpret ledger accounts and their balances
• Candidates need NOT know the use of the folio columns
The Trial Balance
• Recognize that it is a statement of ledger balances on a particular date
• Extract a trial balance
• Explain its uses and limitations
• Identify and explain those errors which do not affect the trial balance-omission, commission, principle, compensating, original entry and reversals
2.0 Accounting Procedures
Within the following areas, candidates should be able to :
2.1 Correction of Errors
• Make journal entries supporting the correction of errors
• Calculate and comment on the effects of errors on the profit, assets, liabilities or owners’ equity
• Prepare a corrected trial balance
• Prepare revised balance sheets or extracts
2.2 Control Accounts
• Prepare sales and purchases ledgers
• Distinguish and account for cash and trade discounts
• Explain that control accounts may be used to provide totals of debtors and creditors, locate errors and act as a deterrent against fraud
• Identify and use the books of prime entry as sources of information for the control account entries
• Enter the following items into the relevant control account: sales and purchases, receipts and payments, cash discounts, returns, bad debts, bad debts recovered, dishonored cheques, interest on overdue accounts, contra entries, refunds opening and closing balances(debit and credit within each account)
• Explain that control accounts are an independent check on the sales and purchases ledgers and draw up a reconciliation of the control accounts and subsidiary ledgers.
2.3 Balance Day Adjustments
• Explain the going concern and accounting period conventions and the matching principle
• Make entries in the journal and ledger accounts to record accrued and prepaid expenses and outstanding and prepaid income
• Make entries in the journal and ledger accounts to write off bad debts and to make provision for
doubtful debts as instructed.
2.4 Accounting for Fixed Assets
2.4.1. Capital and Revenue Expenditure
• Distinguish and account for the different treatment of capital and revenue expenditure and income
• Use materiality as a basis of capitalization of expenditure and income
• Calculate and comment on the effects of different treatment of expenditure on profit and asset valuation
2.4.2 Provision for Depreciation
• Explain depreciation as the allocation of capital expenditure over accounting period
• Give reasons for accounting for depreciation
• Calculate depreciation using the straight line, diminishing(reducing) balance and usage methods
of depreciation and compare the effects of these methods on profits
• Explain the circumstances in which each method is used
• Prepare journal entries and ledger accounts for the provision for depreciation
2.4.3 Disposal Of Fixed Asset
• Calculate and write off provision for depreciation against original cost of the fixed assets
• Prepare a disposal account for the fixed asset
2.5 Information Technology In Accounting
• Recognize the common features of accounting application software
• Explain the advantages and disadvantages of a computerized accounting system
• State the role and describe the impact of information technology on accounting work flow and practices.
3.0 Fundamentals of Preparing Final Accounts
Within the following areas, candidates should be able to:
3.1 Trading and Profit and Loss Accounts
• Distinguish between the gross and net profit or loss for a specified accounting period
• Recognize that net profit(or loss) is the increase(or decrease) in the net assets value during the period
3.2 Balance Sheet
• Recognize that it is a statement of balances of assets and liabilities on a specified date(questions would only be set using the “T” account format
• Distinguish between current assets and fixed assets,current liabilities and long term liabilities
• Compute working capital
Explain the basis of valuation of assets as follows:
• fixed assets at cost less accumulated depreciation
• stock in trade at cost or net realizable value, whichever is lower ( principle of prudence)
• trade debtors at expected collectible amount ie after deduction of provision for doubtful debts
4.0 Preparation of Final Accounts
Within the following areas, candidates should be able to:
4.1 Sole Trader
• Prepare trading and profit and loss accounts and balance sheet
• Make necessary balance day adjustments
• Account for goods taken by owner for own use
4.2 Partnership
• Prepare trading, profit and loss and appropriation accounts and balance sheet
• Make necessary balance day adjustments
• Recognize the effects of the contents of a partnership agreement on profit appropriation
• Show the treatment of interest on capital, partners’ salaries, interest on partners’ loans and on
drawings
• Recognize the advantages of using current accounts to record appropriated profits and drawings of partners
• Draw up partners’ current and capital accounts both in ledger form and as part of a balance sheet presentation
• Record the capital contributions made by partners both in cash or non-cash assets in the formation of a partnership
• Calculate and record goodwill in the amalgamation of two sole traders to form a partnership, including the writing off of goodwill over accounting periods
• Contrast sole trader, partnership and limited liability company in terms of their capital structures
Questions will NOT be set on the dissolution of partnership and preparation of final accounts for a limited liability company.
4.3 Club and Societes
• Distinguish between receipts and payments account and income and expenditure account
• Prepare accounts for receipt and payment, revenue generating activities including subscriptions from members, use of club facilities and sale of refreshments
• Make necessary balance day adjustments
• Prepare income and expenditure account and balance sheet
4.4 Incomplete Record
• Prepare opening and closing statements of assets and liabilities to derive the net profit/loss from change in capital over time
• Compute sales, purchases and gross profit from incomplete information
• Arrive at missing accounting data using mark up, margin and stock turnover
• Recognize the difficulties in providing information on profitability and financial position of business entities when the books of account are not prepared by the double entry system.
5.0 Interpretation of Final Accounts
Within the following areas, candidates should be able to:
5.1 Recognize the need to report and present a true and fair view of business activities
5.2 Financial Relationships:
• Compute and explain the importance of gross profit margin, mark-up on cost, net profit margin, rate of stock turnover and expenses of turnover
• Compute and comment upon the significance of the inter-relationship of the balance sheet items:
• working capital to the liquidity of a business
• current and quick ratios
• owners’ equity and capital employed
• rate of return on capital
• distinguish between and show understanding of owners’ equity and capital employed
• recognize the importance of stock valuation and the effect of an incorrect stock valuation on profit, capital and assets
• explain the relationship of gross and net profits to the valuation of stock and rate of stock turnover.
Scheme of Assessment:
Paper 1 (30%, 1 hr)
Multiple Choice Paper consisting of 30 items testing across the whole syllabus
Paper 2 (70%, 2 hr)
Paper 2 will be divided into two sections:
Section A (50%) – three compulsory structured questions
-one compulsory question which will involve the preparation of the final accounts of a business
Section B (20%) Candidates will answer one out of two problem solving questions.
Candidates will write their answers using multi-column accounting stationery.
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