principles of accounts teaching and learning …

132
PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING SYLLABUS Upper Secondary Express Course Normal (Academic) Course Implementation starting with 2020 Secondary Three Cohort © 2020 Curriculum Planning and Development Division. This publication is not for sale. Permission is granted to reproduce this publication in its entirety for personal or non-commercial educational use only. All other rights reserved.

Upload: others

Post on 27-Nov-2021

16 views

Category:

Documents


1 download

TRANSCRIPT

Page 1: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING SYLLABUS

Upper SecondaryExpress Course

Normal (Academic) Course

Implementation starting with 2020 Secondary Three Cohort

© 2020 Curriculum Planning and Development Division.This publication is not for sale. Permission is granted to reproduce this publication in its entirety for personal or non-commercial educational use only. All other rights reserved.

Page 2: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …
Page 3: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

1

CONTENTS

Page1 INTRODUCTION

• Accounting and its Value in the 21st Century 3• Qualities of a Principles of Accounts Learner 3• 21st Century Competencies and National Education 4• Desired Outcomes of Education 5

2 CONTENT

• Design Considerations of Principles of Accounts 7• Syllabus Aims 7• Knowledge, Skills, Values and Attitudes 8• Content Frame 10• Content Outline 11• Content and MOE Initiatives 13• Content Amplification and Learning Outcomes 16

3 PEDAGOGY

• Pedagogical Practices 110• Nature of Accounting Knowledge 111• Strategies for Principles of Accounts 113

4 ASSESSMENT

• Purpose 118• Assessment Objectives 119• Assessment Specification Grid 119• Scheme of Assessment 120

AppendicesAppendix A: List of Formulae 121Appendix B: Formats of Financial Statements 123

Page 4: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

SECTION 1:INTRODUCTION

• Accounting and its Value in the 21st Century

• Qualities of a Principles of Accounts Learner

• 21st Century Competencies and National Education

• Desired Outcomes of Education

Page 5: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

3

1. INTRODUCTION

Accounting and its value in the 21st Century

Accounting is an information system based on generally accepted accounting principles. It involves recording and processing business transactions, and communicating this information to business owners and stakeholders. The accounting information is then used to evaluate business performance and facilitate decision-making.

The study of accounting helps students understand how businesses measure and communicate their performance, and make use of both accounting and non-accounting information related to their businesses to make decisions. Through the study of accounting, they will acquire transferrable skills such as organising and analysing information for decision-making, and apply these skills in their daily lives. Students will also understand the importance of values such as integrity and objectivity when communicating and making decisions.

Qualities of a Principles of Accounts Learner

Students learning Principles of Accounts will develop a keen eye for detail, an important attribute for accountants. Students will also learn to be organised and structured when they consolidate information into financial statements used by stakeholders for decision-making1. In addition, students will learn to use both accounting and non-accounting information to make decisions, and to become critical thinkers who solve problems and adapt to the evolving needs of stakeholders. We hope that students learning Principles of Accounts will develop these attributes, which will serve them well in the future.

1 More desired attributes of accountants can be found in the Skills Framework for Accountancy, ‘A Guide to Occupations and Skills’, developed by Skills Future Singapore, Workforce Singapore and in consultation with Singapore Accountancy Commission. More information can be found on www.skillsfuture.sg.

Page 6: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

4

21st Century Competencies

Accounting helps students develop 21st century competencies (Figure 1) especially critical thinking and communication skills when they analyse information, make decisions based on it and present their decisions. Accounting also allows students to understand the importance of a common standard for accounting in the face of different cultural needs, global challenges and technological advancements in order to communicate results and make decisions.

Figure 1: 21st Century Competencies Framework

National Education

While the focus of Principles of Accounts is largely on the acquisition of the procedural knowledge of accounting due to age-appropriateness of content, there are opportunities for teachers to explore and deepen the National Education dispositions for citizenship. With the introduction of using scenarios to teach in class, teachers can weave in stories of local businesses to help students acquire a sense of reality, belonging and hope. Understanding the development of the accounting industry also helps students understand the impact of technological advancement on accounting and in Singapore and the less predictable world we are currently in. Sharing snippets of such business stories illustrating Singapore’s economic challenges from the past and present, contributes to students’ ability to engage with Singapore’s present and future issues with confidence, optimism and resilience.

Page 7: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

5

See Section 2 for more details on the opportunities afforded for National Education through the syllabuses.

Desired Outcomes of Education

Every Principles of Accounts student can then embody the Desired Outcomes of Education as:• a confident person who has a strong sense of right and wrong, is adaptable and resilient, knows

him/herself, is discerning in judgment, thinks independently and critically, and communicateseffectively;

• a self-directed learner who takes responsibility for his/her own learning, who questions,reflects and perseveres in the pursuit of learning;

• an active contributor who is able to work effectively in teams, exercises initiative, takescalculated risks, is innovative and strives for excellence; and

• a concerned citizen rooted in Singapore, has a strong civic consciousness, is informed, andtakes an active part in bettering the lives of others around him/her.

Page 8: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

SECTION 2:CONTENT

• Design Considerations of Principles of Accounts

• Syllabus Aims

• Knowledge, Skills, Values and Attitudes

• Content Frame

• Content Outline

• Content and MOE Initiatives

• Content Amplification and Learning Outcomes

Page 9: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

7

2. CONTENT

Design Considerations of Principles of Accounts

There are two broad approaches to accounting education: the user and the preparer. The user approach focuses on learning how to use accounting information for decision-making, which accountants are increasingly required to do. Users are also expected to have sound knowledge of business-related information, and not just depend on accounting information to make decisions about the business. On the other hand, the preparer approach focuses on learning how to prepare and present accounting information, which is traditionally what accountants do.

The aim of a Principles of Accounts education is not to nurture work-ready graduates for the accounting profession and its related field, but to provide students with the foundational knowledge and skills to pursue any area of study or work in the future and to create interest and raise awareness of future pathways in accounting. This subject is not a pre-requisite for business-related courses in tertiary institutions. Students would thus not benefit if the syllabuses were to adopt either a wholly user or preparer approach. Instead, the syllabuses place emphasis on equipping upper secondary school students with age-appropriate and relevant accounting knowledge, skills and values from both the user and preparer approaches.

Syllabus Aims

The Principles of Accounts syllabuses seek to develop in students the knowledge and skills to prepare, communicate and use both accounting and non-accounting information related to the business for decision-making.

To understand the purpose of the information and how business activities are measured and presented, students will be equipped with the basic knowledge and skills to prepare and present accounting information and communicate them in a useful manner that can be understood by others.

By learning to become users of information, students understand:

• what business decisions are;• how decisions are made using accounting information;• the limitations of relying only on accounting information; and• the consideration of non-accounting information.

Page 10: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

8

Knowledge, Skills, Values and Attitudes

Table 1: Knowledge and understanding of Principles of Accounts

Express Normal (Academic)

The syllabus intends for students to develop knowledge and understanding of:

• the purpose of accounting as providingaccounting information to support andfacilitate decision-making;

• the consideration of accounting and non-accounting information in decision-making;

• the role of accountants and their ethicalvalues;

• the use of financial ratios to evaluatethe profitability, liquidity and efficiencyof inventory management and tradereceivables management;

• the basic forms of business entities;

• the elements of financial statements thatrepresent business activities and how theyare presented in financial statements;

• the principles underlying accounting as ameasurement system;

• the accounting information system andaccounting cycle, and the double-entrymethod of recording business activities and

• the internal controls to ensure accuracy ofinformation.

The syllabus intends for students to develop knowledge and understanding of:

• the purpose of accounting as providingaccounting information to support andfacilitate decision-making;

• the consideration of accounting and non-accounting information in decision-making;

• the role of accountants and their ethicalvalues;

• the elements of financial statements thatrepresent business activities and how theyare presented in financial statements;

• the principles underlying accounting as ameasurement system;

• the accounting information system andaccounting cycle, and the double-entrymethod of recording business activitiesand;

• the internal controls to ensure accuracy ofinformation.

Page 11: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

9

Table 2: Skills developed through Principles of Accounts

Express Normal (Academic)

The syllabus intends for students to develop the skills of:

• applying the double entry system ofrecording business transactions;

• preparing accounting information in asuitable form;

• interpreting financial statementsand analysing the effects of businesstransactions and accounting adjustmentson financial statements;

• evaluating businesses for their profitability,liquidity and efficiency of inventorymanagement and trade receivablesmanagement;

• evaluating choices using both accountingand non-accounting information.

The syllabus intends for students to develop the skills of:

• applying the double entry system ofrecording business transactions;

• preparing accounting information in asuitable form;

• interpreting financial statementsand analysing the effects of businesstransactions and accounting adjustmentson financial statements; and

• evaluating choices using both accountingand non-accounting information.

Table 3: Values and attitudes developed through Principles of Accounts

Express Normal (Academic)

The syllabus intends for students to develop the values and attitudes of:

• integrity and objectivity;

• social responsibility, in the context ofaccounting and how it can affect users ofaccounting information; and

• being logical, methodical, consistent andaccurate.

The syllabus intends for students to develop the values and attitudes of:

• integrity and objectivity;

• social responsibility, in the context ofaccounting and how it can affect users ofaccounting information; and

• being logical, methodical, consistent andaccurate.

Page 12: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

10

Content Frame

The content is framed by three key understandings (see Figure 2).

Key Understanding 1 aligns with the primary purpose of accounting and its place in society. Key Understandings 2 and 3 outline the accounting constructs and the accounting professional’s modes of thinking and doing in relation to business activities. All three share the core idea that financial numbers convey information about business activities. The value of learning Principles of Accounts lies in understanding how accounting information about business activities is derived and used.

Since the purpose of accounting is to provide information for decision-making, the way business activities are measured and represented (Key Understandings 2 and 3) is affected by the changing information needs of stakeholders (Key Understanding 1). The relationship between the three key understandings is illustrated in Figure 2.

Key Understanding 1:Accounting and non-accounting information are used to support and facilitate decision-

making.

Stakeholders require accounting and non-accounting information on business activities for decision-making, which in turn affect the business and its activities.

Accounting information serves specific needs.

Accounting practice changes as information needs change.

Key Understandings 2 and 3 define the accounting constructs.

Key Understanding 2:Accounting is a language used to

represent business activities.

Accounting is the language of business as it provides the concepts

and framework to represent business activities.

Key Understanding 3: Accounting is an information system to measure business

activities.

The accounting information system measures business activities by

identifying, recording, analysing and reporting accounting information.

Core Idea:Financial numbers are meaningfully related to

underlying business activities and to each other.

Figure 2: Conceptual Frame for key understandings

Page 13: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

11

Content Outline

Key Understanding 1: Accounting and non-accounting information are used to support and facilitate decision-making.

This key understanding focuses on the relationship between business activities and its stakeholders. Stakeholders provide resources for the business, while the performance of business activities affects stakeholders’ decisions concerning the business. Stakeholders rely on accounting information generated by the accounting information system to make decisions. The stakeholders also use non-accounting information to make well-informed decisions and judgements.

This key understanding will cover the following:

Accounting and its role in Stakeholders’ Decision-Making Process 1.1 Roles of accounting and accountants1.2 Stakeholders and their decision-making needs

Analysis of Financial Statements for Decision-Making (not covered in N(A) syllabus)1.3 Financial statements analysis

1.3.1 Profitability1.3.2 Liquidity1.3.3 Efficiency

Key Understanding 2: Accounting is a language used to represent business activities.

Accounting is considered the language of business as it allows stakeholders to think about, discuss and evaluate business activities. This key understanding looks into how accounting acts as this language, and how it provides the concepts and framework to represent the physical flow of resources, and the performance and position of the business, by grouping the effects of business activities according to their characteristics.

Businesses 2.1 Types of businesses2.2 Forms of business ownerships (Not covered in N(A) syllabus)

Measurement and Presentation of Business Activities2.3 Elements of financial statements2.4 Accounting equation 2.5 Financial statements

2.5.1 Statement of Financial Position (N(A) syllabus excludes working capital and private limited company) 2.5.2 Statement of Financial Performance

2.6 Income and expenses2.6.1 Revenue and other income2.6.2 Cost of sales and other expenses

2.7 Assets2.7.1 Cash in hand and Cash at bank2.7.2 Inventories

Page 14: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

12

2.7.3 Trade receivables 2.7.4 Non-current assets (N(A) syllabus excludes non-accounting information and sale

of non-current assets)2.8 Liabilities

2.8.1 Trade payables 2.8.2 Long-term borrowings (N(A) syllabus excludes calculation of interest)

2.9 Equities2.9.1 Capital and share capital (N(A) syllabus excludes share capital)2.9.2 Drawings2.9.3 Transfer of profit or loss for the year and retained earnings (N(A) syllabus excludes

retained earnings and dividends)

Correction of Errors2.10 Correction of errors

Key Understanding 3: Accounting is an information system to measure business activities.

This key understanding looks into how business activities and the physical flow of resources are quantified and measured in monetary value. When business activities and the flow of resources are expressed in a numerical form, it facilitates comparisons to be done, performance to be tracked and evaluations to be made. A reliable measurement system must be supported by an information system, that systematically collects, records and organises business economic activities into information.

Accounting Assumptions and Principles3.1 Accounting theories

Accounting Information System and Accounting Cycle3.2 Accounting information system and accounting cycle3.3 Understanding the double-entry recording system3.4 Internal controls

The main design features of this syllabus and their rationale are provided below.

Learning OutcomesThe learning outcomes stated in the syllabus will guide teachers in designing appropriate learning experiences and assessment tasks.

Sequence of Teaching and Learning Teachers need not cover the topics from the three key understandings in the order shown in the syllabus, as long as students develop deep meaningful understanding of the material.

Page 15: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

13

Cont

ent a

nd M

OE

Initi

ative

s

The

teac

hing

and

lear

ning

of 2

1st

Cent

ury

Com

pete

ncie

s an

d N

ation

al E

duca

tion

will

tak

e pl

ace

thro

ugh

the

tota

l cur

ricu

lum

. How

ever

, do

note

th

at n

ot a

ll su

bjec

ts a

nd p

rogr

amm

es a

re w

ell s

uite

d to

this

pur

pose

. In

Prin

cipl

es o

f Acc

ount

s, c

erta

in to

pics

in K

ey U

nder

stan

ding

s 1

and

2 le

nd

them

selv

es b

etter

to

the

teac

hing

of

21st

Cen

tury

Com

pete

ncie

s an

d N

ation

al E

duca

tion

than

tho

se in

Key

Und

erst

andi

ng 3

. The

se t

opic

s ar

e hi

ghlig

hted

in th

e ta

ble

belo

w.

Tabl

e 4:

Pri

ncip

les

of A

ccou

nts

and

MO

E in

itiati

ves

Key

Und

erst

andi

ngKn

owle

dge,

Ski

lls a

nd V

alue

s21

st C

entu

ry C

ompe

tenc

ies

Nati

onal

Edu

cati

onLe

arni

ng E

xper

ienc

e

Key

Und

erst

andi

ng 1

: A

ccou

nting

and

non

-ac

coun

ting

info

rmati

on

is u

sed

to s

uppo

rt a

nd

faci

litat

e de

cisi

on-m

akin

g.

Know

ledg

e•

the

use

of fi

nanc

ial r

atios

to

eva

luat

e pr

ofita

bilit

y,

liqui

dity

and

effi

cien

cy o

f in

vent

ory

man

agem

ent

and

trad

e re

ceiv

able

s m

anag

emen

tSk

ill•

eval

uatin

g bu

sine

sses

for

thei

r pr

ofita

bilit

y, li

quid

ity

and

effici

ency

of i

nven

tory

an

d tr

ade

rece

ivab

les

man

agem

ent

Val

ues

• in

tegr

ity

and

obje

ctivi

ty

Civi

c Li

tera

cy, G

loba

l A

war

enes

s an

d Cr

oss

Cult

ural

Ski

llsLe

arni

ng O

utco

me:

A

ctive

ly c

ontr

ibut

es t

o th

e co

mm

unit

y an

d na

tion,

po

sses

ses

an a

war

enes

s of

an

d th

e ab

ility

to

anal

yse

glob

al is

sues

and

tre

nds,

an

d di

spla

ys s

ocio

-cul

tura

l an

d re

ligio

us s

ensi

tivit

y an

d aw

aren

ess.

CGC

2A

war

e of

glo

bal i

ssue

s an

d tr

ends

2.1d

The

stud

ent

is a

ble

to

dem

onst

rate

aw

aren

ess

of

how

glo

bal i

ssue

s im

pact

re

latio

ns b

etw

een

vari

ous

coun

trie

s.CG

C 3

Dis

play

s so

cio-

cult

ural

and

re

ligio

us s

ensi

tivit

y an

d aw

aren

ess

3.1d

The

stud

ent

is a

ble

to

Stud

ents

dev

elop

:A

sen

se o

f rea

lity

whe

n th

ey•

show

aw

aren

ess

of

and

unde

rsta

ndin

g of

Si

ngap

ore’

s co

nstr

aint

s,

and

vuln

erab

ilitie

s in

the

pa

st; a

nd•

mak

e co

nnec

tions

wit

h th

e co

ntem

pora

ry

real

ities

tha

t co

nfro

nt

us a

s a

coun

try

agai

nst

the

back

drop

of a

less

pr

edic

tabl

e w

orld

.

A s

ense

of b

elon

ging

whe

n th

ey•

deve

lop

an a

ttitu

de o

f op

enne

ss t

o ac

cept

oth

ers

diff

eren

t fr

om t

hem

and

• pr

oacti

vely

con

trib

ute

and

wor

k on

impr

ovin

g ou

r liv

es a

nd t

he li

ves

of

othe

rs a

roun

d th

em.

A s

ense

of h

ope

whe

n th

ey•

disp

lay

confi

denc

e an

d op

timis

m in

Sin

gapo

re’s

Stud

ents

und

erst

and

the

impa

ct o

f glo

bal i

ssue

s an

d tr

ends

on

a bu

sine

ss t

hrou

gh

the

cons

ider

ation

of n

on-

acco

untin

g in

form

ation

tha

t ca

n aff

ect

its

perf

orm

ance

an

d de

cisi

ons.

For

inst

ance

, w

hen

intr

oduc

ing

the

non-

acco

untin

g in

form

ation

re

late

d to

the

eco

nom

y of

th

e co

untr

y th

e bu

sine

ss

is in

, tea

cher

s ca

n br

ing

in

Sing

apor

e’s

past

and

pre

sent

ec

onom

ic c

ondi

tions

and

ho

w it

aff

ecte

d bu

sine

sses

an

d th

eir

deci

sion

s.

Thro

ugh

disc

ussi

ons

abou

t re

al b

usin

ess

scen

ario

s in

cl

ass,

stu

dent

s be

com

e aw

are

of t

he c

halle

nges

tha

t bu

sine

sses

face

bot

h in

and

ou

t of

Sin

gapo

re. S

tude

nts

lear

n ho

w t

hese

bus

ines

ses

over

com

e th

eir

chal

leng

es.

Shar

ing

how

loca

l bus

ines

ses

Key

Und

erst

andi

ng 2

: A

ccou

nting

is a

lang

uage

us

ed t

o re

pres

ent

busi

ness

ac

tiviti

es.

Know

ledg

e•

the

cons

ider

ation

of

acco

untin

g an

d no

n-ac

coun

ting

info

rmati

on in

de

cisi

on-m

akin

g; a

nd•

the

elem

ents

of fi

nanc

ial

stat

emen

ts t

hat

repr

esen

t bu

sine

ss a

ctivi

ties

and

how

the

y ar

e pr

esen

ted

Page 16: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

14

Key

Und

erst

andi

ngKn

owle

dge,

Ski

lls a

nd V

alue

s21

st C

entu

ry C

ompe

tenc

ies

Nati

onal

Edu

cati

onLe

arni

ng E

xper

ienc

e

Skill

•pr

epar

ing

acco

untin

gin

form

ation

in a

sui

tabl

efo

rm; a

nd•

eval

uatin

g ch

oice

s us

ing

both

acc

ounti

ng a

nd n

on-

acco

untin

g in

form

ation

Val

ues

•in

tegr

ity

and

obje

ctivi

ty

dem

onst

rate

app

ropr

iate

so

cio-

cult

ural

ski

lls a

nd

beha

viou

r to

wor

k to

geth

er

wit

h ot

hers

from

div

erse

so

cio-

cult

ural

gro

ups

wit

hin

Sing

apor

e an

d be

yond

.

Criti

cal a

nd In

venti

ve

Thin

king

Lear

ning

Out

com

e:

Indi

vidu

ally

and

co

llabo

rativ

ely

gene

rate

s no

vel a

nd u

sefu

l ide

as to

ad

dres

s is

sues

; exe

rcis

es

soun

d re

ason

ing,

and

m

etac

ogni

tion

to m

ake

good

de

cisi

ons;

and

man

ages

co

mpl

exiti

es a

nd a

mbi

guiti

es.

CIT

1Ex

plor

es p

ossi

biliti

es a

nd

gene

rate

s id

eas.

1.1d

The

stud

ent i

s ab

le to

ge

nera

te id

eas

and

expl

ore

diffe

rent

pat

hway

s th

at le

ad

to s

oluti

ons.

CIT

2 Ex

erci

ses

soun

d re

ason

ing

and

deci

sion

-mak

ing.

2.1d

The

stud

ent i

s ab

le to

use

ev

iden

ce a

nd a

dopt

diff

eren

t vi

ewpo

ints

to e

xpla

in

his/

her

reas

onin

g an

d de

cisi

ons,

hav

ing

cons

ider

ed

the

impl

icati

ons

of th

e re

latio

nshi

p am

ong

diffe

rent

vi

ewpo

ints

.

futu

re, a

nd r

esili

ence

to

face

the

cha

lleng

es a

head

;•

e mbr

ace

the

prin

cipl

esw

e va

lue

as S

inga

pore

ans

(e.g

, sel

f-de

term

inati

on,

mul

ti-r

acia

lism

); an

d•

feel

em

pow

ered

to

seek

opp

ortu

nitie

s in

chal

leng

es, b

elie

ving

tha

tSi

ngap

ore

is t

heir

hom

e,re

gard

less

of w

here

the

ym

ay li

ve

over

com

e th

eir

chal

leng

es

incr

ease

s st

uden

ts’

awar

enes

s of

the

chal

leng

es

Sing

apor

e fa

ces

and

build

s th

eir

resi

lienc

e in

faci

ng

the

futu

re. S

tude

nts

will

al

so le

arn

the

impo

rtan

ce

of s

eeki

ng o

ppor

tuni

ties

to o

verc

ome

chal

leng

es b

y st

udyi

ng h

ow th

ese

loca

l bu

sine

sses

inno

vate

and

sei

ze

oppo

rtun

ities

to d

o be

tter

.

Stud

ents

lear

n to

be

sens

itive

to

war

ds c

lass

mat

es fr

om

diff

eren

t soc

io-c

ultu

ral

and

raci

al b

ackg

roun

ds,

and

to w

ork

with

them

du

ring

gro

up d

iscu

ssio

ns

and

task

s. T

his

expe

rien

ce

will

enc

oura

ge th

em to

em

brac

e m

ulti-

raci

alis

m.

They

lear

n to

com

mun

icat

e th

eir

pers

pecti

ves

and

be

open

to th

ose

diff

eren

t fro

m

thei

r ow

n w

hen

they

hav

e to

com

e to

a c

onse

nsus

. Th

ey a

lso

lear

n to

con

side

r ot

her

peop

le’s

opi

nion

s an

d re

asse

ss th

eir

own

pers

pecti

ves.

Whe

n st

uden

ts w

eigh

the

optio

ns o

pen

to a

bus

ines

s,

they

lear

n to

rea

son

and

mak

e de

cisi

ons

base

d on

bo

th a

ccou

nting

and

Page 17: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

15

Key

Und

erst

andi

ngKn

owle

dge,

Ski

lls a

nd V

alue

s21

st C

entu

ry C

ompe

tenc

ies

Nati

onal

Edu

cati

onLe

arni

ng E

xper

ienc

e

2.2d

The

stud

ent i

s ab

le to

su

spen

d ju

dgm

ent,

reas

sess

co

nclu

sion

s an

d co

nsid

er

alte

rnati

ves

to re

fine

his/

her

th

ough

ts, a

ttitu

des,

beh

avio

ur

and

actio

ns.

Com

mun

icati

on,

Colla

bora

tion

and

In

form

ation

Ski

llsLe

arni

ng O

utco

me:

Co

mm

unic

ates

info

rmati

on

and

idea

s cl

earl

y an

d co

llabo

rate

s eff

ectiv

ely;

m

anag

es, c

reat

es a

nd s

hare

s in

form

ation

tho

ughtf

ully

, et

hica

lly a

nd r

espo

nsib

ly.

CCI 2

Man

ages

, cre

ates

and

sh

ares

dig

ital

info

rmati

on

thou

ghtf

ully

, eth

ical

ly a

nd

resp

onsi

bly

2.1d

The

stud

ent

is a

ble

to

inte

grat

e in

form

ation

from

a

vari

ety

of s

ourc

es t

o co

mpl

ete

a ta

sk.

2.2c

The

stud

ent

is a

ble

to

expl

ain/

prov

ide

the

ratio

nale

for

the

ethi

cal u

se

of in

form

ation

and

mak

e in

form

ed c

hoic

es/

a st

and

for

him

self/

hers

elf o

n th

e et

hica

l han

dlin

g an

d us

e of

in

form

ation

.

non-

acco

untin

g in

form

ation

. In

the

pro

cess

, the

y un

ders

tand

tha

t de

cisi

on-

mak

ing

is c

ompl

ex a

nd le

arn

to e

xplo

re p

ossi

biliti

es a

nd

gene

rate

idea

s.

Stud

ents

lear

n th

e im

port

ance

of i

nteg

rity

and

ob

jecti

vity

whe

n pr

epar

ing

acco

untin

g in

form

ation

. Th

ey a

lso

unde

rsta

nd t

he

impo

rtan

ce o

f obj

ectiv

ity

whe

n us

ing

both

acc

ounti

ng

and

non-

acco

untin

g in

form

ation

in d

ecis

ion-

mak

ing.

Page 18: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

16

Tabl

e 5:

Con

tent

Am

plifi

catio

n an

d Le

arni

ng O

utco

mes

for

Expr

ess

cour

se

Key

Und

erst

andi

ng 1

: Acc

ounti

ng a

nd n

on-a

ccou

nting

info

rmati

on a

re u

sed

to s

uppo

rt a

nd fa

cilit

ate

deci

sion

-mak

ing

Stak

ehol

ders

req

uire

acc

ounti

ng a

nd n

on-a

ccou

nting

info

rmati

on o

n bu

sine

ss a

ctivi

ties

for

deci

sion

-mak

ing,

whi

ch in

turn

aff

ects

the

busi

ness

and

its

activ

ities

.

Gui

ding

Que

stion

sKn

owle

dge

Cont

ent

(Exp

ress

)Le

arni

ng O

utco

mes

Stud

ents

will

be

able

to:

1.1

Role

s of

acc

ounti

ng a

nd a

ccou

ntan

ts

1) W

hat

is a

ccou

nting

?

2) W

hat

are

the

role

s of

acc

ounti

ng a

nd

acco

unta

nts?

3) H

ow d

o ac

coun

tant

s fu

lfil t

heir

rol

es?

Cont

extu

al•

Busi

ness

env

iron

men

tRo

le o

f acc

ounti

ng•

Acc

ounti

ng p

rovi

des

acco

untin

g in

form

ation

for

deci

sion

-mak

ing

by

busi

ness

ow

ners

and

oth

er s

take

hold

ers

Role

of a

ccou

ntan

ts•

Thro

ugh

prov

idin

g ac

coun

ting

info

rmati

on fo

r st

akeh

olde

rs’ d

ecis

ion-

mak

ing,

acc

ount

ants

act

as

stew

ards

of

busi

ness

es

• Th

ey s

et u

p th

e ac

coun

ting

info

rmati

on

syst

em to

col

late

, rec

ord,

org

anis

e an

d re

port

acc

ounti

ng in

form

ation

so

that

ow

ners

and

oth

er s

take

hold

ers

can

mak

e de

cisi

ons

rega

rdin

g th

e m

anag

emen

t of

res

ourc

es a

nd th

e pe

rfor

man

ce o

f bu

sine

sses

They

thin

k cr

itica

lly, s

olve

pro

blem

s,

adap

t an

d m

eet

the

need

for

• st

ate

the

role

of a

ccou

nting

• st

ate

the

role

of a

ccou

ntan

ts

• de

fine

inte

grit

y an

d ob

jecti

vity

• ex

plai

n th

e im

port

ance

of h

avin

g in

tegr

ity

and

obje

ctivi

ty in

pre

pari

ng a

nd

pres

entin

g ac

coun

ting

info

rmati

on

Page 19: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

17

Gui

ding

Que

stion

sKn

owle

dge

Cont

ent

(Exp

ress

)Le

arni

ng O

utco

mes

Stud

ents

will

be

able

to:

soph

istic

ated

acc

ounti

ng a

nd b

usin

ess

info

rmati

on•

In th

e fa

ce o

f an

evol

ving

bus

ines

s en

viro

nmen

t and

rapi

d te

chno

logi

cal

adva

ncem

ent,

acco

unta

nts

have

to p

rovi

de

rele

vant

info

rmati

on in

a ti

mel

y m

anne

r for

de

cisi

on-m

akin

g an

d in

sigh

ts th

at a

re e

asily

an

d ap

prop

riate

ly u

nder

stoo

d by

ow

ners

an

d ot

her s

take

hold

ers

base

d on

acc

ounti

ng

theo

ries

• St

akeh

olde

rs p

lace

trus

t in

the

info

rmati

on

prov

ided

by

acco

unta

nts

who

mus

t adh

ere

to p

rofe

ssio

nal e

thic

s, u

phol

d in

tegr

ity a

nd

be o

bjec

tive

(1)(2

)-

inte

grity

is b

eing

str

aigh

tfor

war

d an

d ho

nest

in a

ll pr

ofes

sion

al a

nd b

usin

ess

rela

tions

hips

-

obje

ctivi

ty is

not

letti

ng b

ias,

con

flict

of

inte

rest

or u

ndue

influ

ence

of o

ther

s to

ov

errid

e pr

ofes

sion

al ju

dgm

ent

Not

es(1

) In

clud

es o

nly

the

effec

ts o

f une

thic

al

beha

viou

r on

deci

sions

mad

e by

st

akeh

olde

rs; t

he le

gal c

onse

quen

ces

of

unet

hica

l beh

avio

ur a

re n

ot re

quire

d(2

) In

the

Insti

tute

of S

inga

pore

Cha

rter

ed

Acco

unta

nts’

Cod

e of

Pro

fess

iona

l Con

duct

an

d Et

hics

, the

firs

t tw

o pr

inci

ples

are

in

tegr

ity a

nd o

bjec

tivity

Page 20: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

18

Gui

ding

Que

stion

sKn

owle

dge

Cont

ent

(Exp

ress

)Le

arni

ng O

utco

mes

Stud

ents

will

be

able

to:

1.2

Stak

ehol

ders

and

the

ir d

ecis

ion-

mak

ing

need

s

1) W

ho is

inte

rest

ed

in a

ccou

nting

in

form

ation

?

2) W

hat

kind

s of

in

form

ation

do

stak

ehol

ders

nee

d fo

r de

cisi

on-m

akin

g?

3) W

hy d

o st

akeh

olde

rs

need

bot

h ac

coun

ting

and

non-

acco

untin

g in

form

ation

?

Cont

extu

al•

Busi

ness

env

iron

men

t

Conc

eptu

al•

Rele

vanc

e of

in

form

ation

• A

ccou

nting

and

no

n-ac

coun

ting

info

rmati

on

Stak

ehol

ders

• U

sers

of a

ccou

nting

and

non

-acc

ounti

ng

info

rmati

on o

f a b

usin

ess

for

deci

sion

m

akin

g

Acc

ounti

ng a

nd n

on-a

ccou

nting

info

rmati

on•

Mak

ing

deci

sion

s w

ith

only

acc

ounti

ng

info

rmati

on m

ay c

ause

sta

keho

lder

s to

le

ave

out

impo

rtan

t bu

sine

ss-r

elat

ed

fact

ors

that

are

not

sho

wn

in fi

nanc

ial

stat

emen

ts b

ut m

ay a

ffec

t de

cisi

ons

- ac

coun

ting

info

rmati

on r

efer

s to

in

form

ation

usu

ally

gen

erat

ed b

y th

e ac

coun

ting

info

rmati

on s

yste

m a

nd is

la

rgel

y ex

trac

ted

from

jour

nals

, led

ger

acco

unts

and

fina

ncia

l sta

tem

ents

(in

clud

ing

finan

cial

rati

os)

- no

n-ac

coun

ting

info

rmati

on (3

) ref

ers

to th

e in

form

ation

abo

ut th

e op

erati

on

of a

bus

ines

s no

t fo

und

in jo

urna

ls,

ledg

er a

ccou

nts

or fi

nanc

ial s

tate

men

ts

Not

es(3

) Ref

er to

sec

tions

2.2

, 2.7

.2 to

2.7

.4, a

nd

2.8.

1 fo

r th

e sp

ecifi

c no

n-ac

coun

ting

info

rmati

on fo

r th

is s

ylla

bus

• st

ate

the

stak

ehol

ders

who

are

inte

rest

ed

in th

e aff

airs

of t

he b

usin

ess

and

mak

e us

e of

the

acco

untin

g in

form

ation

for

deci

sion

-mak

ing

• st

ate

exam

ples

of a

ccou

nting

info

rmati

on

need

ed b

y st

akeh

olde

rs o

f a b

usin

ess

for

deci

sion

-mak

ing

• st

ate

exam

ples

of n

on-a

ccou

nting

in

form

ation

nee

ded

by o

wne

rs a

nd

man

ager

s of

a b

usin

ess

for

deci

sion

- m

akin

g

• ex

plai

n w

hy s

take

hold

ers

of a

bus

ines

s ar

e in

tere

sted

in a

ccou

nting

info

rmati

on

• ex

plai

n w

hy o

wne

rs a

nd m

anag

ers

of a

bu

sine

ss a

re in

tere

sted

in n

on-a

ccou

nting

in

form

ation

Page 21: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

19

Gui

ding

Que

stion

sKn

owle

dge

Cont

ent

(Exp

ress

)Le

arni

ng O

utco

mes

Stud

ents

will

be

able

to:

1.3

Fina

ncia

l sta

tem

ents

ana

lysi

sTh

is s

ectio

n lo

oks

at h

ow b

usin

esse

s m

ake

com

pari

sons

aga

inst

them

selv

es o

r on

e ot

her

busi

ness

ove

r a

peri

od o

f tim

e, u

sing

bot

h ab

solu

te

valu

es a

nd fi

nanc

ial r

atios

to m

ake

deci

sion

s.

1.3.

1 Pr

ofita

bilit

y

1) W

hat

is fi

nanc

ial

stat

emen

ts a

naly

sis?

2) H

ow d

oes

a bu

sine

ss

mea

sure

and

ana

lyse

it

s ab

ility

to e

arn

profi

ts?

Cont

extu

alBu

sine

sses

nee

d to

as

sess

per

form

ance

Conc

eptu

al•

Profi

tabi

lity

• Tr

end

of v

alue

s ov

er

time

• Co

mpa

riso

n of

val

ues

agai

nst

one

othe

r bu

sine

ss•

Rele

vanc

e of

in

form

ation

Proc

edur

alCo

mpu

tatio

n of

pr

ofita

bilit

y ra

tios

• M

easu

res

the

abili

ty o

f a b

usin

ess

to e

arn

reve

nue

and

man

age

expe

nses

• Im

port

ance

of b

eing

pro

fitab

le in

its

trad

ing

activ

ities

• Im

port

ance

of b

eing

pro

fitab

le a

s a

who

le

busi

ness

Cons

eque

nces

of n

ot b

eing

pro

fitab

le in

it

s tr

adin

g ac

tiviti

es•

Cons

eque

nces

of n

ot b

eing

pro

fitab

le a

s a

who

le b

usin

ess

Ana

lysi

s of

abs

olut

e va

lues

(4)

• A

naly

sing

the

com

pone

nts

of g

ross

pr

ofit/

loss

suc

h as

net

sal

es r

even

ue a

nd

cost

of s

ales

Ana

lysi

ng th

e co

mpo

nent

s of

pro

fit/l

oss

for

the

year

suc

h as

net

sal

es r

even

ue,

serv

ice

fee

reve

nue,

cos

t of

sal

es, g

ross

pr

ofit

and

expe

nses

Com

pari

ng s

ales

rev

enue

, ser

vice

fee

reve

nue,

cos

t of

sal

es, g

ross

pro

fit/l

oss,

ex

pens

es a

nd p

rofit

/los

s fo

r th

e ye

ar

acro

ss a

max

imum

of t

hree

fina

ncia

l yea

rs

• ex

plai

n th

e im

port

ance

of b

eing

pr

ofita

ble

Ana

lysi

s of

abs

olut

e va

lues

• an

alys

e th

e gr

oss

profi

t/lo

ss a

nd p

rofit

/lo

ss fo

r th

e ye

ar

• in

terp

ret

sale

s re

venu

e, c

ost

of s

ales

, gr

oss

profi

t/lo

ss a

nd p

rofit

/los

s fo

r th

e ye

ar a

cros

s a

max

imum

of t

hree

fina

ncia

l ye

ars

• ev

alua

te th

e pr

ofita

bilit

y of

bus

ines

ses

from

the

tren

d of

sal

es r

even

ue, s

ervi

ce

fee

reve

nue,

cos

t of

sal

es, g

ross

pro

fit/

loss

and

pro

fit/l

oss

for

the

year

acr

oss

a m

axim

um o

f thr

ee fi

nanc

ial y

ears

• re

com

men

d m

eans

to im

prov

e gr

oss

profi

t/lo

ss a

nd p

rofit

/los

s fo

r th

e ye

ar

Ana

lysi

s of

rati

os•

stat

e an

d ca

lcul

ate

the

profi

tabi

lity

ratio

s

• in

terp

ret

profi

tabi

lity

ratio

s ac

ross

a

Page 22: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

20

Gui

ding

Que

stion

sKn

owle

dge

Cont

ent

(Exp

ress

)Le

arni

ng O

utco

mes

Stud

ents

will

be

able

to:

• A

naly

sing

the

tren

d of

fina

ncia

l figu

res

acro

ss ti

me

with

resp

ect t

o th

e gi

ven

scen

ario

and

thei

r im

plic

ation

s fo

r th

e bu

sine

ss•

Ana

lysi

ng th

e pr

obab

le re

ason

s fo

r ch

ange

s in

abs

olut

e va

lues

suc

h as

net

sa

les

reve

nue,

ser

vice

fee

reve

nue

and

cost

of s

ales

and

the

impl

icati

ons

of s

uch

chan

ges

for

the

busi

ness

Impr

ovin

g gr

oss

profi

t/lo

ss a

nd/o

r pr

ofit/

loss

for

the

year

with

resp

ect t

o th

e gi

ven

scen

ario

• M

ay in

clud

e pr

esen

tatio

n of

figu

res

in, o

r in

an

extr

act o

f, th

e St

atem

ent o

f Fin

anci

al

Perf

orm

ance

Ana

lysi

s of

rati

os•

Und

erst

andi

ng a

nd c

ompu

ting

the

profi

tabi

lity

ratio

s:

(i)

gro

ss p

rofit

mar

gin

(ii)

mar

k-up

on

cost

(iii)

profi

t mar

gin

(iv)

retu

rn o

n eq

uity

• U

nder

stan

ding

the

rela

tions

hip

betw

een

gros

s pr

ofit m

argi

n an

d pr

ofit m

argi

n.

• Co

mpa

ring

profi

tabi

lity

ratio

s ac

ross

a

max

imum

of t

hree

fina

ncia

l yea

rs o

r ag

ains

t one

oth

er b

usin

ess

• A

naly

sing

the

tren

d of

rati

os a

cros

s tim

e an

d ag

ains

t one

oth

er b

usin

ess

with

re

spec

t to

the

give

n sc

enar

io a

nd th

eir

impl

icati

ons

for

the

busi

ness

max

imum

of t

hree

fina

ncia

l yea

rs o

r ag

ains

t on

e ot

her

busi

ness

• ev

alua

te th

e pr

ofita

bilit

y of

bus

ines

ses

from

the

tren

d of

pro

fitab

ility

rati

os

acro

ss a

max

imum

of t

hree

fina

ncia

l yea

rs

or a

gain

st o

ne o

ther

bus

ines

s

• re

com

men

d m

eans

to im

prov

e pr

ofita

bilit

y ra

tios

Page 23: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

21

Gui

ding

Que

stion

sKn

owle

dge

Cont

ent

(Exp

ress

)Le

arni

ng O

utco

mes

Stud

ents

will

be

able

to:

• A

naly

sing

the

prob

able

rea

sons

for

chan

ges

in r

atios

and

the

impl

icati

ons

of

such

cha

nges

for

the

busi

ness

Impr

ovin

g th

e pr

ofita

bilit

y ra

tios

wit

h re

spec

t to

the

give

n sc

enar

io

Not

es(4

) A

naly

sis

at th

e un

it c

ost

leve

l is

not

requ

ired

1.3.

2 Li

quid

ity

1) H

ow d

oes

a bu

sine

ss

mea

sure

and

ana

lyse

it

s ab

ility

to m

eet

curr

ent

liabi

lities

?

Cont

extu

alBu

sine

sses

nee

d to

as

sess

liqu

idit

y

Conc

eptu

al•

Liqu

idit

y•

Tren

d of

val

ues

over

tim

e•

Com

pari

son

of v

alue

s ag

ains

t on

e ot

her

busi

ness

• Re

leva

nce

of

info

rmati

on

Proc

edur

alCo

mpu

tatio

n of

liq

uidi

ty r

atios

• Li

quid

ity

mea

sure

s th

e ab

ility

of a

bu

sine

ss to

mee

t it

s sh

ort-

term

fina

ncia

l ob

ligati

ons

• Im

port

ance

of b

eing

liqu

id

• Co

nseq

uenc

es o

f not

bei

ng li

quid

• D

iffer

ence

s be

twee

n liq

uidi

ty a

nd

profi

tabi

lity

Ana

lysi

s of

abs

olut

e va

lues

• U

nder

stan

ding

and

com

putin

g w

orki

ng

capi

tal

• A

naly

sing

the

com

pone

nts

of w

orki

ng

capi

tal a

nd m

eans

of i

mpr

ovem

ent

• Co

mpa

ring

wor

king

cap

ital

, tot

al c

urre

nt

asse

ts o

r it

s co

mpo

nent

s, a

nd to

tal

curr

ent

liabi

lities

or

its

com

pone

nts

acro

ss a

max

imum

of t

hree

fina

ncia

l yea

rs

• A

naly

sing

the

tren

d of

fina

ncia

l figu

res

acro

ss ti

me

wit

h re

spec

t to

the

give

n

• ex

plai

n th

e im

port

ance

of b

eing

liqu

id

• st

ate

and

expl

ain

the

diff

eren

ces

betw

een

liqui

dity

and

pro

fitab

ility

Ana

lysi

s of

abs

olut

e va

lues

• st

ate

and

calc

ulat

e w

orki

ng c

apit

al

• an

alys

e th

e co

mpo

nent

s of

tota

l cur

rent

as

sets

and

tota

l cur

rent

liab

ilitie

s

• in

terp

ret

curr

ent

asse

t ite

ms

and

curr

ent

liabi

lity

item

s ac

ross

a m

axim

um o

f thr

ee

finan

cial

yea

rs

• ev

alua

te th

e liq

uidi

ty o

f bus

ines

ses

from

th

e tr

end

of w

orki

ng c

apit

al, c

urre

nt

asse

t ite

ms

and

curr

ent

liabi

lity

item

s ac

ross

a m

axim

um o

f thr

ee fi

nanc

ial y

ears

• re

com

men

d m

eans

to im

prov

e liq

uidi

ty

Page 24: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

22

Gui

ding

Que

stion

sKn

owle

dge

Cont

ent

(Exp

ress

)Le

arni

ng O

utco

mes

Stud

ents

will

be

able

to:

scen

ario

and

thei

r im

plic

ation

s fo

r th

e bu

sine

ss•

Ana

lysi

ng th

e pr

obab

le r

easo

ns fo

rch

ange

in w

orki

ng c

apit

al, c

urre

nt a

sset

san

d cu

rren

t lia

biliti

es a

nd th

e im

plic

ation

sof

suc

h ch

ange

s fo

r th

e bu

sine

ss•

Impr

ovin

g liq

uidi

ty fo

r th

e ye

ar w

ith

resp

ect

to th

e gi

ven

scen

ario

•M

ay in

clud

e pr

esen

tatio

n of

figu

res

in,

or in

an

extr

act

of, t

he S

tate

men

t of

Fina

ncia

l Pos

ition

Ana

lysi

s of

rati

os•

Und

erst

andi

ng a

nd c

ompu

ting

liqui

dity

ratio

s:(i)

curr

ent

ratio

(ii)q

uick

rati

o•

Und

erst

andi

ng th

e di

ffer

ence

bet

wee

ncu

rren

t ra

tio a

nd q

uick

rati

o, a

nd w

hyqu

ick

ratio

is a

bett

er in

dica

tor

of li

quid

ity

than

cur

rent

rati

o•

Com

pari

ng li

quid

ity

ratio

s ac

ross

am

axim

um o

f thr

ee fi

nanc

ial y

ears

or

agai

nst

one

othe

r bu

sine

ss•

An a

lysi

ng th

e tr

end

of r

atios

acr

oss

time

and

agai

nst

one

othe

r bu

sine

ss w

ith

resp

ect

to th

e gi

ven

scen

ario

•A

naly

sing

pro

babl

e re

ason

s fo

r ch

ange

sin

rati

os a

nd th

e im

plic

ation

s of

suc

hch

ange

s fo

r th

e bu

sine

ss

Ana

lysi

s of

rati

os•

stat

e an

d ca

lcul

ate

liqui

dity

rati

os

•in

terp

ret

liqui

dity

rati

os a

cros

s a

max

imum

of t

hree

fina

ncia

l yea

rs o

rag

ains

t on

e ot

her

busi

ness

•ev

alua

te th

e liq

uidi

ty o

f bus

ines

ses

from

the

tren

d of

liqu

idit

y ra

tios

acro

ssa

max

imum

of t

hree

fina

ncia

l yea

rs o

rag

ains

t on

e ot

her

busi

ness

•re

com

men

d m

eans

to im

prov

e liq

uidi

tyra

tios

Page 25: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

23

Gui

ding

Que

stion

sKn

owle

dge

Cont

ent

(Exp

ress

)Le

arni

ng O

utco

mes

Stud

ents

will

be

able

to:

• Im

prov

ing

the

liqui

dity

rati

os w

ith

resp

ect

to th

e gi

ven

scen

ario

1.3.

3 Effi

cien

cy

1) H

ow d

oes

a bu

sine

ss

mea

sure

and

ana

lyse

it

s ab

ility

to m

anag

e in

vent

ory

and

trad

e re

ceiv

able

s?

Cont

extu

alBu

sine

sses

nee

d to

m

anag

e in

vent

ory

and

trad

e re

ceiv

able

s

Conc

eptu

al•

Inve

ntor

y m

anag

emen

t•

Trad

e re

ceiv

able

s m

anag

emen

t•

Tren

d of

val

ues

over

tim

e •

Com

pari

son

of v

alue

s ag

ains

t on

e ot

her

busi

ness

• Re

leva

nce

of

Info

rmati

on

Proc

edur

alCo

mpu

tatio

n of

effi

cien

cy r

atios

Inve

ntor

y m

anag

emen

t•

Effici

ency

of i

nven

tory

man

agem

ent

mea

sure

s th

e ab

ility

of a

bus

ines

s to

m

anag

e its

inve

ntor

y to

mee

t cus

tom

er

dem

and

• Im

port

ance

of a

trad

ing

busi

ness

bei

ng

able

to m

anag

e its

inve

ntor

y th

roug

h m

onito

ring

the

rate

of i

nven

tory

turn

over

Cons

eque

nces

of n

ot b

eing

abl

e to

m

anag

e in

vent

ory

effici

ently

Trad

e re

ceiv

able

s m

anag

emen

t•

Effici

ency

of t

rade

rece

ivab

les

man

agem

ent m

easu

res

the

abili

ty o

f a

busi

ness

to c

olle

ct it

s de

bts

quic

kly

• Im

port

ance

of m

anag

ing

its tr

ade

rece

ivab

les

thro

ugh

mon

itorin

g th

e ra

te o

f tr

ade

rece

ivab

les

turn

over

• Co

nseq

uenc

es o

f not

bei

ng a

ble

to

man

age

trad

e re

ceiv

able

s effi

cien

tly

Ana

lysi

s of

abs

olut

e va

lues

• Co

mpa

ring

inve

ntor

y ba

lanc

es, c

ost o

f sa

les,

net

cre

dit s

ales

, cre

dit s

ervi

ce fe

e re

venu

e an

d tr

ade

rece

ivab

les

bala

nces

ac

ross

a m

axim

um o

f thr

ee fi

nanc

ial y

ears

• ex

plai

n th

e im

port

ance

of b

eing

abl

e to

m

anag

e in

vent

ory

and

trad

e re

ceiv

able

s effi

cien

tly

Ana

lysi

s of

abs

olut

e va

lues

• an

alys

e in

vent

ory

bala

nces

, cos

t of

sa

les,

trad

e re

ceiv

able

s ba

lanc

es, n

et

cred

it s

ales

rev

enue

and

cre

dit

serv

ice

fee

reve

nue

acro

ss a

max

imum

of t

hree

fin

anci

al y

ears

or

agai

nst

one

othe

r bu

sine

ss

• in

terp

ret

inve

ntor

y ba

lanc

es, c

ost

of

sale

s, tr

ade

rece

ivab

les

bala

nces

, net

cr

edit

sal

es r

even

ue a

nd c

redi

t se

rvic

e fe

e re

venu

e ac

ross

a m

axim

um o

f thr

ee

finan

cial

yea

rs

• ev

alua

te th

e effi

cien

cy o

f bus

ines

ses

from

th

e tr

end

of in

vent

ory

bala

nces

, cos

t of

sa

les,

trad

e re

ceiv

able

s ba

lanc

es, n

et

cred

it s

ales

rev

enue

and

cre

dit

serv

ice

fee

reve

nue

acro

ss a

max

imum

of t

hree

fin

anci

al y

ears

Ana

lysi

s of

rati

os•

stat

e an

d ca

lcul

ate

the

rate

of i

nven

tory

tu

rnov

er (ti

mes

) and

day

s sa

les

in

inve

ntor

y (d

ays)

Page 26: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

24

Gui

ding

Que

stion

sKn

owle

dge

Cont

ent

(Exp

ress

)Le

arni

ng O

utco

mes

Stud

ents

will

be

able

to:

• A

naly

sing

the

tren

d of

fina

ncia

l figu

res

acro

ss ti

me

wit

h re

spec

t to

the

give

n sc

enar

io a

nd th

eir

impl

icati

ons

for

the

busi

ness

• A

naly

sing

the

prob

able

rea

sons

for

chan

ge in

inve

ntor

y ba

lanc

es, c

ost

of

sale

s, tr

ade

rece

ivab

les

bala

nces

, net

cr

edit

sal

es r

even

ue a

nd c

redi

t se

rvic

e fe

e re

venu

e an

d th

e im

plic

ation

s of

suc

h ch

ange

s fo

r th

e bu

sine

ss•

May

incl

ude

pres

enta

tion

of fi

gure

s in

the

Stat

emen

t of

Fin

anci

al P

erfo

rman

ce a

nd

Stat

emen

t of

Fin

anci

al P

ositi

on, o

r in

an

extr

act

of b

oth

the

finan

cial

sta

tem

ents

Ana

lysi

s of

rati

os•

Und

erst

andi

ng a

nd c

ompu

ting

the

effici

ency

rati

os:

(i)

rate

of i

nven

tory

turn

over

(tim

es)

(ii)

days

sal

es in

inve

ntor

y (d

ays)

(ii

i) ra

te o

f tra

de r

ecei

vabl

es tu

rnov

er

(tim

es)

(iv)

trad

e re

ceiv

able

s co

llecti

on p

erio

d (d

ays)

• Co

mpa

ring

the

rate

of i

nven

tory

turn

over

(ti

mes

), da

ys s

ales

in in

vent

ory

(day

s),

rate

of t

rade

rec

eiva

bles

turn

over

(tim

es)

and

trad

e re

ceiv

able

s co

llecti

on p

erio

d (d

ays)

acro

ss a

max

imum

of t

hree

fina

ncia

l ye

ars

or a

gain

st o

ne o

ther

bus

ines

s

• st

ate

and

calc

ulat

e th

e ra

te o

f tra

de

rece

ivab

les

turn

over

(tim

es) a

nd tr

ade

rece

ivab

les

colle

ction

per

iod(

days

)

• in

terp

ret

the

rate

of i

nven

tory

turn

over

(ti

mes

) and

day

s sa

les

in in

vent

ory

(day

s)

acro

ss a

max

imum

of t

hree

fina

ncia

l yea

rs

or a

gain

st o

ne o

ther

bus

ines

s

• in

terp

ret

the

rate

of t

rade

rec

eiva

bles

tu

rnov

er (ti

mes

) and

trad

e re

ceiv

able

s co

llecti

on p

erio

d(da

ys) a

cros

s a

max

imum

of

thre

e fin

anci

al y

ears

or

agai

nst

one

othe

r bu

sine

ss

• ev

alua

te th

e ab

ility

to m

anag

e in

vent

ory

from

the

tren

d of

rat

e of

inve

ntor

y tu

rnov

er (ti

mes

) or

days

sal

es in

in

vent

ory

(day

s) a

cros

s a

max

imum

of

thre

e fin

anci

al y

ears

or

agai

nst

one

othe

r bu

sine

ss

• ev

alua

te th

e ab

ility

to c

olle

ct d

ebt

from

th

e tr

end

of r

ate

of tr

ade

rece

ivab

les

turn

over

(tim

es) a

nd tr

ade

rece

ivab

les

colle

ction

per

iod

(day

s) a

cros

s a

max

imum

of t

hree

fina

ncia

l yea

rs o

r ag

ains

t on

e ot

her

busi

ness

• re

com

men

d m

eans

to im

prov

e th

e ra

te o

f in

vent

ory

turn

over

(tim

es) o

r da

ys s

ales

in

inve

ntor

y (d

ays)

Page 27: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

25

Gui

ding

Que

stion

sKn

owle

dge

Cont

ent

(Exp

ress

)Le

arni

ng O

utco

mes

Stud

ents

will

be

able

to:

•A

naly

sing

the

tren

d of

rati

os a

cros

s tim

ean

d ag

ains

t on

e ot

her

busi

ness

wit

hre

spec

t to

the

give

n sc

enar

io a

nd th

eir

impl

icati

on fo

r th

e bu

sine

ss•

Ana

lysi

ng th

e pr

obab

le r

easo

ns fo

rch

ange

s in

rati

os a

nd th

e im

plic

ation

s of

such

cha

nges

for

the

busi

ness

•Im

prov

ing

the

rate

of i

nven

tory

turn

over

(tim

es),

days

sal

es in

inve

ntor

y (d

ays)

,ra

te o

f tra

de r

ecei

vabl

es tu

rnov

er(ti

mes

) and

trad

e re

ceiv

able

s co

llecti

onpe

riod

(day

s) w

ith

resp

ect

to th

e gi

ven

scen

ario

•r e

com

men

d m

eans

to im

prov

e th

e ra

teof

trad

e re

ceiv

able

s tu

rnov

er (ti

mes

) and

trad

e re

ceiv

able

s co

llecti

on p

erio

d (d

ays)

Page 28: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

26

Key

Und

erst

andi

ng 2

: Acc

ounti

ng is

a la

ngua

ge u

sed

to r

epre

sent

bus

ines

s ac

tivi

ties

Acc

ounti

ng is

the

lang

uage

of b

usin

ess

as it

pro

vide

s th

e co

ncep

ts a

nd fr

amew

ork

to r

epre

sent

bus

ines

s ac

tiviti

es.

Gui

ding

Que

stion

sKn

owle

dge

Cont

ent

(Exp

ress

)Le

arni

ng O

utco

mes

Stud

ents

will

be

able

to:

2.1

Type

s of

bus

ines

ses

1) W

hat

are

the

diff

eren

t ty

pes

of p

rofit

-mak

ing

busi

ness

es a

nd h

ow

do th

eir

finan

cial

st

atem

ents

diff

er?

Cont

extu

alTy

pes

of b

usin

esse

s

Conc

eptu

al•

Trad

ing

busi

ness

es

• Se

rvic

e bu

sine

sses

• M

ain

busi

ness

acti

vitie

s of

pro

fit-m

akin

g bu

sine

sses

: tra

ding

and

ser

vice

Diff

eren

ce b

etw

een

the

busi

ness

ac

tiviti

es o

f tra

ding

and

ser

vice

bu

sine

sses

as

seen

in th

e St

atem

ent

of F

inan

cial

Pos

ition

and

Sta

tem

ent

of

Fina

ncia

l Per

form

ance

• ex

plai

n th

e di

ffer

ence

s be

twee

n tr

adin

g an

d se

rvic

e bu

sine

sses

• di

sting

uish

bet

wee

n fin

anci

al s

tate

men

ts

of b

usin

esse

s in

trad

ing

and

serv

ices

2.2

Form

s of

bus

ines

s ow

ners

hips

1) W

hat

are

the

diff

eren

t le

gal f

orm

s of

bus

ines

s an

d ho

w

do th

ey d

iffer

?

2) W

hat

are

the

fact

ors

to c

onsi

der

whe

n se

lecti

ng a

lega

l for

m

of b

usin

ess?

Cont

extu

alD

iffer

ent

form

s of

bu

sine

ss o

wne

rshi

ps

Conc

eptu

al•

Sole

pro

prie

tors

hip

• Li

mite

d lia

bilit

y pa

rtne

rshi

p•

Priv

ate

Lim

ited

com

pani

es

• Fo

rms

of e

ntitie

s: s

ole

prop

riet

orsh

ip,

limite

d lia

bilit

y pa

rtne

rshi

p an

d pr

ivat

e lim

ited

com

pany

• D

istin

guis

h th

e fe

atur

es o

f diff

eren

t fo

rms

of e

ntitie

s: s

ole

prop

riet

orsh

ip, l

imite

d lia

bilit

y pa

rtne

rshi

p an

d pr

ivat

e lim

ited

com

pany

• D

iffer

ence

s in

term

s of

cap

ital

str

uctu

re,

acce

ss to

fund

s, e

xten

t of

liab

ility

, le

vel o

f con

trol

des

ired

, life

span

an

d tr

ansf

erab

ility

of o

wne

rshi

p fo

r so

le p

ropr

ieto

rshi

p, li

mite

d lia

bilit

y pa

rtne

rshi

p an

d pr

ivat

e lim

ited

com

pany

(5

)

• ex

plai

n th

e fe

atur

es o

f a s

ole

prop

riet

orsh

ip, l

imite

d lia

bilit

y pa

rtne

rshi

p an

d pr

ivat

e lim

ited

com

pany

• di

sting

uish

bet

wee

n th

e fin

anci

al

stat

emen

ts o

f a s

ole

prop

riet

orsh

ip a

nd

priv

ate

limite

d co

mpa

ny

• an

alys

e, e

valu

ate

and

mak

e de

cisi

ons

abou

t th

e fo

rms

of b

usin

ess

owne

rshi

p (s

ole

prop

riet

orsh

ip, l

imite

d lia

bilit

y pa

rtne

rshi

p an

d pr

ivat

e lim

ited

com

pany

) w

hen

setti

ng u

p a

busi

ness

Page 29: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

27

Gui

ding

Que

stion

sKn

owle

dge

Cont

ent

(Exp

ress

)Le

arni

ng O

utco

mes

Stud

ents

will

be

able

to:

• D

iffer

ence

s in

the

Stat

emen

t of

Fin

anci

al

Posi

tion

and

Stat

emen

t of

Fin

anci

al

Perf

orm

ance

for

only

sol

e pr

opri

etor

ship

an

d pr

ivat

e lim

ited

com

pany

• Fa

ctor

s to

con

side

r w

hen

sele

cting

a le

gal

form

of b

usin

ess:

(i)

owne

r/ow

ners

’ exp

ertis

e(ii

) n

atur

e of

the

busi

ness

(ii

i) c

apit

al c

omm

itm

ent

for

initi

al s

et-u

p (a

cces

s to

fund

s)(iv

) lif

espa

n an

d tr

ansf

erab

ility

of

owne

rshi

p(v

) ri

sk (e

.g. l

imite

d lia

bilit

y)(v

i) le

vel o

f con

trol

des

ired

Not

es(5

) Ex

clud

es th

e le

gal f

orm

ation

s of

bu

sine

ss e

ntitie

s an

d kn

owle

dge

of

Boar

d of

Dir

ecto

rs a

nd A

nnua

l Gen

eral

M

eetin

g

2.3

Elem

ents

of fi

nanc

ial s

tate

men

ts

1) H

ow a

re b

usin

ess

activ

ities

mea

sure

d an

d pr

esen

ted

in

finan

cial

sta

tem

ents

?

Cont

extu

alBu

sine

ss a

ctivi

ties

Conc

eptu

al•

Ass

et

• A

ll bu

sine

ss a

ctivi

ties

are

repr

esen

ted

by

thes

e el

emen

ts: a

sset

, lia

bilit

y, e

quit

y,

inco

me

and

expe

nse

• Ex

ampl

es o

f ass

ets,

liab

ilitie

s, e

quit

y,

inco

me

and

expe

nses

• de

fine

asse

t, li

abili

ty, e

quit

y, in

com

e an

d ex

pens

e

• gi

ve e

xam

ples

of a

sset

s, li

abili

ties,

equ

ity,

in

com

e an

d ex

pens

es fo

r a

spec

ific

busi

ness

Page 30: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

28

Gui

ding

Que

stion

sKn

owle

dge

Cont

ent

(Exp

ress

)Le

arni

ng O

utco

mes

Stud

ents

will

be

able

to:

• Li

abili

ty•

Equi

ty•

Inco

me

• Ex

pens

e

• U

nder

stan

d ho

w th

e tr

ade

of th

e bu

sine

ss a

nd th

e us

e of

the

item

s aff

ect

how

they

are

cla

ssifi

ed

• cl

assi

fy it

ems

as a

sset

s, li

abili

ties,

equ

ity,

in

com

e an

d ex

pens

es fo

r a

spec

ific

busi

ness

2.4

Acc

ounti

ng e

quati

on

1) W

hat

is th

e re

latio

nshi

p be

twee

n as

set,

liab

ility

and

eq

uity

?

Conc

eptu

alA

ccou

nting

equ

ation

Proc

edur

alA

naly

se th

e eff

ects

of

tran

sacti

ons

on th

e ac

coun

ting

equa

tion

• Ba

sic

acco

untin

g eq

uatio

n of

ass

ets

= eq

uity

+ li

abili

ties,

and

its

expa

nsio

n to

in

clud

e in

com

e an

d ex

pens

es•

The

basi

c ac

coun

ting

equa

tion

is th

e ba

sis

of th

e St

atem

ent

of F

inan

cial

Pos

ition

• st

ate

the

basi

c ac

coun

ting

equa

tion

and

its

expa

nsio

n

• ca

lcul

ate

the

valu

es o

f ass

ets,

liab

ilitie

s an

d eq

uity

usi

ng th

e ac

coun

ting

equa

tion

• ap

ply

the

acco

untin

g eq

uatio

n to

the

Stat

emen

t of

Fin

anci

al P

ositi

on

• an

alys

e th

e eff

ects

of b

usin

ess

tran

sacti

ons

on th

e ac

coun

ting

equa

tion

2.5

Fina

ncia

l sta

tem

ents

This

sec

tion

look

s at

the

Stat

emen

t of

Fin

anci

al P

ositi

on a

nd S

tate

men

t of

Fin

anci

al P

erfo

rman

ce o

f bot

h so

le p

ropr

ieto

rshi

ps a

nd p

riva

te

limite

d co

mpa

nies

, and

the

end-

of-p

erio

d ac

coun

ting

adju

stm

ents

incl

uded

in th

is s

ylla

bus.

2.5.

1 St

atem

ent

of F

inan

cial

Pos

ition

1) W

hat

are

finan

cial

st

atem

ents

and

thei

r pu

rpos

es?

2) W

hat

is a

Sta

tem

ent

of F

inan

cial

Pos

ition

?

Cont

extu

alCo

mm

unic

ation

of t

he

list

of a

sset

s, li

abili

ties,

an

d eq

uity

of a

bus

ines

s

Purp

ose

of S

tate

men

t of

Fin

anci

al P

ositi

on•

Stat

emen

t of

Fin

anci

al P

ositi

on li

sts

the

asse

ts, l

iabi

lities

and

equ

ity

of a

bu

sine

ss a

t a

poin

t in

tim

e (6

)(7)

Repr

esen

ts th

e ac

coun

ting

equa

tion

• de

fine

and

disti

ngui

sh b

etw

een

non-

curr

ent

and

curr

ent

asse

ts

• de

fine

and

disti

ngui

sh b

etw

een

non-

curr

ent

and

curr

ent

liabi

lities

Page 31: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

29

Gui

ding

Que

stion

sKn

owle

dge

Cont

ent

(Exp

ress

)Le

arni

ng O

utco

mes

Stud

ents

will

be

able

to:

3) H

ow is

info

rmati

on

show

n in

the

Stat

emen

t of

Fi

nanc

ial P

ositi

on?

Conc

eptu

al•

Am

ount

s re

port

ed

are

at a

poi

nt in

tim

e•

Acc

ounti

ng e

quati

on•

Curr

ent

asse

ts•

Non

-cur

rent

ass

ets

• Cu

rren

t lia

biliti

es•

Non

-cur

rent

liab

ilitie

s•

Equi

ty•

Reta

ined

ear

ning

s•

Valu

ation

of a

sset

s•

Rele

vant

acc

ounti

ng

theo

ries

Proc

edur

al•

Prep

are

the

Stat

emen

t of

Fi

nanc

ial P

ositi

on•

Ana

lyse

the

effec

ts o

f bu

sine

ss tr

ansa

ction

s an

d ac

coun

ting

adju

stm

ents

on

the

Stat

emen

t of

Fi

nanc

ial P

ositi

on

Item

s in

the

Stat

emen

t of

Fin

anci

al P

ositi

on•

Clas

sific

ation

of i

tem

s as

non

-cur

rent

as

sets

, cur

rent

ass

ets,

non

-cur

rent

lia

biliti

es, c

urre

nt li

abili

ties

and

equi

ty•

Exam

ples

of n

on-c

urre

nt a

sset

s, c

urre

nt

asse

ts, n

on-c

urre

nt li

abili

ties,

cur

rent

lia

biliti

es a

nd e

quit

y•

Ow

ner’

s eq

uity

for

a so

le p

ropr

ieto

r an

d sh

areh

olde

rs’ e

quit

y fo

r a

priv

ate

limite

d co

mpa

ny (8

)

Valu

ation

met

hods

• A

ccou

nting

theo

ries

that

app

ly to

eac

h va

luati

on m

etho

d•

Valu

ation

met

hods

use

d fo

r as

sets

:-

non-

curr

ent

asse

ts a

t ne

t bo

ok v

alue

, i.e

., co

st le

ss a

ccum

ulat

ed d

epre

ciati

on-

inve

ntor

y va

lues

at

the

low

er o

f cos

t an

d ne

t re

alis

able

val

ue-

trad

e re

ceiv

able

s at

trad

e re

ceiv

able

s le

ss a

llow

ance

for

impa

irm

ent

of tr

ade

rece

ivab

les

• de

fine

net

asse

ts, e

quit

y an

d w

orki

ng

capi

tal

• ca

lcul

ate

net

asse

ts, e

quit

y an

d w

orki

ng

capi

tal

• an

alys

e th

e eff

ects

of b

usin

ess

tran

sacti

ons

and

acco

untin

g ad

just

men

ts

on th

e ow

ner’

s or

sha

reho

lder

s’ e

quit

y,

non-

curr

ent

asse

ts, c

urre

nt a

sset

s, n

on-

curr

ent

liabi

lities

, cur

rent

liab

ilitie

s, n

et

asse

ts a

nd w

orki

ng c

apit

al

• pr

epar

e a

Stat

emen

t of

Fin

anci

al P

ositi

on

wit

h en

d-of

-fina

ncia

l-per

iod

acco

untin

g ad

just

men

ts fo

r a

sole

pro

prie

tors

hip

or

priv

ate

limite

d co

mpa

ny

• pr

epar

e a

Stat

emen

t of

Fin

anci

al P

ositi

on

wit

h en

d-of

-fina

ncia

l-per

iod

acco

untin

g ad

just

men

ts fo

r a

trad

ing

or s

ervi

ce

busi

ness

Page 32: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

30

Gui

ding

Que

stion

sKn

owle

dge

Cont

ent

(Exp

ress

)Le

arni

ng O

utco

mes

Stud

ents

will

be

able

to:

Pres

enta

tion

of th

e St

atem

ent o

f Fin

anci

al

Posi

tion

• N

arra

tive

form

at o

f Sta

tem

ent o

f Fin

anci

al

Posi

tion

• Pr

esen

tatio

n de

tails

to s

how

: -

non-

curr

ent a

nd c

urre

nt a

sset

s (c

urre

nt

asse

ts a

re n

ot r

equi

red

to b

e lis

ted

in

orde

r of

liqu

idit

y)-

non-

curr

ent a

nd c

urre

nt li

abili

ties

- ca

pita

l of t

he s

ole

prop

rieto

r or

sha

re

capi

tal a

nd re

tain

ed e

arni

ngs

of a

pr

ivat

e lim

ited

com

pany

• Ac

coun

ting

adju

stm

ents

can

be

done

at

the

end

of a

per

iod

or fi

nanc

ial y

ear,

and

they

incl

ude

only

:-

decl

ared

div

iden

ds (p

riva

te li

mite

d co

mpa

ny)

- de

prec

iatio

n of

non

-cur

rent

ass

ets,

w

ith o

r w

ithou

t beg

inni

ng a

ccum

ulat

ed

depr

ecia

tion

- im

pairm

ent l

oss

on in

vent

ory

- im

pairm

ent l

oss

on tr

ade

rece

ivab

les

aris

ing

durin

g th

e fin

anci

al p

erio

d, w

ith

or w

ithou

t beg

inni

ng a

llow

ance

for

impa

irmen

t of t

rade

rece

ivab

les

- pr

epai

d ex

pens

es, e

xpen

ses

paya

ble,

se

rvic

e fe

e re

ceiv

ed in

adv

ance

, in

com

e re

ceiv

able

and

inco

me

rece

ived

in

adv

ance

Page 33: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

31

Gui

ding

Que

stion

sKn

owle

dge

Cont

ent

(Exp

ress

)Le

arni

ng O

utco

mes

Stud

ents

will

be

able

to:

- re

-cla

ssifi

catio

n of

cur

rent

por

tion

of

non-

curr

ent

liabi

lity

- co

rrec

tion

of e

rror

s no

t re

veal

ed b

y th

e Tr

ial B

alan

ce

• Ba

sic

inte

rpre

tatio

n an

d si

gnifi

canc

e of

rel

ation

ship

s of

fina

ncia

l figu

res

in

the

Stat

emen

t of

Fin

anci

al P

ositi

on

(9);

unde

rsta

ndin

g th

e re

latio

nshi

p of

fina

ncia

l figu

res

in th

e St

atem

ent

of F

inan

cial

Pos

ition

will

aid

in

unde

rsta

ndin

g Se

ction

1.3

Not

es(6

) The

Sta

tem

ent

of F

inan

cial

Pos

ition

is

to b

e pr

epar

ed fr

om a

list

of a

ccou

nt

bala

nces

or

a tr

ial b

alan

ce(7

) The

Sta

tem

ent

of F

inan

cial

Pos

ition

in

clud

es o

nly

that

for

(i)

trad

ing

and

serv

ice

busi

ness

es(ii

) so

le p

ropr

ieto

rshi

ps a

nd p

riva

te

limite

d co

mpa

nies

(8) T

he te

rms

net

wor

th a

nd c

apita

l ow

ned

are

not

used

(9) I

nclu

des

only

the

follo

win

g:(i)

ho

w r

esou

rces

are

obt

aine

d an

d us

ed

Page 34: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

32

Gui

ding

Que

stion

sKn

owle

dge

Cont

ent

(Exp

ress

)Le

arni

ng O

utco

mes

Stud

ents

will

be

able

to:

(ii)

curr

ent

asse

ts, c

urre

nt li

abili

ties

and

wor

king

cap

ital (

curr

ent

asse

ts −

cur

rent

lia

biliti

es)

(iii)

equi

ty a

nd n

et a

sset

s (t

otal

ass

ets

tota

l lia

biliti

es)

(iv) c

hang

es in

net

ass

ets

betw

een

two

poin

ts in

tim

e an

d th

e pr

ofit

for

the

peri

od

2.5.

2 St

atem

ent

of F

inan

cial

Per

form

ance

1) W

hat

is a

Sta

tem

ent

of F

inan

cial

Pe

rfor

man

ce?

2) H

ow is

info

rmati

on

show

n in

the

Stat

emen

t of

Fin

anci

al

Perf

orm

ance

?

Cont

extu

alCo

mm

unic

ation

of

busi

ness

per

form

ance

Conc

eptu

al•

Am

ount

s re

port

ed

are

for

a pe

riod

of

time

• Ex

pand

ed a

ccou

nting

eq

uatio

n•

Inco

me

• Ex

pens

es

• Pr

ofits

• Re

leva

nt a

ccou

nting

th

eori

es

Proc

edur

al•

Prep

are

the

Stat

emen

t

Purp

ose

of th

e St

atem

ent

of F

inan

cial

Pe

rfor

man

ce•

The

Stat

emen

t of

Fin

anci

al P

erfo

rman

ce

show

s th

e in

com

e an

d ex

pens

es o

f a

busi

ness

for

a pe

riod

of ti

me

(10)

• Sh

ows

the

profi

t fo

r th

e pe

riod

, i.e

., th

e ex

cess

of i

ncom

e ov

er e

xpen

ses

for

a pe

riod

of ti

me

Item

s in

the

Stat

emen

t of

Fin

anci

al

Perf

orm

ance

• Fo

r a

trad

ing

busi

ness

, the

per

petu

al

inve

ntor

y re

cord

ing

met

hod

is a

dopt

ed•

The

follo

win

g de

tails

are

sho

wn

in th

e tr

adin

g po

rtion

of t

he S

tate

men

t of

Fi

nanc

ial P

erfo

rman

ce:

- ne

t sa

les

reve

nue

(sal

es r

even

ue −

sa

les

retu

rns)

- co

st o

f sal

es

• de

fine

and

disti

ngui

sh g

ross

pro

fit/l

oss

and

profi

t/lo

ss fo

r th

e fin

anci

al p

erio

d

• ex

plai

n th

e pu

rpos

es o

f the

trad

ing

porti

on, a

nd p

rofit

and

loss

por

tion

of th

e St

atem

ent

of F

inan

cial

Per

form

ance

• ca

lcul

ate

net

sale

s re

venu

e, s

ervi

ce fe

e re

venu

e, g

ross

pro

fit/l

oss

and

profi

t/lo

ss

for

the

peri

od

• pr

epar

e a

Stat

emen

t of

Fin

anci

al

Perf

orm

ance

wit

h en

d-of

-fina

ncia

l-pe

riod

acc

ounti

ng a

djus

tmen

ts fo

r a

sole

pro

prie

tors

hip

or p

riva

te li

mite

d co

mpa

ny

• pr

epar

e a

Stat

emen

t of

Fin

anci

al

Perf

orm

ance

wit

h en

d-of

-fina

ncia

l-per

iod

acco

untin

g ad

just

men

ts fo

r a

trad

ing

or

serv

ice

busi

ness

Page 35: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

33

Gui

ding

Que

stion

sKn

owle

dge

Cont

ent

(Exp

ress

)Le

arni

ng O

utco

mes

Stud

ents

will

be

able

to:

of F

inan

cial

Pe

rfor

man

ce-

gros

s pr

ofit/

loss

• Fo

r a

serv

ice

busi

ness

, ser

vice

fee

reve

nue

is s

how

n as

a li

ne it

em, s

epar

ate

from

oth

er in

com

e

Pres

enta

tion

of th

e St

atem

ent

of F

inan

cial

Pe

rfor

man

ce•

Nar

rativ

e fo

rmat

of S

tate

men

t of

Fi

nanc

ial P

erfo

rman

ce•

Pres

enta

tion

of s

ales

rev

enue

, sal

es

retu

rns

and

cost

of s

ales

on

the

Stat

emen

t of

Fin

anci

al P

erfo

rman

ce fo

r a

trad

ing

busi

ness

• Pr

esen

tatio

n of

ser

vice

fee

reve

nue

on

the

Stat

emen

t of

Fin

anci

al P

erfo

rman

ce

for

a se

rvic

e bu

sine

ss•

Oth

er e

xpen

ses

in th

e pr

ofit

and

loss

po

rtion

of t

he S

tate

men

t of

Fin

anci

al

Perf

orm

ance

are

not

req

uire

d to

be

clas

sifie

d by

func

tion.

• A

ccou

nting

adj

ustm

ents

can

be

done

at

the

end

of a

per

iod

or fi

nanc

ial y

ear,

and

they

incl

ude

only

:-

depr

ecia

tion

of n

on-c

urre

nt a

sset

s,

wit

h or

wit

hout

beg

inni

ng a

ccum

ulat

ed

depr

ecia

tion

Page 36: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

34

Gui

ding

Que

stion

sKn

owle

dge

Cont

ent

(Exp

ress

)Le

arni

ng O

utco

mes

Stud

ents

will

be

able

to:

- im

pair

men

t lo

ss o

n in

vent

ory

- im

pair

men

t lo

ss o

n tr

ade

rece

ivab

les

aris

ing

duri

ng th

e fin

anci

al p

erio

d, w

ith

or w

itho

ut b

egin

ning

allo

wan

ce fo

r im

pair

men

t of

trad

e re

ceiv

able

s -

serv

ice

fee

reve

nue

rece

ived

in

adva

nce,

pre

paid

exp

ense

s, e

xpen

ses

paya

ble,

oth

er in

com

e re

ceiv

able

s an

d in

com

e re

ceiv

ed in

adv

ance

-

corr

ectio

n of

any

err

ors

not

reve

aled

by

the

Tria

l Bal

ance

• Ba

sic

inte

rpre

tatio

n an

d si

gnifi

canc

e of

re

latio

nshi

ps o

f fina

ncia

l figu

res

in th

e St

atem

ent

of F

inan

cial

Per

form

ance

(1

1); u

nder

stan

ding

the

rela

tions

hips

of

fina

ncia

l figu

res

in th

e St

atem

ent

of F

inan

cial

Per

form

ance

will

aid

in

unde

rsta

ndin

g Se

ction

1.3

Not

es(1

0) S

tate

men

t of F

inan

cial

Per

form

ance

is

to b

e pr

epar

ed fr

om a

list

of a

ccou

nt

bala

nces

or a

tria

l bal

ance

and

incl

udes

on

ly th

at fo

r(i)

tr

adin

g an

d se

rvic

e bu

sine

sses

(ii)

sole

pro

prie

tors

hips

and

pri

vate

lim

ited

com

pani

es

Page 37: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

35

Gui

ding

Que

stion

sKn

owle

dge

Cont

ent

(Exp

ress

)Le

arni

ng O

utco

mes

Stud

ents

will

be

able

to:

(11)

Incl

udes

onl

y th

e fo

llow

ing

rela

tions

hips

bet

wee

n:(i)

sale

s re

venu

e, c

ost

of s

ales

and

gros

s pr

ofit/

loss

(ii)

gros

s pr

ofit/

loss

, oth

er in

com

e,ot

her

expe

nses

and

pro

fit/l

oss

for

the

peri

od(ii

i) sa

les

reve

nue,

cos

t of

sal

es, o

ther

inco

me,

oth

er e

xpen

ses

and

profi

t/lo

ss fo

r th

e pe

riod

2.6

Inco

me

and

expe

nses

This

sec

tion

look

s in

to th

e re

venu

e, o

ther

inco

me,

cos

t of

sal

es a

nd o

ther

exp

ense

item

s in

a S

tate

men

t of

Fin

anci

al P

erfo

rman

ce, a

nd th

e ad

just

men

ts to

be

mad

e to

thes

e ite

ms

at th

e en

d of

a fi

nanc

ial p

erio

d.

2.6.

1 Re

venu

e an

d ot

her

inco

me

1) W

hat

are

the

tran

sacti

ons

for

reve

nue

and

othe

rin

com

e?

2) H

ow a

re r

even

uean

d ot

her

inco

me

pres

ente

d in

the

finan

cial

sta

tem

ents

?

3) H

ow a

re a

djus

tmen

tsfo

r re

venu

e an

dot

her

inco

me

mad

e?

Cont

extu

al•

Trad

ing

and

serv

ice

busi

ness

•H

ow th

e da

tes

for

rece

ipt

of in

com

e ca

ndi

ffer

wit

h th

e pe

riod

they

are

rep

orte

d as

inco

me

Conc

eptu

al•

Am

ount

s re

port

ed a

refo

r a

perio

d of

tim

e•

Sale

s re

venu

e•

Serv

ice

fee

reve

nue

•Se

rvic

e fe

e re

venu

ere

ceiv

ed in

adv

ance

Acc

ounti

ng th

eori

es•

Reve

nue

reco

gniti

on th

eory

•A

ccru

al b

asis

of a

ccou

nting

theo

ry

Acc

ounti

ng fo

r tr

ansa

ction

s•

Acc

ounti

ng fo

r:(i)

sale

of g

oods

on

cash

and

cre

dit

basi

s(ii

)pr

ovis

ion

of s

ervi

ces

on c

ash

and

cred

it b

asis

(iii)

retu

rns

of g

oods

(iv)

serv

ice

fee

reve

nue

rece

ived

inad

vanc

e(v

)ot

her

inco

me

(12)

(vi)

inco

me

rece

ivab

le (1

2)(v

ii)in

com

e re

ceiv

ed in

adv

ance

(12)

Acc

ounti

ng th

eori

es•

expl

ain

the

acco

untin

g of

sal

es r

even

ue,

serv

ice

fee

reve

nue,

oth

er in

com

e,se

rvic

e fe

e re

ceiv

ed in

adv

ance

,in

com

e re

ceiv

able

and

inco

me

rece

ived

in a

dvan

ce in

rel

ation

to r

elev

ant

acco

untin

g th

eori

es

Acc

ounti

ng fo

r tr

ansa

ction

s•

calc

ulat

e th

e sa

les

reve

nue

adju

sted

for

sale

s re

turn

•ca

lcul

ate

the

serv

ice

fee

reve

nue

adju

sted

for

serv

ice

fee

reve

nue

rece

ived

in a

dvan

ce

Page 38: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

36

Gui

ding

Que

stion

sKn

owle

dge

Cont

ent

(Exp

ress

)Le

arni

ng O

utco

mes

Stud

ents

will

be

able

to:

•O

ther

inco

me

•In

com

e re

ceiv

able

•In

com

e re

ceiv

ed in

adva

nce

•Re

venu

e re

cogn

ition

theo

ry•

Accr

ual b

asis

of

acco

untin

g

Proc

edur

al•

Reco

rd s

ales

reve

nue,

serv

ice

fee

reve

nue

and

inco

me

in th

ejo

urna

l, le

dger

acco

unts

and

fina

ncia

lst

atem

ents

•Re

cord

ser

vice

fee

reve

nue

rece

ived

in a

dvan

ce, i

ncom

ere

ceiv

able

and

inco

me

rece

ived

in a

dvan

ce in

the

jour

nal a

nd fi

nanc

ial

stat

emen

ts

•Ca

lcul

ation

of s

ervi

ce fe

e re

venu

e re

ceiv

edin

adv

ance

, inc

ome

rece

ivab

les

and

inco

me

rece

ived

in a

dvan

ce•

Am

ount

s re

ceiv

ed a

re re

cord

ed a

s in

com

eat

the

poin

ts o

f rec

eipt

, and

any

une

arne

dor

not

rece

ived

por

tions

are

adj

uste

d at

the

end

of th

e fin

anci

al p

erio

d•

A dju

stm

ents

at e

nd o

f per

iod

are

to b

em

ade

agai

nst s

epar

ate

serv

ice

fee

reve

nue

rece

ived

in a

dvan

ce, i

ncom

e re

ceiv

able

and

inco

me

rece

ived

in a

dvan

ce le

dger

acco

unts

•Cl

osin

g of

sal

es re

venu

e, s

ales

retu

rns,

serv

ice

fee

reve

nue

and

othe

r in

com

e ar

epe

rfor

med

onl

y at

the

end

of th

e fin

anci

alye

ar, a

nd th

e am

ount

s ar

e tr

ansf

erre

dto

the

inco

me

sum

mar

y (fo

r pe

riods

inbe

twee

n th

e fin

anci

al y

ear,

ther

e w

ill b

eba

lanc

es in

thes

e ac

coun

ts)

Pres

enta

tion

•Pr

esen

tatio

n of

sal

es r

even

ue, s

ales

retu

rns,

ser

vice

fee

reve

nue

and

othe

rin

com

e in

the

Stat

emen

t of

Fin

anci

alPe

rfor

man

ce•

Pres

enta

tion

of in

com

e re

ceiv

able

in th

eSt

atem

ent

of F

inan

cial

Pos

ition

•ca

lcul

ate

othe

r in

com

e ad

just

ed fo

rin

com

e re

ceiv

able

and

inco

me

rece

ived

in a

dvan

ce

•pr

epar

e th

e jo

urna

l ent

ries

aff

ectin

gsa

les

reve

nue,

sal

es r

etur

ns, s

ervi

cefe

e re

venu

e, o

ther

inco

me,

ser

vice

fee

reve

nue

rece

ived

in a

dvan

ce, i

ncom

ere

ceiv

able

and

inco

me

rece

ived

inad

vanc

e

•pr

epar

e th

e sa

les

reve

nue,

sal

es r

etur

ns,

serv

ice

fee

reve

nue

and

othe

r in

com

ele

dger

acc

ount

s w

itho

ut a

djus

tmen

ts fo

rse

rvic

e fe

e re

venu

e re

ceiv

ed in

adv

ance

,in

com

e re

ceiv

able

and

inco

me

rece

ived

in a

dvan

ce

•in

terp

ret

the

sale

s re

venu

e, s

ales

ret

urns

,se

rvic

e fe

e re

venu

e, o

ther

inco

me

ledg

erac

coun

ts w

ith

adju

stm

ents

for

serv

ice

fee

reve

nue

rece

ived

in a

dvan

ce, i

ncom

ere

ceiv

able

and

inco

me

rece

ived

inad

vanc

e

•an

alys

e th

e eff

ects

of s

ervi

ce fe

e re

venu

ere

ceiv

ed in

adv

ance

, inc

ome

rece

ivab

les

and

inco

me

rece

ived

in a

dvan

ce o

ncu

rren

t lia

biliti

es, c

urre

nt a

sset

s an

dpr

ofit/

loss

for

the

peri

od

Page 39: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

37

Gui

ding

Que

stion

sKn

owle

dge

Cont

ent

(Exp

ress

)Le

arni

ng O

utco

mes

Stud

ents

will

be

able

to:

• Pr

esen

tatio

n of

ser

vice

fee

reve

nue

rece

ived

in a

dvan

ce a

nd in

com

e re

ceiv

ed

in a

dvan

ce in

the

Stat

emen

t of

Fin

anci

al

Posi

tion

• In

com

e re

ceiv

able

is s

how

n as

cur

rent

as

sets

in th

e St

atem

ent

of F

inan

cial

Po

sitio

n•

Serv

ice

fee

reve

nue

rece

ived

in a

dvan

ce

and

inco

me

rece

ived

in a

dvan

ce a

re

show

n as

cur

rent

liab

ilitie

s in

the

Stat

emen

t of

Fin

anci

al P

ositi

on

Not

es(1

2) E

xclu

des

the

follo

win

g:

(i)

divi

dend

inco

me

(ii)

prep

arati

on o

f inc

ome

rece

ivab

le a

nd

inco

me

rece

ived

in a

dvan

ce le

dger

ac

coun

ts

Pres

enta

tion

• pr

epar

e an

ext

ract

of t

he S

tate

men

t of

Fin

anci

al P

erfo

rman

ce s

how

ing

the

pres

enta

tion

of s

ales

rev

enue

, sal

es

retu

rns,

and

oth

er in

com

e fo

r a

trad

ing

busi

ness

• pr

epar

e an

ext

ract

of t

he S

tate

men

t of

Fin

anci

al P

erfo

rman

ce s

how

ing

the

pres

enta

tion

of s

ervi

ce fe

e re

venu

e an

d ot

her

inco

me

for

a se

rvic

e bu

sine

ss

• pr

epar

e an

ext

ract

of t

he S

tate

men

t of

Fin

anci

al P

ositi

on s

how

ing

the

pres

enta

tion

of s

ervi

ce fe

e re

venu

e re

ceiv

ed in

adv

ance

for

a se

rvic

e bu

sine

ss

• pr

epar

e an

ext

ract

of t

he S

tate

men

t of

Fin

anci

al P

ositi

on s

how

ing

the

pres

enta

tion

of in

com

e re

ceiv

able

and

in

com

e re

ceiv

ed in

adv

ance

for

both

a

trad

ing

and

a se

rvic

e bu

sine

ss

2.6.

2 Co

st o

f sal

es a

nd o

ther

exp

ense

s

1) W

hat

are

the

tran

sacti

ons

for

cost

of

sal

es a

nd o

ther

ex

pens

es?

Cont

extu

alH

ow th

e da

tes

of

paym

ents

of e

xpen

ses

can

diff

er w

ith

the

peri

od th

ey a

re

repo

rted

as

othe

r ex

pens

es

Acc

ounti

ng th

eori

es•

Mat

chin

g th

eory

• A

ccru

al b

asis

of a

ccou

nting

theo

ry

Acc

ounti

ng fo

r tr

ansa

ction

s•

Acc

ounti

ng fo

r:

Acc

ounti

ng th

eori

es•

expl

ain

the

acco

untin

g of

cos

t of

sal

es

and

othe

r ex

pens

es a

nd a

djus

tmen

ts fo

r pr

epai

d ex

pens

es a

nd e

xpen

ses

paya

ble

in r

elati

on to

rel

evan

t ac

coun

ting

theo

ries

Page 40: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

38

Gui

ding

Que

stion

sKn

owle

dge

Cont

ent

(Exp

ress

)Le

arni

ng O

utco

mes

Stud

ents

will

be

able

to:

2) H

ow a

re c

ost

of s

ales

an

d ot

her

expe

nses

pr

esen

ted

in fi

nanc

ial

stat

emen

ts?

3) H

ow a

re a

djus

tmen

ts

for

othe

r ex

pens

es

mad

e

Conc

eptu

al•

Am

ount

s re

port

ed a

re

for

a pe

riod

of ti

me

• Pr

epay

men

ts•

Expe

nses

pay

able

• Ac

crua

l bas

is o

f ac

coun

ting

• M

atch

ing

theo

ry

Proc

edur

al•

Rec

ord

cost

of s

ales

, an

d ot

her

expe

nses

in

the

jour

nal,

ledg

er

acco

unts

and

fina

ncia

l st

atem

ents

• R

ecor

d pr

epai

d ex

pens

es a

nd

expe

nses

pay

able

in

the

jour

nal a

nd

finan

cial

sta

tem

ents

(i)

cost

of s

ales

(ii)

othe

r ex

pens

es p

aid

by c

ash/

cheq

ue(ii

i) ex

pens

es in

curr

ed b

ut n

ot p

aid

(exp

ense

s pa

yabl

e) (1

3)(iv

) exp

ense

s no

t inc

urre

d bu

t pai

d (p

repa

id

expe

nses

) (13

)•

Calc

ulati

on o

f cos

t of s

ales

and

oth

er

expe

nses

, pre

paid

exp

ense

s an

d ex

pens

es

paya

ble

• A

mou

nts

paid

are

reco

rded

as

othe

r ex

pens

es a

t the

poi

nts

of p

aym

ents

, and

an

y un

used

or

outs

tand

ing

porti

ons

are

adju

sted

at t

he e

nd o

f the

fina

ncia

l per

iod

• Ad

just

men

ts a

t end

of p

erio

d ar

e to

be

mad

e ag

ains

t sep

arat

e pr

epai

d ex

pens

es

and

exp

ense

s pa

yabl

e le

dger

acc

ount

s•

Clos

ing

of a

ll co

st o

f sal

es a

nd e

xpen

ses

acco

unts

are

per

form

ed o

nly

at th

e en

d of

the

finan

cial

yea

r an

d am

ount

s ar

e tr

ansf

erre

d to

inco

me

sum

mar

y (fo

r pe

riods

in b

etw

een

the

finan

cial

yea

r, th

ere

will

be

bala

nces

in th

ese

acco

unts

)

Pres

enta

tion

• Pr

esen

tatio

n of

cos

t of

sal

es a

nd o

ther

ex

pens

es in

the

Stat

emen

t of

Fin

anci

al

Perf

orm

ance

Acc

ounti

ng fo

r tr

ansa

ction

s•

calc

ulat

e th

e co

st o

f sal

es

• ca

lcul

ate

othe

r ex

pens

es a

djus

ted

for

prep

aid

expe

nses

and

exp

ense

s pa

yabl

e

• pr

epar

e th

e jo

urna

l ent

ries

aff

ectin

g co

st o

f sal

es, o

ther

exp

ense

s, p

repa

id

expe

nses

and

exp

ense

s pa

yabl

e

• pr

epar

e th

e co

st o

f sal

es a

nd o

ther

ex

pens

es le

dger

acc

ount

s w

itho

ut

adju

stm

ents

for

prep

aid

expe

nses

and

ex

pens

es p

ayab

le

• in

terp

ret

the

cost

of s

ales

and

oth

er

expe

nses

ledg

er a

ccou

nts

wit

h ad

just

men

ts fo

r pr

epai

d ex

pens

es a

nd

expe

nses

pay

able

• an

alys

e th

e eff

ects

of p

repa

id e

xpen

ses

and

expe

nses

pay

able

on

curr

ent

liabi

lities

, cur

rent

ass

ets

and

profi

t/lo

ss

for

the

peri

od

Pres

enta

tion

• pr

epar

e an

ext

ract

of t

he S

tate

men

t of

Fin

anci

al P

erfo

rman

ce s

how

ing

the

pres

enta

tion

of c

ost

of s

ales

and

oth

er

expe

nses

for

a tr

adin

g bu

sine

ss

Page 41: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

39

Gui

ding

Que

stion

sKn

owle

dge

Cont

ent

(Exp

ress

)Le

arni

ng O

utco

mes

Stud

ents

will

be

able

to:

• Pr

esen

tatio

n of

pre

paid

exp

ense

s an

d ex

pens

es p

ayab

le in

the

Stat

emen

t of

Fi

nanc

ial P

ositi

on•

Prep

aid

expe

nses

are

sho

wn

as c

urre

nt

asse

ts in

the

Stat

emen

t of

Fin

anci

al

Posi

tion

• Ex

pens

es p

ayab

les

are

show

n as

cur

rent

lia

biliti

es in

the

Stat

emen

t of

Fin

anci

al

Posi

tion

Not

e(1

3) E

xclu

des

the

prep

arati

on o

f pre

paid

ex

pens

es a

nd e

xpen

ses

paya

bles

ledg

er

acco

unts

• pr

epar

e an

ext

ract

of t

he S

tate

men

t of

Fin

anci

al P

erfo

rman

ce s

how

ing

the

pres

enta

tion

of o

ther

exp

ense

s fo

r a

serv

ice

busi

ness

• pr

epar

e an

ext

ract

of t

he S

tate

men

t of

Fin

anci

al P

ositi

on s

how

ing

the

pres

enta

tion

of p

repa

id e

xpen

ses

and

expe

nses

pay

able

for

both

a tr

adin

g an

d a

serv

ice

busi

ness

2.7

Ass

ets

This

sec

tion

look

s in

to th

e as

set

item

s in

a S

tate

men

t of

Fin

anci

al P

ositi

on a

nd th

e ad

just

men

ts to

be

mad

e to

thes

e ite

ms

at th

e en

d of

a

finan

cial

per

iod.

2.7.

1 Ca

sh in

han

d an

d ca

sh a

t ba

nk

1) H

ow d

o bu

sine

sses

m

anag

e ca

sh?

2) W

hat

are

the

tran

sacti

ons

invo

lvin

g ca

sh?

Cont

extu

alRe

ceip

ts a

nd p

aym

ents

Conc

eptu

alA

sset

s ve

rsus

liab

ilitie

s

Cash

man

agem

ent

• U

nder

stan

d w

hy b

usin

esse

s ne

ed to

kee

p ca

sh fo

r op

erati

onal

nee

ds•

Und

erst

and

how

bus

ines

ses

man

age

cash

in

han

d, c

ash

at b

ank,

cas

h in

tran

sit,

cas

h re

ceip

ts a

nd c

ash

paym

ents

(14)

Acc

ounti

ng fo

r tr

ansa

ction

s•

prep

are

the

jour

nal e

ntri

es r

elat

ed to

re

ceip

ts a

nd p

aym

ents

• st

ate

the

caus

es o

f dis

hono

ured

che

que

• pr

epar

e th

e jo

urna

l ent

ries

for

dish

onou

red

cheq

ue

Page 42: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

40

Gui

ding

Que

stion

sKn

owle

dge

Cont

ent

(Exp

ress

)Le

arni

ng O

utco

mes

Stud

ents

will

be

able

to:

3) H

ow is

cas

h

pres

ente

d in

fina

ncia

l st

atem

ents

?

Proc

edur

alRe

cord

cas

h re

ceip

ts,

cash

pay

men

ts

and

bank

-rel

ated

tr

ansa

ction

s in

th

e jo

urna

l, le

dger

ac

coun

ts a

nd fi

nanc

ial

stat

emen

ts

Acc

ounti

ng fo

r tr

ansa

ction

s•

Acc

ounti

ng fo

r re

ceip

ts a

nd p

aym

ents

-

cash

at

bank

acc

ount

refl

ects

the

amou

nt d

epos

ited

in th

e ba

nk fo

r sa

fe-

keep

ing

- th

e us

e of

che

ques

and

how

di

shon

oure

d ch

eque

s ha

ppen

- ac

coun

ting

for

dish

onou

red

cheq

ues,

w

ith

and

wit

hout

cas

h di

scou

nt

prev

ious

ly p

rovi

ded/

rece

ived

Pres

enta

tion

• Pr

esen

tatio

n of

cas

h in

han

d, c

ash

at

bank

and

ban

k ov

erdr

aft in

the

Stat

emen

t of

Fin

anci

al P

ositi

on.

Not

e(1

4) T

he in

tern

al c

ontr

ol o

f cas

h is

cov

ered

in

secti

on 3

.4

• pr

epar

e th

e ca

sh in

han

d an

d ca

sh a

t ba

nk le

dger

acc

ount

s

• in

terp

ret

the

cash

in h

and

and

cash

at

bank

ledg

er a

ccou

nts

Pres

enta

tion

• pr

epar

e an

ext

ract

of t

he S

tate

men

t of

Fin

anci

al P

ositi

on s

how

ing

the

pres

enta

tion

of c

ash

at b

ank,

ban

k ov

erdr

aft a

nd c

ash

in h

and

2.7.

2 In

vent

orie

s

1) W

hy d

o bu

sine

sses

ke

ep in

vent

orie

s?

2) H

ow d

o bu

sine

sses

m

anag

e in

vent

orie

s?

Cont

extu

alIn

vent

ory

man

agem

ent

Conc

eptu

al•

Acc

ounti

ng a

nd

Inve

ntor

y m

anag

emen

t•

Und

erst

and

why

bus

ines

ses

keep

in

vent

orie

s to

avo

id o

ut-o

f-st

ock

situ

ation

s

Inve

ntor

y m

anag

emen

t•

expl

ain

why

bus

ines

ses

keep

inve

ntor

ies

• de

scri

be h

ow b

usin

esse

s m

anag

e in

vent

orie

s

Page 43: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

41

Gui

ding

Que

stion

sKn

owle

dge

Cont

ent

(Exp

ress

)Le

arni

ng O

utco

mes

Stud

ents

will

be

able

to:

3) W

hat

are

the

tran

sacti

ons

invo

lvin

g th

e pu

rcha

se a

nd s

ale

of in

vent

ory?

4) H

ow is

inve

ntor

y pr

esen

ted

in fi

nanc

ial

stat

emen

ts?

5) H

ow is

inve

ntor

y va

lued

?

non-

acco

untin

g in

form

ation

• Re

leva

nce

of

info

rmati

on•

Prud

ence

theo

ry•

Valu

ation

of

inve

ntor

y –

at th

e lo

wer

of c

ost

and

net

real

isab

le v

alue

• A

djus

tmen

ts –

to

reco

gnis

e im

pair

men

t lo

ss o

n in

vent

ory

Proc

edur

alRe

cord

pur

chas

es a

nd

sale

s of

inve

ntor

y,

othe

r re

late

d in

vent

ory

tran

sacti

ons

and

any

adju

stm

ents

for

inve

ntor

y in

the

jour

nal,

ledg

er a

ccou

nts

and

finan

cial

sta

tem

ents

• U

nder

stan

d ho

w b

usin

esse

s m

anag

e in

vent

orie

s by

-

keep

ing

prop

er r

ecor

ds to

trac

k in

vent

ory

- ke

epin

g ph

ysic

al in

vent

ory

in th

e w

areh

ouse

- bu

ying

insu

ranc

e to

insu

re th

e in

vent

ory

• U

nder

stan

d ho

w b

usin

esse

s m

anag

e an

d m

ake

deci

sion

s ab

out

type

s of

inve

ntor

y to

buy

by

cons

ider

ing

both

acc

ounti

ng

and

non-

acco

untin

g in

form

ation

- ac

coun

ting

info

rmati

on: c

ost

of

inve

ntor

y, s

tora

ge c

ost,

gro

ss

profi

t m

argi

n, r

ate

of in

vent

ory

turn

over

(tim

es) o

r da

ys s

ales

in

inve

ntor

y(da

ys)

- no

n-ac

coun

ting

info

rmati

on in

clud

es

only

(i)

ty

pes

of s

tora

ge(ii

) na

ture

of p

rodu

ct(ii

i) co

nsum

er p

refe

renc

e

Acc

ounti

ng th

eori

es•

Prud

ence

theo

ry

• an

alys

e, e

valu

ate

and

mak

e de

cisi

ons

abou

t th

e pu

rcha

se o

f inv

ento

ry b

y co

nsid

erin

g ac

coun

ting

and

non-

acco

untin

g in

form

ation

Acc

ounti

ng th

eori

es•

expl

ain

the

valu

ation

of i

nven

tory

in

rela

tion

to r

elev

ant

acco

untin

g th

eori

es

Acc

ounti

ng fo

r tr

ansa

ction

s•

iden

tify

the

cost

s of

pur

chas

es

• ca

lcul

ate

the

cost

of s

ales

and

end

ing

inve

ntor

y

• ca

lcul

ate

the

impa

irm

ent

loss

on

inve

ntor

y ad

just

ed fo

r in

sura

nce

clai

ms

if an

y

• pr

epar

e th

e jo

urna

l ent

ries

on

inve

ntor

y at

poi

nts

of p

urch

ases

and

cos

t of

sal

es a

t po

ints

of s

ales

• pr

epar

e th

e jo

urna

l ent

ry to

rec

ord

impa

irm

ent

loss

on

inve

ntor

y

• pr

epar

e th

e in

vent

ory

ledg

er a

ccou

nt

wit

hout

adj

ustm

ents

for

impa

irm

ent

loss

on

inve

ntor

y

Page 44: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

42

Gui

ding

Que

stion

sKn

owle

dge

Cont

ent

(Exp

ress

)Le

arni

ng O

utco

mes

Stud

ents

will

be

able

to:

Acc

ounti

ng fo

r tr

ansa

ction

s•

Acc

ounti

ng fo

r pu

rcha

ses

of in

vent

ory,

re

turn

of i

nven

tory

, sal

es o

f inv

ento

ry

and

sale

s re

turn

s fo

r a

trad

ing

busi

ness

- pe

rpet

ual i

nven

tory

rec

ordi

ng m

etho

d (1

5)-

good

s ar

e in

vent

orie

d at

the

poin

ts

of p

urch

ases

and

exp

ense

d as

cos

t of

sa

les

at th

e po

ints

of s

ales

- co

sts

of p

urch

ases

inve

ntor

ied

incl

ude

the

purc

hase

pri

ce a

nd c

osts

to b

ring

in

inve

ntor

y le

ss r

etur

ns (1

6)•

Acc

ounti

ng fo

r co

st o

f sal

es

- ca

lcul

ation

of c

ost

of s

ales

and

end

ing

inve

ntor

y us

ing

the

FIFO

met

hod

(17)

Valu

ation

• Va

luati

on o

f end

ing

inve

ntor

y (1

8)-

Sing

apor

e’s

Fina

ncia

l Rep

ortin

g St

anda

rds

(FRS

) 2 s

tate

s th

at

“inv

ento

ries

sha

ll be

mea

sure

d at

the

low

er o

f cos

t an

d ne

t re

alis

able

val

ue”

- ac

coun

ting

for

impa

irm

ent

loss

on

inve

ntor

y w

hen

the

net

real

isab

le v

alue

of

inve

ntor

y is

low

er th

an b

ook

valu

e of

inve

ntor

y at

the

end

of th

e fin

anci

al

peri

od (1

9)

• in

terp

ret

the

inve

ntor

y le

dger

acc

ount

w

ith

adju

stm

ents

for

impa

irm

ent

loss

on

inve

ntor

y an

d/or

insu

ranc

e cl

aim

s

• an

alys

e th

e eff

ects

of u

nder

stat

emen

t or

ove

rsta

tem

ent

of in

vent

ory

on g

ross

pr

ofit/

loss

and

pro

fit/l

oss

for

the

peri

od

for

the

curr

ent

finan

cial

per

iod

Valu

ation

• st

ate

the

valu

ation

met

hod

for

inve

ntor

y in

the

Stat

emen

t of

Fin

anci

al P

ositi

on

Pres

enta

tion

• pr

epar

e an

ext

ract

of t

he S

tate

men

t of

Fin

anci

al P

ositi

on a

nd S

tate

men

t of

Fi

nanc

ial P

erfo

rman

ce s

how

ing

the

valu

es

and

pres

enta

tion

of e

ndin

g in

vent

ory,

co

st o

f sal

es a

nd im

pair

men

t lo

ss o

n in

vent

ory

Page 45: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

43

Gui

ding

Que

stion

sKn

owle

dge

Cont

ent

(Exp

ress

)Le

arni

ng O

utco

mes

Stud

ents

will

be

able

to:

Pres

enta

tion

•Pr

esen

tatio

n of

inve

ntor

y, c

ost

of s

ales

and

impa

irm

ent

loss

on

inve

ntor

y in

the

Stat

emen

t of

Fin

anci

al P

ositi

on a

ndSt

atem

ent

of F

inan

cial

Per

form

ance

Not

es(1

5)A

djus

tmen

t fo

r di

ffer

ence

s be

twee

nen

ding

inve

ntor

y va

lues

der

ived

from

perp

etua

l inv

ento

ry r

ecor

ding

met

hod

and

phys

ical

inve

ntor

y co

unt

is n

otre

quir

ed.

(16)

The

FRS

2 st

ates

that

“th

e co

st o

fin

vent

orie

s sh

all c

ompr

ise

all c

ost

ofpu

rcha

ses

and

othe

r co

sts

incu

rred

in b

ring

ing

the

inve

ntor

ies

to th

eir

pres

ent

loca

tion

and

cond

ition

.”Pr

epai

d ex

pens

es o

r ex

pens

es p

ayab

leon

pur

chas

e ar

e ex

clud

ed. I

n ad

ditio

n,ad

just

men

ts to

cos

ts o

f pur

chas

es th

atw

ill a

ffec

t co

st o

f sal

es a

nd e

ndin

gin

vent

ory

are

excl

uded

. Adj

ustm

ent

to in

vent

ory

valu

e in

clud

es o

nly

impa

irm

ent

loss

on

inve

ntor

y.

Page 46: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

44

Gui

ding

Que

stion

sKn

owle

dge

Cont

ent

(Exp

ress

)Le

arni

ng O

utco

mes

Stud

ents

will

be

able

to:

(17)

Sce

nari

os to

exc

lude

: (i)

m

ore

than

one

fina

ncia

l per

iod,

(ii

) be

ginn

ing

inve

ntor

y co

mpr

isin

g m

ore

than

one

bat

ch o

f goo

ds,

(iii)

a ba

tch

of g

oods

with

onl

y va

lue

or

quan

tity

(iv) c

ost

of s

ales

mea

sure

d by

oth

er

met

hods

bes

ides

FIF

O to

an

entir

e ba

tch

or b

atch

es o

f goo

ds, w

ith

parti

al a

ppor

tionm

ent

of a

ny b

atch

(18)

Cal

cula

ting

unit

cos

t, d

eriv

ing

inve

ntor

y va

lue

from

uni

t co

st a

nd q

uanti

ty,

and

reco

rdin

g in

sto

ck c

ards

are

not

re

quir

ed, a

nd g

oods

ret

urne

d fr

om

cust

omer

s w

ill n

ot le

ad to

ret

urn

of th

e sa

me

good

s to

the

supp

lier

(19)

Pre

para

tion

of im

pair

men

t lo

ss in

the

inve

ntor

y le

dger

acc

ount

is n

ot r

equi

red

2.7.

3 Tr

ade

rece

ivab

les

1) W

hy d

o bu

sine

sses

gr

ant

cred

it to

cu

stom

ers?

2) H

ow d

o bu

sine

sses

m

anag

e tr

ade

rece

ivab

les?

Cont

extu

al

Trad

e re

ceiv

able

s m

an-

agem

ent

Trad

e re

ceiv

able

s m

anag

emen

t•

Und

erst

and

why

bus

ines

ses

give

cre

dit

to

cust

omer

s to

incr

ease

rev

enue

• U

nder

stan

d ho

w b

usin

esse

s m

anag

e an

d m

ake

deci

sion

s ab

out

trad

e re

ceiv

able

s th

roug

h co

nsid

erin

g th

e cr

edit

wor

thin

ess

Trad

e re

ceiv

able

s m

anag

emen

t•

anal

yse,

eva

luat

e an

d m

ake

deci

sion

s ab

out

the

cred

it w

orth

ines

s of

exi

sting

an

d ne

w c

usto

mer

s/tr

ade

rece

ivab

les

by

cons

ider

ing

both

acc

ounti

ng a

nd n

on-

acco

untin

g in

form

ation

Page 47: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

45

Gui

ding

Que

stion

sKn

owle

dge

Cont

ent

(Exp

ress

)Le

arni

ng O

utco

mes

Stud

ents

will

be

able

to:

3) W

hat

are

the

tran

sacti

ons

invo

lvin

gtr

ade

rece

ivab

les?

4) H

ow a

re tr

ade

rece

ivab

les

pres

ente

d in

fina

ncia

lst

atem

ents

?

Conc

eptu

al•

Acc

ounti

ng a

ndno

n-ac

coun

ting

info

rmati

on•

Rele

vanc

e of

info

rmati

on•

Estim

ated

loss

vs

actu

al lo

ss•

Mat

chin

g th

eory

•Pr

uden

ce th

eory

•Va

luati

on o

f ass

ets

–ge

nera

l pro

visi

onfo

r al

low

ance

for

impa

irm

ent

of tr

ade

rece

ivab

les

•Im

pair

men

t lo

ss o

ntr

ade

rece

ivab

les

Proc

edur

alRe

cord

tran

sacti

ons

rela

ted

to tr

ade

rece

ivab

les

and

any

adju

stm

ents

on

trad

e re

ceiv

able

s in

th

e jo

urna

l, le

dger

ac

coun

ts a

nd fi

nanc

ial

stat

emen

ts

of e

xisti

ng a

nd n

ew c

usto

mer

s/

trad

e re

ceiv

able

s by

con

side

ring

bo

th a

ccou

nting

and

non

-acc

ounti

ng

info

rmati

on-

acco

untin

g in

form

ation

: tra

dere

ceiv

able

s ba

lanc

e, c

redi

t te

rms

and

cash

dis

coun

t, n

umbe

r of

day

s tr

ade

rece

ivab

les

are

over

due,

exi

sting

cust

omer

s’ h

isto

ry o

f rep

aym

ent,

rat

eof

trad

e re

ceiv

able

turn

over

(tim

es),

trad

e re

ceiv

able

col

lecti

on p

erio

d(d

ays)

-no

n-ac

coun

ting

info

rmati

on in

clud

eson

ly (2

0) th

e fo

llow

ing:

(i)ec

onom

ic o

utlo

ok(ii

)sp

ecifi

c in

dust

ry o

utlo

ok(ii

i) re

puta

tion

of c

usto

mer

s (e

.g.

soci

ally

res

pons

ible

, his

tory

of t

hebu

sine

ss)

(iv) c

usto

mer

s’ h

isto

ry o

f rep

aym

ent

Acc

ounti

ng th

eori

es•

Mat

chin

g th

eory

•Pr

uden

ce th

eory

Acc

ounti

ng fo

r tr

ansa

ction

s•

Acc

ounti

ng fo

r tr

ansa

ction

s aff

ectin

gtr

ade

rece

ivab

les

of a

trad

ing

busi

ness

:-

cred

it s

ales

and

sal

es r

etur

ns

Acc

ounti

ng th

eori

es•

expl

ain

the

acco

untin

g of

impa

irm

ent

loss

on

trad

e re

ceiv

able

s in

rel

ation

tore

leva

nt a

ccou

nting

theo

ries

Acc

ounti

ng fo

r tr

ansa

ction

s•

defin

e tr

ade

disc

ount

•ex

plai

n w

hy a

trad

e di

scou

nt is

giv

en

•de

fine

cash

dis

coun

t

•ex

plai

n w

hy a

cas

h di

scou

nt is

giv

en

•di

sting

uish

bet

wee

n tr

ade

and

cash

disc

ount

s

•ca

lcul

ate

the

trad

e di

scou

nt a

t th

e sa

le o

fan

d re

turn

of g

oods

•ca

lcul

ate

the

cash

dis

coun

t

•pr

epar

e th

e jo

urna

l ent

ries

to r

ecor

dtr

ansa

ction

s aff

ectin

g tr

ade

rece

ivab

les

•pr

epar

e th

e jo

urna

l ent

ries

on

allo

wan

cefo

r im

pair

men

t of

trad

e re

ceiv

able

s

•pr

epar

e a

trad

e re

ceiv

able

ledg

er a

ccou

nt

Page 48: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

46

Gui

ding

Que

stion

sKn

owle

dge

Cont

ent

(Exp

ress

)Le

arni

ng O

utco

mes

Stud

ents

will

be

able

to:

- ca

sh d

isco

unts

and

trad

e di

scou

nts,

in

clud

ing

thei

r pu

rpos

es a

nd

calc

ulati

ons

- w

rite

-off

of f

ull o

r pa

rtial

am

ount

of

debt

-

rece

ipts

in fu

ll or

par

tial a

mou

nt o

f de

bt o

wed

- di

shon

oure

d ch

eque

s •

Acc

ounti

ng fo

r tr

ansa

ction

s aff

ectin

g tr

ade

rece

ivab

les

of a

ser

vice

bus

ines

s:

- se

rvic

es p

rovi

ded

on c

redi

t-

cash

dis

coun

ts a

nd tr

ade

disc

ount

s,

incl

udin

g th

eir

purp

oses

and

ca

lcul

ation

s-

wri

te-o

ff o

f ful

l or

parti

al a

mou

nt o

f de

bt

- re

ceip

ts in

or

parti

al a

mou

nt o

f deb

t ow

ed

- di

shon

oure

d ch

eque

s

Valu

ation

• Va

luati

on o

f tra

de r

ecei

vabl

es (2

1)-

trad

e re

ceiv

able

s re

pres

ent

the

colle

ction

s in

the

imm

edia

te fu

ture

- al

low

ance

for

impa

irm

ent

of tr

ade

rece

ivab

les

is a

n es

timat

e of

the

valu

e of

deb

ts th

at m

ay b

e un

colle

ctibl

e in

th

e fu

ture

(22)

• in

terp

ret

the

(i) tr

ade

rece

ivab

les,

(ii)

allo

wan

ce fo

r im

pair

men

t of

trad

e re

ceiv

able

s, (i

ii) im

pair

men

t lo

ss o

n tr

ade

rece

ivab

les

ledg

er a

ccou

nts

• an

alys

e th

e eff

ects

of c

ash

disc

ount

on

pro

fit fo

r th

e pe

riod

and

trad

e re

ceiv

able

s

• an

alys

e th

e eff

ects

of c

hang

es in

al

low

ance

for

impa

irm

ent

of tr

ade

rece

ivab

les

and

impa

irm

ent

loss

on

trad

e re

ceiv

able

s on

the

profi

t/lo

ss fo

r th

e pe

riod

and

trad

e re

ceiv

able

s

Valu

ation

• st

ate

the

valu

ation

met

hod

for

trad

e re

ceiv

able

s in

the

Stat

emen

t of

Fin

anci

al

Posi

tion

Pres

enta

tion

• pr

epar

e an

ext

ract

of t

he S

tate

men

t of

Fin

anci

al P

ositi

on a

nd S

tate

men

t of

Fin

anci

al P

erfo

rman

ce s

how

ing

the

pres

enta

tion

of tr

ade

rece

ivab

les,

di

scou

nt a

llow

ed, a

llow

ance

for

impa

irm

ent

of tr

ade

rece

ivab

les,

and

im

pair

men

t lo

ss o

n tr

ade

rece

ivab

les

Page 49: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

47

Gui

ding

Que

stion

sKn

owle

dge

Cont

ent

(Exp

ress

)Le

arni

ng O

utco

mes

Stud

ents

will

be

able

to:

- ca

lcul

ation

and

acc

ounti

ng o

f al

low

ance

for

impa

irm

ent

of tr

ade

rece

ivab

les

- a

decr

ease

in a

llow

ance

is tr

eate

d as

a

redu

ction

aga

inst

exp

ense

s in

the

Stat

emen

t of

Fin

anci

al P

erfo

rman

ce

Pres

enta

tion

• Pr

esen

tatio

n of

trad

e re

ceiv

able

s,

allo

wan

ce fo

r im

pair

men

t of

trad

e re

ceiv

able

s, a

nd im

pair

men

t lo

ss o

n tr

ade

rece

ivab

les

in th

e St

atem

ent

of F

inan

cial

Po

sitio

n an

d St

atem

ent

of F

inan

cial

Pe

rfor

man

ce

Not

es(2

0) In

form

ation

abo

ut e

cono

mic

out

look

an

d sp

ecifi

c in

dust

ry o

utlo

ok a

re to

be

exp

licitl

y gi

ven

(stu

dent

s ar

e no

t ex

pect

ed to

rea

d an

d in

terp

ret

rela

ted

grap

hs, c

hart

s or

any

form

s of

rep

orts

to

ext

ract

info

rmati

on)

(21)

Sce

nari

os to

incl

ude

only

: (i)

pr

ovid

ing

allo

wan

ce fo

r th

e fir

st

time,

(ii)

incr

ease

in a

llow

ance

ove

r pr

ior

year

, and

(iii)

decr

ease

in a

llow

ance

ove

r pr

ior

year

Page 50: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

48

Gui

ding

Que

stion

sKn

owle

dge

Cont

ent

(Exp

ress

)Le

arni

ng O

utco

mes

Stud

ents

will

be

able

to:

(22)

Sin

gapo

re’s

Fin

anci

al R

epor

ting

Stan

dard

109

on

Fina

ncia

l Ins

trum

ents

st

ates

that

“w

hen

mak

ing

the

asse

ssm

ent

of c

redi

t ri

sk, a

n en

tity

shal

l us

e th

e ch

ange

in th

e ri

sk o

f a d

efau

lt oc

curr

ing

over

the

expe

cted

life

of

the

finan

cial

inst

rum

ent

inst

ead

of

the

chan

ge in

the

amou

nt o

f exp

ecte

d cr

edit

loss

es”.

Thu

s, th

e ge

nera

l pr

ovis

ion

for

allo

wan

ce fo

r im

pair

men

t of

trad

e re

ceiv

able

s w

ill b

e us

ed fo

r th

is

sylla

bus.

The

pre

para

tion

of a

llow

ance

fo

r im

pair

men

t of

trad

e re

ceiv

able

s an

d im

pair

men

t lo

ss o

n tr

ade

rece

ivab

les

ledg

er a

ccou

nts

are

not

requ

ired

2.7.

4 N

on-c

urre

nt a

sset

s

1) W

hat

is th

e di

ffer

ence

bet

wee

n ca

pita

l and

rev

enue

ex

pend

itur

e?

2) H

ow d

o bu

sine

sses

m

anag

e th

e bu

ying

(w

hat

to b

uy) o

f non

-cu

rren

t as

sets

?

Cont

extu

al•

Man

agin

g bu

ying

or

renti

ng n

on-c

urre

nt

asse

ts•

Man

agin

g bu

ying

of

non-

curr

ent

asse

ts•

Sale

of n

on-c

urre

nt

asse

ts

Non

-cur

rent

ass

ets

man

agem

ent

• U

nder

stan

d th

e ty

pes

of e

xpen

ditu

re th

at

busi

ness

es c

an c

apit

alis

e •

Und

erst

and

how

bus

ines

ses

mak

e de

cisi

ons

abou

t bu

ying

or

renti

ng

non-

curr

ent

asse

ts b

y co

nsid

erin

g bo

th a

ccou

nting

and

non

-acc

ounti

ng

info

rmati

on-

acco

untin

g in

form

ation

: (i)

curr

ent

finan

cial

sit

uatio

n of

the

busi

ness

Non

-cur

rent

ass

ets

man

agem

ent

• an

alys

e, e

valu

ate

and

mak

e de

cisi

ons

abou

t w

heth

er to

buy

or

rent

non

-cur

rent

as

sets

by

cons

ider

ing

both

acc

ounti

ng

and

non-

acco

untin

g in

form

ation

• an

alys

e, e

valu

ate

and

mak

e de

cisi

ons

abou

t th

e bu

ying

of n

on-c

urre

nt a

sset

s by

con

side

ring

bot

h ac

coun

ting

and

non-

acco

untin

g in

form

ation

Page 51: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

49

Gui

ding

Que

stion

sKn

owle

dge

Cont

ent

(Exp

ress

)Le

arni

ng O

utco

mes

Stud

ents

will

be

able

to:

3) W

hat

are

the

tran

sacti

ons

invo

lvin

gno

n-cu

rren

t as

sets

?

4) H

ow a

re n

on-c

urre

ntas

sets

pre

sent

ed in

finan

cial

sta

tem

ents

?

Conc

eptu

al•

Capi

tal v

s re

venu

eex

pend

itur

e•

R ele

vanc

e of

info

rmati

on•

Mat

eria

lity

theo

ry•

Mat

chin

g th

eory

•Co

nsis

tenc

y th

eory

•Pr

uden

ce th

eory

•Va

luati

on o

f non

-cu

rren

t as

sets

– a

tco

st le

ss a

ccum

ulat

edde

prec

iatio

n•

Gai

n/lo

ss o

n sa

le o

fno

n-cu

rren

t as

set

=Sa

le p

roce

eds

-N

et B

ook

valu

e

Proc

edur

al•

Reco

rd tr

ansa

ction

sre

late

d to

non

-cu

rren

t as

sets

and

any

adju

stm

ents

for

non-

curr

ent

asse

ts

(ii) c

ost

of o

wne

rshi

p ve

rsus

ren

ting

-no

n-ac

coun

ting

info

rmati

on in

clud

eson

ly:

adva

ntag

es o

r di

sadv

anta

ges

of b

uyin

g or

ren

ting

•U

nder

stan

d ho

w b

usin

esse

s m

anag

e an

dm

ake

deci

sion

s ab

out

the

acqu

isiti

onof

non

-cur

rent

s as

sets

(wha

t to

buy

) by

cons

ider

ing

both

acc

ounti

ng a

nd n

on-

acco

untin

g in

form

ation

-ac

coun

ting

info

rmati

on: p

rice

of n

on-

curr

ent

asse

ts, i

nsta

llatio

n co

st, c

ost

of m

aint

aini

ng th

e no

n-cu

rren

t as

sets

,an

d re

late

d re

pair

cos

t-

non-

acco

untin

g in

form

ation

incl

udes

only

the

follo

win

g:(i)

purp

ose

of th

e no

n-cu

rren

t as

set

(ii)

feat

ures

of t

he n

on-c

urre

nt a

sset

(23)

(iii)

cust

omer

rev

iew

s of

the

non-

curr

ent

asse

ts(iv

)w

arra

nty

Acc

ounti

ng th

eori

es•

Mat

chin

g th

eory

Acc

ounti

ng th

eori

es•

expl

ain

the

appl

icati

on o

f the

mat

eria

lity

theo

ry o

n th

e tr

eatm

ent

of c

apit

al a

ndre

venu

e ex

pend

itur

e

•ex

plai

n th

e ne

ed to

cha

rge

depr

ecia

tion

in r

elati

on to

rel

evan

t ac

coun

ting

theo

ries

•ex

plai

n th

e pr

esen

tatio

n of

net

boo

kva

lue

in r

elati

on to

rel

evan

t ac

coun

ting

theo

ries

Acc

ounti

ng fo

r tr

ansa

ction

sCa

pita

l and

rev

enue

exp

endi

ture

•de

fine

capi

tal a

nd r

even

ue e

xpen

ditu

re

•di

sting

uish

bet

wee

n ca

pita

l and

rev

enue

expe

ndit

ure

•cl

assi

fy a

ccou

nting

tran

sacti

ons

as c

apit

alan

d re

venu

e ex

pend

itur

e

•an

alys

e th

e eff

ects

of d

iffer

ence

s in

clas

sific

ation

and

trea

tmen

t of

cap

ital

and

reve

nue

expe

ndit

ure

on fi

nanc

ial

stat

emen

ts

Page 52: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

50

Gui

ding

Que

stion

sKn

owle

dge

Cont

ent

(Exp

ress

)Le

arni

ng O

utco

mes

Stud

ents

will

be

able

to:

in th

e jo

urna

l, le

dger

acc

ount

s an

d fin

anci

al s

tate

men

ts•

Reco

rd tr

ansa

ction

s re

late

d to

the

sale

of

non-

curr

ent

asse

ts

in th

e jo

urna

l and

fin

anci

al s

tate

men

ts

• Co

nsis

tenc

y th

eory

• M

ater

ialit

y th

eory

• Pr

uden

ce th

eory

Acc

ounti

ng fo

r tr

ansa

ction

s•

Acc

ounti

ng fo

r re

venu

e ve

rsus

cap

ital

ex

pend

itur

e-

the

acco

untin

g tr

eatm

ent

of c

apit

al

and

reve

nue

expe

ndit

ure,

spe

cific

ally

w

heth

er e

xpen

ditu

re in

curr

ed in

re

latio

n to

a n

on-c

urre

nt a

sset

is to

be

cap

ital

ised

as

part

of t

he n

on-

curr

ent

asse

t’s

cost

or

reco

rded

in th

e St

atem

ent

of F

inan

cial

Per

form

ance

as

an e

xpen

se-

exam

ples

of c

apit

al a

nd r

even

ue

expe

ndit

ure

- ex

pend

itur

e on

non

-cur

rent

ass

ets

subs

eque

nt to

acq

uisi

tion

can

only

be

capi

talis

ed if

it in

crea

ses

the

capa

city

an

d us

eful

life

of t

he n

on-c

urre

nt

asse

ts a

nd im

prov

es th

eir

func

tion

- eff

ects

of e

rron

eous

cla

ssifi

catio

n an

d tr

eatm

ent

of e

xpen

ditu

re o

n fin

anci

al

stat

emen

ts•

Acc

ounti

ng fo

r pu

rcha

se o

f non

-cur

rent

as

sets

(24)

- co

st o

f non

-cur

rent

ass

ets

com

pris

ing

Purc

hase

of n

on-c

urre

nt a

sset

s•

prep

are

the

jour

nal e

ntri

es o

n pu

rcha

ses

of n

on-c

urre

nt a

sset

s

• pr

epar

e th

e no

n-cu

rren

t as

set

ledg

er

acco

unt

to s

how

the

purc

hase

and

sal

e of

no

n-cu

rren

t as

sets

• in

terp

ret

the

non-

curr

ent

asse

t le

dger

ac

coun

t

Dep

reci

ation

and

acc

umul

ated

dep

reci

ation

defin

e de

prec

iatio

n an

d ac

cum

ulat

ed

depr

ecia

tion

• st

ate

the

caus

es o

f dep

reci

ation

• st

ate

and

disti

ngui

sh th

e de

prec

iatio

n m

etho

ds o

f (i)

stra

ight

-line

and

(ii)

redu

cing

-bal

ance

met

hods

• ex

plai

n th

e su

itab

ility

of s

elec

ted

depr

ecia

tion

met

hods

for

diff

eren

t ty

pes

of n

on-c

urre

nt a

sset

s

• ca

lcul

ate

depr

ecia

tion

and

accu

mul

ated

de

prec

iatio

n ac

cord

ing

to th

e (i)

str

aigh

t-lin

e an

d (ii

) red

ucin

g-ba

lanc

e m

etho

ds

• ca

lcul

ate

the

rate

of d

epre

ciati

on, l

engt

h of

use

ful l

ife, a

nnua

l dep

reci

ation

,

Page 53: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

51

Gui

ding

Que

stion

sKn

owle

dge

Cont

ent

(Exp

ress

)Le

arni

ng O

utco

mes

Stud

ents

will

be

able

to:

purc

hase

pri

ces

and

the

cost

s of

brin

ging

the

non-

curr

ent

asse

ts to

op

erati

ng c

ondi

tion

• A

ccou

nting

for

depr

ecia

tion

and

accu

mul

ated

dep

reci

ation

(dep

reci

ation

to

dat

e) (2

5)

- ca

uses

of d

epre

ciati

on

- m

etho

ds o

f dep

reci

ation

o

stra

ight

line

o

redu

cing

bal

ance

-

suit

abili

ty o

f dep

reci

ation

met

hods

for

diff

eren

t cl

asse

s of

non

-cur

rent

ass

ets

- ne

t bo

ok v

alue

rep

rese

nts

the

estim

ated

futu

re e

cono

mic

val

ue o

f a

non-

curr

ent

asse

t -

accu

mul

ated

dep

reci

ation

is a

n ap

prox

imati

on o

f the

red

uctio

n in

ec

onom

ic v

alue

of a

non

-cur

rent

ass

et

• A

ccou

nting

for

the

sale

of n

on-c

urre

nt

asse

ts (2

6)

Valu

ation

• Va

luati

on o

f non

-cur

rent

ass

ets

- at

cos

t le

ss a

ccum

ulat

ed d

epre

ciati

on

accu

mul

ated

dep

reci

ation

and

net

boo

k va

lue

or c

ost

of n

on-c

urre

nt a

sset

s

• pr

epar

e th

e jo

urna

l ent

ries

on

depr

ecia

tion

and

accu

mul

ated

de

prec

iatio

n

• an

alys

e th

e eff

ects

of d

iffer

ent

depr

ecia

tion

met

hods

on

profi

t/lo

ss fo

r th

e pe

riod

and

net

boo

k va

lue

of n

on-

curr

ent

asse

ts

• in

terp

ret

the

(i) d

epre

ciati

on a

nd

(ii) a

ccum

ulat

ed d

epre

ciati

on le

dger

ac

coun

ts

Sale

of n

on-c

urre

nt a

sset

s•

calc

ulat

e th

e ga

in o

r lo

ss o

n th

e sa

le o

f no

n-cu

rren

t as

sets

• pr

epar

e th

e jo

urna

l ent

ries

on

the

sale

of

non-

curr

ent

asse

ts

• in

terp

ret

the

sale

of n

on-c

urre

nt a

sset

le

dger

acc

ount

Valu

ation

• st

ate

the

valu

ation

met

hod

for

non-

curr

ent

asse

ts in

the

Stat

emen

t of

Fi

nanc

ial P

ositi

on

Page 54: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

52

Gui

ding

Que

stion

sKn

owle

dge

Cont

ent

(Exp

ress

)Le

arni

ng O

utco

mes

Stud

ents

will

be

able

to:

Pres

enta

tion

•Pr

esen

tatio

n of

non

-cur

rent

ass

ets

atne

t bo

ok v

alue

(cos

t le

ss a

ccum

ulat

edde

prec

iatio

n) in

the

Stat

emen

t of

Fina

ncia

l Pos

ition

•Pr

esen

tatio

n of

dep

reci

ation

and

gai

n/lo

ss o

n th

e sa

le o

f non

-cur

rent

ass

ets

inth

e St

atem

ent

of F

inan

cial

Per

form

ance

Not

es(2

3)Th

e fe

atur

es o

f the

non

-cur

rent

ass

ets

to b

e co

nsid

ered

dur

ing

purc

hase

ref

ers

to p

ossi

ble

prod

uct

spec

ifica

tions

suc

has

effi

cien

cy o

f the

pro

duct

.(2

4)Sc

enar

io to

incl

ude

only

: pur

chas

esof

non

-cur

rent

ass

ets

by c

ash

and

oncr

edit,

and

con

trib

ution

of n

on-c

urre

ntas

sets

by

the

owne

r(2

5)Sc

enar

ios

to in

clud

e on

ly: p

artia

l(b

y w

hole

mon

th) o

r fu

ll ye

ar o

fde

prec

iatio

n in

the

year

of a

cqui

sitio

n.Th

e pr

epar

ation

of a

ccum

ulat

edde

prec

iatio

n an

d de

prec

iatio

n le

dger

acco

unts

are

not

req

uire

d.

Pres

enta

tion

•pr

epar

e an

ext

ract

of S

tate

men

t of

Fina

ncia

l Pos

ition

and

Sta

tem

ent

of F

inan

cial

Per

form

ance

sho

win

gth

e pr

esen

tatio

n of

net

boo

k va

lue,

accu

mul

ated

dep

reci

ation

and

depr

ecia

tion

•pr

epar

e an

ext

ract

of t

he S

tate

men

tof

Fin

anci

al P

erfo

rman

ce s

how

ing

the

pres

enta

tion

of g

ain

or lo

ss o

n th

e sa

le o

fno

n-cu

rren

t as

sets

Page 55: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

53

Gui

ding

Que

stion

sKn

owle

dge

Cont

ent

(Exp

ress

)Le

arni

ng O

utco

mes

Stud

ents

will

be

able

to:

(26)

The

pre

para

tion

of th

e sa

le o

f non

-cu

rren

t as

set

ledg

er a

ccou

nt is

not

re

quir

ed a

nd o

nly

the

follo

win

g sc

enar

ios

are

incl

uded

:(i)

st

artin

g fr

om p

urch

ase

of o

ne n

on-

curr

ent

asse

t th

at is

sub

sequ

ently

so

ld, w

ith o

r w

ithou

t re

plac

emen

t(ii

) st

artin

g fr

om p

urch

ase

of t

wo

or m

ore

non-

curr

ent

asse

ts a

nd

subs

eque

ntly

sol

d on

e of

them

, with

or

with

out

repl

acem

ent

(iii)

star

ting

with

bal

ance

s in

the

non-

curr

ent

asse

t an

d ac

cum

ulat

ed

depr

ecia

tion

ledg

er a

ccou

nts

and

one

of th

e no

n-cu

rren

t as

sets

is s

old

in th

e cu

rren

t fin

anci

al p

erio

d (iv

) pa

rtial

(by

who

le m

onth

) or

full

year

of d

epre

ciati

on in

the

year

of

purc

hase

but

no

depr

ecia

tion

in th

e ye

ar o

f sal

e(v

) ei

ther

the

stra

ight

-line

or

redu

cing

-ba

lanc

e de

prec

iatio

n m

etho

ds

Page 56: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

54

Gui

ding

Que

stion

sKn

owle

dge

Cont

ent

(Exp

ress

)Le

arni

ng O

utco

mes

Stud

ents

will

be

able

to:

2.8

Liab

iliti

esTh

is s

ectio

n lo

oks

into

the

liabi

lity

item

s in

a S

tate

men

t of

Fin

anci

al P

ositi

on a

nd th

e ad

just

men

ts to

be

mad

e to

thes

e ite

ms

at th

e en

d of

a

finan

cial

per

iod.

2.8.

1 Tr

ade

paya

bles

1) H

ow d

o bu

sine

sses

m

anag

e tr

ade

paya

bles

?

2) W

hat

are

the

tran

sacti

ons

invo

lvin

g tr

ade

paya

bles

?

3) H

ow a

re tr

ade

paya

bles

pre

sent

ed in

fin

anci

al s

tate

men

ts?

Cont

extu

alM

anag

ing

supp

liers

and

pu

rcha

sing

on

cred

it Co

ncep

tual

Liab

ilitie

s

Proc

edur

alRe

cord

tran

sacti

ons

rela

ted

to tr

ade

paya

bles

in th

e jo

urna

l, le

dger

acc

ount

s an

d fin

anci

al s

tate

men

ts

Supp

lier

man

agem

ent

• U

nder

stan

d w

hy b

usin

esse

s bu

y on

cre

dit

inst

ead

of p

ayin

g ca

sh

• U

nder

stan

d ho

w b

usin

esse

s m

anag

e su

pplie

rs a

nd d

ecid

e w

hich

sup

plie

r to

bu

y fr

om b

y co

nsid

erin

g bo

th a

ccou

nting

an

d no

n-ac

coun

ting

info

rmati

on.

- ac

coun

ting

info

rmati

on: c

ost

of

inve

ntor

y, c

redi

t te

rms

and

cash

di

scou

nt, c

ost

of s

uppl

ies,

cos

t of

no

n-cu

rren

t as

sets

, del

iver

y ch

arge

s,

trad

e di

scou

nt a

nd c

ost

of s

ervi

ces

(inst

alla

tion

and

mai

nten

ance

)-

non-

acco

untin

g in

form

ation

incl

udes

on

ly th

e fo

llow

ing:

(i)

loca

l or

over

seas

sup

plie

r(ii

) aft

er-s

ales

ser

vice

(iii)

retu

rn p

olic

y(iv

) on

line

vs b

rick

-and

-mor

tar

supp

lier

(v)

repu

tatio

n of

sup

plie

r (e

.g.,

soci

ally

res

pons

ible

, his

tory

of t

he

busi

ness

)

Supp

lier

man

agem

ent

• an

alys

e, e

valu

ate

and

mak

e de

cisi

ons

abou

t w

hich

sup

plie

r to

buy

from

by

cons

ider

ing

both

acc

ounti

ng a

nd n

on-

acco

untin

g in

form

ation

Acc

ounti

ng fo

r tr

ansa

ction

s•

defin

e tr

ade

disc

ount

• ex

plai

n w

hy a

trad

e di

scou

nt is

rec

eive

d

• de

fine

cash

dis

coun

t

• ex

plai

n w

hy a

cas

h di

scou

nt is

rec

eive

d

• di

sting

uish

bet

wee

n tr

ade

and

cash

di

scou

nts

• ca

lcul

ate

the

trad

e di

scou

nt a

t th

e pu

rcha

se a

nd r

etur

n of

goo

ds

• ca

lcul

ate

the

cash

dis

coun

t at

pay

men

t

• pr

epar

e th

e jo

urna

l ent

ries

to r

ecor

d tr

ansa

ction

s aff

ectin

g tr

ade

paya

bles

Page 57: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

55

Gui

ding

Que

stion

sKn

owle

dge

Cont

ent

(Exp

ress

)Le

arni

ng O

utco

mes

Stud

ents

will

be

able

to:

(vi)

war

rant

y

Acc

ounti

ng fo

r tr

ansa

ction

s•

Acc

ounti

ng fo

r tr

ansa

ction

s aff

ectin

g th

e cr

edit

pur

chas

e of

goo

ds a

nd s

ervi

ces

and

non-

curr

ent

asse

ts:

- cr

edit

pur

chas

es o

f goo

ds a

nd s

ervi

ces

- cr

edit

pur

chas

es o

f non

-cur

rent

ass

ets

- re

turn

s of

goo

ds

- ca

sh d

isco

unts

and

trad

e di

scou

nts,

in

clud

ing

thei

r pu

rpos

es a

nd

calc

ulati

ons

- fu

ll or

par

tial p

aym

ents

- fr

eigh

t ch

arge

s

Pre

sent

ation

• Pr

esen

tatio

n of

trad

e pa

yabl

es in

the

Stat

emen

t of

Fin

anci

al P

ositi

on

• pr

epar

e a

trad

e pa

yabl

e le

dger

acc

ount

• in

terp

ret

a tr

ade

paya

ble

ledg

er a

ccou

nt

• an

alys

e th

e eff

ects

of c

ash

disc

ount

on

pro

fit/l

oss

for

the

peri

od a

nd tr

ade

paya

bles

Pres

enta

tion

• pr

epar

e an

ext

ract

of t

he S

tate

men

t of

Fin

anci

al P

erfo

rman

ce s

how

ing

the

pres

enta

tion

of d

isco

unt

rece

ived

• pr

epar

e an

ext

ract

of t

he S

tate

men

t of

Fin

anci

al P

ositi

on s

how

ing

the

pres

enta

tion

of tr

ade

paya

bles

2.8.

2 L

ong-

term

bor

row

ings

1) W

hat

are

the

tran

sacti

ons

for

long

-te

rm b

orro

win

gs?

Cont

extu

alO

btai

ning

loan

s fo

r bu

sine

ss u

se

Long

-ter

m b

orro

win

gs m

anag

emen

t•

Und

erst

and

why

bus

ines

ses

obta

in lo

ans

to fi

nanc

e it

s bu

sine

ss o

pera

tions

Acc

ounti

ng th

eori

es•

expl

ain

the

acco

untin

g of

long

-ter

m

borr

owin

gs in

tere

st e

xpen

se in

rel

ation

to

rele

vant

acc

ounti

ng th

eori

es

Page 58: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

56

Gui

ding

Que

stion

sKn

owle

dge

Cont

ent

(Exp

ress

)Le

arni

ng O

utco

mes

Stud

ents

will

be

able

to:

2) H

ow a

re lo

ng-

term

bor

row

ings

pr

esen

ted

in fi

nanc

ial

stat

emen

ts?

Conc

eptu

al•

Curr

ent

vs n

on-

curr

ent

liabi

lities

• M

atch

ing

theo

ry•

Acc

rual

bas

is o

f ac

coun

ting

Proc

edur

alRe

cord

tran

sacti

ons

rela

ted

to lo

ans

and

loan

inte

rest

s in

th

e jo

urna

l, le

dger

ac

coun

ts a

nd fi

nanc

ial

stat

emen

ts

Acc

ounti

ng th

eori

es•

Mat

chin

g th

eory

Acc

rual

bas

is o

f acc

ounti

ng

Acc

ounti

ng fo

r tr

ansa

ction

s•

Acc

ounti

ng fo

r ne

w lo

an a

nd lo

an

repa

ymen

t (2

7)•

Recl

assi

fy p

ortio

n of

liab

ility

pay

able

w

ithi

n th

e ne

xt fi

nanc

ial y

ear

as c

urre

nt

liabi

lity

• A

ccou

nting

for

inte

rest

exp

ense

and

in

tere

st e

xpen

se p

ayab

le (2

7)

Pres

enta

tion

• Pr

esen

tatio

n of

long

-ter

m b

orro

win

gs,

inte

rest

exp

ense

and

inte

rest

exp

ense

pa

yabl

e in

the

Stat

emen

t of

Fin

anci

al

Perf

orm

ance

and

Sta

tem

ent

of F

inan

cial

Po

sitio

n

Not

es(2

7) T

he fi

nanc

ial y

ear

end

for

scen

ario

s th

at in

clud

e th

e ta

king

up

of lo

ng-

term

bor

row

ing

will

alw

ays

end

on

31 D

ecem

ber.

The

obta

inin

g of

loan

s,

repa

ymen

t of

loan

s an

d in

tere

st p

aid

can

take

pla

ce a

t an

y tim

e du

ring

the

finan

cial

yea

r. Lo

ans

are

assu

med

to

Acc

ounti

ng fo

r tr

ansa

ction

s •

disti

ngui

sh b

etw

een

bank

loan

and

ban

k ov

erdr

aft

• ca

lcul

ate

inte

rest

exp

ense

and

inte

rest

ex

pens

e pa

yabl

e

• pr

epar

e th

e jo

urna

l ent

ries

on

new

loan

, lo

an r

epay

men

t, in

tere

st e

xpen

se a

nd

inte

rest

exp

ense

pay

able

• pr

epar

e an

d in

terp

ret

long

-ter

m

borr

owin

gs le

dger

acc

ount

• in

terp

ret

the

inte

rest

exp

ense

ledg

er

acco

unts

wit

h ad

just

men

ts fo

r in

tere

st

expe

nse

paya

ble

Pres

enta

tion

• pr

epar

e an

ext

ract

of t

he S

tate

men

t of

Fin

anci

al P

ositi

on a

nd S

tate

men

t of

Fin

anci

al P

erfo

rman

ce s

how

ing

the

pres

enta

tion

of lo

an, i

nter

est

expe

nse

paya

ble

and

inte

rest

exp

ense

Page 59: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

57

Gui

ding

Que

stion

sKn

owle

dge

Cont

ent

(Exp

ress

)Le

arni

ng O

utco

mes

Stud

ents

will

be

able

to:

be r

epai

d in

equ

al in

stal

men

ts o

ver

the

loan

tenu

re. T

his

sylla

bus

does

not

in

clud

e lo

ans

borr

owed

on

a sh

ort-

term

bas

is.

2.9

Equi

ties

This

sec

tion

look

s in

to th

e eq

uity

item

s of

bot

h a

sole

pro

prie

tors

hip

and

a pr

ivat

e lim

ited

com

pany

in a

Sta

tem

ent

of F

inan

cial

Pos

ition

, and

th

e ad

just

men

ts to

be

mad

e to

thes

e ite

ms

at th

e en

d of

a fi

nanc

ial p

erio

d.

2.9.

1 Ca

pita

l and

sha

re c

apit

al

1) H

ow a

re th

e so

le

prop

riet

or’s

and

sh

areh

olde

rs’

inte

rest

s in

the

busi

ness

pre

sent

ed in

fin

anci

al s

tate

men

ts?

Cont

extu

al•

Sole

pro

prie

tors

hip

• Pr

ivat

e lim

ited

com

pany

Conc

eptu

al

• A

mou

nts

repo

rted

ar

e as

at

a po

int

in

time

• A

ccou

nting

enti

ty

theo

ry

Proc

edur

alRe

cord

tran

sacti

ons

rela

ted

to th

e so

le

prop

riet

or’s

and

sh

areh

olde

rs’ i

nter

ests

in

the

jour

nal,

ledg

er

acco

unts

and

fina

ncia

l st

atem

ents

Acc

ounti

ng th

eori

es•

Acc

ounti

ng e

ntity

theo

ry

Acc

ounti

ng fo

r tr

ansa

ction

s•

Acc

ounti

ng fo

r tr

ansa

ction

s aff

ectin

g th

e so

le p

ropr

ieto

r’s

inte

rest

(ow

ner’

s eq

uity

) (2

8)•

Acc

ounti

ng fo

r tr

ansa

ction

s aff

ectin

g th

e sh

areh

olde

rs’ i

nter

ests

(sha

reho

lder

s’

equi

ty) (

29):

-

Issu

ance

of c

apit

al o

nly

Pres

enta

tion

• Pr

esen

tatio

n of

cap

ital

and

sha

re c

apit

al

in th

e St

atem

ent

of F

inan

cial

Pos

ition

Acc

ounti

ng th

eori

es•

expl

ain

the

acco

untin

g of

cap

ital

and

sh

are

capi

tal i

n re

latio

n to

rel

evan

t ac

coun

ting

theo

ries

Acc

ounti

ng fo

r tr

ansa

ction

s•

calc

ulat

e sh

are

capi

tal

• pr

epar

e th

e jo

urna

l ent

ries

on

capi

tal

cont

ribu

ted

and

shar

e ca

pita

l

• pr

epar

e th

e ca

pita

l and

sha

re c

apit

al

ledg

er a

ccou

nts

• In

terp

ret

the

capi

tal a

nd s

hare

cap

ital

le

dger

acc

ount

s

• an

alys

e th

e ch

ange

s in

the

owne

r’s

and

shar

ehol

ders

’ equ

ity

to id

entif

y th

e re

ason

s fo

r th

e ch

ange

s

Page 60: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

58

Gui

ding

Que

stion

sKn

owle

dge

Cont

ent

(Exp

ress

)Le

arni

ng O

utco

mes

Stud

ents

will

be

able

to:

Not

es(2

8) S

cena

rios

to in

clud

e on

ly c

ontr

ibuti

on o

f ca

pita

l in

cash

or

in k

ind

(29)

Sha

reho

lder

s’ in

tere

sts

incl

ude

only

the

follo

win

g(i)

or

dina

ry s

hare

s as

the

unit

of

owne

rshi

p in

the

com

pany

(ii)

issu

ance

of o

rdin

ary

shar

es fu

lly

paid

up

(iii)

calc

ulati

on o

f sha

re c

apita

l bas

ed

on u

nit

issu

e pr

ice

and

quan

tity

issu

ed

Pres

enta

tion

• pr

epar

e an

ext

ract

of t

he S

tate

men

t of

Fin

anci

al P

ositi

on s

how

ing

the

pres

enta

tion

of th

e so

le p

ropr

ieto

r’s

inte

rest

in th

e bu

sine

ss a

nd th

e sh

areh

olde

rs’ i

nter

ests

in th

e pr

ivat

e lim

ited

com

pany

2.9.

2 D

raw

ings

1) H

ow d

o bu

sine

sses

re

cord

wit

hdra

wal

s by

sol

e pr

opri

etor

s?

Cont

extu

alO

wne

r w

ithd

raw

s as

-se

ts fr

om b

usin

ess

for

own

use

Conc

eptu

al

• A

mou

nts

repo

rted

ar

e as

at

a po

int

in

time

• A

ccou

nting

enti

ty

theo

ry

Proc

edur

alRe

cord

tran

sacti

ons

rela

ted

to d

raw

ings

Acc

ounti

ng th

eori

es•

Acc

ounti

ng e

ntity

theo

ry

Acc

ounti

ng fo

r tr

ansa

ction

s•

Dra

win

gs in

cas

h or

in k

inds

wou

ld

redu

ce th

e so

le p

ropr

ieto

r’s

equi

ty in

the

Stat

emen

t of

Fin

anci

al P

ositi

on•

Clos

ing

of th

e dr

awin

gs le

dger

acc

ount

to

the

capi

tal l

edge

r ac

coun

t at

the

end

of

the

finan

cial

yea

r

Pres

enta

tion

• Pr

esen

tatio

n of

dra

win

gs in

the

capi

tal

acco

unt

Acc

ounti

ng th

eori

es•

expl

ain

the

acco

untin

g of

dra

win

gs in

re

latio

n to

rel

evan

t ac

coun

ting

theo

ries

Acc

ounti

ng fo

r tr

ansa

ction

s•

defin

e dr

awin

gs

• pr

epar

e th

e jo

urna

l ent

ries

rel

ated

to

draw

ings

and

the

tran

sfer

of d

raw

ings

to

the

capi

tal a

ccou

nt

• pr

epar

e th

e dr

awin

gs le

dger

acc

ount

• in

terp

ret

the

draw

ings

ledg

er a

ccou

nt

• an

alys

e th

e im

pact

of d

raw

ings

on

the

sole

pro

prie

tor’

s eq

uity

Page 61: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

59

Gui

ding

Que

stion

sKn

owle

dge

Cont

ent

(Exp

ress

)Le

arni

ng O

utco

mes

Stud

ents

will

be

able

to:

in th

e jo

urna

l, le

dger

ac

coun

ts a

nd fi

nanc

ial

stat

emen

ts

Pres

enta

tion

• pr

epar

e an

ext

ract

of t

he S

tate

men

t of

Fin

anci

al P

ositi

on s

how

ing

the

pres

enta

tion

of c

apit

al le

ss d

raw

ings

as

a si

ngle

line

item

2.9.

3 Tr

ansf

er o

f pro

fit/l

oss

for

the

year

and

ret

aine

d ea

rnin

gs

1) H

ow d

o so

le

prop

riet

ors

reco

rd

the

tran

sfer

of p

rofit

fo

r th

e pe

riod

to

capi

tal a

ccou

nt?

2) H

ow d

o pr

ivat

e lim

ited

com

pani

es

reco

rd p

rofit

for

the

year

, div

iden

ds a

nd

tran

sfer

to r

etai

ned

earn

ings

?

Cont

extu

al•

Tran

sfer

of p

rofit

s•

Dec

lara

tion

of

divi

dend

s

Conc

eptu

al•

Am

ount

s re

port

ed a

s at

a p

oint

in ti

me

Proc

edur

alRe

cord

tran

sfer

of

profi

ts a

nd d

ivid

ends

in

the

jour

nal,

ledg

er

acco

unts

and

fina

ncia

l st

atem

ents

Acc

ounti

ng fo

r tr

ansa

ction

s•

Sole

pro

prie

tors

hip

- pr

ofit/

loss

for

the

peri

od is

add

ed/

dedu

cted

to/f

rom

the

capi

tal

- tr

ansf

er o

f pro

fit/l

oss

for

the

year

to

the

sole

pro

prie

tor’

s ca

pita

l led

ger

acco

unt

at th

e en

d of

the

finan

cial

yea

r•

Priv

ate

limite

d co

mpa

ny-

reta

ined

ear

ning

s/ac

cum

ulat

ed lo

sses

: ac

cum

ulati

on o

f pas

t pr

ofit/

loss

less

de

clar

ed d

ivid

ends

o

tran

sfer

of p

rofit

/los

s fo

r th

e fin

anci

al y

ear

to th

e re

tain

ed

earn

ings

ledg

er a

ccou

nt a

t th

e en

d of

th

e fin

anci

al y

ear

o m

ovem

ents

in r

etai

ned

earn

ings

to

incl

ude

only

pro

fit/l

oss

for

the

year

an

d di

vide

nds

decl

ared

dur

ing

the

finan

cial

yea

r

Acc

ounti

ng fo

r tr

ansa

ction

s•

defin

e di

vide

nds

and

reta

ined

ear

ning

s

• ca

lcul

ate

the

endi

ng r

etai

ned

earn

ings

aft

er a

djus

ting

for

profi

t/lo

ss fo

r th

e ye

ar

and

decl

ared

div

iden

d

• pr

epar

e th

e jo

urna

l ent

ries

on

the

tran

sfer

of p

rofit

/los

s fo

r th

e ye

ar to

the

sole

pro

prie

tor’

s ca

pita

l acc

ount

• pr

epar

e th

e jo

urna

l ent

ries

on

the

tran

sfer

of p

rofit

/los

s fo

r th

e ye

ar

to r

etai

ned

earn

ings

, dec

lara

tion

of

divi

dend

s, p

aym

ent

of d

ivid

ends

and

tr

ansf

er o

f div

iden

ds fo

r th

e ye

ar to

re

tain

ed e

arni

ngs

acco

unt

• pr

epar

e th

e ca

pita

l led

ger

acco

unt

show

ing

the

tran

sfer

of p

rofit

s/lo

ss

• pr

epar

e th

e re

tain

ed e

arni

ngs

ledg

er

acco

unt

Page 62: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

60

Gui

ding

Que

stion

sKn

owle

dge

Cont

ent

(Exp

ress

)Le

arni

ng O

utco

mes

Stud

ents

will

be

able

to:

- di

vide

nds:

the

retu

rn o

n sh

areh

olde

rs’

inte

rest

s in

the

busi

ness

(30)

o ca

lcul

ation

of d

ecla

red

divi

dend

s ba

sed

on d

ivid

end

per

shar

e an

d qu

antit

y of

issu

ed o

rdin

ary

shar

eso

acco

untin

g fo

r de

clar

ed d

ivid

ends

an

d pa

ymen

t of

div

iden

ds

Pres

enta

tion

• Pr

esen

tatio

n of

the

sole

pro

prie

tor’

s ca

pita

l acc

ount

(aft

er a

ddin

g or

ded

uctin

g pr

ofit

or lo

ss fo

r th

e ye

ar) i

n th

e St

atem

ent

of F

inan

cial

Pos

ition

• Pr

esen

tatio

n of

ret

aine

d ea

rnin

gs o

r ac

cum

ulat

ed lo

sses

in th

e St

atem

ent

of

Fina

ncia

l Pos

ition

Not

e(3

0) D

ivid

ends

incl

udes

onl

y on

e fin

al

divi

dend

pai

d, a

nd th

e de

clar

ed d

ivid

end

is p

aid

out

in fu

ll an

d ex

clud

es th

e de

cisi

on o

n ho

w th

e am

ount

of d

ivid

end

per

shar

e is

arr

ived

at

and

the

lega

l pr

oced

ures

for

decl

ared

div

iden

ds.

• In

terp

ret

the

reta

ined

ear

ning

s le

dger

ac

coun

t

• pr

epar

e th

e di

vide

nds

ledg

er a

ccou

nt

• In

terp

ret

the

divi

dend

s le

dger

acc

ount

• an

alys

e th

e im

pact

of p

rofit

/los

s on

the

owne

r’s

equi

ty

• an

alys

e th

e im

pact

of d

ecla

red

divi

dend

s an

d pr

ofit/

loss

for

the

year

on

reta

ined

ea

rnin

gs a

nd s

hare

hold

ers’

equ

ity

Pres

enta

tion

• pr

epar

e an

ext

ract

of t

he S

tate

men

t of

Fin

anci

al P

ositi

on s

how

ing

the

pres

enta

tion

of c

apit

al a

fter

adj

ustin

g fo

r dr

awin

gs a

nd p

rofit

/los

s fo

r th

e ye

ar a

s a

sing

le li

ne it

em

• pr

epar

e an

ext

ract

of t

he S

tate

men

t of

Fin

anci

al P

ositi

on s

how

ing

the

pres

enta

tion

of r

etai

ned

earn

ings

/ac

cum

ulat

ed lo

sses

Page 63: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

61

Gui

ding

Que

stion

sKn

owle

dge

Cont

ent

(Exp

ress

)Le

arni

ng O

utco

mes

Stud

ents

will

be

able

to:

2.10

Cor

recti

on o

f err

ors

1) H

ow d

o er

rors

occ

ur?

2) H

ow d

o er

rors

aff

ect

the

acco

unts

?

Conc

eptu

alD

oubl

e en

try

• Co

rrec

tion

of e

rror

s no

t re

veal

ed b

y th

e Tr

ial B

alan

ce•

Adj

uste

d Tr

ial B

alan

ce a

nd S

tate

men

t of

Fin

anci

al P

ositi

on a

fter

cor

recti

on o

f er

rors

(31)

Stat

emen

t to

sho

w a

djus

ted

profi

ts

Not

e(3

1) T

his

incl

udes

onl

y on

e fin

anci

al p

erio

d;

erro

rs r

evea

led

by a

Tri

al B

alan

ce a

re

not

requ

ired

• ex

plai

n ho

w e

rror

s no

t re

veal

ed b

y a

Tria

l Ba

lanc

e ha

ppen

• pr

epar

e th

e jo

urna

l ent

ries

to c

orre

ct

erro

rs

• an

alys

e th

e eff

ects

of e

rror

s on

pro

fit/

loss

for

the

peri

od a

nd o

n ite

ms

in th

e St

atem

ent

of F

inan

cial

Pos

ition

• an

alys

e th

e eff

ects

of c

orre

ction

of e

rror

s on

pro

fit/l

oss

for

the

peri

od a

nd o

n ite

ms

in th

e St

atem

ent

of F

inan

cial

Pos

ition

• pr

epar

e an

adj

uste

d Tr

ial B

alan

ce a

fter

co

rrec

tion

of e

rror

s

• pr

epar

e a

stat

emen

t of

adj

uste

d pr

ofits

aft

er c

orre

ction

of e

rror

s

• pr

epar

e an

adj

uste

d St

atem

ent

of

Fina

ncia

l Pos

ition

, or

an e

xtra

ct o

f one

, aft

er c

orre

ction

of e

rror

s

Page 64: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

62

Key

Und

erst

andi

ng 3

: Acc

ounti

ng is

an

info

rmati

on s

yste

m t

o m

easu

re b

usin

ess

acti

viti

es

The

acco

untin

g in

form

ation

sys

tem

mea

sure

s bu

sine

ss a

ctivi

ties

by id

entif

ying

, rec

ordi

ng, a

naly

sing

and

rep

ortin

g ac

coun

ting

info

rmati

on.

Gui

ding

Que

stion

sKn

owle

dge

Cont

ent

(Exp

ress

)Le

arni

ng O

utco

mes

Stud

ents

will

be

able

to:

3.1

Acc

ounti

ng t

heor

ies

1) W

hat

are

the

acco

untin

g th

eori

es?

2) H

ow d

o th

ey a

ffec

t th

e pr

epar

ation

an

d pr

esen

tatio

n of

acc

ounti

ng

info

rmati

on?

Conc

eptu

al

Acc

ounti

ng th

eori

es•

Acc

ounti

ng th

eori

es a

nd th

eir

impl

icati

ons

for

the

prep

arati

on a

nd

pres

enta

tion

of th

e St

atem

ent

of

Fina

ncia

l Pos

ition

and

Sta

tem

ent

of

Fina

ncia

l Per

form

ance

The

acco

untin

g th

eori

es a

re:

(i)

acco

untin

g en

tity

(ii)

goin

g co

ncer

n(ii

i) m

onet

ary

(iv)

acco

untin

g pe

riod

(v)

accr

ual b

asis

of a

ccou

nting

(vi)

obje

ctivi

ty(v

ii)

hist

oric

al c

ost

(viii

) co

nsis

tenc

y(ix

) m

ater

ialit

y (x

) pr

uden

ce(x

i) re

venu

e re

cogn

ition

(xii)

m

atch

ing

• Th

e ac

coun

ting

theo

ries

app

licab

le to

the

finan

cial

ele

men

ts a

re m

ainl

y la

id o

ut in

Ke

y U

nder

stan

ding

2

• de

fine

each

acc

ounti

ng th

eory

• id

entif

y th

e ac

coun

ting

theo

ry a

pplie

d in

a

give

n sc

enar

io

• ex

plai

n ho

w e

ach

acco

untin

g th

eory

aff

ects

the

prep

arati

on a

nd p

rese

ntati

on

of fi

nanc

ial s

tate

men

ts

Page 65: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

63

Gui

ding

Que

stion

sKn

owle

dge

Cont

ent

(Exp

ress

)Le

arni

ng O

utco

mes

Stud

ents

will

be

able

to:

3.2

Acc

ounti

ng in

form

ation

sys

tem

and

acc

ounti

ng c

ycle

1) W

hat

is th

e ac

coun

ting

cycl

e?

2) W

hat

is th

e ac

coun

ting

info

rmati

on s

yste

m?

3) H

ow a

re b

usin

ess

and

acco

untin

g tr

ansa

ction

s pr

oces

sed?

4) W

hy a

re s

ourc

e do

cum

ents

im

port

ant?

5) W

hat

are

the

sour

ce

docu

men

ts?

6) W

hat

are

jour

nal a

nd

ledg

ers?

7) W

hat

is r

ecor

ded

in th

e jo

urna

l and

le

dger

s?

8) W

hat

is a

Tri

al

Bala

nce?

Cont

extu

al

• Bu

sine

ss tr

ansa

ction

s•

Impa

ct o

f tec

hnol

ogy

on a

ccou

nting

Conc

eptu

al•

Acc

ounti

ng

info

rmati

on s

yste

m•

Rele

vant

acc

ounti

ng

theo

ries

• Th

e ac

coun

ting

cycl

e is

the

proc

essi

ng

of a

ccou

nting

tran

sacti

ons

thro

ugh

the

acco

untin

g in

form

ation

sys

tem

. The

st

ages

of a

ccou

nting

cyc

le a

re

(i)

iden

tifyi

ng a

nd r

ecor

ding

(ii)

adju

sting

(iii)

repo

rting

(iv)

clos

ing

• Th

e cl

osin

g of

acc

ount

s is

onl

y do

ne a

t th

e en

d of

a fi

nanc

ial y

ear

• A

com

pute

rise

d ac

coun

ting

info

rmati

on

syst

em g

ener

ally

com

pris

es th

e fo

llow

ing:

(i)

so

urce

doc

umen

ts(ii

) jo

urna

l(ii

i) le

dger

s (iv

) Tr

ial B

alan

ce

(v)

Stat

emen

t of

Fin

anci

al P

erfo

rman

ce(v

i) St

atem

ent

of F

inan

cial

Pos

ition

Sour

ce d

ocum

ents

• Pu

rpos

es o

f sou

rce

docu

men

ts

• Is

sue

and

rece

ipt

of d

ocum

ents

in

rela

tion

to s

elle

r/pr

ovid

er a

nd b

uyer

/co

nsum

er o

f goo

ds/s

ervi

ces

(32)

• st

ate

the

orde

r in

whi

ch e

ach

type

of

tran

sacti

on is

pro

cess

ed th

roug

h th

e ac

coun

ting

info

rmati

on s

yste

m

• ex

plai

n ho

w e

ach

type

of t

rans

actio

n is

pro

cess

ed th

roug

h th

e ac

coun

ting

info

rmati

on s

yste

m

• st

ate

the

purp

oses

of s

ourc

e do

cum

ents

• st

ate

the

purp

ose

of e

ach

type

of s

ourc

e do

cum

ent

• st

ate

the

sour

ce d

ocum

ents

use

d in

the

tran

sacti

on

• ex

plai

n th

e pu

rpos

e of

the

Tria

l Bal

ance

• ex

plai

n th

e lim

itati

on o

f the

Tri

al B

alan

ce

• pr

epar

e a

Tria

l Bal

ance

Page 66: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

64

Gui

ding

Que

stion

sKn

owle

dge

Cont

ent

(Exp

ress

)Le

arni

ng O

utco

mes

Stud

ents

will

be

able

to:

9) W

hy is

the

Tria

l Ba

lanc

e no

t an

ab

solu

te p

roof

of

accu

racy

?

• Ty

pes

of tr

ansa

ction

s an

d th

eir

sour

ce

docu

men

ts:

- ca

sh p

urch

ases

and

sal

es: r

ecei

pts

- cr

edit

pur

chas

es a

nd s

ales

: inv

oice

s -

rece

ipt

of m

oney

: rem

ittan

ce a

dvic

e (c

redi

t cu

stom

er),

rece

ipt,

ban

k st

atem

ent

- pa

ymen

t of

mon

ey: p

aym

ent

vouc

her,

rece

ipt,

ban

k st

atem

ent

- ov

erch

arge

s an

d re

turn

s of

inve

ntor

y:

cred

it n

otes

-

unde

rcha

rges

: deb

it n

otes

Jour

nal

• Re

pres

enta

tion

of tr

ansa

ction

s in

jour

nal

Ledg

er a

ccou

nt•

Repr

esen

tatio

n of

tran

sacti

ons

in le

dger

ac

coun

ts

Tria

l Bal

ance

• Fo

rmat

of a

Tri

al B

alan

ce•

Faci

litat

es th

e pr

epar

ation

of fi

nanc

ial

stat

emen

ts a

nd c

an a

lso

be u

sed

as a

ch

eck

on a

rith

meti

c ac

cura

cy•

Lim

itati

on a

s an

abs

olut

e pr

oof o

f ac

cura

cy

Page 67: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

65

Gui

ding

Que

stion

sKn

owle

dge

Cont

ent

(Exp

ress

)Le

arni

ng O

utco

mes

Stud

ents

will

be

able

to:

Not

e(3

2) E

xclu

des

deta

ils a

bout

the

cont

ent

on

sour

ce d

ocum

ents

3.3

Und

erst

andi

ng t

he d

oubl

e-en

try

reco

rdin

g sy

stem

1) H

ow a

re b

usin

ess

activ

ities

rec

orde

d in

the

acco

untin

g in

form

ation

sys

tem

?

Conc

eptu

al

Dou

ble-

entr

y re

cord

ing

syst

em

Proc

edur

alRe

cord

tran

sacti

ons

in

the

jour

nal a

nd le

dger

ac

coun

ts

Met

hod

of r

ecor

ding

• D

oubl

e-en

try

reco

rdin

g m

etho

d an

d ru

les

Jour

nal e

ntri

es•

Prep

arati

on o

f jou

rnal

ent

ries

Ledg

er a

ccou

nts

• Pr

epar

ation

of l

edge

r ac

coun

ts•

Posti

ng o

f jou

rnal

ent

ries

to le

dger

ac

coun

ts (3

3)•

Ana

lysi

ng th

e eff

ects

of t

rans

actio

ns o

n le

dger

bal

ance

s•

Und

erst

andi

ng th

at th

e be

ginn

ing

and

endi

ng le

dger

bal

ance

s re

pres

ent

the

cum

ulati

ve v

alue

s to

dat

e •

Clos

ing

of a

ll in

com

e an

d ex

pens

es

to a

n in

com

e su

mm

ary

acco

unt

(an

inte

rmed

iate

acc

ount

dur

ing

clos

ing

phas

e), w

hich

is th

en c

lose

d to

the

capi

tal

acco

unt

(for

sol

e pr

opri

etor

ship

s) o

r re

tain

ed e

arni

ngs

acco

unt

(for

pri

vate

lim

ited

com

pani

es) (

34)

• st

ate

the

ledg

er a

ccou

nts

to b

e de

bite

d an

d cr

edite

d

• pr

epar

e th

e jo

urna

l ent

ries

• pr

epar

e th

e le

dger

acc

ount

s

• in

terp

ret

the

tran

sacti

ons

reco

rded

and

th

e ba

lanc

es in

the

ledg

er a

ccou

nts

Page 68: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

66

Gui

ding

Que

stion

sKn

owle

dge

Cont

ent

(Exp

ress

)Le

arni

ng O

utco

mes

Stud

ents

will

be

able

to:

• Cl

osin

g of

the

draw

ings

acc

ount

to th

e ca

pita

l acc

ount

for

sole

pro

prie

tors

hips

(3

4)•

Clos

ing

of th

e di

vide

nds

acco

unt

amou

nt

to th

e re

tain

ed e

arni

ngs

acco

unt

for

priv

ate

limite

d co

mpa

nies

(34)

Not

es(3

3) E

xclu

des

the

posti

ng o

f acc

ounti

ng

adju

stm

ents

from

the

jour

nal t

o le

dger

s(3

4) C

losi

ng o

f inc

ome

and

expe

nses

ac

coun

ts, d

raw

ings

and

div

iden

ds

acco

unts

will

onl

y be

don

e at

the

end

of

the

finan

cial

yea

r

3.4

Inte

rnal

con

trol

s

1) W

hat

are

inte

rnal

co

ntro

ls?

2) W

hy a

re in

tern

al

cont

rols

impo

rtan

t?

3) W

hat

are

the

inte

rnal

co

ntro

ls o

ver

cash

?

Cont

extu

al•

How

bus

ines

ses

man

-ag

e ca

sh•

Safe

guar

ding

cas

h

Conc

eptu

alIn

tern

al c

ontr

ols

and

inte

rnal

con

trol

s ov

er

cash

• Pu

rpos

e of

inte

rnal

con

trol

s-

safe

guar

d as

sets

of t

he b

usin

ess

- en

sure

bus

ines

s tr

ansa

ction

s ar

e re

-co

rded

acc

urat

ely

- co

mpl

y w

ith

law

s an

d re

gula

tions

• In

tern

al c

ontr

ols

to s

afeg

uard

cas

h by

ha

ving

con

trol

s ov

er:

- ca

sh in

han

d-

cash

at

bank

- ca

sh in

tran

sit

- ca

sh r

ecei

pts

- ca

sh p

aym

ents

• ex

plai

n th

e pu

rpos

e of

inte

rnal

con

trol

s

• ex

plai

n th

e w

ays

of in

tern

al c

ontr

ols

over

ca

sh in

han

d, c

ash

at b

ank,

cas

h in

tran

sit,

ca

sh r

ecei

pts

and

cash

pay

men

ts

• ex

plai

n th

e pu

rpos

e of

pre

pari

ng b

ank

reco

ncili

ation

• id

entif

y th

e di

ffer

ence

s be

twee

n th

e bu

sine

ss c

ash

at b

ank

bala

nce

and

the

bala

nce

in th

e ba

nk s

tate

men

t

Page 69: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

67

Gui

ding

Que

stion

sKn

owle

dge

Cont

ent

(Exp

ress

)Le

arni

ng O

utco

mes

Stud

ents

will

be

able

to:

Proc

edur

alPr

epar

ation

of

bank

rec

onci

liatio

n st

atem

ent

•In

tern

al c

ontr

ols

over

cas

h-

segr

egati

on o

f duti

es-

cust

ody

of c

ash

-au

thor

isati

on-

bank

rec

onci

liatio

n•

Purp

ose

of p

repa

ring

ban

k re

conc

iliati

on:

chec

k th

e ca

sh a

t ba

nk b

alan

ce o

f the

busi

ness

aga

inst

the

bank

’s r

ecor

d as

show

n on

the

bank

sta

tem

ent

•Re

conc

iliati

on o

f diff

eren

ces

betw

een

the

busi

ness

cas

h at

ban

k ba

lanc

e an

d th

eba

lanc

e in

the

bank

sta

tem

ent

(35)

•D

iffer

ence

s ar

e du

e to

the

timin

g of

the

tran

sacti

ons

reco

rded

by

the

busi

ness

and

the

bank

, and

err

ors

in r

ecor

ding

•Ty

pes

of d

iffer

ence

s (3

6):

(i)di

rect

dep

osit

s(ii

)di

rect

pay

men

ts(ii

i)c h

eque

s no

t ye

t pr

esen

ted

(iv)

depo

sits

in tr

ansi

t(v

)di

shon

oure

d ch

eque

s(v

i)er

rors

mad

e by

the

busi

ness

or

the

bank

•A

djus

ting

the

cash

at

bank

ledg

er a

ccou

nt•

Form

at o

f a b

ank

reco

ncili

ation

sta

tem

ent

•ex

plai

n th

e ca

uses

of d

iffer

ence

s be

twee

nth

e bu

sine

ss c

ash

at b

ank

bala

nce

and

the

bala

nce

in th

e ba

nk s

tate

men

t

•pr

epar

e an

adj

uste

d ca

sh a

t ba

nk le

dger

acco

unt

•pr

epar

e th

e ba

nk r

econ

cilia

tion

stat

emen

t

•an

alys

e th

e eff

ects

of a

djus

ting

for

the

diff

eren

ces

betw

een

the

cash

at

bank

bala

nce

and

the

bala

nce

in th

e ba

nkst

atem

ent

on c

ash

at b

ank

and

profi

t fo

rth

e pe

riod

Page 70: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

68

Gui

ding

Que

stion

sKn

owle

dge

Cont

ent

(Exp

ress

)Le

arni

ng O

utco

mes

Stud

ents

will

be

able

to:

Not

es(3

5) In

clud

es o

nly

the

follo

win

g sc

enar

ios:

(i)

sa

me

open

ing

bala

nce

betw

een

cash

at

bank

and

ban

k st

atem

ent

(ii)

diff

eren

t op

enin

g ba

lanc

e be

twee

n ca

sh a

t ba

nk a

nd b

ank

stat

emen

t,

and

the

diff

eren

ce is

lim

ited

to o

nly

one

tran

sacti

on(ii

i) op

enin

g ba

lanc

e in

cas

h at

ban

k an

d ba

nk s

tate

men

t ca

n be

eith

er

a po

sitiv

e ba

lanc

e or

a b

ank

over

draft

(iv

) en

ding

bal

ance

in c

ash

at b

ank

and

bank

sta

tem

ent

can

eith

er

be a

pos

itive

bal

ance

or

a ba

nk

over

draft

(v)

bank

rec

onci

liatio

n m

ust

be p

er-

form

ed b

y co

mpa

ring

cas

h at

ban

k le

dger

acc

ount

and

a b

ank

stat

e-m

ent

(36)

Und

erst

andi

ng h

ow e

lect

roni

c ba

nk

tran

sacti

ons

(e.g

., cr

edit

tran

sfer

, st

andi

ng o

rder

) are

rec

orde

d in

the

acco

unts

of t

he b

usin

ess

is r

equi

red

but

desc

ripti

ons

of th

eir

proc

essi

ng a

re n

ot

requ

ired

Page 71: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

69

Key

Und

erst

andi

ng 1

: Acc

ounti

ng a

nd n

on-a

ccou

nting

info

rmati

on a

re u

sed

to s

uppo

rt a

nd fa

cilit

ate

deci

sion

-mak

ing

Stak

ehol

ders

req

uire

acc

ounti

ng a

nd n

on-a

ccou

nting

info

rmati

on o

n bu

sine

ss a

ctivi

ties

for

deci

sion

-mak

ing,

whi

ch in

turn

aff

ects

the

busi

ness

and

its

activ

ities

.

Gui

ding

Que

stion

sKn

owle

dge

Cont

ent

(Nor

mal

(Aca

dem

ic))

Lear

ning

Out

com

esSt

uden

ts w

ill b

e ab

le t

o:

1.1

Role

s of

acc

ounti

ng a

nd a

ccou

ntan

ts

1) W

hat

is a

ccou

nting

?

2) W

hat

are

the

role

s of

acc

ounti

ng a

nd

acco

unta

nts?

3) H

ow d

o ac

coun

tant

s fu

lfil t

heir

rol

es?

Cont

extu

al•

Bus

ines

s en

viro

nmen

t

Role

of a

ccou

nting

• A

ccou

nting

pro

vide

s ac

coun

ting

info

rmati

on fo

r de

cisi

on-m

akin

g by

bu

sine

ss o

wne

rs a

nd o

ther

sta

keho

lder

s

Role

of a

ccou

ntan

ts•

Thro

ugh

prov

idin

g ac

coun

ting

info

rmati

on fo

r st

akeh

olde

rs’ d

ecis

ion-

mak

ing,

acc

ount

ants

act

as

stew

ards

of

busi

ness

es•

They

set

up

the

acco

untin

g in

form

ation

sy

stem

to c

olla

te, r

ecor

d, o

rgan

ise

and

repo

rt a

ccou

nting

info

rmati

on s

o th

at

owne

rs a

nd o

ther

sta

keho

lder

s ca

n m

ake

deci

sion

s re

gard

ing

the

man

agem

ent

of r

esou

rces

and

the

perf

orm

ance

of

busi

ness

es.

• Th

ey th

ink

criti

cally

, sol

ve p

robl

ems,

ad

apt

and

mee

t th

e ne

ed fo

r so

phis

ticat

ed a

ccou

nting

and

bus

ines

s in

form

ation

• st

ate

the

role

of a

ccou

nting

• st

ate

the

role

of a

ccou

ntan

ts

• de

fine

inte

grit

y an

d ob

jecti

vity

• ex

plai

n th

e im

port

ance

of h

avin

g in

tegr

ity

and

obje

ctivi

ty in

pre

pari

ng a

nd

pres

entin

g ac

coun

ting

info

rmati

on

Tabl

e 6:

Con

tent

Am

plifi

catio

n an

d Le

arni

ng O

utco

mes

for

Nor

mal

(Aca

dem

ic) c

ours

e

Page 72: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

70

Gui

ding

Que

stion

sKn

owle

dge

Cont

ent

(Nor

mal

(Aca

dem

ic))

Lear

ning

Out

com

esSt

uden

ts w

ill b

e ab

le t

o:•

In th

e fa

ce o

f an

evol

ving

bus

ines

sen

viro

nmen

t an

d ra

pid

tech

nolo

gica

lad

vanc

emen

t, a

ccou

ntan

ts h

ave

topr

ovid

e re

leva

nt in

form

ation

in a

timel

y m

anne

r fo

r de

cisi

on-m

akin

g an

din

sigh

ts th

at a

re e

asily

and

app

ropr

iate

lyun

ders

tood

by

owne

rs a

nd o

ther

stak

ehol

ders

bas

ed o

n ac

coun

ting

theo

ries

•St

akeh

olde

rs p

lace

trus

t in

the

info

rmati

on p

rovi

ded

by a

ccou

ntan

tsw

ho m

ust

adhe

re to

pro

fess

iona

l eth

ics,

upho

ld in

tegr

ity

and

be o

bjec

tive

(1)(

2)-

inte

grit

y is

bei

ng s

trai

ghtf

orw

ard

and

hone

st in

all

prof

essi

onal

and

bus

ines

sre

latio

nshi

ps-

obje

ctivi

ty is

not

letti

ng b

ias,

con

flict

of

inte

rest

or

undu

e in

fluen

ce o

f oth

ers

over

ride

pro

fess

iona

l jud

gem

ent

Not

es(1

)In

clud

es o

nly

the

effec

ts o

f une

thic

albe

havi

our

on d

ecis

ions

mad

e by

stak

ehol

ders

; the

lega

l con

sequ

ence

s of

unet

hica

l beh

avio

ur a

re n

ot r

equi

red

(2)

In th

e In

stitu

te o

f Sin

gapo

re C

hart

ered

Acc

ount

ants

’ Cod

e of

Pro

fess

iona

lCo

nduc

t an

d Et

hics

, the

firs

t tw

opr

inci

ples

are

inte

grit

y an

d ob

jecti

vity

Page 73: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

71

Gui

ding

Que

stion

sKn

owle

dge

Cont

ent

(Nor

mal

(Aca

dem

ic))

Lear

ning

Out

com

esSt

uden

ts w

ill b

e ab

le t

o:

1.2

Stak

ehol

ders

and

the

ir d

ecis

ion-

mak

ing

need

s

1) W

ho is

inte

rest

ed

in a

ccou

nting

in

form

ation

?

2) W

hat

kind

s of

in

form

ation

do

stak

ehol

ders

nee

d fo

r de

cisi

on-m

akin

g?

3) W

hy d

o st

akeh

olde

rs

need

bot

h ac

coun

ting

and

non-

acco

untin

g in

form

ation

?

Cont

extu

al•

Busi

ness

env

iron

men

t

Conc

eptu

al•

Rele

vanc

e of

in

form

ation

• A

ccou

nting

and

no

n-ac

coun

ting

info

rmati

on

Stak

ehol

ders

• U

sers

of a

ccou

nting

and

non

-acc

ounti

ng

info

rmati

on o

f a b

usin

ess

for

deci

sion

-m

akin

g

Acc

ounti

ng a

nd n

on-a

ccou

nting

info

rmati

on•

Mak

ing

deci

sion

s w

ith

only

acc

ounti

ng

info

rmati

on m

ay c

ause

sta

keho

lder

s to

le

ave

out

impo

rtan

t bu

sine

ss-r

elat

ed

fact

ors

that

are

not

sho

wn

on fi

nanc

ial

stat

emen

ts b

ut m

ay a

ffec

t de

cisi

ons

- ac

coun

ting

info

rmati

on r

efer

s to

in

form

ation

usu

ally

gen

erat

ed b

y th

e ac

coun

ting

info

rmati

on s

yste

m a

nd is

la

rgel

y ex

trac

ted

from

jour

nals

, led

ger

acco

unts

and

fina

ncia

l sta

tem

ents

- no

n-ac

coun

ting

info

rmati

on (3

) re

fers

to th

e in

form

ation

abo

ut th

e op

erati

on o

f a b

usin

ess

not

foun

d in

jo

urna

ls, l

edge

r ac

coun

ts o

r fin

anci

al

stat

emen

ts.

Not

e(3

) Re

fer

to s

ectio

ns 2

.7.2

, 2.7

.3, a

nd

2.8.

1 fo

r th

e sp

ecifi

c no

n-ac

coun

ting

info

rmati

on fo

r th

is s

ylla

bus

• st

ate

the

stak

ehol

ders

who

are

inte

rest

ed

in th

e aff

airs

of t

he b

usin

ess

and

mak

e us

e of

the

acco

untin

g in

form

ation

for

deci

sion

-mak

ing

• st

ate

exam

ples

of a

ccou

nting

info

rmati

on

need

ed b

y st

akeh

olde

rs o

f a b

usin

ess

for

deci

sion

-mak

ing

• st

ate

exam

ples

of n

on-a

ccou

nting

in

form

ation

nee

ded

by o

wne

rs a

nd

man

ager

s of

a b

usin

ess

for

deci

sion

- m

akin

g

• ex

plai

n w

hy s

take

hold

ers

of a

bus

ines

s ar

e in

tere

sted

in a

ccou

nting

info

rmati

on

• e

xpla

in w

hy o

wne

rs a

nd m

anag

ers

of a

bu

sine

ss a

re in

tere

sted

in n

on-a

ccou

nting

in

form

ation

Page 74: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

72

Key

Und

erst

andi

ng 2

: Acc

ounti

ng is

a la

ngua

ge u

sed

to r

epre

sent

bus

ines

s ac

tivi

ties

Acc

ounti

ng is

the

lang

uage

of b

usin

ess

as it

pro

vide

s th

e co

ncep

ts a

nd fr

amew

ork

to r

epre

sent

bus

ines

s ac

tiviti

es.

Gui

ding

Que

stion

sKn

owle

dge

Cont

ent

(Nor

mal

(Aca

dem

ic))

Lear

ning

Out

com

esSt

uden

ts w

ill b

e ab

le t

o:

2.1

Type

s of

Bus

ines

ses

1) W

hat

are

the

diff

eren

t ty

pes

of p

rofit

-mak

ing

busi

ness

es a

nd h

ow

do th

eir

finan

cial

st

atem

ents

diff

er?

Cont

extu

alTy

pes

of b

usin

esse

s

Conc

eptu

al•

Trad

ing

busi

ness

es

• Se

rvic

e bu

sine

sses

• M

ain

busi

ness

acti

vitie

s of

pro

fit-m

akin

g bu

sine

sses

: tra

ding

and

ser

vice

Diff

eren

ce b

etw

een

the

busi

ness

ac

tiviti

es o

f tra

ding

and

ser

vice

bu

sine

sses

as

seen

in th

e St

atem

ent

of F

inan

cial

Pos

ition

and

Sta

tem

ent

of

Fina

ncia

l Per

form

ance

• ex

plai

n th

e di

ffer

ence

s be

twee

n tr

adin

g an

d se

rvic

e bu

sine

sses

• di

sting

uish

bet

wee

n fin

anci

al s

tate

men

ts

of b

usin

esse

s in

trad

ing

and

serv

ices

2.3

Elem

ents

of fi

nanc

ial s

tate

men

ts

1) H

ow a

re b

usin

ess

activ

ities

mea

sure

d an

d pr

esen

ted

in

finan

cial

sta

tem

ents

?

Cont

extu

alBu

sine

ss a

ctivi

ties

Conc

eptu

al•

Ass

et•

Liab

ility

• Eq

uity

• In

com

e •

Expe

nse

• A

ll bu

sine

ss a

ctivi

ties

are

repr

esen

ted

by

thes

e el

emen

ts: a

sset

, lia

bilit

y, e

quit

y,

inco

me

and

expe

nse

• Ex

ampl

es o

f ass

ets,

liab

ilitie

s, e

quit

y,

inco

me

and

expe

nses

• U

nder

stan

d ho

w th

e tr

ade

of th

e bu

sine

ss a

nd th

e us

e of

the

item

s aff

ect

how

they

are

cla

ssifi

ed

• de

fine

asse

t, li

abili

ty, e

quit

y, in

com

e an

d ex

pens

es

• gi

ve e

xam

ples

of a

sset

s, li

abili

ties,

equ

ity,

in

com

e an

d ex

pens

es fo

r a

spec

ific

busi

ness

• cl

assi

fy it

ems

as a

sset

s, li

abili

ties,

equ

ity,

in

com

e an

d ex

pens

es fo

r a

spec

ific

busi

ness

Page 75: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

73

Gui

ding

Que

stion

sKn

owle

dge

Cont

ent

(Nor

mal

(Aca

dem

ic))

Lear

ning

Out

com

esSt

uden

ts w

ill b

e ab

le t

o:

2.4

Acc

ounti

ng e

quati

on

1) W

hat

is th

e re

latio

nshi

p be

twee

n as

set,

liab

ility

and

eq

uity

?

Conc

eptu

alA

ccou

nting

equ

ation

Proc

edur

alA

naly

se th

e eff

ects

of

tran

sacti

ons

on th

e ac

coun

ting

equa

tion

• Ba

sic

acco

untin

g eq

uatio

n of

ass

ets

= eq

uity

+ li

abili

ties,

and

its

expa

nsio

n to

in

clud

e in

com

e an

d ex

pens

es•

The

basi

c ac

coun

ting

equa

tion

is th

e ba

sis

of th

e St

atem

ent

of F

inan

cial

Pos

ition

• st

ate

the

basi

c ac

coun

ting

equa

tion

and

its

expa

nsio

n

• ca

lcul

ate

the

valu

es o

f ass

ets,

liab

ilitie

s an

d eq

uity

usi

ng th

e ac

coun

ting

equa

tion

• ap

ply

the

acco

untin

g eq

uatio

ns to

the

Stat

emen

t of

Fin

anci

al P

ositi

on

• an

alys

e th

e eff

ects

of b

usin

ess

tran

sacti

ons

on th

e ac

coun

ting

equa

tion

2.5

Fina

ncia

l sta

tem

ents

This

sec

tion

look

s at

the

Stat

emen

t of

Fin

anci

al P

ositi

on a

nd S

tate

men

t of

Fin

anci

al P

erfo

rman

ce o

f sol

e pr

opri

etor

ship

s, a

nd th

e en

d-of

-pe-

riod

acc

ounti

ng a

djus

tmen

ts in

clud

ed in

this

syl

labu

s.

2.5.

1 St

atem

ent

of F

inan

cial

Pos

ition

1) W

hat

are

finan

cial

st

atem

ents

and

thei

r pu

rpos

es?

2) W

hat

is a

Sta

tem

ent

of F

inan

cial

Pos

ition

?

3) H

ow is

info

rmati

on

show

n in

the

Stat

emen

t of

Fi

nanc

ial P

ositi

on?

Cont

extu

alCo

mm

unic

ation

of t

he

list

of a

sset

s, li

abili

ties,

an

d eq

uity

of a

bus

ines

s

Conc

eptu

al•

Am

ount

s re

port

ed

are

at a

poi

nt in

tim

e•

Acc

ounti

ng e

quati

on•

Curr

ent

asse

ts•

Non

-cur

rent

ass

ets

Purp

ose

of th

e St

atem

ent

of F

inan

cial

Po

sitio

n•

Stat

emen

t of

Fin

anci

al P

ositi

on li

sts

the

asse

ts, l

iabi

lities

and

equ

ity

of a

bus

ines

s at

a p

oint

in ti

me

(4)(

5)

• Re

pres

ents

the

acco

untin

g eq

uatio

n

Item

s in

the

Stat

emen

t of

Fin

anci

al P

ositi

on•

Clas

sific

ation

of i

tem

s as

non

-cur

rent

as

sets

, cur

rent

ass

ets,

non

-cur

rent

lia

biliti

es, c

urre

nt li

abili

ties

and

equi

ty

• de

fine

and

disti

ngui

sh b

etw

een

non-

curr

ent

and

curr

ent

asse

ts

• de

fine

and

disti

ngui

sh b

etw

een

non-

curr

ent

and

curr

ent

liabi

lities

• de

fine

net

asse

ts a

nd e

quit

y

• ca

lcul

ate

net

asse

ts a

nd e

quit

y

• an

alys

e th

e eff

ects

of b

usin

ess

tran

sacti

ons

and

acco

untin

g ad

just

men

ts

on th

e ow

ner’

s eq

uity

, non

-cur

rent

Page 76: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

74

Gui

ding

Que

stion

sKn

owle

dge

Cont

ent

(Nor

mal

(Aca

dem

ic))

Lear

ning

Out

com

esSt

uden

ts w

ill b

e ab

le t

o:•

Curr

ent

liabi

lities

• N

on-c

urre

nt li

abili

ties

• Eq

uity

• Va

luati

on o

f ass

ets

• Re

leva

nt a

ccou

nting

th

eori

es

Proc

edur

al•

Prep

are

the

Stat

emen

t of

Fi

nanc

ial P

ositi

on•

Ana

lyse

the

effec

ts o

f bu

sine

ss tr

ansa

ction

s an

d ac

coun

ting

adju

stm

ents

on

the

Stat

emen

t of

Fi

nanc

ial P

ositi

on

• Ex

ampl

es o

f non

-cur

rent

ass

ets,

cur

rent

as

sets

, non

-cur

rent

liab

ilitie

s, c

urre

nt

liabi

lities

and

equ

ity

• O

wne

r’s

equi

ty fo

r a

sole

pro

prie

tor

(6)

Valu

ation

met

hods

• A

ccou

nting

theo

ries

that

app

ly to

eac

h va

luati

on m

etho

d•

Valu

ation

met

hods

use

d fo

r as

sets

:-

non-

curr

ent

asse

ts a

t ne

t bo

ok v

alue

, i.e

., co

st le

ss a

ccum

ulat

ed d

epre

ciati

on-

inve

ntor

y va

lues

at

the

low

er o

f cos

t an

d ne

t re

alis

able

val

ue-

trad

e re

ceiv

able

s at

trad

e re

ceiv

able

s le

ss a

llow

ance

for

impa

irm

ent

of tr

ade

rece

ivab

les

Pres

enta

tion

of th

e St

atem

ent

of F

inan

cial

Po

sitio

n•

Nar

rativ

e fo

rmat

of S

tate

men

t of

Fi

nanc

ial P

ositi

on•

Pres

enta

tion

deta

ils to

sho

w:

- no

n-cu

rren

t an

d cu

rren

t as

sets

(cur

rent

as

sets

are

not

req

uire

d to

be

liste

d in

or

der

of li

quid

ity)

- no

n-cu

rren

t an

d cu

rren

t lia

biliti

es-

capi

tal o

f the

sol

e pr

opri

etor

asse

ts, c

urre

nt a

sset

s, n

on-c

urre

nt

liabi

lities

, cur

rent

liab

ilitie

s an

d ne

t as

sets

• pr

epar

e a

Stat

emen

t of

Fin

anci

al P

ositi

on

wit

h en

d-of

-fina

ncia

l-per

iod

acco

untin

g ad

just

men

ts fo

r a

sole

pro

prie

tors

hip

• pr

epar

e a

Stat

emen

t of

Fin

anci

al P

ositi

on

wit

h en

d-of

-fina

ncia

l-per

iod

acco

untin

g ad

just

men

ts fo

r a

trad

ing

or s

ervi

ce

busi

ness

Page 77: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

75

Gui

ding

Que

stion

sKn

owle

dge

Cont

ent

(Nor

mal

(Aca

dem

ic))

Lear

ning

Out

com

esSt

uden

ts w

ill b

e ab

le t

o:•

Acc

ounti

ng a

djus

tmen

ts c

an b

e do

ne a

t th

e en

d of

a p

erio

d or

fina

ncia

l yea

r, an

d th

ey in

clud

e on

ly:

- de

prec

iatio

n of

non

-cur

rent

ass

ets,

w

ith

or w

itho

ut b

egin

ning

acc

umul

ated

de

prec

iatio

n-

impa

irm

ent

loss

on

inve

ntor

y-

impa

irm

ent

loss

on

trad

e re

ceiv

able

s ar

isin

g du

ring

the

finan

cial

per

iod,

wit

h or

wit

hout

beg

inni

ng a

llow

ance

for

impa

irm

ent

of tr

ade

rece

ivab

les

- pr

epai

d ex

pens

es, e

xpen

ses

paya

ble,

se

rvic

e fe

e re

ceiv

ed in

adv

ance

, in

com

e re

ceiv

able

and

inco

me

rece

ived

in

adv

ance

-

re-c

lass

ifica

tion

of c

urre

nt p

ortio

n of

no

n-cu

rren

t lia

bilit

y

• Ba

sic

inte

rpre

tatio

n an

d si

gnifi

canc

e of

re

latio

nshi

ps o

f fina

ncia

l figu

res

in th

e St

atem

ent

of F

inan

cial

Pos

ition

(7)

Not

es(4

) The

Sta

tem

ent

of F

inan

cial

Pos

ition

is

to b

e pr

epar

ed fr

om a

list

of a

ccou

nt

bala

nces

or

a tr

ial b

alan

ce

Page 78: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

76

Gui

ding

Que

stion

sKn

owle

dge

Cont

ent

(Nor

mal

(Aca

dem

ic))

Lear

ning

Out

com

esSt

uden

ts w

ill b

e ab

le t

o:(5

) The

Sta

tem

ent

of F

inan

cial

Pos

ition

in

clud

es o

nly

that

for

(i)

trad

ing

and

serv

ice

busi

ness

es(ii

) so

le p

ropr

ieto

rshi

ps(6

) The

term

s ne

t w

orth

and

cap

ital

ow

ned

are

not

used

(7) I

nclu

des

only

the

follo

win

g:(i)

ho

w r

esou

rces

are

obt

aine

d an

d us

ed(ii

) eq

uity

and

net

ass

ets

(tot

al a

sset

s -

tota

l lia

biliti

es)

(iii)

chan

ges

in n

et a

sset

s be

twee

n tw

o po

ints

in ti

me

and

the

profi

t fo

r th

e pe

riod

2.5.

2 St

atem

ent

of F

inan

cial

Per

form

ance

1) W

hat

is a

Sta

tem

ent

of F

inan

cial

Pe

rfor

man

ce?

2) H

ow is

info

rmati

on

show

n in

the

Stat

emen

t of

Fin

anci

al

Perf

orm

ance

?

Cont

extu

alCo

mm

unic

ation

of a

bu

sine

ss p

erfo

rman

ce

Conc

eptu

al•

Am

ount

s re

port

ed

are

for

a pe

riod

of

time

• Ex

pand

ed a

ccou

nting

eq

uatio

n•

Inco

me

• Ex

pens

es

• Pr

ofits

Purp

ose

of th

e St

atem

ent

of F

inan

cial

Pe

rfor

man

ce•

The

Stat

emen

t of

Fin

anci

al P

erfo

rman

ce

show

s th

e in

com

e an

d ex

pens

es o

f a

busi

ness

for

a pe

riod

of ti

me

(8)

• Sh

ows

the

profi

t fo

r th

e pe

riod

, i.e

., th

e ex

cess

of i

ncom

e ov

er e

xpen

ses

for

a pe

riod

of ti

me

Item

s in

the

a St

atem

ent

of F

inan

cial

Pe

rfor

man

ce•

For

a tr

adin

g bu

sine

ss, t

he p

erpe

tual

in

vent

ory

reco

rdin

g m

etho

d is

ado

pted

• de

fine

and

disti

ngui

sh g

ross

pro

fit/l

oss

and

profi

t/lo

ss fo

r th

e fin

anci

al p

erio

d

• ex

plai

n th

e pu

rpos

es o

f the

trad

ing

porti

on a

nd p

rofit

and

loss

por

tion

of th

e St

atem

ent

of F

inan

cial

Per

form

ance

• ca

lcul

ate

net

sale

s re

venu

e, s

ervi

ce fe

e re

venu

e, g

ross

pro

fit/l

oss

and

profi

t/lo

ss

for

the

peri

od

• pr

epar

e a

Stat

emen

t of

Fin

anci

al

Perf

orm

ance

wit

h en

d-of

-fina

ncia

l-pe

riod

acc

ounti

ng a

djus

tmen

ts fo

r a

sole

pr

opri

etor

ship

Page 79: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

77

Gui

ding

Que

stion

sKn

owle

dge

Cont

ent

(Nor

mal

(Aca

dem

ic))

Lear

ning

Out

com

esSt

uden

ts w

ill b

e ab

le t

o:•

Rele

vant

acc

ounti

ng

theo

ries

Proc

edur

al•

Prep

are

the

Stat

emen

t of

Fin

anci

al

Perf

orm

ance

• Th

e fo

llow

ing

deta

ils a

re s

how

n in

the

trad

ing

porti

on o

f the

Sta

tem

ent

of

Fina

ncia

l Per

form

ance

: -

net

sale

s re

venu

e (s

ales

rev

enue

- sa

les

retu

rns)

- co

st o

f sal

es-

gros

s pr

ofit/

loss

• Fo

r a

serv

ice

busi

ness

, ser

vice

fee

reve

nue

is s

how

n as

a li

ne it

em s

epar

ate

from

oth

er in

com

e

Pres

enta

tion

of th

e St

atem

ent

of F

inan

cial

Pe

rfor

man

ce•

Nar

rativ

e fo

rmat

of S

tate

men

t of

Fi

nanc

ial P

erfo

rman

ce•

Pres

enta

tion

of s

ales

rev

enue

, sal

es

retu

rns

and

cost

of s

ales

on

the

Stat

emen

t of

Fin

anci

al P

erfo

rman

ce fo

r a

trad

ing

busi

ness

• Pr

esen

tatio

n of

ser

vice

fee

reve

nue

on

the

Stat

emen

t of

Fin

anci

al P

erfo

rman

ce

for

a se

rvic

e bu

sine

ss•

Oth

er e

xpen

ses

in th

e pr

ofit

and

loss

po

rtion

of t

he S

tate

men

t of

Fin

anci

al

Perf

orm

ance

are

not

req

uire

d to

be

clas

sifie

d by

func

tion

• pr

epar

e a

Stat

emen

t of

Fin

anci

al

Perf

orm

ance

wit

h en

d-of

-fina

ncia

l-per

iod

acco

untin

g ad

just

men

ts fo

r tr

adin

g or

se

rvic

e bu

sine

ss

Page 80: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

78

Gui

ding

Que

stion

sKn

owle

dge

Cont

ent

(Nor

mal

(Aca

dem

ic))

Lear

ning

Out

com

esSt

uden

ts w

ill b

e ab

le t

o:•

Acc

ounti

ng a

djus

tmen

ts c

an b

e do

ne a

t th

e en

d of

a p

erio

d or

fina

ncia

l yea

r, an

d th

ey in

clud

e on

ly:

- de

prec

iatio

n of

non

-cur

rent

ass

ets,

w

ith

or w

itho

ut b

egin

ning

acc

umul

ated

de

prec

iatio

n-

impa

irm

ent

loss

on

inve

ntor

y-

impa

irm

ent

loss

on

trad

e re

ceiv

able

s ar

isin

g du

ring

the

finan

cial

per

iod,

wit

h or

wit

hout

beg

inni

ng a

llow

ance

for

impa

irm

ent

of tr

ade

rece

ivab

les

- se

rvic

e fe

e re

venu

e re

ceiv

ed in

ad

vanc

e, p

repa

id e

xpen

ses,

exp

ense

s pa

yabl

e, o

ther

inco

me

rece

ivab

les

and

inco

me

rece

ived

in a

dvan

ce

• Ba

sic

inte

rpre

tatio

n an

d si

gnifi

canc

e of

re

latio

nshi

ps o

f fina

ncia

l figu

res

in th

e St

atem

ent

of F

inan

cial

Per

form

ance

(9)

Not

es(8

) Th

e St

atem

ent

of F

inan

cial

Per

form

ance

is

to b

e pr

epar

ed fr

om a

list

sof

acc

ount

ba

lanc

es o

r a

tria

l bal

ance

and

incl

udes

on

ly th

at fo

r(i)

tr

adin

g an

d se

rvic

e bu

sine

sses

(ii)

sole

pro

prie

tors

hips

Page 81: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

79

Gui

ding

Que

stion

sKn

owle

dge

Cont

ent

(Nor

mal

(Aca

dem

ic))

Lear

ning

Out

com

esSt

uden

ts w

ill b

e ab

le t

o:(9

)Inc

lude

s on

ly th

e fo

llow

ing

rela

tions

hips

betw

een:

(i)sa

les

reve

nue,

cos

t of

sal

es a

nd g

ross

profi

t/lo

ss(ii

)gro

ss p

rofit

/los

s, o

ther

inco

me,

oth

erex

pens

es a

nd p

rofit

/los

s fo

r th

epe

riod

(iii)

sale

s re

venu

e, c

ost

of s

ales

, oth

erin

com

e, o

ther

exp

ense

s an

d pr

ofit/

loss

for

the

peri

od

2.6

Inco

me

and

expe

nses

This

sec

tion

look

s in

to th

e re

venu

e, o

ther

inco

me,

cos

t of

sal

es a

nd o

ther

exp

ense

item

s in

a S

tate

men

t of

Fin

anci

al P

erfo

rman

ce, a

nd th

e ad

just

men

ts to

be

mad

e to

thes

e ite

ms

at th

e en

d of

a fi

nanc

ial p

erio

d.

2.6.

1 Re

venu

e an

d ot

her

inco

me

1) W

hat

are

the

tran

sacti

ons

for

reve

nue

and

othe

rin

com

e?

2) H

ow a

re r

even

uean

d ot

her

inco

me

pres

ente

d in

fina

ncia

lst

atem

ents

?

3) H

ow a

re a

djus

tmen

tsfo

r re

venu

e an

dot

her

inco

me

mad

e?

Cont

extu

al•

Trad

ing

and

serv

ice

busi

ness

•H

ow th

e da

tes

for

rece

ipt

of in

com

e ca

ndi

ffer

wit

h th

e pe

riod

they

are

rep

orte

d as

inco

me

Conc

eptu

al•

Am

ount

s re

port

edar

e fo

r a

peri

od o

ftim

e•

Sale

s re

venu

e•

Serv

ice

fee

reve

nue

•Se

rvic

e fe

e re

venu

e

Acc

ounti

ng th

eori

es•

Reve

nue

reco

gniti

on th

eory

•A

ccru

al b

asis

of a

ccou

nting

theo

ry

Acc

ounti

ng fo

r tr

ansa

ction

s•

Acc

ounti

ng fo

r:(i)

sale

of g

oods

on

cash

and

cre

dit

basi

s(ii

)pr

ovis

ion

of s

ervi

ces

on c

ash

and

cred

it b

asis

(iii)

retu

rns

of g

oods

(iv)

serv

ice

fee

reve

nue

rece

ived

inad

vanc

e(v

)ot

her

inco

me

(10)

(vi)

inco

me

rece

ivab

le (1

0)(v

ii)in

com

e re

ceiv

ed in

adv

ance

(10)

Acc

ounti

ng th

eori

es•

expl

ain

the

acco

untin

g of

sal

es r

even

ue,

serv

ice

fee

reve

nue,

oth

er in

com

e,se

rvic

e fe

e re

ceiv

ed in

adv

ance

,in

com

e re

ceiv

able

and

inco

me

rece

ived

in a

dvan

ce in

rel

ation

to r

elev

ant

acco

untin

g th

eori

es

Acc

ounti

ng fo

r tr

ansa

ction

s•

calc

ulat

e th

e sa

les

reve

nue

adju

sted

for

sale

s re

turn

•ca

lcul

ate

the

serv

ice

fee

reve

nue

adju

sted

for

serv

ice

fee

reve

nue

rece

ived

in a

dvan

ce

Page 82: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

80

Gui

ding

Que

stion

sKn

owle

dge

Cont

ent

(Nor

mal

(Aca

dem

ic))

Lear

ning

Out

com

esSt

uden

ts w

ill b

e ab

le t

o:re

ceiv

ed in

adv

ance

• O

ther

inco

me

• In

com

e re

ceiv

able

• In

com

e re

ceiv

ed in

ad

vanc

e•

Reve

nue

reco

gniti

on

theo

ry

• A

ccru

al b

asis

of

acco

untin

g

Proc

edur

al•

Rec

ord

sale

s re

venu

e,

serv

ice

fee

reve

nue

and

inco

me

in th

e jo

urna

l, le

dger

ac

coun

ts a

nd

finan

cial

sta

tem

ents

• R

ecor

d se

rvic

e fe

e re

venu

e re

ceiv

ed

in a

dvan

ce, i

ncom

e re

ceiv

able

and

in

com

e re

ceiv

ed

in a

dvan

ce in

the

jour

nal a

nd fi

nanc

ial

stat

emen

ts

• Ca

lcul

ation

of s

ervi

ce fe

e re

venu

e re

ceiv

ed in

adv

ance

, inc

ome

rece

ivab

les

and

inco

me

rece

ived

in a

dvan

ce•

Am

ount

s re

ceiv

ed a

re r

ecor

ded

as

inco

me

at th

e po

ints

of r

ecei

pt, a

nd

any

unea

rned

or

not

rece

ived

por

tions

ar

e ad

just

ed a

t th

e en

d of

the

finan

cial

pe

riod

• A

djus

tmen

ts a

t en

d of

per

iod

are

to

be m

ade

agai

nst

sepa

rate

ser

vice

fee

reve

nue

rece

ived

in a

dvan

ce, i

ncom

e re

ceiv

able

and

inco

me

rece

ived

in

adva

nce

ledg

er a

ccou

nts

• Cl

osin

g of

sal

es r

even

ue, s

ales

ret

urns

, se

rvic

e fe

e re

venu

e an

d ot

her

inco

me

are

perf

orm

ed o

nly

at th

e en

d of

the

finan

cial

ye

ar, a

nd th

e am

ount

s ar

e tr

ansf

erre

d to

the

inco

me

sum

mar

y (f

or p

erio

ds in

be

twee

n th

e fin

anci

al y

ear,

ther

e w

ill b

e ba

lanc

es in

thes

e ac

coun

ts)

Pres

enta

tion

• Pr

esen

tatio

n of

sal

es r

even

ue, s

ales

re

turn

s, s

ervi

ce fe

e re

venu

e an

d ot

her

inco

me

in th

e St

atem

ent

of F

inan

cial

Pe

rfor

man

ce•

Pres

enta

tion

of in

com

e re

ceiv

able

in th

e St

atem

ent

of F

inan

cial

Pos

ition

• ca

lcul

ate

othe

r in

com

e ad

just

ed fo

r in

com

e re

ceiv

able

and

inco

me

rece

ived

in

adv

ance

• pr

epar

e th

e jo

urna

l ent

ries

aff

ectin

g sa

les

reve

nue,

sal

es r

etur

ns, s

ervi

ce

fee

reve

nue,

oth

er in

com

e, s

ervi

ce fe

e re

venu

e re

ceiv

ed in

adv

ance

, inc

ome

rece

ivab

le a

nd in

com

e re

ceiv

ed in

ad

vanc

e

• pr

epar

e th

e sa

les

reve

nue,

sal

es r

etur

ns,

serv

ice

fee

reve

nue

and

othe

r in

com

e le

dger

acc

ount

s w

itho

ut a

djus

tmen

ts fo

r se

rvic

e fe

e re

venu

e re

ceiv

ed in

adv

ance

, in

com

e re

ceiv

able

and

inco

me

rece

ived

in

adv

ance

• in

terp

ret

the

sale

s re

venu

e, s

ales

ret

urns

, se

rvic

e fe

e re

venu

e, o

ther

inco

me

ledg

er

acco

unts

wit

h ad

just

men

ts fo

r se

rvic

e fe

e re

venu

e re

ceiv

ed in

adv

ance

, inc

ome

rece

ivab

le a

nd in

com

e re

ceiv

ed in

ad

vanc

e

• an

alys

e th

e eff

ects

of s

ervi

ce fe

e re

venu

e re

ceiv

ed in

adv

ance

, inc

ome

rece

ivab

les

and

inco

me

rece

ived

in a

dvan

ce o

n cu

rren

t lia

biliti

es, c

urre

nt a

sset

s an

d pr

ofit/

loss

for

the

peri

od

Page 83: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

81

Gui

ding

Que

stion

sKn

owle

dge

Cont

ent

(Nor

mal

(Aca

dem

ic))

Lear

ning

Out

com

esSt

uden

ts w

ill b

e ab

le t

o:•

Pres

enta

tion

of s

ervi

ce fe

e re

venu

e re

ceiv

ed in

adv

ance

and

inco

me

rece

ived

in

adv

ance

in th

e St

atem

ent

of F

inan

cial

Po

sitio

n•

Inco

me

rece

ivab

le is

sho

wn

as c

urre

nt

asse

ts in

the

Stat

emen

t of

Fin

anci

al

Posi

tion

• S

ervi

ce fe

e re

venu

e re

ceiv

ed in

adv

ance

an

d in

com

e re

ceiv

ed in

adv

ance

are

sh

own

as c

urre

nt li

abili

ties

in th

e St

atem

ent

of F

inan

cial

Pos

ition

Not

e(1

0) E

xclu

des

the

follo

win

g(i)

di

vide

nd in

com

e(ii

) pr

epar

ation

of i

ncom

e re

ceiv

able

an

d in

com

e re

ceiv

ed in

adv

ance

le

dger

acc

ount

s

Pres

enta

tion

• pr

epar

e an

ext

ract

of t

he S

tate

men

t of

Fin

anci

al P

erfo

rman

ce s

how

ing

the

pres

enta

tion

of s

ales

rev

enue

, sal

es

retu

rns,

and

oth

er in

com

e fo

r a

trad

ing

busi

ness

• pr

epar

e an

ext

ract

of t

he S

tate

men

t of

Fin

anci

al P

erfo

rman

ce s

how

ing

the

pres

enta

tion

of s

ervi

ce fe

e re

venu

e an

d ot

her

inco

me

for

a se

rvic

e bu

sine

ss

• pr

epar

e an

ext

ract

of t

he S

tate

men

t of

Fin

anci

al P

ositi

on s

how

ing

the

pres

enta

tion

of s

ervi

ce fe

e re

venu

e re

ceiv

ed in

adv

ance

for

a se

rvic

e bu

sine

ss

• pr

epar

e an

ext

ract

of t

he S

tate

men

t of

Fin

anci

al P

ositi

on s

how

ing

the

pres

enta

tion

of in

com

e re

ceiv

able

and

in

com

e re

ceiv

ed in

adv

ance

for

both

a

trad

ing

and

a se

rvic

e bu

sine

ss

2.6.

2 Co

st o

f sal

es a

nd o

ther

exp

ense

s

1) W

hat

are

the

tran

sacti

ons

for

cost

of

sal

es a

nd o

ther

ex

pens

es?

2) H

ow a

re c

ost

of s

ales

an

d ot

her

expe

nses

pr

esen

ted

in fi

nanc

ial

stat

emen

ts?

Cont

extu

alH

ow th

e da

tes

of

paym

ents

of e

xpen

ses

can

diff

er w

ith

the

peri

od th

ey a

re

repo

rted

as

expe

nses

Conc

eptu

al•

Am

ount

s re

port

ed

Acc

ounti

ng th

eori

es•

Mat

chin

g th

eory

Acc

rual

bas

is o

f acc

ounti

ng

Acc

ounti

ng fo

r tr

ansa

ction

s•

Acc

ounti

ng fo

r:

(i)

cost

of s

ales

(ii)

othe

r ex

pens

es p

aid

by c

ash/

cheq

ue

Acc

ounti

ng th

eori

es•

expl

ain

the

acco

untin

g of

cos

t of

sal

es,

othe

r ex

pens

es, a

nd a

djus

tmen

ts fo

r pr

epai

d ex

pens

es a

nd e

xpen

ses

paya

ble

in r

elati

on to

rel

evan

t ac

coun

ting

theo

ries

Acc

ounti

ng fo

r tr

ansa

ction

s•

calc

ulat

e th

e co

st o

f sal

es

Page 84: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

82

Gui

ding

Que

stion

sKn

owle

dge

Cont

ent

(Nor

mal

(Aca

dem

ic))

Lear

ning

Out

com

esSt

uden

ts w

ill b

e ab

le t

o:3)

How

are

adj

ustm

ents

for

othe

r ex

pens

esm

ade?

are

for

a pe

riod

of

time

•Pr

epay

men

ts•

Expe

nses

pay

able

•A

ccru

al b

asis

of

acco

untin

g•

Mat

chin

g th

eory

Proc

edur

al•

Reco

rd c

ost

of s

ales

,an

d ot

her

expe

nses

in th

e jo

urna

l,le

dger

acc

ount

s an

dfin

anci

al s

tate

men

ts

•Re

cord

pre

paid

expe

nses

and

expe

nses

pay

able

in th

e jo

urna

l and

finan

cial

sta

tem

ents

(iii)

expe

nses

incu

rred

but

not

pai

d(e

xpen

ses

paya

ble)

(11)

(iv)

expe

nses

not

incu

rred

but

pai

d(p

repa

id e

xpen

ses)

(11)

•Ca

lcul

ation

of c

ost

of s

ales

and

oth

erex

pens

es, p

repa

id e

xpen

ses

and

expe

nses

paya

ble

•A

mou

nts

paid

are

rec

orde

d as

oth

erex

pens

es a

t th

e po

ints

of p

aym

ents

,an

d an

y un

used

or

outs

tand

ing

porti

ons

are

adju

sted

at

the

end

of th

e fin

anci

alpe

riod

•A

djus

tmen

ts a

t en

d of

per

iod

are

to b

em

ade

agai

nst

sepa

rate

pre

paid

exp

ense

san

d ex

pens

es p

ayab

le le

dger

acc

ount

s•

Clos

ing

of a

ll co

st o

f sal

es a

nd e

xpen

ses

acco

unts

are

per

form

ed o

nly

at th

e en

dof

the

finan

cial

yea

r an

d am

ount

s ar

etr

ansf

erre

d to

the

inco

me

sum

mar

y (f

orpe

riod

s in

bet

wee

n th

e fin

anci

al y

ear,

ther

e w

ill b

e ba

lanc

es in

thes

e ac

coun

ts)

Pres

enta

tion

•Pr

esen

tatio

n of

cos

t of

sal

es a

nd o

ther

expe

nses

in th

e St

atem

ent

of F

inan

cial

Perf

orm

ance

•Pr

esen

tatio

n of

pre

paid

exp

ense

s an

dex

pens

es p

ayab

le in

the

Stat

emen

t of

Fina

ncia

l Pos

ition

•ca

lcul

ate

othe

r ex

pens

es a

djus

ted

for

prep

aid

expe

nses

and

exp

ense

s pa

yabl

e

•p r

epar

e th

e jo

urna

l ent

ries

aff

ectin

gco

st o

f sal

es, o

ther

exp

ense

s, p

repa

idex

pens

es a

nd e

xpen

ses

paya

ble

•pr

epar

e th

e co

st o

f sal

es a

nd o

ther

expe

nses

ledg

er a

ccou

nts

wit

hout

adju

stm

ents

for

prep

aid

expe

nses

and

expe

nses

pay

able

•i n

terp

ret

the

cost

of s

ales

and

oth

erex

pens

es le

dger

acc

ount

s w

ith

adju

stm

ents

for

prep

aid

expe

nses

and

expe

nses

pay

able

•an

alys

e th

e eff

ects

of p

repa

id e

xpen

ses

and

expe

nses

pay

able

on

curr

ent

liabi

lities

, cur

rent

ass

ets

and

profi

t/lo

ssfo

r th

e pe

riod

Pres

enta

tion

•pr

epar

e an

ext

ract

of t

he S

tate

men

tof

Fin

anci

al P

erfo

rman

ce s

how

ing

the

pres

enta

tion

of c

ost

of s

ales

and

oth

erex

pens

es fo

r a

trad

ing

busi

ness

•pr

epar

e an

ext

ract

of t

he S

tate

men

tof

Fin

anci

al P

erfo

rman

ce s

how

ing

the

pres

enta

tion

of o

ther

exp

ense

s fo

r a

Page 85: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

83

Gui

ding

Que

stion

sKn

owle

dge

Cont

ent

(Nor

mal

(Aca

dem

ic))

Lear

ning

Out

com

esSt

uden

ts w

ill b

e ab

le t

o:•

Prep

aid

expe

nses

are

sho

wn

as c

urre

nt

asse

ts in

the

Stat

emen

t of

Fin

anci

al

Posi

tion

• Ex

pens

es p

ayab

les

are

show

n as

cur

rent

lia

biliti

es in

the

Stat

emen

t of

Fin

anci

al

Posi

tion

Not

e(1

1) E

xclu

des

the

prep

arati

on o

f pre

paid

ex

pens

es a

nd e

xpen

ses

paya

bles

ledg

er

acco

unts

serv

ice

busi

ness

prep

are

an e

xtra

ct o

f the

Sta

tem

ent

of F

inan

cial

Pos

ition

sho

win

g th

e pr

esen

tatio

n of

pre

paid

exp

ense

s an

d ex

pens

es p

ayab

le fo

r bo

th a

trad

ing

and

a se

rvic

e bu

sine

ss

2.7

Ass

ets

This

sec

tion

look

s in

to th

e as

set

item

s in

a S

tate

men

t of

Fin

anci

al P

ositi

on a

nd th

e ad

just

men

ts to

be

mad

e to

thes

e ite

ms

at th

e en

d of

a

finan

cial

per

iod.

2.7.

1 Ca

sh in

han

d an

d ca

sh a

t ba

nk

1) H

ow d

o bu

sine

sses

m

anag

e ca

sh?

2) W

hat

are

the

tran

sacti

ons

invo

lvin

g ca

sh?

3) H

ow is

cas

h

pres

ente

d in

fina

ncia

l st

atem

ents

?

Cont

extu

alRe

ceip

ts a

nd p

aym

ents

Conc

eptu

alA

sset

s ve

rsus

liab

ilitie

s

Cash

man

agem

ent

• U

nder

stan

d w

hy b

usin

esse

s ne

ed to

kee

p ca

sh fo

r op

erati

onal

nee

ds•

Und

erst

and

how

bus

ines

ses

man

age

cash

in

han

d, c

ash

at b

ank,

cas

h in

tran

sit,

cas

h re

ceip

ts a

nd c

ash

paym

ents

(12)

Acc

ounti

ng fo

r tr

ansa

ction

s•

Acc

ounti

ng fo

r re

ceip

ts a

nd p

aym

ents

-

cash

at

bank

acc

ount

refl

ects

the

amou

nt d

epos

ited

in th

e ba

nk fo

r sa

fe-

keep

ing

Acc

ounti

ng fo

r tr

ansa

ction

s•

prep

are

the

jour

nal e

ntri

es r

elat

ed to

re

ceip

ts a

nd p

aym

ents

• st

ate

the

caus

es o

f dis

hono

ured

che

que

• pr

epar

e th

e jo

urna

l ent

ries

for

dish

onou

red

cheq

ue

• pr

epar

e th

e ca

sh in

han

d an

d ca

sh a

t ba

nk le

dger

acc

ount

s

• in

terp

ret

the

cash

in h

and

and

cash

at

bank

ledg

er a

ccou

nts

Page 86: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

84

Gui

ding

Que

stion

sKn

owle

dge

Cont

ent

(Nor

mal

(Aca

dem

ic))

Lear

ning

Out

com

esSt

uden

ts w

ill b

e ab

le t

o:Pr

oced

ural

Reco

rd c

ash

rece

ipts

, ca

sh p

aym

ents

an

d ba

nk-r

elat

ed

tran

sacti

ons

in

the

jour

nal,

ledg

er

acco

unts

and

fina

ncia

l st

atem

ents

- th

e us

e of

che

ques

and

how

di

shon

oure

d ch

eque

s ha

ppen

- ac

coun

ting

for

dish

onou

red

cheq

ues,

w

ith

and

wit

hout

cas

h di

scou

nt

prev

ious

ly p

rovi

ded/

rece

ived

Pres

enta

tion

• Pr

esen

tatio

n of

cas

h in

han

d, c

ash

at

bank

and

ban

k ov

erdr

aft in

the

Stat

emen

t of

Fin

anci

al P

ositi

on

Not

e(1

2) T

he in

tern

al c

ontr

ol o

f cas

h is

cov

ered

in

secti

on 3

.4

Pres

enta

tion

• pr

epar

e an

ext

ract

of t

he S

tate

men

t of

Fin

anci

al P

ositi

on s

how

ing

the

pres

enta

tion

of c

ash

at b

ank,

ban

k ov

erdr

aft a

nd c

ash

in h

and

2.7.

2 In

vent

orie

s

1) W

hy d

o bu

sine

sses

ke

ep in

vent

orie

s?

2) H

ow d

o bu

sine

sses

m

anag

e in

vent

orie

s?

3) W

hat

are

the

tran

sacti

ons

invo

lvin

g th

e pu

rcha

se a

nd s

ale

of in

vent

ory?

Cont

extu

al

Inve

ntor

y m

anag

emen

t

Conc

eptu

al•

Acc

ounti

ng a

nd

non-

acco

untin

g in

for-

mati

on•

Rele

vanc

e of

in

form

ation

Inve

ntor

y m

anag

emen

t•

Und

erst

and

why

bus

ines

ses

keep

in

vent

orie

s to

avo

id o

ut-o

f-st

ock

situ

ation

s•

Und

erst

and

how

bus

ines

ses

man

age

inve

ntor

ies

by

- ke

epin

g pr

oper

rec

ords

to tr

ack

inve

ntor

y-

keep

ing

phys

ical

inve

ntor

y in

the

war

ehou

se-

buyi

ng in

sura

nce

to in

sure

the

inve

ntor

y

Inve

ntor

y m

anag

emen

t•

expl

ain

why

bus

ines

ses

keep

inve

ntor

ies

• de

scri

be h

ow b

usin

esse

s m

anag

e in

vent

orie

s

• an

alys

e, e

valu

ate

and

mak

e de

cisi

ons

abou

t th

e pu

rcha

se o

f inv

ento

ry b

y co

nsid

erin

g ac

coun

ting

and

non-

acco

untin

g in

form

ation

Page 87: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

85

Gui

ding

Que

stion

sKn

owle

dge

Cont

ent

(Nor

mal

(Aca

dem

ic))

Lear

ning

Out

com

esSt

uden

ts w

ill b

e ab

le t

o:4)

How

is in

vent

ory

pres

ente

d in

fina

ncia

l st

atem

ents

?

5) H

ow is

inve

ntor

y va

lued

?

• Pr

uden

ce th

eory

• Va

luati

on o

f in

vent

ory

– at

the

low

er o

f cos

t an

d ne

t re

alis

able

val

ue•

Adj

ustm

ents

– to

re

cogn

ise

impa

irm

ent

loss

on

inve

ntor

y

Proc

edur

alRe

cord

pur

chas

e an

d sa

les

of in

vent

ory,

ot

her

rela

ted

inve

ntor

y tr

ansa

ction

s an

d an

y ad

just

men

ts fo

r in

vent

ory

in th

e jo

urna

l, le

dger

acc

ount

s an

d fin

anci

al s

tate

men

ts

• U

nder

stan

d ho

w b

usin

esse

s m

anag

e an

d m

ake

deci

sion

s ab

out

type

s of

inve

ntor

y to

buy

by

cons

ider

ing

both

acc

ounti

ng

and

non-

acco

untin

g in

form

ation

- ac

coun

ting

info

rmati

on: c

ost

of

inve

ntor

y an

d st

orag

e co

st

- no

n-ac

coun

ting

info

rmati

on in

clud

es

only

(i)

ty

pes

of s

tora

ge(ii

) na

ture

of p

rodu

ct(ii

i) cu

stom

er p

refe

renc

e

Acc

ounti

ng th

eori

es•

Prud

ence

theo

ry

Acc

ounti

ng fo

r tr

ansa

ction

s•

Acc

ounti

ng fo

r pu

rcha

ses

of in

vent

ory,

re

turn

of i

nven

tory

, sal

es o

f inv

ento

ry

and

sale

s re

turn

s fo

r a

trad

ing

busi

ness

- pe

rpet

ual i

nven

tory

rec

ordi

ng m

etho

d (1

3)-

good

s ar

e in

vent

orie

d at

the

poin

ts

of p

urch

ases

and

exp

ense

d as

cos

t of

sa

les

at th

e po

ints

of s

ales

Acc

ounti

ng th

eori

es•

expl

ain

the

valu

ation

of i

nven

tory

in

rela

tion

to r

elev

ant

acco

untin

g th

eori

es

Acc

ounti

ng fo

r tr

ansa

ction

s•

iden

tify

the

cost

s of

pur

chas

es

• ca

lcul

ate

the

cost

of s

ales

and

end

ing

inve

ntor

y

• ca

lcul

ate

the

impa

irm

ent

loss

on

inve

ntor

y ad

just

ed fo

r in

sura

nce

clai

ms

if an

y

• pr

epar

e th

e jo

urna

l ent

ries

on

inve

ntor

y at

poi

nts

of p

urch

ases

and

cos

t of

sal

es a

t po

ints

of s

ales

• pr

epar

e th

e jo

urna

l ent

ry to

rec

ord

impa

irm

ent

loss

on

inve

ntor

y

• pr

epar

e th

e in

vent

ory

ledg

er a

ccou

nt

wit

hout

adj

ustm

ents

for

impa

irm

ent

loss

on

inve

ntor

y

Page 88: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

86

Gui

ding

Que

stion

sKn

owle

dge

Cont

ent

(Nor

mal

(Aca

dem

ic))

Lear

ning

Out

com

esSt

uden

ts w

ill b

e ab

le t

o:-

cost

s of

pur

chas

es in

vent

orie

d in

clud

eth

e pu

rcha

se p

rice

and

cos

ts to

bri

ng in

inve

ntor

y le

ss r

etur

ns (1

4)•

Acc

ounti

ng fo

r co

st o

f sal

es-

calc

ulati

on o

f cos

t of

sal

es a

nd e

ndin

gin

vent

ory

usin

g th

e FI

FO m

etho

d (1

5)

Valu

ation

•Va

luati

on o

f end

ing

inve

ntor

y (1

6)-

Sing

apor

e’s

Fina

ncia

l Rep

ortin

gSt

anda

rds

(FRS

) 2 s

tate

s th

at“i

nven

tori

es s

hall

be m

easu

red

at th

elo

wer

of c

ost

and

net

real

isab

le v

alue

”-

acco

untin

g fo

r im

pair

men

t lo

ss o

nin

vent

ory

whe

n th

e ne

t re

alis

able

val

ueof

inve

ntor

y is

low

er th

an b

ook

valu

eof

inve

ntor

y at

the

end

of th

e fin

anci

alpe

riod

(17)

Pres

enta

tion

•Pr

esen

tatio

n of

inve

ntor

y, c

ost

of s

ales

and

impa

irm

ent

loss

on

inve

ntor

y in

the

Stat

emen

t of

Fin

anci

al P

ositi

on a

ndSt

atem

ent

of F

inan

cial

Per

form

ance

•in

terp

ret

the

inve

ntor

y le

dger

acc

ount

wit

h ad

just

men

ts fo

r im

pair

men

t lo

ss o

nin

vent

ory

and/

or in

sura

nce

clai

ms

•a n

alys

e th

e eff

ects

of u

nder

stat

emen

tor

ove

rsta

tem

ent

of in

vent

ory

on g

ross

profi

t/lo

ss a

nd p

rofit

for

the

peri

od/l

oss

for

the

curr

ent

finan

cial

per

iod

Valu

ation

•st

ate

the

valu

ation

met

hod

for

inve

ntor

yin

the

Stat

emen

t of

Fin

anci

al P

ositi

on

Pres

enta

tion

•pr

epar

e an

ext

ract

of t

he S

tate

men

tof

Fin

anci

al P

ositi

on a

nd S

tate

men

t of

Fina

ncia

l Per

form

ance

sho

win

g th

e va

lues

and

pres

enta

tion

of e

ndin

g in

vent

ory,

cost

of s

ales

and

impa

irm

ent

loss

on

inve

ntor

y

Page 89: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

87

Gui

ding

Que

stion

sKn

owle

dge

Cont

ent

(Nor

mal

(Aca

dem

ic))

Lear

ning

Out

com

esSt

uden

ts w

ill b

e ab

le t

o:N

otes

(13)

Adj

ustm

ent

for

diff

eren

ces

betw

een

endi

ng in

vent

ory

valu

es d

eriv

ed fr

om

perp

etua

l inv

ento

ry r

ecor

ding

met

hod

and

phys

ical

inve

ntor

y co

unt

is n

ot

requ

ired

.(1

4) T

he F

RS 2

sta

tes

that

“th

e co

st o

f in

vent

orie

s sh

all c

ompr

ise

all c

ost

of

purc

hase

s an

d ot

her

cost

s in

curr

ed

in b

ring

ing

the

inve

ntor

ies

to th

eir

pres

ent

loca

tion

and

cond

ition

”.

Prep

aid

expe

nses

or

expe

nses

pay

able

on

pur

chas

e ar

e ex

clud

ed. I

n ad

ditio

n,

adju

stm

ents

to c

osts

of p

urch

ases

that

w

ill a

ffec

t co

st o

f sal

es a

nd e

ndin

g in

vent

ory

are

excl

uded

. Adj

ustm

ent

to in

vent

ory

valu

e in

clud

es o

nly

impa

irm

ent

loss

on

inve

ntor

y.

(15)

Sce

nari

os to

exc

lude

: (i)

m

ore

than

one

fina

ncia

l per

iod,

(ii

) be

ginn

ing

inve

ntor

y co

mpr

isin

g m

ore

than

one

bat

ch o

f goo

ds,

(iii)

a ba

tch

of g

oods

with

onl

y va

lue

or

quan

tity

Page 90: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

88

Gui

ding

Que

stion

sKn

owle

dge

Cont

ent

(Nor

mal

(Aca

dem

ic))

Lear

ning

Out

com

esSt

uden

ts w

ill b

e ab

le t

o:(iv

) co

st o

f sal

es m

easu

red

by o

ther

m

etho

ds b

esid

es F

IFO

to a

n en

tire

batc

h (o

r ba

tche

s) o

f goo

ds, w

ith

parti

al a

ppor

tionm

ent

of a

ny b

atch

(16)

Cal

cula

ting

unit

cos

t, d

eriv

ing

inve

ntor

y va

lue

from

uni

t co

st a

nd q

uanti

ty,

and

reco

rdin

g in

sto

ck c

ards

are

not

re

quir

ed, a

nd g

oods

ret

urne

d fr

om

cust

omer

s w

ill n

ot le

ad to

ret

urn

of th

e sa

me

good

s to

the

supp

lier

(17)

Pre

para

tion

of im

pair

men

t lo

ss in

th

e in

vent

ory

ledg

er a

ccou

nt is

not

re

quir

ed

2.7.

3 Tr

ade

rece

ivab

les

1) W

hy d

o bu

sine

sses

gr

ant

cred

it to

cu

stom

ers?

2) H

ow d

o bu

sine

sses

m

anag

e tr

ade

rece

ivab

les?

Cont

extu

al

Trad

e re

ceiv

able

s m

anag

emen

t

Conc

eptu

al•

Acc

ounti

ng a

nd

non-

acco

untin

g in

form

ation

• Re

leva

nce

of

info

rmati

on

Trad

e re

ceiv

able

s m

anag

emen

t•

Und

erst

and

why

bus

ines

ses

give

cre

dit

to

cust

omer

s to

incr

ease

rev

enue

• U

nder

stan

d ho

w b

usin

esse

s m

anag

e an

d m

ake

deci

sion

s ab

out

trad

e re

ceiv

able

s th

roug

h co

nsid

erin

g th

e cr

edit

wor

thin

ess

of e

xisti

ng a

nd n

ew c

usto

mer

s/

trad

e re

ceiv

able

s by

con

side

ring

bo

th a

ccou

nting

and

non

-acc

ounti

ng

info

rmati

on

Trad

e re

ceiv

able

s m

anag

emen

t•

anal

yse,

eva

luat

e an

d m

ake

deci

sion

s ab

out

the

cred

it w

orth

ines

s of

exi

sting

an

d ne

w c

usto

mer

s/tr

ade

rece

ivab

les

by

cons

ider

ing

both

acc

ounti

ng a

nd n

on-

acco

untin

g in

form

ation

Page 91: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

89

Gui

ding

Que

stion

sKn

owle

dge

Cont

ent

(Nor

mal

(Aca

dem

ic))

Lear

ning

Out

com

esSt

uden

ts w

ill b

e ab

le t

o:3)

Wha

t ar

e th

etr

ansa

ction

s in

volv

ing

trad

e re

ceiv

able

s?

4) H

ow a

re tr

ade

rece

ivab

les

pres

ente

d in

fina

ncia

lst

atem

ents

?

•Es

timat

ed lo

ss v

sac

tual

loss

•M

atch

ing

theo

ry•

P rud

ence

theo

ry•

Valu

ation

of a

sset

s–

gene

ral p

rovi

sion

for

allo

wan

ce fo

rim

pair

men

t of

trad

ere

ceiv

able

s•

Impa

irm

ent

loss

on

trad

e re

ceiv

able

s

Proc

edur

alRe

cord

tran

sacti

ons

rela

ted

to tr

ade

rece

ivab

les

and

any

adju

stm

ents

on

trad

e re

ceiv

able

s in

th

e jo

urna

l led

ger

acco

unts

and

fina

ncia

l st

atem

ents

-ac

coun

ting

info

rmati

on: t

rade

rece

ivab

les

bala

nce,

cre

dit

term

s an

dca

sh d

isco

unt,

num

ber

of d

ays

trad

ere

ceiv

able

s ar

e ov

erdu

e, e

xisti

ngcu

stom

ers’

his

tory

of r

epay

men

t-

non-

acco

untin

g in

form

ation

incl

udes

only

(18)

the

follo

win

g(i)

econ

omic

out

look

(ii)

spec

ific

indu

stry

out

look

(iii)

repu

tatio

n of

cus

tom

er (e

.g.

soci

ally

res

pons

ible

, his

tory

of t

hebu

sine

ss)

(iv)

cust

omer

s’ h

isto

ry o

f rep

aym

ent

Acc

ounti

ng th

eori

es•

Mat

chin

g th

eory

•Pr

uden

ce th

eory

Acc

ounti

ng fo

r tr

ansa

ction

s•

Acc

ounti

ng fo

r tr

ansa

ction

s aff

ectin

gtr

ade

rece

ivab

les

of a

trad

ing

busi

ness

:-

cred

it s

ales

and

sal

es r

etur

ns-

cash

dis

coun

ts a

nd tr

ade

disc

ount

s,in

clud

ing

thei

r pu

rpos

es a

ndca

lcul

ation

s

Acc

ounti

ng th

eori

es•

expl

ain

the

acco

untin

g of

impa

irm

ent

loss

on

trad

e re

ceiv

able

s in

rel

ation

tore

leva

nt a

ccou

nting

theo

ries

Acc

ounti

ng fo

r tr

ansa

ction

s•

defin

e tr

ade

disc

ount

•ex

plai

n w

hy a

trad

e di

scou

nt is

giv

en

•de

fine

cash

dis

coun

t

•ex

plai

n w

hy a

cas

h di

scou

nt is

giv

en

•di

sting

uish

bet

wee

n tr

ade

and

cash

disc

ount

s

•ca

lcul

ate

the

trad

e di

scou

nt a

t th

e sa

le o

fan

d re

turn

of g

oods

•ca

lcul

ate

the

cash

dis

coun

t

•pr

epar

e th

e jo

urna

l ent

ries

to r

ecor

dtr

ansa

ction

s aff

ectin

g tr

ade

rece

ivab

les

•pr

epar

e th

e jo

urna

l ent

ries

on

allo

wan

cefo

r im

pair

men

t of

trad

e re

ceiv

able

s

•pr

epar

e a

trad

e re

ceiv

able

ledg

er a

ccou

nt

Page 92: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

90

Gui

ding

Que

stion

sKn

owle

dge

Cont

ent

(Nor

mal

(Aca

dem

ic))

Lear

ning

Out

com

esSt

uden

ts w

ill b

e ab

le t

o:-

wri

te-o

ff o

f ful

l or

parti

al a

mou

nt o

fde

bt-

rece

ipts

in fu

ll or

par

tial a

mou

nt o

fde

bt o

wed

-di

shon

oure

d ch

eque

s•

Acc

ounti

ng fo

r tr

ansa

ction

s aff

ectin

gtr

ade

rece

ivab

les

of s

ervi

ce b

usin

ess:

-s e

rvic

es p

rovi

ded

on c

redi

t-

cash

dis

coun

ts a

nd tr

ade

disc

ount

s,in

clud

ing

thei

r pu

rpos

es a

ndca

lcul

ation

s-

wri

te-o

ff o

f ful

l or

parti

al a

mou

nt o

fde

bt-

rece

ipts

in fu

ll or

par

tial a

mou

nt o

fde

bt o

wed

-di

shon

oure

d ch

eque

s

Valu

ation

•Va

luati

on o

f tra

de r

ecei

vabl

es (1

9)-

trad

e re

ceiv

able

s re

pres

ent

the

colle

ction

s in

the

imm

edia

te fu

ture

.-

allo

wan

ce fo

r im

pair

men

t of

trad

ere

ceiv

able

s is

an

estim

ate

of th

e va

lue

of d

ebts

that

may

be

unco

llecti

ble

inth

e fu

ture

(20)

•in

terp

ret

the

(i) tr

ade

rece

ivab

les,

(ii)

allo

wan

ce fo

r im

pair

men

t of

trad

ere

ceiv

able

s, (i

ii) im

pair

men

t lo

ss o

n tr

ade

rece

ivab

les

ledg

er a

ccou

nts

•an

alys

e th

e eff

ects

of c

ash

disc

ount

on p

rofit

for

the

peri

od a

nd tr

ade

rece

ivab

les

•an

alys

e th

e eff

ects

of c

hang

es in

allo

wan

ce fo

r im

pair

men

t of

trad

ere

ceiv

able

s an

d im

pair

men

t lo

ss o

n tr

ade

rece

ivab

les

on th

e pr

ofit/

loss

for

the

peri

od a

nd tr

ade

rece

ivab

les

Valu

ation

•st

ate

the

valu

ation

met

hod

for

trad

ere

ceiv

able

s in

the

Stat

emen

t of

Fin

anci

alPo

sitio

n

Pres

enta

tion

•pr

epar

e an

ext

ract

of t

he S

tate

men

tof

Fin

anci

al P

ositi

on a

nd S

tate

men

tof

Fin

anci

al P

erfo

rman

ce s

how

ing

the

pres

enta

tion

of tr

ade

rece

ivab

les,

disc

ount

allo

wed

, allo

wan

ce fo

rim

pair

men

t of

trad

e re

ceiv

able

s an

dim

pair

men

t lo

ss o

n tr

ade

rece

ivab

les

Page 93: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

91

Gui

ding

Que

stion

sKn

owle

dge

Cont

ent

(Nor

mal

(Aca

dem

ic))

Lear

ning

Out

com

esSt

uden

ts w

ill b

e ab

le t

o:-

calc

ulati

on a

nd a

ccou

nting

of

allo

wan

ce fo

r im

pair

men

t of

trad

ere

ceiv

able

s-

a d e

crea

se in

allo

wan

ce is

trea

ted

asa

redu

ction

aga

inst

exp

ense

s in

the

Stat

emen

t of

Fin

anci

al P

erfo

rman

ce

Pres

enta

tion

•Pr

esen

tatio

n of

trad

e re

ceiv

able

s,al

low

ance

for

impa

irm

ent

of tr

ade

rece

ivab

les,

and

impa

irm

ent

loss

on

trad

ere

ceiv

able

s in

the

Stat

emen

t of

Fin

anci

alPo

sitio

n an

d St

atem

ent

of F

inan

cial

Perf

orm

ance

Not

es(1

8)In

form

ation

abo

ut e

cono

mic

out

look

and

spec

ific

indu

stry

out

look

are

tobe

exp

licitl

y gi

ven

(stu

dent

s ar

e no

tex

pect

ed to

rea

d an

d in

terp

ret

rela

ted

grap

hs, c

hart

s or

any

form

s of

rep

orts

to e

xtra

ct th

is in

form

ation

)(1

9)Sc

enar

ios

to in

clud

e on

ly:

(i)pr

ovid

ing

allo

wan

ce fo

r th

e fir

sttim

e(ii

)in

crea

se in

allo

wan

ce o

ver

prio

rye

ar(ii

i)d e

crea

se in

allo

wan

ce o

ver

prio

rye

ar

Page 94: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

92

Gui

ding

Que

stion

sKn

owle

dge

Cont

ent

(Nor

mal

(Aca

dem

ic))

Lear

ning

Out

com

esSt

uden

ts w

ill b

e ab

le t

o:(2

0) S

inga

pore

’s F

inan

cial

Rep

ortin

g St

anda

rd 1

09 o

n Fi

nanc

ial I

nstr

umen

ts

stat

es th

at “

whe

n m

akin

g th

e as

sess

men

t of

cre

dit

risk

, an

entit

y sh

all

use

the

chan

ge in

the

risk

of a

def

ault

occu

rrin

g ov

er th

e ex

pect

ed li

fe o

f th

e fin

anci

al in

stru

men

t in

stea

d of

th

e ch

ange

in th

e am

ount

of e

xpec

ted

cred

it lo

sses

”. T

hus,

the

gene

ral

prov

isio

n fo

r al

low

ance

for

impa

irm

ent

of tr

ade

rece

ivab

les

will

be

used

for

this

sy

llabu

s. T

he p

repa

ratio

n of

allo

wan

ce

for

impa

irm

ent

of tr

ade

rece

ivab

les

and

impa

irm

ent

loss

on

trad

e re

ceiv

able

s le

dger

acc

ount

s ar

e no

t re

quir

ed.

2.7.

4 N

on-c

urre

nt a

sset

s

1) W

hat

is th

e di

ffer

ence

bet

wee

n ca

pita

l and

rev

enue

ex

pend

itur

e?

2) W

hat

are

the

tran

sacti

ons

invo

lvin

g no

n-cu

rren

t as

sets

?

Cont

extu

alBu

ying

of n

on-c

urre

nt

asse

ts

Non

-cur

rent

ass

ets

man

agem

ent

• U

nder

stan

d th

e ty

pes

of e

xpen

ditu

re th

at

busi

ness

es c

an c

apit

alis

e

Acc

ounti

ng th

eori

es•

Mat

chin

g th

eory

Cons

iste

ncy

theo

ry

• M

ater

ialit

y th

eory

• Pr

uden

ce th

eory

Acc

ounti

ng th

eori

es•

expl

ain

the

appl

icati

on o

f the

mat

eria

lity

theo

ry o

n th

e tr

eatm

ent

of c

apit

al a

nd

reve

nue

expe

ndit

ure

• ex

plai

n th

e ne

ed to

cha

rge

depr

ecia

tion

in r

elati

on to

rel

evan

t ac

coun

ting

theo

ries

• ex

plai

n th

e pr

esen

tatio

n of

net

boo

k va

lue

in r

elati

on to

rel

evan

t ac

coun

ting

theo

ries

Page 95: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

93

Gui

ding

Que

stion

sKn

owle

dge

Cont

ent

(Nor

mal

(Aca

dem

ic))

Lear

ning

Out

com

esSt

uden

ts w

ill b

e ab

le t

o:3)

How

are

non

-cur

rent

as

sets

pre

sent

ed in

fin

anci

al s

tate

men

ts?

Conc

eptu

al•

Capi

tal v

s re

venu

e ex

pend

itur

e•

Mat

eria

lity

theo

ry•

Mat

chin

g th

eory

• Co

nsis

tenc

y th

eory

• Pr

uden

ce th

eory

• Va

luati

on o

f non

-cu

rren

t as

sets

– a

t co

st le

ss a

ccum

ulat

ed

depr

ecia

tion

Proc

edur

al•

Reco

rd tr

ansa

ction

s re

late

d to

non

-cu

rren

t as

sets

and

an

y ad

just

men

ts

for

non-

curr

ent

asse

ts in

the

jour

nal,

ledg

er a

ccou

nts

and

finan

cial

sta

tem

ents

Acc

ounti

ng fo

r tr

ansa

ction

s•

Acc

ounti

ng fo

r re

venu

e ve

rsus

cap

ital

ex

pend

itur

e-

the

acco

untin

g tr

eatm

ent

of c

apit

al

and

reve

nue

expe

ndit

ure,

spe

cific

ally

w

heth

er e

xpen

ditu

re in

curr

ed in

re

latio

n to

a n

on-c

urre

nt a

sset

is to

be

cap

ital

ised

as

part

of t

he n

on-

curr

ent

asse

t’s

cost

or

reco

rded

in th

e St

atem

ent

of F

inan

cial

Per

form

ance

as

an e

xpen

se-

exam

ples

of c

apit

al a

nd r

even

ue

expe

ndit

ure

- ex

pend

itur

e on

non

-cur

rent

ass

ets

subs

eque

nt to

acq

uisi

tion

can

only

be

capi

talis

ed if

it in

crea

ses

the

capa

city

an

d us

eful

life

of t

he n

on-c

urre

nt

asse

ts a

nd im

prov

es th

eir

func

tion

- eff

ects

of e

rron

eous

cla

ssifi

catio

n an

d tr

eatm

ent

of e

xpen

ditu

re o

n fin

anci

al

stat

emen

ts•

Acc

ounti

ng fo

r pu

rcha

se o

f non

-cur

rent

as

sets

(21)

- co

st o

f non

-cur

rent

ass

ets

com

pris

ing

purc

hase

pri

ces

and

the

cost

s of

br

ingi

ng th

e no

n-cu

rren

t as

sets

to

oper

ating

con

ditio

n

Acc

ounti

ng fo

r tr

ansa

ction

sCa

pita

l and

rev

enue

exp

endi

ture

• de

fine

capi

tal a

nd r

even

ue e

xpen

ditu

re

• di

sting

uish

bet

wee

n ca

pita

l and

rev

enue

ex

pend

itur

e

• cl

assi

fy a

ccou

nting

tran

sacti

ons

as c

apit

al

and

reve

nue

expe

ndit

ure

• an

alys

e th

e eff

ects

of d

iffer

ence

s in

cl

assi

ficati

on a

nd tr

eatm

ent

of c

apit

al

and

reve

nue

expe

ndit

ure

on fi

nanc

ial

stat

emen

ts

Purc

hase

of n

on-c

urre

nt a

sset

s•

prep

are

the

jour

nal e

ntri

es o

n pu

rcha

ses

of n

on-c

urre

nt a

sset

s

• pr

epar

e th

e no

n-cu

rren

t as

set

ledg

er

acco

unt

to s

how

the

purc

hase

of n

on-

curr

ent

asse

ts

• in

terp

ret

the

non-

curr

ent

asse

t le

dger

ac

coun

t

Dep

reci

ation

and

acc

umul

ated

dep

reci

ation

defin

e de

prec

iatio

n an

d ac

cum

ulat

ed

depr

ecia

tion

Page 96: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

94

Gui

ding

Que

stion

sKn

owle

dge

Cont

ent

(Nor

mal

(Aca

dem

ic))

Lear

ning

Out

com

esSt

uden

ts w

ill b

e ab

le t

o:•

Acc

ounti

ng fo

r de

prec

iatio

n an

d ac

cum

ulat

ed d

epre

ciati

on (d

epre

ciati

on

to d

ate)

(22)

-

caus

es o

f dep

reci

ation

-

met

hods

of d

epre

ciati

on

o st

raig

ht li

ne

o re

duci

ng b

alan

ce

- su

itab

ility

of d

epre

ciati

on m

etho

ds fo

r di

ffer

ent

clas

ses

of n

on-c

urre

nt a

sset

s -

net

book

val

ue r

epre

sent

s th

e es

timat

ed fu

ture

eco

nom

ic v

alue

of a

no

n-cu

rren

t as

set

- ac

cum

ulat

ed d

epre

ciati

on is

an

appr

oxim

ation

of t

he r

educ

tion

in

econ

omic

val

ue o

f a n

on-c

urre

nt a

sset

Valu

ation

• Va

luati

on o

f non

-cur

rent

ass

ets

- at

cos

t le

ss a

ccum

ulat

ed d

epre

ciati

on

Pres

enta

tion

• Pr

esen

tatio

n of

non

-cur

rent

ass

ets

at

net

book

val

ue (c

ost

less

acc

umul

ated

de

prec

iatio

n) in

the

Stat

emen

t of

Fi

nanc

ial P

ositi

on•

Pres

enta

tion

of d

epre

ciati

on o

f non

-cu

rren

t as

set

in th

e St

atem

ent

of

Fina

ncia

l Per

form

ance

• st

ate

the

caus

es o

f dep

reci

ation

• st

ate

and

disti

ngui

sh th

e de

prec

iatio

n m

etho

ds o

f (i)

stra

ight

-line

and

(ii)

redu

cing

-bal

ance

met

hods

• ex

plai

n th

e su

itab

ility

of s

elec

ted

depr

ecia

tion

met

hods

for

diff

eren

t ty

pes

of n

on-c

urre

nt a

sset

s

• ca

lcul

ate

depr

ecia

tion

and

accu

mul

ated

de

prec

iatio

n ac

cord

ing

to th

e (i)

str

aigh

t-lin

e an

d (ii

) red

ucin

g-ba

lanc

e m

etho

ds

• ca

lcul

ate

the

rate

of d

epre

ciati

on, l

engt

h of

use

ful l

ife, a

nnua

l dep

reci

ation

, ac

cum

ulat

ed d

epre

ciati

on a

nd n

et b

ook

valu

e or

cos

t of

non

-cur

rent

ass

ets

• pr

epar

e th

e jo

urna

l ent

ries

on

depr

ecia

tion

and

accu

mul

ated

de

prec

iatio

n

• an

alys

e th

e eff

ects

of d

iffer

ent

depr

ecia

tion

met

hods

on

profi

t/lo

ss fo

r th

e pe

riod

and

net

boo

k va

lue

of n

on-

curr

ent

asse

ts

• in

terp

ret

the

(i) d

epre

ciati

on a

nd

(ii) a

ccum

ulat

ed d

epre

ciati

on le

dger

ac

coun

ts

Page 97: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

95

Gui

ding

Que

stion

sKn

owle

dge

Cont

ent

(Nor

mal

(Aca

dem

ic))

Lear

ning

Out

com

esSt

uden

ts w

ill b

e ab

le t

o:•

Acc

ounti

ng fo

r de

prec

iatio

n an

d ac

cum

ulat

ed d

epre

ciati

on (d

epre

ciati

on

to d

ate)

(22)

-

caus

es o

f dep

reci

ation

-

met

hods

of d

epre

ciati

on

o st

raig

ht li

ne

o re

duci

ng b

alan

ce

- su

itab

ility

of d

epre

ciati

on m

etho

ds fo

r di

ffer

ent

clas

ses

of n

on-c

urre

nt a

sset

s -

net

book

val

ue r

epre

sent

s th

e es

timat

ed fu

ture

eco

nom

ic v

alue

of a

no

n-cu

rren

t as

set

- ac

cum

ulat

ed d

epre

ciati

on is

an

appr

oxim

ation

of t

he r

educ

tion

in

econ

omic

val

ue o

f a n

on-c

urre

nt a

sset

Valu

ation

• Va

luati

on o

f non

-cur

rent

ass

ets

- at

cos

t le

ss a

ccum

ulat

ed d

epre

ciati

on

Pres

enta

tion

• Pr

esen

tatio

n of

non

-cur

rent

ass

ets

at

net

book

val

ue (c

ost

less

acc

umul

ated

de

prec

iatio

n) in

the

Stat

emen

t of

Fi

nanc

ial P

ositi

on•

Pres

enta

tion

of d

epre

ciati

on o

f non

-cu

rren

t as

set

in th

e St

atem

ent

of

Fina

ncia

l Per

form

ance

• st

ate

the

caus

es o

f dep

reci

ation

• st

ate

and

disti

ngui

sh th

e de

prec

iatio

n m

etho

ds o

f (i)

stra

ight

-line

and

(ii)

redu

cing

-bal

ance

met

hods

• ex

plai

n th

e su

itab

ility

of s

elec

ted

depr

ecia

tion

met

hods

for

diff

eren

t ty

pes

of n

on-c

urre

nt a

sset

s

• ca

lcul

ate

depr

ecia

tion

and

accu

mul

ated

de

prec

iatio

n ac

cord

ing

to th

e (i)

str

aigh

t-lin

e an

d (ii

) red

ucin

g-ba

lanc

e m

etho

ds

• ca

lcul

ate

the

rate

of d

epre

ciati

on, l

engt

h of

use

ful l

ife, a

nnua

l dep

reci

ation

, ac

cum

ulat

ed d

epre

ciati

on a

nd n

et b

ook

valu

e or

cos

t of

non

-cur

rent

ass

ets

• pr

epar

e th

e jo

urna

l ent

ries

on

depr

ecia

tion

and

accu

mul

ated

de

prec

iatio

n

• an

alys

e th

e eff

ects

of d

iffer

ent

depr

ecia

tion

met

hods

on

profi

t/lo

ss fo

r th

e pe

riod

and

net

boo

k va

lue

of n

on-

curr

ent

asse

ts

• in

terp

ret

the

(i) d

epre

ciati

on a

nd

(ii) a

ccum

ulat

ed d

epre

ciati

on le

dger

ac

coun

ts

Gui

ding

Que

stion

sKn

owle

dge

Cont

ent

(Nor

mal

(Aca

dem

ic))

Lear

ning

Out

com

esSt

uden

ts w

ill b

e ab

le t

o:N

otes

(21)

Sce

nari

o to

incl

ude

only

pur

chas

es

of n

on-c

urre

nt a

sset

s by

cas

h an

d on

cr

edit,

and

con

trib

ution

of n

on-c

urre

nt

asse

ts b

y th

e ow

ner

(22)

Sce

nari

os to

incl

ude

only

par

tial

(by

who

le m

onth

) or

full

year

of

depr

ecia

tion

in th

e ye

ar o

f acq

uisi

tion.

Th

e pr

epar

ation

of a

ccum

ulat

ed

depr

ecia

tion

and

depr

ecia

tion

ledg

er

acco

unts

are

not

req

uire

d.

Valu

ation

• st

ate

the

valu

ation

met

hod

for

non-

curr

ent

asse

ts in

the

Stat

emen

t of

Fi

nanc

ial P

ositi

on

Pres

enta

tion

• pr

epar

e an

ext

ract

of t

he S

tate

men

t of

Fin

anci

al P

ositi

on a

nd S

tate

men

t of

Fin

anci

al P

erfo

rman

ce s

how

ing

the

pres

enta

tion

of n

et b

ook

valu

e,

accu

mul

ated

dep

reci

ation

and

de

prec

iatio

n

2.8

Liab

iliti

esTh

is s

ectio

n lo

oks

into

the

liabi

lity

item

s in

a S

tate

men

t of

Fin

anci

al P

ositi

on a

nd th

e ad

just

men

ts to

be

mad

e to

thes

e ite

ms

at th

e en

d of

a

finan

cial

per

iod.

2.8.

1 Tr

ade

paya

bles

1) H

ow d

o bu

sine

sses

m

anag

e tr

ade

paya

bles

?

2) W

hat

are

the

tran

sacti

ons

invo

lvin

g tr

ade

paya

bles

?

Cont

extu

alM

anag

ing

supp

liers

and

pu

rcha

sing

on

cred

it

Conc

eptu

alLi

abili

ties

Supp

lier

man

agem

ent

• U

nder

stan

d w

hy b

usin

esse

s bu

y on

cre

dit

inst

ead

of p

ayin

g ca

sh

• U

nder

stan

d ho

w b

usin

esse

s m

anag

e su

pplie

rs a

nd d

ecid

e w

hich

sup

plie

r to

bu

y fr

om b

y co

nsid

erin

g bo

th a

ccou

nting

an

d no

n-ac

coun

ting

info

rmati

on.

Supp

lier

man

agem

ent

• an

alys

e, e

valu

ate

and

mak

e de

cisi

ons

abou

t w

hich

sup

plie

r to

buy

from

by

cons

ider

ing

both

acc

ounti

ng a

nd n

on-

acco

untin

g in

form

ation

Acc

ounti

ng fo

r tr

ansa

ction

s•

defin

e tr

ade

disc

ount

Page 98: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

96

Gui

ding

Que

stion

sKn

owle

dge

Cont

ent

(Nor

mal

(Aca

dem

ic))

Lear

ning

Out

com

esSt

uden

ts w

ill b

e ab

le t

o:3)

How

are

trad

e pa

yabl

es p

rese

nted

in

finan

cial

sta

tem

ents

?

Proc

edur

alRe

cord

tran

sacti

ons

rela

ted

to tr

ade

paya

bles

in th

e jo

urna

l, le

dger

acc

ount

s an

d fin

anci

al s

tate

men

ts

- A

ccou

nting

info

rmati

on: c

ost

of

inve

ntor

y, c

redi

t te

rms

and

cash

di

scou

nt, c

ost

of s

uppl

ies,

cos

t of

no

n-cu

rren

t as

sets

, del

iver

y ch

arge

s,

trad

e di

scou

nt a

nd c

ost

of s

ervi

ces

(inst

alla

tion

and

mai

nten

ance

)-

Non

-acc

ounti

ng in

form

ation

incl

udes

on

ly th

e fo

llow

ing:

(i) l

ocal

or

over

seas

sup

plie

r(ii

) aft

er-s

ales

ser

vice

(iii)

retu

rn p

olic

y(iv

) onl

ine

vs b

rick

-and

-mor

tar

supp

lier

(v) r

eput

ation

of s

uppl

ier

(e.g

., so

cial

ly

resp

onsi

ble,

his

tory

of t

he b

usin

ess)

(v

i) w

arra

nty

Acc

ounti

ng fo

r tr

ansa

ction

s•

Acc

ounti

ng fo

r tr

ansa

ction

s aff

ectin

g th

e cr

edit

pur

chas

e of

goo

ds a

nd s

ervi

ces

and

non-

curr

ent

asse

ts:

- cr

edit

pur

chas

es o

f goo

ds a

nd s

ervi

ces

- cr

edit

pur

chas

es o

f non

-cur

rent

ass

ets

- re

turn

s of

goo

ds

- ca

sh d

isco

unts

and

trad

e di

scou

nts,

in

clud

ing

thei

r pu

rpos

es a

nd

calc

ulati

ons

• ex

plai

n w

hy a

trad

e di

scou

nt is

rec

eive

d

• de

fine

cash

dis

coun

t

• ex

plai

n w

hy a

cas

h di

scou

nt is

rec

eive

d

• di

sting

uish

bet

wee

n tr

ade

and

cash

di

scou

nts

• ca

lcul

ate

the

trad

e di

scou

nt a

t th

e pu

rcha

se a

nd r

etur

n of

goo

ds

• ca

lcul

ate

the

cash

dis

coun

t at

pay

men

t

• pr

epar

e th

e jo

urna

l ent

ries

to r

ecor

d tr

ansa

ction

s aff

ectin

g tr

ade

paya

bles

• pr

epar

e a

trad

e pa

yabl

e le

dger

acc

ount

• in

terp

ret

a tr

ade

paya

ble

ledg

er a

ccou

nt

• an

alys

e th

e eff

ects

of c

ash

disc

ount

on

pro

fit/l

oss

for

the

peri

od a

nd tr

ade

paya

bles

Pres

enta

tion

• pr

epar

e an

ext

ract

of t

he S

tate

men

t of

Fin

anci

al P

erfo

rman

ce s

how

ing

the

pres

enta

tion

of d

isco

unt

rece

ived

Page 99: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

97

Gui

ding

Que

stion

sKn

owle

dge

Cont

ent

(Nor

mal

(Aca

dem

ic))

Lear

ning

Out

com

esSt

uden

ts w

ill b

e ab

le t

o:-

full

or p

artia

l pay

men

ts-

frei

ght

char

ges

Pre

sent

ation

• Pr

esen

tatio

n of

trad

e pa

yabl

es in

the

Stat

emen

t of

Fin

anci

al P

ositi

on

• pr

epar

e an

ext

ract

of t

he S

tate

men

t of

Fin

anci

al P

ositi

on s

how

ing

the

pres

enta

tion

of tr

ade

paya

bles

2.8.

2 Lo

ng-t

erm

bor

row

ings

1) W

hat

are

the

tran

sacti

ons

for

long

-te

rm b

orro

win

gs?

2) H

ow a

re lo

ng-

term

bor

row

ings

pr

esen

ted

in fi

nanc

ial

stat

emen

ts?

Cont

extu

alO

btai

ning

loan

for

busi

ness

use

Conc

eptu

al•

Curr

ent

vs n

on-

curr

ent

liabi

lities

• M

atch

ing

theo

ry•

Acc

rual

bas

is o

f ac

coun

ting

Proc

edur

alRe

cord

tran

sacti

ons

rela

ted

to lo

ans

and

loan

inte

rest

s in

th

e jo

urna

l, le

dger

ac

coun

ts a

nd fi

nanc

ial

stat

emen

ts

Long

-ter

m b

orro

win

gs m

anag

emen

t•

Und

erst

and

why

bus

ines

ses

obta

in lo

ans

to fi

nanc

e it

s bu

sine

ss o

pera

tions

Acc

ounti

ng th

eori

es•

Mat

chin

g th

eory

• A

ccru

al b

asis

of a

ccou

nting

Acc

ounti

ng fo

r tr

ansa

ction

s•

Acc

ounti

ng fo

r ne

w lo

an a

nd lo

an

repa

ymen

t (2

3)•

Recl

assi

fy p

ortio

n of

liab

ility

pay

able

w

ithi

n th

e ne

xt fi

nanc

ial y

ear

as c

urre

nt

liabi

lity

• A

ccou

nting

for

inte

rest

exp

ense

and

in

tere

st e

xpen

se p

ayab

le (2

4)

Pres

enta

tion

• Pr

esen

tatio

n of

long

-ter

m b

orro

win

gs,

inte

rest

exp

ense

and

inte

rest

pay

able

in

the

Stat

emen

t of

Fin

anci

al P

erfo

rman

ce

and

Stat

emen

t of

Fin

anci

al P

ositi

on

Acc

ounti

ng th

eori

es•

expl

ain

the

acco

untin

g of

long

-ter

m

borr

owin

gs in

tere

st e

xpen

se in

rel

ation

to

rele

vant

acc

ounti

ng th

eori

es

Acc

ounti

ng fo

r tr

ansa

ction

s •

disti

ngui

sh b

etw

een

bank

loan

and

ban

k ov

erdr

aft

• pr

epar

e th

e jo

urna

l ent

ries

on

new

loan

, lo

an r

epay

men

t, in

tere

st e

xpen

se a

nd

inte

rest

pay

able

• pr

epar

e an

d in

terp

ret

the

long

-ter

m

borr

owin

gs le

dger

acc

ount

• in

terp

ret

the

inte

rest

exp

ense

ledg

er

acco

unts

wit

h ad

just

men

t fo

r in

tere

st

expe

nse

paya

ble

Page 100: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

98

Gui

ding

Que

stion

sKn

owle

dge

Cont

ent

(Nor

mal

(Aca

dem

ic))

Lear

ning

Out

com

esSt

uden

ts w

ill b

e ab

le t

o:N

otes

(23)

The

finan

cial

yea

r en

d fo

r sc

enar

ios

that

incl

ude

the

taki

ng u

p of

long

-te

rm b

orro

win

g w

ill a

lway

s en

d on

31 D

ecem

ber.

The

obta

inin

g of

loan

s,re

paym

ent

of lo

ans

and

inte

rest

pai

dca

n ta

ke p

lace

at

any

time

duri

ng th

efin

anci

al y

ear.

Loan

s ar

e as

sum

ed to

be r

epai

d in

equ

al in

stal

men

ts o

ver

the

loan

tenu

re. T

his

sylla

bus

does

not

incl

ude

loan

s bo

rrow

ed o

n a

shor

t-te

rmba

sis.

(24)

Excl

udes

the

calc

ulati

on o

f int

eres

tex

pens

e.

Pres

enta

tion

•pr

epar

e an

ext

ract

of t

he S

tate

men

tof

Fin

anci

al P

ositi

on a

nd S

tate

men

tof

Fin

anci

al P

erfo

rman

ce s

how

ing

the

pres

enta

tion

of lo

an, i

nter

est

paya

ble

and

inte

rest

exp

ense

2.9

Equi

ties

This

sec

tion

look

s in

to th

e eq

uity

item

s of

a s

ole

prop

riet

orsh

ip in

a S

tate

men

t of

Fin

anci

al P

ositi

on, a

nd th

e ad

just

men

ts to

be

mad

e to

th

ese

item

s at

the

end

of a

fina

ncia

l per

iod.

2.9.

1 Ca

pita

l

1) H

ow is

the

sole

prop

riet

or’s

inte

rest

in th

e bu

sine

sspr

esen

ted

in fi

nanc

ial

stat

emen

ts?

Cont

extu

alSo

le p

ropr

ieto

rshi

pA

ccou

nting

theo

ries

•A

ccou

nting

enti

ty th

eory

Acc

ounti

ng fo

r tr

ansa

ction

s•

Acc

ounti

ng fo

r tr

ansa

ction

s aff

ectin

g th

eso

le p

ropr

ieto

r’s

inte

rest

(ow

ner’

s eq

uity

)(2

5)

Acc

ounti

ng th

eori

es•

expl

ain

the

acco

untin

g of

cap

ital

inre

latio

n to

rel

evan

t ac

coun

ting

theo

ries

Page 101: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

99

Gui

ding

Que

stion

sKn

owle

dge

Cont

ent

(Nor

mal

(Aca

dem

ic))

Lear

ning

Out

com

esSt

uden

ts w

ill b

e ab

le t

o:Co

ncep

tual

Am

ount

s re

port

ed

are

as a

t a

poin

t in

tim

e •

Acc

ounti

ng e

ntity

th

eory

Proc

edur

alRe

cord

tran

sacti

ons

rela

ted

to th

e so

le

prop

riet

or’s

inte

rest

in

the

jour

nal,

ledg

er

acco

unts

and

fina

ncia

l st

atem

ents

Pres

enta

tion

• Pr

esen

tatio

n of

cap

ital

in th

e St

atem

ent

of F

inan

cial

Pos

ition

Not

e(2

5) S

cena

rios

to in

clud

e on

ly c

ontr

ibuti

on

of c

apita

l in

cash

or

in k

ind

Acc

ounti

ng fo

r tr

ansa

ction

s•

prep

are

the

jour

nal e

ntri

es o

n ca

pita

l co

ntri

bute

d

• pr

epar

e th

e ca

pita

l led

ger

acco

unt

• in

terp

ret

the

capi

tal l

edge

r ac

coun

t

• an

alys

e th

e ch

ange

s in

the

owne

r’s

equi

ty

to id

entif

y th

e re

ason

s fo

r th

e ch

ange

s

Pres

enta

tion

• pr

epar

e an

ext

ract

of t

he S

tate

men

t of

Fin

anci

al P

ositi

on s

how

ing

the

pres

enta

tion

of th

e so

le p

ropr

ieto

rshi

p’s

inte

rest

in th

e bu

sine

ss

2.9.

2 D

raw

ings

1) H

ow d

o bu

sine

sses

re

cord

wit

hdra

wal

s by

sol

e pr

opri

etor

s?

Cont

extu

alO

wne

r w

ithd

raw

s as

sets

from

bus

ines

s fo

r ow

n us

e

Conc

eptu

al

• A

mou

nts

repo

rted

ar

e as

at

a po

int

in

time

• A

ccou

nting

enti

ty

theo

ry

Acc

ounti

ng th

eori

es•

Acc

ounti

ng e

ntity

theo

ry

Acc

ounti

ng fo

r tr

ansa

ction

s•

Dra

win

gs in

cas

h or

in k

inds

wou

ld r

e-du

ce th

e so

le p

ropr

ieto

rshi

p eq

uity

in th

e St

atem

ent

of F

inan

cial

Pos

ition

• Cl

osin

g of

the

draw

ings

ledg

er a

ccou

nt to

th

e ca

pita

l led

ger

acco

unt

at th

e en

d of

th

e fin

anci

al y

ear

Acc

ounti

ng th

eori

es•

expl

ain

the

acco

untin

g of

dra

win

gs in

re

latio

n to

rel

evan

t ac

coun

ting

theo

ries

Acc

ounti

ng fo

r tr

ansa

ction

s•

defin

e dr

awin

gs

• pr

epar

e th

e jo

urna

l ent

ries

rel

ated

to

draw

ings

and

the

tran

sfer

of d

raw

ings

to

the

capi

tal a

ccou

nt

Page 102: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

100

Gui

ding

Que

stion

sKn

owle

dge

Cont

ent

(Nor

mal

(Aca

dem

ic))

Lear

ning

Out

com

esSt

uden

ts w

ill b

e ab

le t

o:Pr

oced

ural

Reco

rd tr

ansa

ction

s re

late

d to

dra

win

gs

in th

e jo

urna

l, le

dger

ac

coun

ts a

nd fi

nanc

ial

stat

emen

ts

Pres

enta

tion

• Pr

esen

tatio

n of

dra

win

gs in

the

capi

tal

acco

unt

• pr

epar

e th

e dr

awin

gs le

dger

acc

ount

• in

terp

ret

the

draw

ings

ledg

er a

ccou

nt

• an

alys

e th

e im

pact

of d

raw

ings

on

the

sole

pro

prie

tor’

s eq

uity

Pres

enta

tion

• pr

epar

e an

ext

ract

of t

he S

tate

men

t of

Fin

anci

al P

ositi

on s

how

ing

the

pres

enta

tion

of c

apit

al le

ss d

raw

ings

as

a si

ngle

line

item

2.9.

3 Tr

ansf

er o

f pro

fit/l

oss

for

the

year

How

do

sole

pro

prie

tors

re

cord

the

tran

sfer

of

profi

t fo

r th

e pe

riod

to

the

capi

tal a

ccou

nt?

Cont

extu

al•

Tran

sfer

of p

rofit

s

Conc

eptu

al•

Am

ount

s re

port

ed a

s at

a p

oint

in ti

me

Proc

edur

alRe

cord

tran

sfer

of p

rof-

it in

the

jour

nal,

ledg

er

acco

unts

and

fina

ncia

l st

atem

ents

Acc

ounti

ng fo

r tr

ansa

ction

s•

Sole

pro

prie

tors

hip

- pr

ofit/

loss

for

the

peri

od is

add

ed/

dedu

cted

to/f

rom

the

capi

tal

- tr

ansf

er o

f pro

fit/l

oss

for

the

year

to

the

sole

pro

prie

tor’

s ca

pita

l led

ger

acco

unt

at th

e en

d of

the

finan

cial

yea

r Pr

esen

tatio

n•

Pres

enta

tion

of th

e so

le p

ropr

ieto

r’s

capi

tal a

ccou

nt (a

fter

add

ing

or d

educ

ting

profi

t or

loss

for

the

peri

od) i

n th

e st

atem

ent

of F

inan

cial

Pos

ition

Acc

ounti

ng fo

r tr

ansa

ction

s•

prep

are

the

jour

nal e

ntri

es o

n th

e tr

ansf

er o

f pro

fit/l

oss

for

the

year

to th

e so

le p

ropr

ieto

r’s

capi

tal a

ccou

nt

• pr

epar

e th

e ca

pita

l led

ger

acco

unt

show

ing

the

tran

sfer

of p

rofit

/los

s

• an

alys

e th

e im

pact

of p

rofit

/los

s on

the

owne

r’s

equi

ty

Pres

enta

tion

• pr

epar

e an

ext

ract

of t

he S

tate

men

t of

Fin

anci

al P

ositi

on s

how

ing

the

pres

enta

tion

of c

apit

al a

fter

adj

ustin

g fo

r dr

awin

gs a

nd p

rofit

/los

s fo

r th

e ye

ar a

s a

sing

le li

ne it

em

Page 103: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

101

Gui

ding

Que

stion

sKn

owle

dge

Cont

ent

(Nor

mal

(Aca

dem

ic))

Lear

ning

Out

com

esSt

uden

ts w

ill b

e ab

le t

o:

2.10

Cor

recti

on o

f err

ors

1) H

ow d

o er

rors

occ

ur?

2) H

ow d

o er

rors

aff

ect

the

acco

unts

?

Conc

eptu

al

Dou

ble

entr

y•

Corr

ectio

n of

err

ors

not

reve

aled

by

the

Tria

l Bal

ance

• A

djus

ted

Tria

l Bal

ance

aft

er c

orre

ction

of

erro

rs (2

6)

Not

e(2

6) T

his

incl

udes

onl

y on

e fin

anci

al p

erio

d;

erro

rs r

evea

led

by a

Tri

al B

alan

ce a

re

not

requ

ired

• ex

plai

n ho

w e

rror

s no

t re

veal

ed b

y a

Tria

l Ba

lanc

e ha

ppen

• pr

epar

e th

e jo

urna

l ent

ries

to c

orre

ct

erro

rs

• an

alys

e th

e eff

ects

of e

rror

s on

pro

fit/

loss

for

the

peri

od a

nd o

n ite

ms

in th

e St

atem

ent

of F

inan

cial

Pos

ition

• an

alys

e th

e eff

ects

of c

orre

ction

of e

rror

s on

pro

fit/l

oss

for

the

peri

od a

nd in

item

s on

the

Stat

emen

t of

Fin

anci

al P

ositi

on

• pr

epar

e an

adj

uste

d Tr

ial B

alan

ce a

fter

co

rrec

tion

of e

rror

s

Page 104: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

102

Key

Und

erst

andi

ng 3

: Acc

ounti

ng is

an

info

rmati

on s

yste

m t

o m

easu

re b

usin

ess

acti

viti

es

The

acco

untin

g in

form

ation

sys

tem

mea

sure

s bu

sine

ss a

ctivi

ties

by id

entif

ying

, rec

ordi

ng, a

naly

sing

and

rep

ortin

g ac

coun

ting

info

rmati

on.

Gui

ding

Que

stion

sKn

owle

dge

Cont

ent

(Nor

mal

(Aca

dem

ic))

Lear

ning

Out

com

esSt

uden

ts w

ill b

e ab

le t

o:

3.1

Acc

ounti

ng t

heor

ies

1) W

hat

are

the

acco

untin

g th

eori

es?

2) H

ow d

o th

ey a

ffec

t th

e pr

epar

ation

an

d pr

esen

tatio

n of

acc

ounti

ng

info

rmati

on?

Conc

eptu

al

Acc

ounti

ng th

eori

es•

Acc

ounti

ng th

eori

es a

nd th

eir

impl

icati

ons

for

the

prep

arati

on a

nd

pres

enta

tion

of S

tate

men

t of

Fin

anci

al

Posi

tion

and

Stat

emen

t of

Fin

anci

al

Perf

orm

ance

The

acco

untin

g th

eori

es a

re:

(i)

acco

untin

g en

tity

(ii)

goin

g co

ncer

n(ii

i) m

onet

ary

(iv)

acco

untin

g pe

riod

(v)

accr

ual b

asis

of a

ccou

nting

(vi)

obje

ctivi

ty(v

ii)

hist

oric

al c

ost

(viii

) co

nsis

tenc

y(ix

) m

ater

ialit

y (x

) pr

uden

ce(x

i) re

venu

e re

cogn

ition

(xii)

m

atch

ing

• Th

e ac

coun

ting

theo

ries

app

licab

le to

the

finan

cial

ele

men

ts a

re m

ainl

y la

id o

ut in

Ke

y U

nder

stan

ding

2

• de

fine

each

acc

ounti

ng th

eory

• id

entif

y th

e ac

coun

ting

theo

ry a

pplie

d in

a

give

n sc

enar

io

• ex

plai

n ho

w e

ach

acco

untin

g th

eory

aff

ects

the

prep

arati

on a

nd p

rese

ntati

on

of fi

nanc

ial s

tate

men

ts

Page 105: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

103

Gui

ding

Que

stion

sKn

owle

dge

Cont

ent

(Nor

mal

(Aca

dem

ic))

Lear

ning

Out

com

esSt

uden

ts w

ill b

e ab

le t

o:

3.2

Acc

ounti

ng in

form

ation

sys

tem

and

acc

ounti

ng c

ycle

1) W

hat

is th

e ac

coun

ting

cycl

e?

2) W

hat

is th

e ac

coun

ting

info

rmati

on s

yste

m?

3) H

ow a

re b

usin

esse

s an

d ac

coun

ting

tran

sacti

ons

proc

esse

d?

4) W

hy a

re s

ourc

e do

cum

ents

im

port

ant?

5) W

hat

are

the

sour

ce

docu

men

ts?

6) W

hat

are

jour

nal a

nd

ledg

ers?

7) W

hat

is r

ecor

ded

in th

e jo

urna

l and

le

dger

s?

8) W

hat

is a

Tri

al

Bala

nce?

Cont

extu

al

• Bu

sine

ss tr

ansa

ction

s•

Impa

ct o

f tec

hnol

ogy

on a

ccou

nting

Conc

eptu

al•

Acc

ounti

ng

info

rmati

on s

yste

m•

Rele

vant

acc

ounti

ng

theo

ries

• Th

e ac

coun

ting

cycl

e is

the

proc

essi

ng

of a

ccou

nting

tran

sacti

ons

thro

ugh

the

acco

untin

g in

form

ation

sys

tem

. The

st

ages

of a

ccou

nting

cyc

le a

re

(i)

ide

ntify

ing

and

reco

rdin

g(ii

) ad

justi

ng(ii

i) re

porti

ng(iv

) cl

osin

g•

The

clos

ing

of a

ccou

nts

is o

nly

done

at

the

end

of a

fina

ncia

l yea

r•

A c

ompu

teri

sed

acco

untin

g in

form

ation

sy

stem

gen

eral

ly c

ompr

ises

the

follo

win

g:

(i)

sour

ce d

ocum

ents

(ii)

jour

nal

(iii)

ledg

ers

(iv)

Tria

l Bal

ance

(v

) St

atem

ent

of F

inan

cial

Per

form

ance

(v

i) St

atem

ent

of F

inan

cial

Pos

ition

Sour

ce d

ocum

ents

• Pu

rpos

es o

f sou

rce

docu

men

ts

• Is

sue

and

rece

ipt

of d

ocum

ents

in

rela

tion

to s

elle

r/pr

ovid

er a

nd b

uyer

/co

nsum

er o

f goo

ds/s

ervi

ces

(27)

• Ty

pes

of tr

ansa

ction

s an

d th

eir

sour

ce

docu

men

ts:

• st

ate

the

orde

r in

whi

ch e

ach

type

of

tran

sacti

on is

pro

cess

ed th

roug

h th

e ac

coun

ting

info

rmati

on s

yste

m

• ex

plai

n ho

w e

ach

type

of t

rans

actio

n is

pro

cess

ed th

roug

h th

e ac

coun

ting

info

rmati

on s

yste

m.

• st

ate

the

purp

oses

of s

ourc

e do

cum

ents

• st

ate

the

purp

ose

of e

ach

type

of s

ourc

e do

cum

ent

• st

ate

the

sour

ce d

ocum

ents

use

d in

the

tran

sacti

on

• ex

plai

n th

e pu

rpos

e of

the

Tria

l Bal

ance

• ex

plai

n th

e lim

itati

on o

f the

Tri

al B

alan

ce

• pr

epar

e a

Tria

l Bal

ance

Page 106: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

104

Gui

ding

Que

stion

sKn

owle

dge

Cont

ent

(Nor

mal

(Aca

dem

ic))

Lear

ning

Out

com

esSt

uden

ts w

ill b

e ab

le t

o:9)

Why

is th

e Tr

ial

Bala

nce

not

an

abso

lute

pro

of o

f ac

cura

cy?

- ca

sh p

urch

ases

and

sal

es: r

ecei

pts

- cr

edit

pur

chas

es a

nd s

ales

: inv

oice

s -

rece

ipt

of m

oney

: re

mitt

ance

adv

ice

(cre

dit

cust

omer

), re

ceip

t, b

ank

stat

emen

t-

paym

ent

of m

oney

: pay

men

t vo

uche

r, re

ceip

t, b

ank

stat

emen

t-

over

char

ges

and

retu

rns

of in

vent

ory:

cr

edit

not

es

- un

derc

harg

es: d

ebit

not

es

Jour

nal

• Re

pres

enta

tion

of tr

ansa

ction

s in

the

jour

nal

Ledg

er a

ccou

nt•

Repr

esen

tatio

n of

tran

sacti

ons

in le

dger

ac

coun

ts

Tria

l Bal

ance

• Fo

rmat

of a

Tri

al B

alan

ce•

Faci

litat

es th

e pr

epar

ation

of fi

nanc

ial

stat

emen

ts a

nd c

an a

lso

be u

sed

as a

ch

eck

on a

rith

meti

c ac

cura

cy•

Lim

itati

on a

s an

abs

olut

e pr

oof o

f ac

cura

cyN

ote

(27)

Exc

lude

s de

tails

abo

ut th

e co

nten

t of

so

urce

doc

umen

ts

Page 107: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

105

Gui

ding

Que

stion

sKn

owle

dge

Cont

ent

(Nor

mal

(Aca

dem

ic))

Lear

ning

Out

com

esSt

uden

ts w

ill b

e ab

le t

o:

3.3

Und

erst

andi

ng t

he d

oubl

e-en

try

reco

rdin

g sy

stem

1) H

ow a

re b

usin

ess

activ

ities

rec

orde

d in

th

e ac

coun

ting

info

r -m

ation

sys

tem

?

Conc

eptu

al

Dou

ble-

entr

y re

cord

ing

syst

em

Proc

edur

alRe

cord

tran

sacti

ons

in

the

jour

nal a

nd le

dger

ac

coun

ts

Met

hod

of r

ecor

ding

• D

oubl

e-en

try

reco

rdin

g m

etho

d an

d ru

les

Jour

nal e

ntri

es•

Prep

arati

on o

f jou

rnal

ent

ries

Ledg

er a

ccou

nts

• Pr

epar

ation

of l

edge

r ac

coun

ts•

Posti

ng o

f jou

rnal

ent

ries

to le

dger

ac

coun

ts (2

8)•

Ana

lysi

ng th

e eff

ects

of t

rans

actio

ns o

n le

dger

bal

ance

s•

Und

erst

andi

ng th

at th

e be

ginn

ing

and

endi

ng le

dger

bal

ance

s re

pres

ent

the

cum

ulati

ve v

alue

s to

dat

e •

Clos

ing

of a

ll in

com

e an

d ex

pens

es

to a

n in

com

e su

mm

ary

acco

unt

(an

inte

rmed

iate

acc

ount

dur

ing

clos

ing

phas

e), w

hich

is th

en c

lose

d to

the

capi

tal

acco

unt

(for

sol

e pr

opri

etor

ship

s) (2

8)•

Clos

ing

of th

e dr

awin

gs a

ccou

nt to

the

capi

tal a

ccou

nt fo

r so

le p

ropr

ieto

rshi

ps

(29)

Not

es(2

8) E

xclu

des

the

posti

ng o

f acc

ounti

ng

adju

stm

ents

from

the

jour

nal t

o le

dger

s

(29)

Clo

sing

of i

ncom

e an

d ex

pens

es

acco

unts

and

dra

win

gs w

ill o

nly

be

done

at

the

end

of th

e fin

anci

al y

ear.

• st

ate

the

ledg

er a

ccou

nts

to b

e de

bite

d an

d cr

edite

d

• pr

epar

e th

e jo

urna

l ent

ries

• pr

epar

e th

e le

dger

acc

ount

s

• in

terp

ret

the

tran

sacti

ons

reco

rded

and

th

e ba

lanc

es in

the

ledg

er a

ccou

nts

Page 108: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

106

Gui

ding

Que

stion

sKn

owle

dge

Cont

ent

(Nor

mal

(Aca

dem

ic))

Lear

ning

Out

com

esSt

uden

ts w

ill b

e ab

le t

o:

3.4

Inte

rnal

con

trol

s

1) W

hat

are

inte

rnal

co

ntro

ls?

2) W

hy a

re in

tern

al c

on-

trol

s im

port

ant?

3) W

hat

are

the

inte

rnal

co

ntro

ls o

ver

cash

?

Cont

extu

al•

How

bus

ines

ses

man

-ag

e ca

sh•

Safe

guar

ding

cas

h

Conc

eptu

alIn

tern

al c

ontr

ols

and

inte

rnal

con

trol

s ov

er

cash

Proc

edur

alPr

epar

ation

of b

ank

reco

ncili

ation

sta

te-

men

t

• Pu

rpos

e of

inte

rnal

con

trol

s-

safe

guar

d as

sets

of t

he b

usin

ess

- en

sure

bus

ines

s tr

ansa

ction

s ar

e re

-co

rded

acc

urat

ely

- co

mpl

y w

ith

law

s an

d re

gula

tions

• In

tern

al c

ontr

ols

to s

afeg

uard

cas

h by

ha

ving

con

trol

s ov

er:

- ca

sh in

han

d-

cash

at

bank

- ca

sh in

tran

sit

- ca

sh r

ecei

pts

- ca

sh p

aym

ents

• In

tern

al c

ontr

ols

over

cas

h -

segr

egati

on o

f duti

es-

cust

ody

of c

ash

- au

thor

isati

on-

bank

rec

onci

liatio

n •

Purp

ose

of p

repa

ring

ban

k re

conc

iliati

on:

chec

k th

e ca

sh a

t ba

nk b

alan

ce o

f the

bu

sine

ss a

gain

st th

e ba

nk’s

rec

ord

as

show

n on

the

bank

sta

tem

ent

• Re

conc

iliati

on o

f diff

eren

ces

betw

een

the

busi

ness

cas

h at

ban

k ba

lanc

e an

d th

e ba

lanc

e in

the

bank

sta

tem

ent

(30)

• ex

plai

n th

e pu

rpos

e of

inte

rnal

con

trol

s

• ex

plai

n th

e w

ays

of in

tern

al c

ontr

ols

over

ca

sh in

han

d, c

ash

at b

ank,

cas

h in

tran

sit,

ca

sh r

ecei

pts

and

cash

pay

men

ts

• ex

plai

n th

e pu

rpos

e of

pre

pari

ng b

ank

reco

ncili

ation

• id

entif

y th

e di

ffer

ence

s be

twee

n th

e bu

sine

ss c

ash

at b

ank

bala

nce

and

the

bala

nce

in th

e ba

nk s

tate

men

t

• ex

plai

n th

e ca

uses

of d

iffer

ence

s be

twee

n th

e bu

sine

ss c

ash

at b

ank

bala

nce

and

the

bala

nce

in th

e ba

nk s

tate

men

t

• pr

epar

e an

adj

uste

d ca

sh a

t ba

nk le

dger

ac

coun

t

• pr

epar

e th

e ba

nk r

econ

cilia

tion

stat

emen

t

• an

alys

e th

e eff

ects

of a

djus

ting

for

the

diff

eren

ces

betw

een

the

cash

at

bank

ba

lanc

e an

d th

e ba

lanc

e in

the

bank

st

atem

ent

on c

ash

at b

ank

and

profi

t fo

r th

e pe

riod

Page 109: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

107

Gui

ding

Que

stion

sKn

owle

dge

Cont

ent

(Nor

mal

(Aca

dem

ic))

Lear

ning

Out

com

esSt

uden

ts w

ill b

e ab

le t

o:•

Diff

eren

ces

are

due

to th

e tim

ing

of th

e tr

ansa

ction

s re

cord

ed b

y th

e bu

sine

ss

and

the

bank

, and

err

ors

in r

ecor

ding

• Ty

pes

of d

iffer

ence

s (3

1):

(i)

dire

ct d

epos

its

(ii)

dire

ct p

aym

ents

(ii

i) ch

eque

s no

t ye

t pr

esen

ted

(iv)

depo

sits

in tr

ansi

t

(v)

dish

onou

red

cheq

ues

(vi)

erro

rs m

ade

by th

e bu

sine

ss o

r th

e ba

nk•

Adj

ustin

g th

e ca

sh a

t ba

nk le

dger

acc

ount

Form

at o

f a b

ank

reco

ncili

ation

sta

tem

ent

Not

es(3

0) In

clud

es o

nly

the

follo

win

g sc

enar

ios:

(i)

sa

me

open

ing

bala

nce

betw

een

cash

at

bank

and

ban

k st

atem

ent

(ii)

diff

eren

t op

enin

g ba

lanc

e be

twee

n ca

sh a

t ba

nk a

nd b

ank

stat

emen

t,

and

the

diff

eren

ce is

lim

ited

to o

nly

one

tran

sacti

on(ii

i) op

enin

g ba

lanc

e in

cas

h at

ban

k an

d ba

nk s

tate

men

t ca

n be

eith

er a

po

sitiv

e ba

lanc

e or

a b

ank

over

draft

Page 110: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

108

Gui

ding

Que

stion

sKn

owle

dge

Cont

ent

(Nor

mal

(Aca

dem

ic))

Lear

ning

Out

com

esSt

uden

ts w

ill b

e ab

le t

o:(iv

) end

ing

bala

nce

in c

ash

at b

ank

and

bank

sta

tem

ent

can

eith

er b

e a

posi

tive

bala

nce

or a

ban

k ov

erdr

aft(v

) ba

nk r

econ

cilia

tion

mus

t be

pe

rfor

med

by

com

pari

ng c

ash

at

bank

ledg

er a

ccou

nt a

nd a

ban

k st

atem

ent

(31)

Und

erst

andi

ng h

ow e

lect

roni

c ba

nk

tran

sacti

ons

(e.g

., cr

edit

tran

sfer

, st

andi

ng o

rder

) are

rec

orde

d in

the

acco

unts

of t

he b

usin

ess

is r

equi

red

but

desc

ripti

ons

of th

eir

proc

essi

ng a

re n

ot

requ

ired

Page 111: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

SECTION 3:PEDAGOGY

• Pedagogical Practices

• Nature of Accounting Knowledge

• Strategies for Principles of Accounts

Page 112: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

110

3. PEDAGOGY

Pedagogical Practices

The aim of the Principles of Accounts syllabuses is to develop in students the knowledge and skills to prepare, communicate and use both accounting information and non-accounting information to make decisions.

To nurture in students the desired qualities and dispositions of a Principles of Accounts learner, it is crucial to recognise that how they learn is as important as what they learn. The Singapore Curriculum Philosophy (SCP) espouses our beliefs about teaching, learning and assessment to effectively facilitate student learning. Teachers should actively draw reference from the SCP and the subjects’ Knowledge Bases (KB) related to teaching and learning of accounting, and translate them into a meaningful application of the Pedagogical Practices (PP) as spelt out in the Singapore Teaching Practice (STP).

The STP explicates a set of PP that connected to four fundamental teaching processes and the twenty-four Teaching Areas (TA) presented in Figure 3 below:

Pedagogical PracticesFigure 3: Pedagogical Practices

Page 113: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

111

Nature of Accounting Knowledge

A common misconception is that accounting is all about mastering the procedures in preparing accounts. In fact, accounting knowledge comprises three layers: contextual, conceptual and procedural. Accounting represents business activities in numerical form. By themselves, accounting numbers have no meaning; the numbers are only meaningful when interpreted in the context of the business. As business activities are immense and multifarious, they need a systematic procedure of organising and recording accounting numbers. The accounting constructs used to represent and measure business activities form the bedrock of how accounting numbers are to be understood, conceptualised and interpreted.

Table 7 explains the three layers of accounting knowledge and suggests associated instructional approaches. Owing to the nature of accounting knowledge, a repertoire of strategies is deployed in the accounting classroom.

Table 7: Summary of accounting knowledge and suggested instructional approaches

Types of Accounting Knowledge Suggested Instructional Approaches

Contextual Knowledge

• the environment that accounting functions in

• business objectives and activities

• the larger business environment

Broad Objective

• Connecting what students learn in class with the real business world

Approaches

• Relating to students’ prior experiences by framing and evoking their encounters with businesses

• Developing relevant business knowledge by using authentic materials and through direct or indirect exposure to real businesses

Page 114: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

112

Types of Accounting Knowledge Suggested Instructional Approaches

Conceptual Knowledge

• how theories and concepts are organised to represent and think about business economic activities

• how business economic activities are perceived

Broad Objectives

• Appreciating the way of representing and organising accounting knowledge

• Making meanings and connections

• Organising and modelling thinking

Approaches

• Using teaching models of expository, inquiry, self-discovery, etc.

• Explicating how experts think through and solve problems

• Monitoring how students form understanding

Procedural Knowledge

• accounting conventions and terminologies

• double-entry rule

Broad objectives:

• Attaining an acceptable level of proficiency in thinking and executing the double-entry method of recording,

• Attaining an acceptable level of thinking through how information flows through the accounting information system

Approach

To have a sound grasp of the procedures until they can read and interpret ledger accounts and financial statements:

• Mastery learning through modelling, stepped demonstrations of the procedures, and adequate guided and independent practices. Learning is to be carefully designed from simple to complex, and integrating previously taught procedures and principles.

Page 115: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

113

Strategies for Principles of Accounts

Learning takes place individually and collaboratively, as students construct and co-construct meaning from knowledge and experiences. To provide students with a richer scope for acquiring decision-making skills, scenarios (mini-case studies) can be used in teaching and learning Principles of Accounts. The use of scenarios will complement and enrich the strategies of questioning, processing, connecting and reflecting for teaching decision-making in class.

Questioning, Processing, Connecting and Reflecting

According to Smith and Ragan (2005), teachers and students have specific roles to play, and work together to promote teaching and learning. Every instruction and activity that the teacher provides and initiates should be intentional and purposeful. Students are not only receiving instruction passively; they are also actively working on the learning materials, and linking them to prior learning. They are actively creating their knowledge and owning it. The teacher’s role is to facilitate and support students’ learning.

Adapted from Francis, Mulder and Stark (1995), the strategies of questioning, processing, connecting and reflecting are needed to bring about purposeful and engaged learning in class. Table 8 outlines these strategies.

Table 8: Summary of strategies in class

Strategy Purpose Student’s Role Teacher’s Role

Questioning • arouse interest• provide focus for

learning• prepare for learning• probe and develop

deep understanding

• initiate active questioning

• encourage questioning

• guide the discussion

Processing • process and practise• apply and

demonstrate learning

• accomplish learning outcomes

• demonstrate and guide

• create opportunities for students to deepen and demonstrate learning

• provide feedbackConnecting • gain deeper

understanding• see relevance of

learning in authentic contexts

• extract meaningful patterns

• discern purposes• detect key

conceptual threads• relate learning to

real world

• evoke, uncover and guide students to draw connections

Reflecting • initiate self-directed learning

• be conscious of thinking processes

• review and reflect on learning

• encourage, lead and guide

Page 116: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

114

Questioning Questioning is a universal teaching strategy. It is used to arouse students’ interest, focus their learning, prepare them to acquire new concepts, and help them probe and develop a deeper understanding. Questioning assumes that teachers are interested in what students know and how they think, and that students are interested in what others know and how they think. Good questions help develop students’ thinking and correct their misconceptions.

ProcessingStudents need to process, practise and apply their learning to different contexts so as to gain a deeper understanding and develop competency. Processing is not about rote learning or memorising procedures. Through demonstration and modelling, the emphasis is on making clear the thinking behind the procedures – the whys and why nots – not completing the procedures themselves. During the process, feedback is provided.

ConnectingConnecting entails relating to students’ prior life experiences, or providing the necessary life experiences, so as to help students create personal meaning in what they are learning. In addition to achieving cognitive clarity and developing a schema of learning, connecting also involves relating learning to the real world so that learning is seen as part and parcel of living, or preparing for life and work.

ReflectingStudents who are reflective become conscious of their thinking and are better able to direct their efforts towards purposeful learning. Reflection promotes integration of learning. Students should be offered opportunities to discuss and defend what they have learned so that they can reflect on their mental models, discover their misconceptions and correct them. Engaging in such mental activities will increase cognitive flexibility and improve retention of information.

Using Scenarios in Teaching

Students gain a deeper understanding through working on a case study than reading a book or listening to lectures passively. Case studies were first introduced at business schools and their use has an established history.

A case is a story with a hidden message centred on making a decision or solving a problem. It is a story about a situation that an individual or a group has to resolve. It usually involves one of the following types of situations: a problem, a decision to be made, an evaluation to be made, or rules to be analysed and applied.

Cases could range from short and simple ones, such as news clips or news articles, to long and complex ones, such as those centred on a single business. They could be based on real-world events or fictitious but realistic situations. There is no limit to how case studies are to be used; they can be creatively adapted for teaching and learning in a variety of ways.

For the purposes of Principles of Accounts at the O and N(A) levels, scenarios (mini-case studies) can be used to provide context and scope for students to acquire decision-making skills. These scenarios could be real or fictitious, and involve situations where students are expected to evaluate choices and justify their decisions. Using such scenarios in teaching would help develop students’ decision-making skills.

Page 117: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

115

Recommended Strategies for Each Key Understanding

Pedagogical knowledge is closely related to content knowledge for creating an effective and en-gaging learning environment. Figure 4 summarises how the suggested strategies could be used to deliver content knowledge in Principles of Accounts.

Key Understanding 1 (KU1):Accounting and non-accounting information are used to support and facilitate decision-

making.

Students learn to be users of accounting information.

Strategies• Using scenarios to activate learning and provide opportunities to acquire decision-making

skills• Using questioning, processing, connecting and reflecting to help understand the roles

of accounting and accountants, and how they need to be ethical in preparing and usingaccounting information for decision-making

Key Understanding 2 (KU2):Accounting is a language used to

represent business activities.

Key Understanding 3 (KU3): Accounting is an information system to

measure business activities.

Students learn to be preparers and communicators of accounting information.

Strategies• KU2: using questioning, processing, connecting and reflecting to help students understand

accounting concepts; using scenarios to help them see how both accounting and non-accounting information are used to make decisions

• KU3: using other strategies as using scenarios is not efficient or effective for understandingthe accounting information system

Figure 4: Suggested strategies to deliver content knowledge in Principles of Accounts

Page 118: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

116

References

Francis, M. C., Mulder, T. C., & Stark, J. S. (1995). Intentional learning: A process for learning to learn in the accounting curriculum. Accounting Education Change Commission and American Accounting Association.

Smith, G. (1987). The use and effectiveness of the case study method in management education – A critical review. Management Learning, 18, 51-61.

Smith, P. L., & Ragan, T. J. (2005). Instructional design (3rd ed.). Hoboken, NJ: John Wiley & Sons.

Weil, S., Oyelere, P., Yeoh, J., & Firer, C. (2001). A study of students’ perceptions of the usefulness of case studies for the development of finance and accounting-related skills and knowledge. Ac-counting Education, 10(2), 123-146

Page 119: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

SECTION 4:ASSESSMENT

• Purpose

• Assessment Objectives

• Assessment Specification Grid

• Scheme of Assessment

Page 120: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

118

4. ASSESSMENT

Purpose

Assessment is the process of gathering and analysing evidence about students’ learning and development for making appropriate instructional decisions and enhancing learning. Assessment plays an integral role in teaching and learning Principles of Accounts. This belief coheres with the SCP which envisions that learning flourishes when assessment is used to address students’ learning gaps and helps students become self-directed learners. It is thus essential for assessment to begin with a clear purpose: to facilitate meaningful learning and support students in developing 21st century competencies.

Formative assessment, or assessment for learning, takes place during teaching and aims to help students improve their learning. It provides teachers with information on their students’ progress and valuable feedback on the effectiveness of their lessons. Using this information, teachers scaffold lessons to ensure progression in their students’ learning. Assessment for learning can also help students develop positive habits of, and skills related to, reflection and self-directed learning through peer and self-assessment.

Summative assessment, or assessment of learning, takes place at the end of a unit or term for the purpose of giving information on students’ mastery of knowledge and skills, assigning grades or certifying student proficiency. It plays a critical role in assessing students’ knowledge and understanding of the subject. It yields information on mastery and attainment, and provides a means to determine the ability of students to progress to the next level.

Page 121: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

119

Assessment Objectives

AO1: Knowledge and Comprehension

Identify and comprehend accounting knowledge appropriate to the syllabus.

AO2: Application

Select and apply accounting knowledge to various accounting situation.

AO3: Analysis and Synthesis

Analyse, interpret, organise and synthesise accounting information.

AO4: Evaluation

Interpret and evaluate accounting information to make judgements and recommendations.

Assessment Specification Grid

The following weighting of the assessment objectives gives an indication of their relative importance. They are not intended to provide a precise allocation of marks to each assessment objective.

Table 9: Assessment Specification Grid

Ordinary-Level

AO 1Knowledge and Comprehension

AO2Application

AO3Analysis and

SynthesisAO4

Evaluation Total

Paper 1 15% 10% 10% 5% 40%

Paper 2 10% 15% 20% 15% 60%

Total 25% 25% 30% 20% 100%

Normal (Academic)-

level

AO 1Knowledge and Comprehension

AO2Application

AO3Analysis and

SynthesisAO4

Evaluation Total

Paper 1 20% 15% 5% 0% 40%

Paper 2 10% 25% 20% 5% 60%

Total 30% 40% 25% 5% 100%

Page 122: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

120

Scheme of Assessment

There are two compulsory papers.

Table 10: Scheme of Assessment for Ordinary-level

O-level Details Weighting Duration

Paper 1 Answer three to four compulsory structured questions (40 marks) 40% 1 hour

Paper 2

Answer four compulsory structured questions. (60 marks)

• One question requires the preparationof financial statements for a business forone financial year (20 marks)

• A scenario-based question (7 marks) willbe part of one of the three remainingquestions

60% 2 hours

Table 11: Scheme of Assessment for Normal (Academic)-level

N(A)-level Details Weighting Duration

Paper 1 Answer three to four compulsory structured questions (40 marks) 40% 1 hour

Paper 2

Answer four compulsory structured questions (60 marks)

• One question requires the preparationof financial statements for a business forone financial year (20 marks)

• A scenario-based question (5 marks) willbe part of one of the three remainingquestions

60% 2 hours

Scenario-based Question

The scenario-based question requires students to make a decision between two possible choices in the context of a fictitious business. Each scenario will include both accounting and non-accounting information that students are expected to use to support their decision.

Page 123: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

121

LIST OF FORMULAE APPENDIX A

Profitability Ratios

(i) Gross profit margin (%) = Gross profit × 100Net sales revenue

(ii) Mark-up on cost (%) = Gross profit × 100Cost of sales

(iii) Profit margin (%) = Profit for the period × 100Net sales revenue

(iv) Return on equity (%) = Profit for the period × 100Average equity

Average equity = (Total equity at the beginning of the financial period + Total equity at the end of the financial period) / 2

For a sole proprietor, total equity is the owner’s equity, which comprises the capital amount after profit/loss and drawings.

For a private limited company, total equity is the shareholders’ equity, which comprises share capital and retained earnings.

Liquidity Ratios(i) Working capital = Total current assets − Total current liabilities

(ii) Current ratio = Total current assetsTotal current liabilities

(iii) Quick ratio = Total current assets − inventory − prepaymentsTotal current liabilities

Page 124: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

122

Efficiency Ratios

(i) Rate of inventory turnover (times)

= Cost of sales

Average inventoryAverage inventory = (Inventory at the beginning of the financial period + Inventory at the end of the financial period) / 2

(ii) Days sales in inventory (days) =Average inventory

Cost of sales× 365 days

(iii) Trade receivables collection period (days)

=Average net trade receivablesNet credit sales / service fee

revenue× 365 days

Average net trade receivables = (Net trade receivables at the beginning of the financial period + Net trade receivables at the end of the financial period) / 2

(iv) Rate of trade receivables turn-over (times)

=Net credit sales / service fee revenue

Average net trade receivables

Others

(i) Rate of depreciation for straight-line method (%)

=Yearly depreciation

Original cost − Scrap value× 100

(ii) Owner’s Equity = Total assets − Total liabilities

(iii) Net sales revenue (for trading business)

= Sales revenue − Sales returns

(iv) Cost of purchases =Purchase price − Returns + Expenses on purchases

Page 125: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

123

FORMATS OF FINANCIAL STATEMENTS APPENDIX B

1 Statement of Financial Performance

(A) Trading business

Name of BusinessStatement of Financial Performance for the year ended…

$ $Sales revenue xxxxless: Sales returns xxxxNet sales revenue xxxxless: Cost of sales xxxxGross profit xxxxOther incomeCommission income xxxxDiscount received xxxxGain on sale of non-current assets1 xxxxRent income xxxx xxxx

less: Other expenses 3

Impairment loss on trade receivables xxxxDepreciation of fixtures and fittings2 xxxxDepreciation of office equipment2 xxxxDepreciation of motor vehicles2 xxxxInterest xxxxInsurance xxxxLoss on sale of non-current assets1 xxxxMotor vehicle expenses xxxxOffice expenses xxxxRent and rates xxxxWages and salaries xxxx xxxxProfit for the year xxxx

1 Either one of these items will appear if only one asset was sold during the year.2 The depreciation amounts may be aggregated and presented as one figure.3 It is not required to classify expenses by function.* The above statement does not show all the income and expense items covered in this syllabus.

Page 126: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

124

(B) Service Business

Name of BusinessStatement of Financial Performance for the year ended…

$ $Service fee revenue xxxx

Other incomeCommission income xxxxDiscount received xxxxGain on sale of non-current assets1 xxxxRent income xxxx xxxx

less: Other expenses3

Impairment loss on trade receivables xxxxDepreciation of fixtures and fittings2 xxxxDepreciation of office equipment2 xxxxDepreciation of motor vehicles2 xxxxInterest xxxxInsurance xxxxLoss on sale of non-current assets1 xxxxMotor vehicle expenses xxxxOffice expenses xxxxRent and rates xxxxWages and salaries xxxx xxxxProfit for the year xxxx

1 Either one of these items will appear if only one asset was sold during the year.

2 The depreciation amounts may be aggregated and presented as one figure.

3 It is not required to classify expenses by function.

* The above statement does not show all the income and expense items covered in this syllabus.

Page 127: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

125

2 Statement of Financial Position

(B) Sole Proprietorship

Name of BusinessStatement of Financial Position as at …

$ $ $AssetsNon-current assets Cost Accumulated

depreciationNet book

valueProperty xxxx xxxx xxxxFixtures and fittings xxxx xxxx xxxxOffice equipment xxxx xxxx xxxxMotor vehicles xxxx xxxx xxxx

xxxx

Current assetsInventory xxxxTrade receivables xxxxless: Allowance for impairment of trade receivables xxxx xxxxOther receivables/ prepaid expenses/ income receiv-ables

xxxx

Cash at bank xxxxCash in hand xxxx xxxxTotal assets xxxx

Equity and Liabilities

Owner’s equityCapital xxxx

Non-current liabilitiesLong-term borrowings xxxx

Current liabilitiesTrade payables xxxxExpenses payable/income received in advance xxxxCurrent portion of long-term borrowings xxxx xxxxTotal equity and liabilities xxxx

* It is not required to classify assets and liabilities by order of liquidity.

* The above statement does not show all the asset and liability items covered in this syllabus.

* Each line item represents a consolidation of assets or liabilities of a similar nature, e.g., computers, fax machines and printers have to be

consolidated and represented as office equipment.

Page 128: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

126

(B) Private Limited Company

Name of BusinessStatement of Financial Position as at …

$ $ $AssetsNon-current assets Cost Accumulated

depreciationNet book

valueProperty xxxx xxxx xxxxFixtures and fittings xxxx xxxx xxxxOffice equipment xxxx xxxx xxxxMotor vehicles xxxx xxxx xxxx

xxxx

Current assetsInventory xxxxTrade receivables xxxxless: Allowance for impairment of trade receivables xxxx xxxxOther receivables/ prepaid expenses/ income receivables

xxxx

Cash at bank xxxxCash in hand xxxx xxxxTotal assets xxxx

Equity and Liabilities

Shareholders’ equityShare capital, xxx ordinary shares xxxxRetained earnings xxxx xxxx

Non-current liabilitiesLong-term borrowings xxxx

Current liabilitiesTrade payables xxxxExpenses payable/income received in advance xxxxCurrent portion of long-term borrowings xxxx xxxxTotal equity and liabilities xxxx

• The Singapore Companies Act has abolished par value shares and authorised share capital.

* It is not required to classify assets and liabilities by order of liquidity.

* The above statement does not show all the asset and liability items covered in this syllabus.

* Each line item represents a consolidation of assets or liabilities of a similar nature, e.g., computers, fax machines and printers have to be

consolidated and represented as office equipment.

Page 129: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

127

Ledger Account

Cash at bank accountDr $ Cr $ Bal $

Mar 1 Balance b/d 5,100 Dr5 Tung 2,340 7,440 Dr8 Gordon 1,630 5,810 Dr

16 Sales revenue 7,300 13,110 Dr19 Inventory 4,110 9,000 Dr22 Rental 700 9,700 Dr26 Insurance 200 9,500 Dr

Apr 1 Balance b/d 9,500 Dr

Page 130: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

128

NOTES

Page 131: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

129

NOTES

Page 132: PRINCIPLES OF ACCOUNTS TEACHING AND LEARNING …

130

NOTES