Principles of Accounts (CSEC to the Point)

• SECTION 1 - ACCOUNTING AS A PROFESSION 0/6

  • Explain the concept and purpose of accounting
  • Internal & External users of Accounting Information and their needs
  • Traditional and emerging careers in the field of Accounting
  • Discuss ethical issues in the field of Accounting
  • Accounting as a profession full slide
  • Suggested Teaching and Learning Activities by CSEC

• SECTION 2 - ACCOUNTING AS A SYSTEM 0/18

  • Account concepts and conventions
  • Principles which guide the accounting process
  • The Accounting cycle with its diagrammatic representation
  • Types of business organizations – Sole Traders, Partnerships, Corporations (Limited Liability Companies), Cooperatives, Non-Profit Organizations
  • Financial Statements – Income statement / Trading Profit & Loss A/C, Income and Expenditure A/C, Balance Sheet, Cash Flow Statements (don’t need to teach cash flow)
  • Accounting processes which could be readily performed by the use of the computer for example payroll, stock control, debtors’ and creditors’ schedules
  • Advantage and disadvantages of using the computer in Accounting
  • Assess the role and impact of technology on the accounting process
  • Definition and purpose of a Balance Sheet
  • Balance Sheet equation A= C+L
  • Definition and examples of Assets, Liabilities, Capital
  • Definition and examples of Non-Current Assets, Current Assets, Current Liabilities, Non-Current Liabilities
  • Preparation of Balance Sheet
  • Arrangement of Assets and Liabilities in order of: (a) Permanence; (b) Liquidity
  • Effect of transactions on Balance Sheet items – increase or decrease in items while maintaining the Balance Sheet Equation
  • Accounting Equation 0 question
  • Identifying Assets & Liabilities 0 question
  • CSEC Recommendation Activities

• SECTION 3 - BOOKS OF ORIGINAL ENTRY 0/12

  • TEACHER'S GUIDE - Throughout the syllabus, an asterisk **** is used to highlight specific objectives for which practical activities are imperative.

  • The Use of Books of Original Entry
  • Cash & Credit Transactions – The use of cash, cheques, credit cards and debit cards
  • Source documents and books of original entry
  • Prepare source documents*****
  • Translate source documents prepared to create transactions *****
  • Identify & Record transactions in the book of original entry to which transactions will be recorded
  • Treatment of trade discounts and cash discounts
  • Cash discounts – discounts allowed and discounts received
  • Balancing of the cash books (cash book and petty cash book using the Imprest System) ******
  • The significance of the balances brought down on the cash book
  • Treatment of the totals from the books of original entry (Day Books)
  • Questions and Answers 1 question27 min

• SECTION 4 - LEDGERS & THE TRIAL BALANCE 0/9

  • At the end of this section, you should be able to: identify different types of ledgers, describe the different classes of accounts, explain the significance of debit and credit in each class of account, distinguish between capital expenditure and revenue expenditure, draw up simple account formats, post from books of original entry to the general ledger and subsidiary ledgers, balance and close accounts, use the bal b/d to prepare trial balance, outline the uses and limitations of the trial balance.

  • Describe the different classes of accounts
  • Identify the different types of ledgers
  • Explain the significance of debit and credit in each class of account
  • ***Draw up simple account formats, neatly and accurately
  • ***Post from books of original entry to the general ledger and the subsidiary ledgers
  • ***Balance and close accounts
  • Interpret entries and balances
  • ***use the balances brought down to construct the trial balance
  • outline the uses and limitations of the trial balance

• SECTION 5 - THE PREPARATION AND ANALYSIS OF FINANCIAL STATEMENTS OF THE SOLE TRADER 0/10

  • The purpose of preparing the Financial Statements to satisfy the needs of the users.
  • Trading and Profit and Loss Account and Balance Sheet
  • Calculation of closing inventory (stock); using: FIFO, LIFO, AVCO
  • ****Income Statement for a Sole-Traders including adjustment for return inwards and outwards; carriage inwards and outwards, closing stocks.
  • ****Definition of working capital (net current assets), calculation of working capital; preparation of classified Balance Sheet showing working capital
  • Working Capital as a basic tool for solvency; working capital formula
  • ****Calculate simple ratios such as inventory turnover, average inventory, gross profit percentage, net profit percentage.
  • ****Calculate ratios such as current ratio; acid test ratio; return on investment. (objective in Section 9)
  • Treatment of net profit or loss on the Balance Sheet
  • Preparation of simple reports evaluating a business based on ratios and making recommendations

• SECTION 6 - ACCOUNTING ADJUSTMENTS 0/13

  • Accounting Concepts – Prudence, accrual, consistency
  • The Reasons for Adjustments; application of the matching/accruals concepts
  • Pre-payments – prepaid expenses and advanced revenues; Accruals – accrued expenses and revenues
  • Definition for bad and doubtful debts; reasons for bad debts (aging debtors) and provisions for doubtful debts.
  • Journal entries and ledger accounts
  • Accounting entries in the Income Statement and Balance Sheet
  • Definition of depreciation; causes of depreciation; factors to be considered when calculating depreciation (cost, estimated useful life and scrap value)
  • Straight line method (using formula) and reducing balance method of depreciation
  • Journal entries for the provision for depreciation; the maintenance of the provision for depreciation account; the treatment of accumulated depreciation on the Balance Sheet; the determination of NBV
  • Capital expenditure; revenue expenditure
  • Journal entries and Ledger accounts for expenses and revenues
  • ****Prepare income statements to reflect adjusting entries
  • The Preparation of Adjusted Financial Statements.

• SECTION 7 - CONTROL SYSTEMS 0/13

  • The Use of Control Systems in the accounting process
  • Common control systems
  • Type of errors
  • Correction of errors via journal entries
  • Uses of the suspense account
  • Suspense accounts
  • The effect of errors on the Income Statement and the Balance Sheet
  • Use of control accounts
  • Sources of information for entries in control accounts
  • Sales Ledger Control Accounts, Purchase Ledger Control Accounts
  • Meaning (significance) of the balances on Control Account
  • Identification of the items that cause the difference between cash book and Bank Statement balances and updating of the cash book
  • Uses and construction of the Bank Reconciliation Statement

• SECTION 8 - ACCOUNTING FOR PARTNERSHIPS 0/10

  • Define a partnership business
  • State the features of a partnership
  • Reasons for forming a partnership
  • Essential components of a partnership.
  • ****Prepare journal entries and ledger accounts to record the capital of partnership
  • ****Methods of sharing profit/loss: capital ratio, fixed centage, equally
  • ****The preparation of the appropriation account
  • ****prepare current account of partners
  • The significance of the debit and credit balances brought down on the current accounts
  • ****The treatment of current account balances on the balance sheet; (emphasis on the capital section).

• SECTION 9 - ACCOUNTING FOR LIMITED LIABILITY COMPANIES, CO-OPERATIVES AND NON PROFIT ORGANISATIONS 0/11

  • Identify the essential features of limited liability companies, co-operatives and non-profit organisations
  • Types of limited liability companies, co-operatives (eg Credit Union, Agricultural Societies) and non-profit organisation.
  • Advantages and disadvantages of limited liability companies
  • Method of raising capital – equity (preference and ordinary shares), debt (debentures, bank loans)
  • Types of shares, rights and privileges of owners of each type of shares
  • ****Journal entries to record the issue of shares and debentures
  • ****Calculate dividend payments for various types of shares
  • ****Appropriation of profits (dividends and reserves)
  • ****Prepare the final accounts of limited liability companies and co-operatives
  • ****Calculation and interpretation of accounting ratios (section 5)
  • ****Preparation of receipts and payments accounts only for non-profit organisations

• SECTION 10 - MANUFACTURING AND INVENTORY CONTROL 0/7

  • Distinguish between direct and indirect costs
  • ****Preparation of manufacturing account
  • ****Calculate unit cost of items produced
  • ****Prepare final accounts for a manufacturing concern – Trading Profit and Loss account and Balance Sheet
  • ****Basic costing principles
  • Methods of Inventory Valuation
  • Calculate the value of closing inventory

• SECTION 11 - ACCOUNTING FOR THE ENTREPRENEUR 0/9

  • List methods of payment
  • Use of time cards, time books, electronic clock-in cards, employee earnings records.
  • ****Prepare spreadsheet to arrive at net pay amounts after deductions
  • Identify main accounting software used for payroll
  • Distinguish between voluntary and statutory deductions
  • ****calculate employees earnings
  • ****Prepare cash flow projections within a six-month period
  • ****Prepae sales and production budgets for a three-month period
  • ****Use accounting knowledge and skills to prepare a simple business plan