Maintaining Financial Records and Preparing Accounts
Unit summary
This unit related to the maintenance of accounts from the drafting of the initial trial balance through to the preparation of information required to produce a set of final accounts. The first learning outcome is concerned with the records for capital items, how to deal with acquisitions, on-going depreciation and the rules for disposal. The second learning outcome requires the learner to collect relevant information for preparing the final accounts and to present the information to a supervisor in the form of a trial balance or an extended trial balance. The third learning outcome requires the learner to prepare final accounts for sole traders and partnerships. The learner must also be responsible for communications in relation to the handling of queries, for making suggestions for improvements and maintaining confidentiality.
Unit details
-
15 Business, Administration and Law
-
15.1
Accounting and Finance
Assessment Methodology: Independent assessment of at least 3 hours duration is mandatory for this unit, OR, if NVQ, work-based evidence
You must have knowldge and understanding of: The Business Environment: 1. The types and characteristics of different assets and key issues relating to the acquisition and disposal of capital assets; 2. The relevant legislation and regulations; 3. The main requirements of relevant Statements of Standard Accounting Practice and Financial Reporting Standards; 4. Legal requirements relating to the division of profits between partners; 5. The methods of recording information for the organisational accounts of sole traders and partnerships; 6. The structure of the organisational accounts of sole traders and partnerships; 7. The need to present accounts in the correct form; 8. The form of final accounts of sole traders and partnerships; 9. The importance of maintaining the confidentiality of business transactions. Accounting Techniques: 10. Methods of depreciation and when to use each of the: straight line; reducing balance; 11. The accounting treatment of capital items sold, scrapped or otherwise retired from service; 12. How to use plant registers and similar subsidiary records; 13. How to use the transfer journal; 14. The methods of funding: part exchange deals; 15. The accounting treatment of accruals and prepayments; 16. The methods of analysing income and expenditure; 17. The method of closing off revenue accounts; 18. The methods of restructuring accounts from incomplete evidence; 19. How to identify and correct different types of error; 20. How to make and adjust provisions; 21. How to draft final accounts of sole traders and partnerships. Accounting Principles and Theory: 22. Basic accounting concepts that play a role in the selection of accounting policies - accruals and going concern; (continued below)
(continued from above) 23. The objectives and constraints in selecting accounting policies - relevance, reliability, comparability and ease of understanding, materiality; 24. The principles of double entry accounting 25. The distinction between capital and revenue expenditure and what constitutes capital expenditure; 26. The function and form of accounts for income and expenditure; 27. The function and form of a trial balance and extended trial balance; 28. The function and form of a profit and loss account and balance sheet for sole traders and partnerships; 29. The basic principles of stock valuation including those relating to cost or net realisable value and to what is included in cost; 30. The objectives of making provisions for depreciation and other purposes. The Organisation: 31. The ways the accounting systems of an organisation are affected by its organisational structure, its administrative systems and procedures and the nature of its business transactions Based on AOSG Level 3 in Accounting Unit 5
FSSC has had sight of draft materials and provided helpful comment on these. A formal request for support from FSSC has been made.
| Learning Outcome |
Assessment Criteria |
| 1. Maintain records relating to capital acquisition and disposal |
5.1A Accurately record relevant details relating to capital expenditure in the appropriate records
5.1.B Correctly reconcile the organisation's books of original entry, ledgers and asset register with the physical presence of capital items
5.1.C Accurately identify and record all acquisition and disposal costs and revenues in the appropriate records
5.1.D Correctly calculate and record in the appropriate records, depreciation charges using the straight line method, and other necessary entries and adjustments
5.1.E Correctly calculate and record in the appropriate records, depreciation charges using the reducing balance method, and other necessary entries and adjustments
5.1.F Produce records that clearly show the correct prior authority for capital expenditure and disposal and the approved method and funding and disposal
5.1.G Correctly calculate and record the profit and loss on disposal in the appropriate records
5.1.H Appropriately apply the organisation's policies and procedures relating to the maintenance of capital records
5.1.I Identify and resolve or refer to the appropriate person any lack of agreement between physical items and records
5.1.J Make appropriate suggestions for improvements in the way the organisation maintains its capital records where possible to the appropriate person |
| 2. Collect and collate information for the preparation of final accounts |
5.2.A Correctly prepare a purchase ledger reconciliation for the preparation of final accounts
5.2.B Correctly prepare a sales ledger reconciliation for the preparation of final accounts
5.2.C Correctly prepare a closing stock reconciliation for the preparation of final accounts
5.2.D Identify any discrepancies in the reconciliation process and either take steps to rectify them or refer them to the appropriate person
5.2.E Accurately prepare a trial balance and open a suspense account to record any imbalance
5.2.F Accurately locate incorrect double entries which have caused an imbalance and clear the suspense account by correcting the errors, or reduce them and refer outstanding items to the appropriate person
5.2.G Correctly locate missing entries which have caused an imbalance and clear the suspense account by correcting the errors
5.2.H Correctly locate numerical inconsistencies and wrong calculations which have caused an imbalance and clear the suspense account by correcting the errors
5.2.I Correctly identify that insufficient data and incomplete records have caused an imbalance and clear the suspense account by correcting the errors
5.2.J Accurately locate inconsistencies within data which have caused an imbalance and clear the suspense account by correcting the errors
5.2.K Correctly identify, calculate and record prepayments and accruals
5.2.L Correctly identify, calculate and record provision for doubtful debts
5.2.M Correctly identify, calculate and record provision for depreciation
5.2.N Correctly identify, calculate and record closing stock
5.2.O Produce accurate and relevant journal entries to close off the revenue accounts in preparation for the transfer of balances to the final accounts
5.2.P Conduct investigations into business transactions with tact and courtesy
5.2.Q Appropriately apply the organisation's policies, regulations, procedures and timescales relating to preparing final accounts |
| 3. Prepare the final accounts of sole traders and partnerships |
5.3.A Accurately prepare a Profit and Loss account of a sole trader in proper form, from the trial balance
5.3.B Accurately prepare a Balance Sheet of a sole trader in proper form, from the trial balance
5.3.C Accurately prepare a Profit and Loss account of a partnership in proper form, from the trial balance
5.3.D Accurately prepare a Balance Sheet of a partnership in proper form, from the trial balance
5.3.E Accurately prepare a Partnership appropriation account of a partnership in proper form and in compliance with partnership agreement, from the trial balance
5.3.F Accurately prepare Partners' capital and current accounts of a partnership in proper form and in compliance with partnership agreement, from the trial balance
5.3.G Appropriately apply organisation's policies, regulations, procedures and timescales in relation to preparing final accounts of sole traders and partnerships
5.3.H Identify and resolve or refer to the appropriate person discrepancies, unusual features or queries |