Accounting Adjustments
Unit summary
The aim of this unit is to introduce accounting adjustments into the ledger accounts of businesses.On completion of this unit you will be familiar with the different types of ledgers that are generally kept and the nature of the ledger accounts therein. You will learn how to record for VAT, accrued and prepaid income and expenses, wages and salaries and depreciation of fixed assets. You will develop an awareness of the different ways in which the acquisition of fixed assets can be financed through leasing and hire purchase contracts, and you will be able to record payments on such contracts in the appropriate ledger accounts.Completion of this unit will provide you with the knowledge, understanding and skills required to progress to unit 3 of the AAT Level 2 Award in Bookkeeping.
Unit details
-
15 Business, Administration and Law
-
15.1
Accounting and Finance
Assessment Methodology: Centrally set and marked examination
Based on the knowledge and understanding of AOSG Level 2 in Accounting units 1, 2 and 3 and Level 3 in Accounting units 5 and 7
FSSC has formally supported this unit (please see letter of support attached in the qualification need/support section)
| Learning Outcome |
Assessment Criteria |
| 2.1 Develop an awareness of the purpose and contents of ledgers |
2.1.A Accurately identify transactions and accounts which appear in the nominal ledger
2.1.B Accurately identify transactions and accounts which appear in the sales ledger
2.1.C Accurately identify transactions and accounts which appear in the purchases ledger
2.1.D Demonstrate an understanding of the purpose of keeping separate sales, purchases and nominal ledgers
2.1.E Demonstrate an understanding of accounting adjustments to be made prior to the preparation of a set of accounts. |
| 2.2 Develop an awareness of the need to account for VAT |
2.2.A Accurately calculate VAT on standard, exempt and zero rated goods.
2.2.B Demonstrate an understanding of the basic rules regarding registration for VAT for businesses.
2.2.C Distinguish between input and output VAT
2.2.D Correctly record the accounting entries required in the ledgers to account for VAT |
| 2.3 Account for accruals and prepayments |
2.3.A Demonstrate an understanding of the accruals concept
2.3.B Accurately calculate the amount accrued on both income and expenses
2.3.C Accurately calculate the amount prepaid on both income and expenses
2.3.D Accurately prepare the journal to record accrued and prepaid income and expenses
2.3.E Demonstrate an understanding of the subsequent reversal of accrued and prepaid income and expenses. |
| 2.4 Account for wages and salaries |
2.4.A Correctly use the PAYE system in relation to employee deductions for income tax and national insurance contributions (NIC)
2.4.B Record the various elements of wages and salaries in the appropriate ledger accounts accurately
2.4.C Correctly use a wages and salaries control account in a computerised system. |
| 2.5 Account for the depreciation of fixed assets |
2.5.A Correctly identify why there is a need for depreciation on fixed assets
2.5.B Correctly calculate depreciation using straight line method
2.5.C Correctly calculate depreciation using reducing balance method
2.5.D Accurately record depreciation in the appropriate ledger accounts
2.5.E Accurately record the disposal of assets in the ledger accounts
2.5.F Correctly apply various accounting concepts |
| 2.6 Account for Hire Purchase and Leasing |
2.6.A Correctly identify how the purchase of assets can be financed through hire purchase contracts
2.6.B Correctly identify how the purchase of assets can be financed by a finance lease
2.6.C Correctly identify the differences in accounting for a finance lease and for an operating lease
2.6.D Accurately record the acquisition of an asset on hire purchase in the appropriate ledger accounts
2.6.E Accurately record the repayments made on a hire purchase contract in the appropriate ledger accounts of the lessee (buyer). |