Practical Bookkeeping and Final Accounts
Unit summary
This unit aims to equip candidates with the necessary skills, knowledge and understanding to prepare a set of final accounts initially for a sole trader. The practical elements of the unit require candidates to demonstrate ability to enter data into appropriate day books (including the cash book and the petty cash book) and then post the entries to the appropriate ledgers. The unit also introduces candidates to provisions for depreciation and bad debts and allows candidates to develop an understanding of why such adjustments are important and necessary in financial reporting. Finally the unit requires that candidates demonstrate an understanding of the differences in sole trader accounts, partnerships and limited companies. Candidates are required to produce a set of final accounts for internal use in a limited company. The regulatory framework for published accounts is also included to the extent that candidates are made aware of the format for published final accounts. Candidates successfully completing this unit as well as Units 1 and 2 of the same qualification, will be awarded the AAT Level 2 Award in Bookkeeping.
Unit details
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15 Business, Administration and Law
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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, Level 3 in Accounting unit 5 and Level 4 in Accounting unit 11
FSSC has formally supported this unit (please see letter of support attached in the qualification need/support section)
| Learning Outcome |
Assessment Criteria |
| 3.1 Develop an understanding of the process from day books to ledgers |
3.1.A Correctly identify information to be entered in the sales day book
3.1.B Correctly Identify information to be entered in the purchases day book
3.1.C Correctly post information from the sales day book to the sales ledger
3.1.D Correctly post information from the purchases day book to the purchases ledger.
3.1.E Correctly post entries from sales ledger to the nominal ledger
3.1.F Correctly post entries from the purchases ledger to the nominal ledger.
3.1.G Correctly identify the difference in operations between manual and computerised systems. |
| 3.2 Process receipts and payments |
3.2.A Correctly identify different methods by which a business can receive income
3.2.B Correctly identify different methods by which a business can make payments
3.2.C Correctly prepare business documentation relating to receipts
3.2.D Correctly prepare business documentation relating to payments
3.2.E Correctly lodge receipts to a business bank account
3.2.F Use different methods to make payments from a business bank account
3.2G Accurately explain why effective control must be exercised over both receipts and payments
3.2.H Accurately explain what computer-generated reports are available and how they can be used. |
| 3.3 Record items in the cash book and the petty cash book |
3.3.A Accurately record bank receipts in the cash book
3.3.B Accurately record cheque payments in the cash book
3.3.C Correctly post from the cash book to the ledgers in a manual accounting system
3.3.D Explain how the postings are different in a computerised accounting system.
3.3.E Accurately record cash discounts in a columnar cash book
3.3.F Accurately post cash discounts from the cash book to the ledger accounts
3.3.G Correctly record transactions in a petty cash book using an imprest system
3.3.H Balance off both the petty cash book and the cash book at the end of an accounting period |
| 3.4 Prepare a bank reconciliation statement |
3.4.A Correctly identify differences between the cash book and the bank statement
3.4.B Correctly update the cash book and nominal ledger for items appearing in the bank statement but not yet entered in the cash book.
3.4.C Accurately prepare a bank reconciliation statement |
| 3.5 Adjust for bad debts and provisional bad debts |
3.5.A Write off bad debts in the ledgers
3.5.B Record contra entries between the sales and purchases ledger
3.5.C Create a provision for bad debts
3.5D Correctly make adjustments to existing bad debt provision
3.5.E Accurately explain, with reference to the prudence concept, why an adjustment to the bad debt provision is necessary
3.5.F Correct differences between the debtors’ control account and the sales ledger
3.5.G Correct differences between the creditors’ control account and the purchases ledger
3.5.H Explain why differences in the control accounts and the corresponding list of balances cannot occur in a computerised system. |
| 3.6 Prepare final accounts |
3.6.A Explain the differences between receipts and payment accounts and income and expenditure accounts
3.6.B Correctly identify the differences in the balance sheet presentation of a sole trader and those of a partnership.
3.6.C Correctly explain the meaning of a limited company’s share capital, reserves and debentures as a long term liability
3.6.D Accurately prepare a profit and loss account and a balance sheet for a limited company for internal use.
3.6.E Explain the requirement for published accounts for a limited company referring to legislation governing this requirement
3.6.F Illustrate the format of a set of final accounts for publication |