Accounting and Finance

Scope and sequence

For teaching and examination in 2013 and 2014

2008/14989[v5]

Accounting and Finance: Scope and sequence

For teaching and examination in 2013 and 2014

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Accounting and Finance: Scope and sequence

For teaching and examination in 2013 and 2014

Accounting and FinanceScope and sequence of content

UNIT 1A
Personal finance

UNIT 1B
Small cash entities

UNIT 2A
Double entry accounting
for small businesses

UNIT 2B
Accrual accounting

UNIT 3A
Internal management for
business

UNIT 3B
Australian reporting
entities

Financial institutions and systems

Financial
institutions

the role of financial

institutions that meet the
personal needs of
individuals e.g. banks
(include internet and
phone banking), credit
unions, retail stores and
telecommunications
companies.

identify the functions of

the various institutions
that service the financial
needs of small entities
e.g. banks, insurance
companies and other
finance sources.

sources of finance, other

than equity, available to
small businesses
advantages and
disadvantages of these
sources of finance
identify the factors
financial institutions
consider when approving
finance
risk (collateral,
liquidity, history,
guarantors) and
return (interest rate,
future business).

nature, benefits and risks

to small business of
electronic processing
EFTPOS
bill payments
electronic payment
system
credit cards
online banking
direct debits.

role of financial institutions

and the management of
business finance
short-term: cash
management trusts,
money market and
term deposits
long-term: shares,
debentures,
unsecured notes,
trusts and term
deposits.

Financial
systems and
fundamental
principles

nature and purpose of

documents for recording
and communicating of
personal financial
information e.g. cheques,
bank and credit card
statements, Automatic
Teller Machine (ATM),
EFTPOS slips and
internet receipts
systems and types of
bank accounts and
sources of borrowing for
personal financial
management e.g. types of
credit cards
the concept of security on
investment
risk of return
security on
borrowings
explain the relationship
between risk and rate of
return e.g. interest rates
the importance of proper
disclosure e.g. reading
fine print on contracts,
providing accurate
financial information
role and benefits of
insurance e.g. car, travel
insurance

nature of the systems that

businesses use to carry
out banking, investment,
purchases, borrowing and
other financial
transactions
nature and purpose of
source documents in a
cash accounting system
tax invoices/receipts
bank deposit slips
cheque butts
EFTPOS receipts
Business Activity
Statement
principles of single-entry
cash accounting practices
and entries e.g. cash
book, petty cash and bank
reconciliation systems
methods of recording and
maintaining single-entry
accounting systems using
manual or electronic tools
purpose and advantages
of multi-columnar cash
books/journals
definition of the
accounting equation
accepted accounting
principles
accounting entity
monetary

characteristics of the main

types of small business
ownership: sole trader,
partnership and small
proprietary company
number of owners
liability of owners
ability to raise capital
or borrow funds
distribution of profits
transfer of ownership
separate accounting
or legal entity
continuity of existence
advantages and
disadvantages of the main
types of small business
ownership
different types and
characteristics of business
undertakings
manufacturing
trading/retailing
service providing
fundamental concepts and
conventions of financial
accounting
the accounting
equation
double entry
accounting
the accounting cycle:
documents, journals,
ledger, adjusting
entries, closing
entries and financial

accrual basis assumption

as per the Framework
distinction between
cash and accrual
methods of
accounting
recognition criteria of
o assets
o liabilities
o incomes
o expenses
classification of incomes,
expenses, assets and
liabilities by nature and
function
purpose and nature of
balance day adjustments
accrued expenses
prepaid
expenses/stock of
supplies
accrued income
income in advance
doubtful debts
depreciation
nature of depreciable noncurrent assets
nature of depreciation
expense
determining the cost of a
depreciable non-current
asset

distinguish between
management accounting
and financial accounting
the nature of cost
concepts
materials, labour and
overheads
cost behaviours:
fixed, variable and
mixed costs
relationships to cost
objects: direct and
indirect costs
treatment of costs:
product and period
time orientation of
costs: past and future
the concept of mark-up
and the calculation of the
unit price of a product
the nature and importance
of the master budget
operating
capital expenditure
financial
the important financial
principles of asset
management
appropriate levels of
investment in noncurrent assets

sources of youth debt:

Accounting and Finance: Scope and sequence

For teaching and examination in 2013 and 2014

characteristics of
companies: public and
large proprietary
companies
liability of owners
number of members
and directors
continuity of existence
legal entity
transferability of
ownership
separation of
ownership and
management
the purpose and
importance of accounting
standards
protection of external
users
assist directors in
discharging their
obligations
facilitate the
Australian capital
markets
the role of the conceptual
framework in Australia
the nature of the

UNIT 1A
Personal finance

UNIT 2A
Double entry accounting
for small businesses

UNIT 1B
Small cash entities

UNIT 2B
Accrual accounting

UNIT 3A
Internal management for
business

UNIT 3B
Australian reporting
entities

appropriate
management of
accounts receivable,
inventory and cash
appropriate
management of shortand long-term debt
appropriate level of
equity capital
nature and importance of
capital investment
decisions
concept of the time
value of money
factors affecting capital
investment decisions
consumer
preferences
competition
government
regulation
explain the relationship
between volume of
activity, costs and profit.

reporting entity

Financial institutions and systems

credit cards, mobile
telephone contracts, rent
and student fee loans
implications of personal
credit ratings.

accounting period
going concern
simple definitions of
assets, liabilities,
expense, income and
equity
characteristics,
administration and types
of records for incorporated
not-for-profit
organisations.

statements
principles of the
perpetual inventory
system
definition of GST and the
GST system
principles and features of
GST
taxable supplies,
GST-free supplies
and input taxed
supplies
accounting and
reporting for GST
including the BAS
accounting assumptions
as per the Framework for
the Preparation and
Presentation of General
Purpose Financial Reports
(hereafter referred to as
the Framework): accrual
basis and going concern
accepted accounting
principles and conventions
accounting entity
monetary
historical cost
materiality
accounting period
accounting for inventory
perpetual versus
periodic inventory
methods
elements of financial
statements as per the
Framework
assets, liabilities,
equity, income and
expenses
importance of financial
statements to determine
performance
financial position
liquidity
considerations when
supplying credit to
customers
credit history
employment history
security
bad debts.

identification of the more

appropriate method of
depreciation to apply
straight-line
reducing/diminishing
balance
identification of over- or
under-depreciation on
sale of non-current asset
concept of inventory
costing methods
weighted average
First-in First-out.

Accounting and Finance: Scope and sequence

For teaching and examination in 2013 and 2014

evaluation and
application of the
qualitative
characteristics of
financial information
the objectives of
general purpose
financial reports and
their usefulness
evaluation and
application of asset,
liability, income and
expense recognition
and measurement
criteria
the purpose of disclosure
in financial reports
changes in
accounting policy
comparability and
understandability
purpose and nature of the
cash flow statement
concept of cash and cash
equivalents
classification of cash flow
activities.

UNIT 1A
Personal finance

UNIT 1B
Small cash entities

UNIT 2A
Double entry accounting
for small businesses

UNIT 2B
Accrual accounting

UNIT 3A
Internal management for
business

UNIT 3B
Australian reporting
entities

cost accounting limited to

calculation of the unit
price of a product/service
using only job order
costing processes (GST
NOT included)
calculation of direct
materials, direct
labour and overhead
costs
calculation and
application of
predetermined
overhead recovery
rates only using
normal capacity
calculation of unit cost
and the setting of
selling/quotation
prices for a job
costing
product/service
use of standard
costing and variance
analysis for:
o materials i.e. price
and usage
o labour i.e. rate and
efficiency
Cost-Volume-Profit (CVP)
processing for a single
and multi-product
(maximum 3 products)
business
calculation of
contribution margin
calculation of
contribution margin
per unit
calculation of
weighted average
contribution per unit
calculation of margin
of safety
calculation of selling
price, variable cost,
fixed cost, profit or
sales volume

preparation of the general

journal and general ledger
for
issue of ordinary
shares payable in full
on application
bonus share issues
interim and final
dividends
(recommended,
declared or paid)
share issue costs
preparation of the retained
earnings ledger account
profit
dividends
transfers to and from
reserve accounts
debit or credit opening
balances
preparation of financial
statements in accordance
with the Framework and in
accordance with the
standards
statement of
comprehensive
income (one
statement version
ONLY: notes NOT
required)
statement of financial
position and the
following notes:
o share capital
o other reserves
o property, plant and
equipment
o dividends
statement of changes
in equity (notes NOT
required)
o retained earnings
o equity
o share capital
o reserves
cash flow statement from
comparative balance
sheets and income
statements using the
direct method only (notes
NOT required and GST
NOT included)
preparation of the above
financial statements is
restricted to the following
issues:

Recording, using and evaluating financial information

Recording,
processing and
communicating
financial
information

preparation of documents
associated with personal
financial information e.g.
cheques, application for
bank account or credit
card, mobile phone
preparation of personal
budgets
preparation of personal
bank reconciliation
statements
maintenance of personal
financial records for
personal income tax and
calculation of tax payable
including only:
assessable income
(limited to salaries
and wages and
interest)
allowable deductions
(limited to union fees,
professional
associations,
donations and uniform
and motor vehicle
expenses)
tax offset (limited to
health insurance).

preparation of documents
manually or electronically
to record business
financial information
order forms
tax invoices/receipts
delivery notes
cheques
bank deposit slips
preparation of cash
receipts and payment
journals or cash book with
separate columns for
GST; cash
sales/purchases;
commonly recurring
receipts/payments
preparation of petty cash
book
preparation of payroll
records for a small cash
based business e.g. pay
advice slip, wages book
preparation of simple cash
budgets
preparation of bank
reconciliation statements
presentation of financial
information in the form of
simple unclassified reports
applying the accounting
equation for small cash
based entities
statement of receipts
and payments
income statement
balance sheet.

calculation of GST
receivable or payable
manual preparation of the
general journal to process
financial transactions to
the general ledger and
trial balance including:
errors disclosed/not
disclosed by trial
balance
GST
closing entries
perpetual inventory
system given the cost
of sales (NOTE: No
requirement to teach
inventory costing
systems such as Lastin First-out, First-in
First-out and weighted
average)
manual preparation of the
general journal and
general ledger to include:
cash and credit
transactions to
include cash receipts,
cash payments, sales,
purchases, sales
returns, purchases
returns, discount
allowed, discount
received
entries to commence
business
purchase of noncurrent assets
write-off bad debts
withdrawal of
inventory or cash by
the proprietor
correction of errors
manual preparation of
simple classified financial
statements for a sole
trader excluding balance
day adjustments

income statements

manual preparation of
general journal and ledger
entries for balance day
adjustments (asset and
liability method only) to
prepare financial reports
(GST not included)
manual preparation of
general journal and
general ledger entries for
recording of depreciation
and disposal of a single
depreciable asset
(including cost of a
depreciable non-current
asset, depreciation
expense, disposal of
depreciable asset using
the Sale of Asset Method)
manual preparation of
closing general journal
entries
manual preparation of trial
balance
manual preparation of
classified financial
statements for a sole
trader including balance
day adjustments
income statements
balance sheets for a
trading/
merchandising/
service business
using an established chart
of accounts and the
perpetual inventory
system, apply double
entry principles using
MYOB Mind Your Own
Business or QuickBooks
to electronically record
financial data and produce
financial reports after
considering adjusting
entries

Accounting and Finance: Scope and sequence

For teaching and examination in 2013 and 2014

UNIT 1A
Personal finance

UNIT 1B
Small cash entities

UNIT 2A
Double entry accounting
for small businesses

UNIT 2B
Accrual accounting

UNIT 3A
Internal management for
business

UNIT 3B
Australian reporting
entities

Recording, using and evaluating financial information

revaluation of
property, plant and
equipment (nondepreciable assets
ONLY)
cash dividends
bonus share issues
transfers to or from
general reserve
preliminary expenses
issue of ordinary
shares including
share issue costs
balance day
adjustments as per
those in Unit 2B
for the purpose of
calculating income tax
expense, profit before
tax will be deemed to
equal taxable income
preparation of the
following ratios:
liquidity:
o working
capital/current
o quick asset
efficiency:
o debtors collection
o inventory/stock
turnover
profitability:
o profit
o rate of return on
assets
o times interest
earned
leverage:
o debt to equity
market:
o earnings per share
o price/earnings
o dividend yield.
Note: Application of GST is
NOT required

balance sheets for

a trading/
merchandising/
service business.

preparation of the
following ratios:

calculation of breakeven point

calculation of the
profitability:
effect on profit/loss of
make or buy
decisions
o profit formula:
calculation of the
profit
effect on profit/loss of
net sales
closing a
o gross profit formula:
department/dropping
a segment product
gross profit
decision
net sales
calculation of the gain
o expense formula:
or loss on special
order decisions
operating expenses

preparation
of cash
net sales
budgets including debtors
o rate of return on assets formula:and creditors schedules
(GST NOT included)
profit
preparation of budgeted
average total assets
income statements (GST
liquidity:
NOT included)
preparation of
o working capital formula:
performance reports for
cash budgets and
current assets
budgeted income
current liabilities
statement
o quick asset formula:
capital
current assets
investment/budgeting
inventory and prepayments
techniques for capital
current liabilities
expenditure, limited to
bank overdraft
calculations for cash flows
using straight-line
leverage:
depreciation method
ONLY and net of taxation:
discounted cash flows
o debt to equity formula:
[net present value
total liabilities
(NPV) ONLY]
total equity
payback period.
Note: Application of GST is
NOT required

Accounting and Finance: Scope and sequence

For teaching and examination in 2013 and 2014

UNIT 1A
Personal finance

UNIT 1B
Small cash entities

UNIT 2A
Double entry accounting
for small businesses

UNIT 2B
Accrual accounting

nature and importance of

internal control
application of the
principles of internal
control over cash,
inventory, accounts
receivable, accounts
payable and non-current
assets
administrative
controls
accounting controls
limitations of internal
control.

interpretation of the
following ratios to evaluate
the profitability and
stability of a business:
profitability:
o profit
o gross profit
o expense
o rate of return on
assets
liquidity:
o working capital
o quick asset
leverage:
o debt to equity.

UNIT 3A
Internal management for
business

UNIT 3B
Australian reporting
entities

differences between
internal and external
reporting
internal and external
users
regulation
Accounting Standards
types of financial
statements
types of reports
internal audit and control
purpose of internal
control
review of procedures
and policies
detection and
correction of errors
and deficiencies
relationship to the
external audit process
the role and function of
the accountant in
managing business
operations
purpose and function of
cash budgets
importance of cash to
business viability
interpretation of cash
budgets
purpose and function of
budgeted income
statement
interpretation of
budgeted income
statement
difference between cash
and accrual performance
purpose and function of
performance reports
interpretation of
performance reports
for cash budgets and
budgeted income
statements
interpretation of capital
investment/budgeting
techniques to evaluate
capital expenditure

examination and
interpretation of annual
reports, financial
statements and stock
exchange data to assess
the position and
performance of a public
company
purpose of annual
reporting and the use of
key performance
indicators by directors for
accountability and
decision-making purposes
interpretation of the
following ratios:
liquidity:
o working
capital/current
o quick asset
efficiency:
o debtors collection
o inventory/stock
turnover
profitability:
o profit
o rate of return on
assets
o times interest
earned
leverage:
o debt to equity
market:
o earnings per share
o price/earnings
o dividend yield
interpretation of the
movements in cash flow
items
limitations in assessing
performance from
financial statement
analysis and from
traditional financial
accounting
historical cost
accounting
lack of comparability
between entities
lack of disclosure.

Recording, using and evaluating financial information

Evaluating
financial
information for
planning
coordination,
controlling and
investing

interpretation of
information relevant to
personal financial
management e.g. pay
slips, bank statements,
EFTPOS and other media
importance of personal
financial planning,
(including short- and longterm goal setting), and the
financial factors affecting
financial decision making
e.g. the importance of
compounding interest
versus simple interest
investment options
available to individuals
e.g. superannuation,
share market, property,
cash deposits and longterm investments
sources of financial advice
e.g. banks, media, and
financial advisors.

interpretation of
information presented in
simple financial
statements and the
analysis of this information
to assess profitability and
liquidity
interpretation of simple
cash budgets
importance of liquidity to
the entity
principles of internal
control over cash.

Accounting and Finance: Scope and sequence

For teaching and examination in 2013 and 2014

UNIT 1A
Personal finance

UNIT 1B
Small cash entities

UNIT 2A
Double entry accounting
for small businesses

UNIT 2B
Accrual accounting

UNIT 3A
Internal management for
business

Recording, using and evaluating financial information

importance of business
planning including a
consideration of
goals, objectives and
generic business
strategies: cost
leadership versus
differentiation,
strategic initiatives
and performance
management
reduce costs and
risks
Cost-Volume-Profit (CVP)
analysis for decisionmaking purposes
cost behaviour
contribution margin
break-even point
margin of safety
interpretation of CVP
results and testing of
sensitivity to changing
decisions about
volumes, product
mixes, pricing and
costs and the impact
of capacity constraints
make or buy
decisions
close down
product/business unit
decisions
accept or reject
special orders
decisions.

Accounting and Finance: Scope and sequence

For teaching and examination in 2013 and 2014

UNIT 3B
Australian reporting
entities

UNIT 1A
Personal finance

UNIT 1B
Small cash entities

UNIT 2A
Double entry accounting
for small businesses

UNIT 2B
Accrual accounting

UNIT 3A
Internal management for
business

UNIT 3B
Australian reporting
entities

role and function of the

professional accounting
and financial associations
e.g. Certified Practising
Accountants of Australia,
Institute of Chartered
Accountants of Australia,
National Institute of
Accountants, Financial
Planning Association of
Australia Limited.

the importance and

impact of legislation
relating to the financial
management of business
the concept of
insolvency as applied
according to the
Bankruptcy Act and
Corporations Act
order of repayment to
creditors.

the purpose and nature of

the Corporations Act, and
its impact on company
formation and operations
powers and duties of
directors
a written constitution
replaceable rules
prospectus
rights of shareholders
the nature and importance
of the Financial Reporting
Council (FRC), Australian
Securities and
Investments Commission
(ASIC), International
Accounting Standards
Board (IASB), Australian
Accounting Standards
Board (AASB), Australian
Securities Exchange
(ASX) and lobby groups
which regulate and
influence the general
purpose financial reporting
of companies in Australia
the role and function of
external auditors
protection of external
users
to perform an
independent audit of
the financial
statements
appointed by the
shareholders and
reappointed at the
Annual General
Meeting (AGM).

Government and the community

The role and
influence of
governments
and other bodies

types of taxation affecting

individuals e.g. income
tax, GST, capital gains
and fringe benefits such
as cars, mobile phones
identity and function of
government agencies in
relation to personal
finance e.g. Department of
Consumer and
Employment Protection.

impact of governments
(local, state and federal)
on the operations of small
businesses e.g. taxation,
financial assistance,
regulations
impact on small business
entities by other bodies
e.g. consumer groups,
trade unions, professional
associations and industry
groups, accountants.

legislation relating to the

formation of sole trader,
partnership and small
proprietary companies
e.g. GST Act (1999),
Business Names
Registration Act (2011),
Partnership Act of WA
(1895), Corporations Act
(2001)
the impact of GST legal
requirements on small
businesses
registering for GST
Australian Business
Number (ABN).

Accounting and Finance: Scope and sequence

For teaching and examination in 2013 and 2014

UNIT 1A
Personal finance

UNIT 1B
Small cash entities

UNIT 2A
Double entry accounting
for small businesses

how social, environmental

and ethical factors
influence the
establishment and
operations of small cash
entities
impact of costs associated
with setting up small cash
entities.

costs and benefits for

small business of
engaging in socially,
environmentally and
ethically responsible
behaviour
sponsorship
resource conservation
taxation responsibility.

UNIT 2B
Accrual accounting

UNIT 3A
Internal management for
business

UNIT 3B
Australian reporting
entities

identification of the costs

and potential income
associated with engaging
in socially and
environmentally
responsible practices
the ethical issues
encountered in financial
dealings between
business
owners/managers and
their employees, clients
and investors.

the extent, nature and

usefulness of corporate
social disclosure
the difficulties faced by
accountants in producing
social and environmental
information
the use made of corporate
social disclosure by the
company and other users
critical evaluation of
corporate social
disclosure as made by
Australian companies.

Government and the community

The influence of
social,
environmental
and ethical
factors

10

factors affecting personal

financial decision making
e.g. influence of media,
peer group pressure,
beliefs and values.

the role and nature of the

professional codes of
conduct for accounting
practitioners and financial
service providers.

Accounting and Finance: Scope and sequence

For teaching and examination in 2013 and 2014