Accounting Subject Outline (For Teaching in 2018)

Accounting
2018 Subject Outline

Stage 1 and Stage 2
For teaching
 in Australian and SACE International schools from
January 2018 to December 2018
 in SACE International schools only, from
May/June 2018 to March 2019
Published by the SACE Board of South Australia,
60 Greenhill Road, Wayville, South Australia 5034
Copyright © SACE Board of South Australia 2010
First published 2010
Reissued for 2011 (published online October 2010,
printed January 2011), 2012, 2013, 2014, 2015, 2016, 2017, 2018
ISBN 978 1 74102 607 8 (online Microsoft Word version)
ref: A670282
This subject outline is accredited for teaching at Stage 1 from 2010 and at Stage 2 from 2011
CONTENTS
Introduction .......................................................................................................................... 1
Subject Description .......................................................................................................... 1
Capabilities ...................................................................................................................... 1
Literacy in Accounting ...................................................................................................... 3
Numeracy in Accounting .................................................................................................. 3
Aboriginal and Torres Strait Islander Knowledge, Cultures, and Perspectives ............... 3
Stage 1 Accounting ........................................................................................................... 5
Learning Scope and Requirements..................................................................................... 6
Learning Requirements ................................................................................................... 6
Content ............................................................................................................................ 6
Assessment Scope and Requirements ............................................................................. 10
Evidence of Learning ..................................................................................................... 10
Assessment Design Criteria .......................................................................................... 10
School Assessment ....................................................................................................... 11
Performance Standards ................................................................................................. 13
Assessment Integrity ..................................................................................................... 16
Support Materials .............................................................................................................. 17
Subject-specific Advice .................................................................................................. 17
Advice on Ethical Study and Research ......................................................................... 17
Stage 2 Accounting ......................................................................................................... 19
Learning Scope and Requirements................................................................................... 20
Learning Requirements ................................................................................................. 20
Content .......................................................................................................................... 20
Assessment Scope and Requirements ............................................................................. 31
Evidence of Learning ..................................................................................................... 31
Assessment Design Criteria .......................................................................................... 31
School Assessment ....................................................................................................... 33
External Assessment ..................................................................................................... 34
Performance Standards ................................................................................................. 34
Assessment Integrity ..................................................................................................... 39
Support Materials .............................................................................................................. 40
Subject-specific Advice .................................................................................................. 40
Advice on Ethical Study and Research ......................................................................... 40
INTRODUCTION
SUBJECT DESCRIPTION
Accounting is a 10-credit subject or a 20-credit subject at Stage 1, and a 20-credit subject
at Stage 2.
The study of Accounting encompasses the successful management of financial affairs in
business. It gives students opportunities to learn the practical skills needed to manage
their own financial affairs and to develop an understanding of the ethical and regulatory
considerations that affect financial decision-making in contemporary society.
Students acquire knowledge and skills related to the accounting process for
organisational and business applications. They understand the processes involved in
generating, recording, classifying, analysing, interpreting, and reporting accounting
information as a basis for planning, control, and effective decision-making. They learn
how to interpret the financial information of an accounting entity and how to convey this
information to interested users.
Accounting enables students to participate effectively and responsibly in a changing
social, legal, and economic environment. Students develop skills in critical thinking,
problem-solving, and the use of information and communication technologies. These
skills enable them to apply accounting information in financial decision-making. An
understanding of accounting concepts in financial management and decision-making
helps students to develop skills in, and an appreciation of, active and responsible
citizenship.
CAPABILITIES
The capabilities connect student learning within and across subjects in a range of
contexts. They include essential knowledge and skills that enable people to act in
effective and successful ways.
The five capabilities that have been identified are:
 communication
 citizenship
 personal development
 work
 learning.
The capabilities, in particular those for communication, work, and learning, are reflected
in the learning requirements, content, assessment design criteria, and performance
standards in this subject. Understanding the relationship between accounting and social,
legal, regulatory, and ethical considerations in business and enterprise helps to develop
students’ capability for citizenship.
Accounting 2018 Subject Outline — Stage 1 and Stage 2 1

Communication
In this subject, students develop their capability for communication by, for example:
 using accounting terminology accurately
 explaining influences on the recording of accounting information
 using accounting terminology to identify and explain possible and preferable outcomes
 interpreting and comparing results with those of competitors and/or other economic
conditions
 commenting on results or findings, taking into consideration accountability as well as social,
legal, regulatory, and ethical issues
 selecting and organising relevant and reliable accounting information from a variety of
sources.
Citizenship
In this subject, students develop their capability for citizenship by, for example:
 considering the social, legal, and ethical implications of accounting decisions
 developing an understanding of accounting concepts in financial management and
decision-making as they apply to active and responsible citizenship
 recognising that social, legal, regulatory, and ethical issues both influence and are
influenced by business and accounting decisions.
Personal Development
In this subject, students develop their capability for personal development by, for
example:
 developing an awareness of the importance of maintaining accurate financial records
 applying effective decision-making skills, using financial and non-financial information
 analysing and evaluating accounting information and making informed choices and
decisions.
Work
In this subject, students develop their capability for work by, for example:
 developing an awareness of the importance of maintaining accurate financial records that
meet social, legal, regulatory, and ethical requirements
 identifying key elements of accounting in practical situations
 understanding the existence and influence of the regulatory framework that underpins
accounting
 developing skills in the use of information and communication technologies in the
accounting process
 developing employability skills that can be used globally.
2 Accounting 2018 Subject Outline — Stage 1 and Stage 2

Learning
In this subject, students develop their capability for learning by, for example:
 analysing and interpreting financial information to make recommendations and draw
appropriate conclusions
 applying problem-solving skills
 understanding the impact of change on financial decisions
 explaining processes used in the completion of a task
 selecting, organising, and evaluating information for relevance and reliability
 using a variety of techniques such as data analysis and spreadsheets.
LITERACY IN ACCOUNTING
In Accounting, students have opportunities to develop the following literacy skills:
 understanding and appropriately using accounting terminology
 effectively communicating accounting information in appropriate forms
 discussing, explaining, comparing, contrasting, and examining questions or issues, using
accounting information
 writing reports in the form of an analytical response to given data (e.g. financial statements)
 reporting information to users for planning, control, and decision-making
 demonstrating an ability to interpret specific accounting information in relation to a particular
issue.
NUMERACY IN ACCOUNTING
In Accounting, students have opportunities to develop the following numeracy skills:
 collecting and processing financial data
 interpreting, analysing, and evaluating financial information
 displaying financial information, using appropriate accounting conventions
 predicting outcomes from data collected
 distinguishing between financial and non-financial information.
ABORIGINAL AND TORRES STRAIT ISLANDER KNOWLEDGE,

CULTURES, AND PERSPECTIVES
In partnership with Aboriginal and Torres Strait Islander communities, and schools and
school sectors, the SACE Board of South Australia supports the development of high-
quality learning and assessment design that respects the diverse knowledge, cultures,
and perspectives of Indigenous Australians.
The SACE Board encourages teachers to include Aboriginal and Torres Strait Islander
knowledge and perspectives in the design, delivery, and assessment of teaching and
learning programs by:
 providing opportunities in SACE subjects for students to learn about Aboriginal and Torres
Strait Islander histories, cultures, and contemporary experiences
 recognising and respecting the significant contribution of Aboriginal and Torres Strait
Islander peoples to Australian society
Accounting 2018 Subject Outline — Stage 1 and Stage 2 3

 drawing students’ attention to the value of Aboriginal and Torres Strait Islander knowledge
and perspectives from the past and the present
 promoting the use of culturally appropriate protocols when engaging with and learning from
Aboriginal and Torres Strait Islander peoples and communities.
4 Accounting 2018 Subject Outline — Stage 1 and Stage 2

Stage 1 Accounting
LEARNING SCOPE AND REQUIREMENTS
LEARNING REQUIREMENTS
The learning requirements summarise the knowledge, skills, and understanding that
students are expected to develop and demonstrate through their learning in Stage 1
Accounting.
In this subject, students are expected to:
1. understand the role of accounting in society
2. record and report financial information, using manual methods as well as information
and communication technologies
3. apply the principles and practices of recording and reporting financial information
4. recognise and understand financial information for decision-making
5. analyse, interpret, and communicate financial information, using accounting
terminology
6. apply effective decision-making skills, using financial and non-financial information
7. recognise social, legal, regulatory, and/or ethical influences on financial recording and
decision-making.
CONTENT
Accounting is a 10-credit subject or a 20-credit subject at Stage 1.
A 10-credit subject consists of:
 The Environment of Accounting
 at least two option topics.
A 20-credit subject consists of:

 The Environment of Accounting
 at least four option topics.
The option topics are as follows:

 Personal Financial Management
 Business Documents
 Keeping Cash Records
 Double-entry Recording
 Financial Reports
 Analysis and Interpretation of Financial Reports
 Teacher-developed Topic(s).
6 Stage 1 Accounting 2018

The Environment of Accounting
The Environment of Accounting introduces students to the basic concepts and principles
of accounting.
This topic gives students opportunities to develop knowledge of:
 accounting and its function in a society
 the regulatory and conceptual frameworks of accounting
 the needs of internal and external stakeholders
 social, ethical, and technological issues
 the impacts of past, present, and possible future accounting decisions.
‘The Environment of Accounting’ should be integrated and developed within the option
topics chosen for study, giving students opportunities to gain a basic understanding of the
nature and processes of accounting.
Information and communication technologies are an essential feature of accounting
practice. Financial information at the first stage of recording by a business is generally
computerised. It is therefore important that students become aware of the tools of
information and communication technologies that are used in processing accounting
information. Where possible, the use of information and communication technologies
should be integrated throughout the study of Accounting.
Option Topics
When making decisions about the type, number, and depth of content of topics, teachers
should consider the needs and interests of the students and the information and
communication technologies available. ‘Teacher-developed Topic(s)’ could include
opportunities for students to investigate and develop accounting skills in a work-related
context.
Personal Financial Management

This topic gives students the opportunity to develop an awareness of the importance of
maintaining accurate personal financial records that meet social, legal, and ethical
requirements. Some suggested themes that could be developed include:
 banking (including electronic)
 investing/saving
 budgeting
 record-keeping (budgets, statements of affairs, bank reconciliation statements)
 borrowing and the use of credit.
Business Documents
In this topic students have opportunities to gain an understanding of the accounting
source documents used by businesses.
This topic gives students opportunities to develop an understanding of a range of
documents, including:
 delivery dockets
 order forms
 invoices
Stage 1 Accounting 2018 7

 credit notes
 statements of account
 cheques
 remittance advice
 receipts
 tax invoices
 business activity statements.
Keeping Cash Records

In this topic students have opportunities to become familiar with maintaining basic cash
records, using manual methods as well as information and communication technologies.
The following records should be included:
 columnar cash receipts and records of payments
 bank account statements
 bank reconciliation statements
 petty cash records
 profit calculation records/statements.
Double-entry Recording
In this topic students have opportunities to use both manual methods and information and
communication technologies in the following aspects of accounting:
 the principles of double-entry recording and the use of specialised journals
 general journal entries for commencement of business and purchase and sale of an asset
on credit
 ledger accounts from journals
 a trial balance.
Financial Reports
In this topic students have opportunities to use both manual methods and information and
communication technologies in the preparation of reports, which could include:
 income statements
 a balance sheet
 statements of cash flows.
Analysis and Interpretation of Financial Reports

In this topic students have opportunities to do simple analysis of financial reports to plan
and control future decision-making.
Students have opportunities to communicate their understanding of:
 short-term liquidity
 return on investment
 gearing
 profitability analysis.

Teacher-developed Topic(s)
If the other option topics do not meet student needs, teachers may prepare alternative
topics, preferably in consultation and negotiation with their students.
These teacher-developed topic(s) need to complement the study of ‘The Environment of
Accounting’.

ASSESSMENT SCOPE AND REQUIREMENTS
Assessment at Stage 1 is school based.
EVIDENCE OF LEARNING
The following assessment types enable students to demonstrate their learning in
Stage 1 Accounting:
 Assessment Type 1: Skills and Applications Tasks
 Assessment Type 2: Investigation.
For a 10-credit subject, students should provide evidence of their learning through four or
five assessments. Each assessment type should have a weighting of at least 20%.
Students undertake:
 at least two skills and applications tasks
 at least one investigation.
For a 20-credit subject, students should provide evidence of their learning through eight
to ten assessments. Each assessment type should have a weighting of at least 20%.
Students undertake:
 at least four skills and applications tasks
 at least two investigations.
ASSESSMENT DESIGN CRITERIA

The assessment design criteria are based on the learning requirements and are used by
teachers to:
 clarify for the student what he or she needs to learn
 design opportunities for the student to provide evidence of his or her learning at the highest
possible level of achievement.
The assessment design criteria consist of specific features that:
 students should demonstrate in their learning
 teachers look for as evidence that students have met the learning requirements.
For this subject the assessment design criteria are:

 understanding
 analysis and interpretation
 application
 communication.

The specific features of these criteria are described below.
The set of assessments, as a whole, must give students opportunities to demonstrate
each of the specific features by the completion of study of the subject.
Understanding
The specific features are as follows:
U1 Understanding of the role of accounting in society.
U2 Recognition and understanding of financial information for decision-making.
U3 Recognition of social, legal, regulatory, and/or ethical influences on financial
recording and decision-making.
Analysis and Interpretation

The specific feature is as follows:
AI1 Analysis and interpretation of financial information, using appropriate accounting
terminology.
Application
A1 Application of the principles and practices of recording and reporting financial
information.
A2 Recording and reporting of financial information, using manual methods as well as
information and communication technologies.
A3 Application of decision-making skills, using financial and non-financial information.
Communication
C1 Communication of appropriate financial information.
C2 Use of appropriate accounting terminology.
SCHOOL ASSESSMENT
Assessment Type 1: Skills and Applications Tasks
For a 10-credit subject, students undertake at least two skills and applications tasks. For
a 20-credit subject, students undertake at least four skills and applications tasks.
For both a 10-credit subject and a 20-credit subject, at least one skills and applications
task should require students to solve accounting problems that may:
 be routine, analytical, and/or interpretative
 be posed in familiar and unfamiliar contexts
 require the appropriate use of information and communication technologies.
For both a 10-credit subject and a 20-credit subject, at least one other skills and
applications task should require students to use, interpret, evaluate, and reflect on a

selection and range of sources. They apply their knowledge and understanding of
accounting to structured questions that illustrate an aspect of accounting practice.
Through analysing various sources, students apply their understanding of the concepts
and processes involved in generating, recording, classifying, analysing, interpreting, and
reporting accounting information.
In setting skills and applications tasks, teachers may provide students with information in
written form or in the form of numerical data or tables.
For this assessment type, students should:
 demonstrate an understanding of relevant accounting concepts, skills, and practices
 select appropriate accounting techniques to successfully solve routine, analytical, and/or
interpretative problems
 provide explanations and use notation, terminology, and presentation correctly throughout
the task.
Students may be required to use information and communication technologies
appropriately to aid and enhance the solution of some problems.
Skills and applications tasks should be undertaken under the direct supervision of a
teacher. Some tasks may allow students to work collaboratively.
For this assessment type, students provide evidence of their learning in relation to the
following assessment design criteria:
 understanding
 application
 communication.
Assessment Type 2: Investigation

For a 10-credit subject, students undertake at least one investigation. For a 20-credit
subject, students undertake at least two investigations.
An investigation is a structured activity in which students use financial and non-financial
information to explore an aspect of accounting. Students should have opportunities to
investigate the use of accounting in a practical situation. Activities could vary, depending
on the topics chosen. Examples may include an investigation of personal investment
options, an analysis of a set of cash records, an analysis of an income statement and
balance sheets, or an interview with a householder on budgeting, credit, and financial
planning.
Presentation for assessment could take a variety of forms, including PowerPoint
presentations, web pages, spreadsheets, analytical commentaries, and collections of
data from a variety of sources with appropriate comments, essays, or reports.
A presentation should be a maximum of 1000 words if written or a maximum of
6 minutes for an individual oral presentation, or the equivalent in multimodal form.
 understanding
 application
 communication.

PERFORMANCE STANDARDS
The performance standards describe five levels of achievement, A to E.
Each level of achievement describes the knowledge, skills, and understanding that
teachers refer to in deciding how well a student has demonstrated his or her learning on
the basis of the evidence provided.
During the teaching and learning program the teacher gives students feedback on their
learning, with reference to the performance standards.
At the student’s completion of study of a subject, the teacher makes a decision about the
quality of the student’s learning by:
 referring to the performance standards
 taking into account the weighting of each assessment type
 assigning a subject grade between A and E.
Teachers can use a SACE Board school assessment grade calculator to help them to
assign the subject grade. The calculator is available on the SACE website
(www.sace.sa.edu.au).

Performance Standards for Stage 1 Accounting
14
- Understanding Analysis and Interpretation Application Communication
A Comprehensive understanding of the role Astute analysis and interpretation of Highly proficient application of the Highly accurate communication of
of accounting in society. financial information, using appropriate principles and practices of recording and appropriate and specific financial
accounting terminology. reporting financial information. information.
Astute and detailed recognition and
understanding of financial information for High degree of accuracy in the recording Highly appropriate and well-informed use
decision-making. and reporting of financial information, of a range of accounting terminology.
using manual methods as well as
Perceptive and well-informed recognition information and communication
of social, legal, regulatory, and/or ethical technologies.
influences on financial recording and
decision-making. Astute application of decision-making
skills, using financial and non-financial
information.
B Detailed understanding of the role of Well-considered analysis and Proficient application of the principles Mostly accurate communication of
accounting in society. interpretation of financial information, and practices of recording and reporting appropriate financial information.
using appropriate accounting financial information.
Detailed recognition and understanding terminology. Appropriate and well-informed use of
of financial information for decision- Mostly accurate recording and reporting accounting terminology.
making. of financial information, using manual
methods as well as information and
Well-informed recognition of social, legal, communication technologies.
regulatory, and/or ethical influences on
financial recording and decision-making. Thoughtful application of decision-making
skills, using financial and non-financial
information.
C Appropriate understanding of the role of Considered analysis and interpretation of Competent application of the principles Competent communication of appropriate
accounting in society. financial information, using mostly and practices of recording and reporting financial information.
appropriate accounting terminology. financial information.
Appropriate recognition and Generally appropriate and informed use
understanding of financial information for Competent recording and reporting of of accounting terminology.
decision-making. financial information, using manual
methods as well as information and
Informed recognition of social, legal,
Stage 1 Accounting 2018
communication technologies.
regulatory, and/or ethical influences on
financial recording and decision-making. Appropriate application of decision-
making skills, using financial and non-
financial information.
D Basic understanding of the role of Some consideration and basic use of Some basic application of one or more Communication of some basic financial
accounting in society. financial information, using some principles and/or practices of recording information.
appropriate accounting terminology. and reporting financial information.
Some recognition and understanding of Inconsistent use of some accounting
some financial information for decision- Recording and reporting of some basic terminology.
making. financial information, using manual
methods and/or information and
Some recognition of one or more social, communication technologies.
legal, regulatory, and/or ethical
influences on financial recording and Application of some basic decision-
decision-making. making skills, using financial and non-
financial information.
E Emerging awareness of the role of Attempted consideration of simple Few elements of application of one or Limited communication of some aspects
accounting in society. financial information, with limited use of more of the principles or practices of of simple financial information.
appropriate accounting terminology. recording and reporting financial
Emerging awareness of the purpose of information. Attempted use of a limited range of
financial information for decision-making. accounting terminology.
Attempted recording of aspects of simple
Limited recognition of a social, legal, financial information, using manual
regulatory, or ethical influence on methods or information and
financial recording and decision-making. communication technologies.
Limited application of any decision-
making skills relevant to financial and
non-financial information.
15
ASSESSMENT INTEGRITY
The SACE Assuring Assessment Integrity Policy outlines the principles and processes
that teachers and assessors follow to assure the integrity of student assessments. This
policy is available on the SACE website (www.sace.sa.edu.au) as part of the SACE
Policy Framework.
The SACE Board uses a range of quality assurance processes so that the grades
awarded for student achievement in the school assessment are applied consistently and
fairly against the performance standards for a subject, and are comparable across all
schools.
Information and guidelines on quality assurance in assessment at Stage 1 are available
on the SACE website (www.sace.sa.edu.au).

SUPPORT MATERIALS
SUBJECT-SPECIFIC ADVICE
Online support materials are provided for each subject and updated regularly on the
SACE website (www.sace.sa.edu.au). Examples of support materials are sample learning
and assessment plans, annotated assessment tasks, annotated student responses, and
recommended resource materials.
ADVICE ON ETHICAL STUDY AND RESEARCH

Advice for students and teachers on ethical study and research practices is available in
the guidelines on the ethical conduct of research in the SACE on the SACE website

Stage 2 Accounting
LEARNING SCOPE AND REQUIREMENTS
LEARNING REQUIREMENTS
The learning requirements summarise the knowledge, skills, and understanding that
students are expected to develop and demonstrate through their learning in Stage 2
Accounting.
In this subject, students are expected to:
1. identify various accounting entities and the main users of financial information
2. recognise, understand, record, report, and communicate financial information in a
manner appropriate to the identified needs of the user
3. understand and apply the process required to maintain financial information in order to
report the results of business activity
4. recognise that accounting concepts and standards determine the responsibilities and
obligations of accounting entities to report financial information
5. apply identified accounting concepts and standards to generate financial reports
6. analyse and interpret financial and non-financial information for decision-making and
problem-solving
7. recognise that social, legal, regulatory, and ethical issues both influence and are
influenced by business and accounting decisions.
CONTENT
Stage 2 Accounting is a 20-credit subject. Students are required to study the following
three sections:
 Section 1: The Environment of Accounting
 Section 2: Financial Accounting
 Section 3: Management Accounting.
Section 1: The Environment of Accounting

Section 1 provides knowledge and understanding of the role of accounting and its entities
and decision-making structures. Section 1 is the basis of the practical application in
Sections 2 and 3. Students develop a conceptual understanding, which they then apply in
Sections 2 and 3.
Section 1 emphasises the decision-making function of the accounting process. The
accountability and control functions of accounting are further expanded in Sections 2 and 3.

What is the role of accounting?
Accounting provides financial information for controlling resources and making judgments
of accountability.
What is the accounting process?

The accounting process involves the collection, processing, and analysis of data, and the
reporting of information to users for planning, control, and decision-making.
Which entities use accounting information?

Students should recognise the existence of the following entities:
 sole traders
 partnerships
 limited companies (private and public)
 individuals
 incorporated and unincorporated associations.
Students should identify the:

 legal entity
 accounting entity.
Students should know the functions and structure of:

 sole traders
 partnerships
 limited companies (private and public).

Who uses accounting information for decision-making?
The users of accounting information make decisions. The table below includes the main
types of users:
External Users Internal Users

Present or potential investors Owners/partners
Present or potential creditors Boards of directors
Customers Managers
Employees and trade unions
General public
Regulatory agencies
Stock exchange
Taxation authorities
What uses are made of accounting information?

Uses will depend on the user, as the following examples show:
 A potential creditor: should credit be extended?
 A potential investor: should money be invested in the organisation?
 A taxation authority: is the firm paying appropriate levels of tax?
 A manager: should an advertising campaign be undertaken?
How can decisions be made by external and internal users?

Decisions are made by using a structured process in which the problem or situation that
needs a decision is identified, the alternatives are considered, and a strategy for
implementation is provided. The process includes the use of quantitative data provided in
the accounting information and the use of qualitative data, such as recognising
contemporary social and ethical issues.
What influences the production of accounting information?

The influences are:
 regulatory frameworks, including the Australian Securities and Investments Commission,
the Australian Securities Exchange listing requirements, the Corporations Act 2001 (Cwlth),
and other legal requirements
 conceptual frameworks, including the Australian Accounting Standards Board Conceptual
Framework, which sets out the concepts that underlie the preparation and presentation of
financial reports for external users
 the needs of the accounting entity
 technological development
 social and ethical issues.

Intended Learning
At the end of this section, students should be able to:
 identify the interrelationship of the accountability, control, and decision-making functions of
accounting
 describe the accounting process
 describe the functions and main features of a range of entities
 distinguish between legal entity and accounting entity
 identify owner’s liability in a range of entity structures
 identify the various users of accounting information
 describe the uses made of accounting information
 distinguish between quantitative and qualitative data
 understand that decision-making can be analysed as a series of sequential steps
 recognise social, legal, regulatory, and ethical issues that affect financial decisions
 demonstrate knowledge of the existence and influence of the regulatory and conceptual
frameworks
 appreciate the technological, social, regulatory, and ethical issues that influence the
accounting information produced.

Section 2: Financial Accounting
This section is concerned primarily with the provision of accounting information to satisfy
the needs of external as well as internal users, and for accountability purposes.
In this section students gain a working knowledge of the dual effects that transactions
have on the accounting equation. It is therefore necessary for students to develop an
understanding of debit and credit and the nature of accounts in order to record the
changes that occur after each transaction.
Students:
 develop a conceptual knowledge of the whole double-entry recording process
 construct an account in order to record the effects of transactions
 record transactions in the general journal
 construct accounts
 work from a list of given account balances to make adjustments and prepare accounting
reports.
The recording of specialised journals is not required.
Students generate reports for a sole trader from a list of account balances and recognise
reports for other business entities.
The accounting concepts listed below affect the treatment of data and should be
considered in the preparation of accounting reports. Students should understand the
meaning, application, and interrelationship of the following accounting concepts:
 accounting entity  materiality
 accounting period  monetary
 accrual accounting  prudence
 consistency  realisation
 duality  relevance
 going concern  reliability.
 historical cost
These accounting concepts provide the basis for current standards and practices.
What is the purpose of accounting reports and what information do they contain?
Report and Purpose Information

Balance sheet:  Components: assets, liabilities, and owner’s
equity
Statement of financial position
 The accounting equation
 The concept of duality, showing the effects of
transactions on the balance sheet
 Classification of the components: current and
non-current assets, liabilities, and owner’s equity
Income statement:  Components: revenue and expenses
The measurement of profit or loss  Classification of the components for service

and trading entities
Statement of cash flows:  Components: cash (sources and uses)
Sources of cash inflows and outflows  Differences between net profit and net cash
flows in an accrual accounting system

What are the links between the reports?
Reports Links
Income statement and balance sheet  Transfer of profit
 Impact of the going concern concept
Income statement and statement of cash flows  Cash versus accrual representation of
periodic flows (especially from operations)
Statement of cash flows and balance sheet  Flow analysis of change in cash position over
a period
How are financial data organised into report format?

Students recognise and interpret reports of different accounting entities but generate
reports only for a sole trader.
Financial data can be organised through the preparation of an appropriately classified
income statement, balance sheet, and statement of cash flows for a sole trader (for
service and trading entities), taking into account:
 adjustments for prepayments and accruals of expenses and revenue (the adjustments for
prepayments depend on the initial treatment of the transaction)
 accumulated depreciation and allowance for doubtful debts.
How do reports vary for different accounting entities?

Students recognise the similarities and differences in the reports of a range of accounting
entities, including sole trader, partnership, and company. Variations in the reports include
format, the names of reports, owner’s equity, and terminology. The analysis and
interpretation of authentic company reports should be included in this section.
What uses are made of the reports?

Reports can be used to convey:
 an analysis by calculation of the ratios used to measure return and risk
 an interpretation of ratio calculations
 an interpretation of statements by vertical, horizontal, and trend analyses defined as
– vertical analysis: the relationship of items within financial statements for one
accounting period
– horizontal analysis: the relationship of items within financial statements for
consecutive accounting periods
– trend analysis: the relationship of items within financial statements for a period of
3 or more years
 an interpretation by comparison of results with those of competitors and/or by other
economic indicators
 comments on results or findings, taking into consideration accountability and social, legal,
regulatory, and ethical issues.

Analysis Tools
Students may use the following ratios for analysis of financial information:
Profitability (Return) Expressed as

For all entities:
Return on equity net profit %
owner’s equity*
Return on total assets net profit  interest expense %

total assets*
Net profit margin net profit %
net sales
Expense individual expenses %
net sales
Gross profit margin gross profit %
net sales
For companies:
Earnings per ordinary share net profit for ordinary shareholders $
number of ordinary shares
Earnings yield earnings per ordinary share %
market price per ordinary share
Dividend per ordinary share total ordinary dividend $
number of ordinary shares
Dividend yield dividend per ordinary share %
market price per ordinary share
Financial Stability (Risk)

Short Term (Liquidity)
Quick asset (acid test) † current assets  inventory ratio
current liabilities
Working capital current assets ratio
current liabilities
Debtors’ turnover net credit sales times
debtors *
Inventory turnover cost of goods sold times
inventory *
* Averages are used for these values. However, the availability of information may necessitate the
use of opening or closing values.
† It is acceptable also to deduct bank overdrafts from current liabilities when calculating this ratio,
as appears in some textbooks and study guides.

Financial Stability (Risk), continued Expressed as
Long Term (Solvency)
Total debt/total assets total liabilities %
total assets
Debt/equity total liabilities %
owner’s equity
Times interest earned net profit  interest expense times
interest expense
What are the limitations of the information in these reports?

The limitations of the monetary, historical cost, consistency, prudence, and accounting
period concepts should be considered when analysing and interpreting the reports.
Intended Learning
 demonstrate understanding of the reporting needs of a range of accounting entities
 use terminology relevant to accounting reports
 recognise the features of accounting reports and understand their use and purpose
 understand the effects of accounting concepts and conventions on the final reports
 identify the links between the reports
 understand the difference between profit and cash flow
 use the accounting equation to describe and record the effects of financial transactions on
the reports
 prepare classified final reports from a list of account balances that have been adjusted
 recognise the limitations that are inherent in the accounting concepts and conventions
 identify the range of reports used by different entities
 recognise the impact of different ownership structures on reporting requirements
 calculate ratios to measure return and risk
 analyse and interpret financial statements and comment on the findings.

Section 3: Management Accounting
This section concerns the provision of information to internal decision-makers for
accountability and control. ‘Management’ refers to those owners or employees of an
entity who have direct or delegated responsibility for making business decisions. Reports
are specific to the needs and responsibilities of management and include information on
past, current, and estimated future positions.
In this section students apply the conceptual knowledge that was introduced in Section 1.
Students gain an understanding of how managers plan and control the business in order
to make valid decisions. Students learn to recognise the effects of social and ethical
issues on decisions.
What types of data and information are used in making decisions?

The types of data and information used in making decisions include:
 quantitative data (numeric, measurable)
 qualitative information (e.g. social, legal, regulatory, environmental, ethical, short-term
versus long-term, and efficiency versus effectiveness)
 financial information (e.g. budgets, ratios, sales results, and current interest rates)
 non-financial information (e.g. benchmarks, staff turnover, and market share).
What types of social and ethical issues influence management in decision-making?

Management is influenced by:
 personal and social values
 environmental impact studies
 ethical investments
 technological developments.
What social and ethical issues may result from accounting decisions?
Issues that may arise as a result of accounting decisions include:
 changes in working conditions (e.g. job satisfaction and levels of employment)
 advantages or disadvantages to different groups in society
 non-disclosure or distortion of information to shareholders or creditors
 impact on the physical environment.
How can management use accounting information in planning and control?

Planning is needed for establishing goals and for monitoring and evaluating progress.
Planning can include:
 calculating break-even point
 preparing cash budgets
 recognising the distinction between cash and profit
 comparing actual and planned performance
 recognising the purpose and use of the budgeted income statement and the balance sheet.

The formula for calculating the break-even point is:
fixed costs of production

= number of units required to break even.
(selling price  variable cost price) per unit
How can accounting information help management to control assets and liabilities?
Records must be kept in order to control the assets and liabilities of the business.
These records are produced using a recording process that involves source documents,
journals, and ledgers.
Students gain an understanding of a recording process in which data from a variety of
sources are used for the control of assets and liabilities. It is necessary for students to
have conceptual knowledge of the double-entry recording process. For this purpose, an
understanding of journals and ledgers is required.
The control of assets and liabilities includes the following:
Current Assets
Inventories
 Preparation of perpetual inventory records using inventory cards and ledgers (first-in first-
out and specific identification methods).
 Understanding of the role of a stocktake.
 Completion of stock adjustment on the inventory card, in the general journal, and in the
inventory control account.
 Recognition of the concept of lower of cost or net realisable value.
 Understanding of inventory control procedures for monitoring storage and security, and
turnover and inventory levels.
 Calculation of inventory turnover ratio and analysis of the results.
Debtors
 Preparation of a debtors’ ledger, control account, and schedule of debtors.
 Interpretation of ageing analysis.
 Recognition of credit control procedures for screening debtors and determining credit limits,
incentives to pay, and penalties for late payment.
 Distinction between bad and doubtful debts.
 Calculation of debtors’ turnover ratio and analysis of the results.
 Recording of bad debt write-off and creation of an allowance for doubtful debts.
(The total bad debt account balance should be transferred to any existing allowance
account.)
Cash
 Recording of receipts and payments.
 Recognition that some entities use a columnar receipts-and-payments cash book.
 Reconciliation of cash records with the bank statement to prepare a bank reconciliation
statement.
 Understanding of procedures used to improve and/or control the cash flow of a business.

Non-current Assets
 Understanding of the use of an asset register or schedule so that depreciation can be
recorded.
 Recognition of the need to account for depreciation.
 Calculation of depreciation, using various methods, including straight-line,
diminishing-balance, and units-of-use.
 Recording of depreciation in a general journal and ledger.
Liabilities
 Recognition of distinctions between external and internal sources of funds and their costs,
benefits, and risks.
 Understanding of reasons for short-term or long-term borrowing.
 Measurement and interpretation of level of debt or equity.
How does technology help in the control of assets and liabilities?

Technology helps in:
 the monitoring of assets (scanners, passwords, key cards)
 the timely recording of transactions and reporting of results
 improvements to the availability, communication, and analysis of accounting information
 the establishment of simulations.
Intended Learning
 explain how financial information is used in decision-making in a variety of situations
 recognise the importance of non-financial information in decision-making
 prepare cash budgets
 read and interpret budgeted income statements and budgeted balance sheets
 calculate the break-even point and understand its implications for budgeting decisions
 select suitable types and sources of finance for particular situations
 understand the principles of a double-entry recording process
 understand the need for, and procedures used to control, assets and liabilities
 record (for inventories) debtors, cash, and depreciation
 calculate and evaluate inventory turnover
 understand the application of prudence in inventory valuation
 calculate and evaluate debtors’ turnover
 understand the use of an asset register or schedule
 understand the need for depreciation and the suitability of different methods for different
types of assets
 recognise the implications for an entity of using borrowed funds
 appreciate the use of technology to monitor and control assets
 recognise that social and ethical issues may influence and arise from decision-making.

ASSESSMENT SCOPE AND REQUIREMENTS
All Stage 2 subjects have a school assessment component and an external assessment
component.
EVIDENCE OF LEARNING
The following assessment types enable students to demonstrate their learning in
Stage 2 Accounting:
School Assessment (70%)
 Assessment Type 1: Skills and Applications Tasks (50%)
 Assessment Type 2: Report (20%)
External Assessment (30%)
 Assessment Type 3: Examination (30%).
Students should provide evidence of their learning through seven to ten assessments,
including the external assessment component. Students undertake:
 five to eight skills and applications tasks
 one report
 one examination.
ASSESSMENT DESIGN CRITERIA

The assessment design criteria are based on the learning requirements and are used by:
 teachers to clarify for the student what he or she needs to learn
 teachers and assessors to design opportunities for the student to provide evidence of his or
her learning at the highest possible level of achievement.
The assessment design criteria consist of specific features that:
 students should demonstrate in their learning
 teachers and assessors look for as evidence that students have met the learning
requirements.
For this subject the assessment design criteria are:
 understanding
 application
 communication.

The specific features of these criteria are described below.
The set of assessments, as a whole, must give students opportunities to demonstrate
each of the specific features by the completion of study of the subject.
Understanding
U1 Identification of various accounting entities and the main users of financial
information.
U2 Recognition, understanding, recording, and reporting of financial information in a
manner appropriate to the identified needs of the user.
U3 Recognition that accounting concepts and standards determine the responsibilities
and obligations of accounting entities to report financial information.
U4 Understanding of the process required to maintain financial information in order to
report the results of business activity.
U5 Recognition of how social, legal, regulatory, and ethical issues both influence and
are influenced by business and accounting decisions.
Analysis and Interpretation

AI1 Analysis of financial and non-financial information for decision-making and
problem-solving.
AI2 Interpretation of financial and non-financial information.
Application
A1 Application of identified accounting concepts to generate financial reports.
A2 Application of the process required to maintain financial information in order to
Communication
C1 Communication of financial information in a manner appropriate to the identified
needs of the user.
C2 Use of appropriate accounting terminology.

SCHOOL ASSESSMENT
Assessment Type 1: Skills and Applications Tasks (50%)

Students undertake five to eight skills and applications tasks.
Each skills and applications task should be based on unseen data and undertaken under
timed, supervised conditions, to a maximum of 1 hour.
Students solve accounting problems that may:
 be routine, analytical, and/or interpretative
 be posed in familiar and unfamiliar contexts
 require the appropriate use of information and communication technologies.
In setting skills and applications tasks, teachers may provide students with information in
written form or in the form of numerical data or tables.
For this assessment type, students should:
 demonstrate an understanding of relevant accounting concepts, skills, and practices
 select appropriate accounting techniques to successfully solve routine, analytical, and/or
interpretative problems
 provide explanations and use notation, terminology, and presentation correctly throughout
the task.
Students may be required to use information and communication technologies
appropriately to aid and enhance the solution of some problems.
It is recommended that teachers integrate appropriate accounting software packages into
some of these assessments.
 understanding
 application
 communication.
Assessment Type 2: Report (20%)

Students undertake an analytical response to unseen data, such as financial statements,
under timed, supervised conditions, to a maximum of 1 hour.
The report must include:
 clear headings and sections
 a brief introduction
 calculations, ratios, tables, and graphs, as appropriate
 interpretation of financial information
 a conclusion.
 understanding
 communication.

EXTERNAL ASSESSMENT
Assessment Type 3: Examination (30%)

Students undertake a 2-hour external examination that consists of a range of problem
questions, including short-answer and extended-response questions. Problem questions
integrate knowledge, skills, and understanding from all sections of the content, with a
focus on the knowledge, skills, applications, analysis, and interpretation involved in
accounting practice.
All specific features of the assessment design criteria for this subject may be assessed in
the external examination.
PERFORMANCE STANDARDS
The performance standards describe five levels of achievement, A to E.
Each level of achievement describes the knowledge, skills, and understanding that
teachers and assessors refer to in deciding how well a student has demonstrated his or
her learning on the basis of the evidence provided.
During the teaching and learning program the teacher gives students feedback on their
learning, with reference to the performance standards.
At the student’s completion of study of each school assessment type, the teacher makes
a decision about the quality of the student’s learning by:
 referring to the performance standards
 assigning a grade between A and E for the assessment type.
The student’s school assessment and external assessment are combined for a final
result, which is reported as a grade between A and E.

Performance Standards for Stage 2 Accounting
A Astute identification of various accounting Astute analysis of financial and non- Comprehensive, logical, and astute Astute communication of financial
entities and the main users of financial financial information for decision-making application of identified accounting information in a coherent manner most
information. and problem-solving. concepts to generate financial reports. appropriate to the identified needs of the
user.
Comprehensive recognition, Perceptive and critical interpretation of Perceptive application of the process
understanding, recording, and reporting financial and non-financial information. required to maintain financial information Highly appropriate and well-informed use
of financial information in a manner in order to report the results of business of a range of accounting terminology.
appropriate to the identified needs of the activity.
user.
Insightful recognition that accounting
concepts and standards determine the
responsibilities and obligations of
accounting entities to report financial
information.
Comprehensive and well-informed
understanding of the process required to
maintain financial information in order to
Insightful and well-informed recognition
of how social, legal, regulatory, and
ethical issues both influence and are
influenced by business and accounting
decisions.
35
36
B Well-considered identification of various Thoughtful analysis of financial and non- Capable and well-informed application of Well-informed communication of financial
accounting entities and the main users of financial information for decision-making identified accounting concepts to information in a clear manner appropriate
financial information. and problem-solving. generate financial reports. to the identified needs of the user.
Detailed recognition, understanding, Well-considered and critical interpretation Thoughtful application of the process Appropriate and well-informed use of
recording, and reporting of financial of financial and non-financial information. required to maintain financial information accounting terminology.
information in a manner appropriate to in order to report the results of business
the identified needs of the user. activity.
Clear and well-informed recognition that
accounting concepts and standards
determine the responsibilities and
obligations of accounting entities to
report financial information.
Detailed understanding of the process
required to maintain financial information
in order to report the results of business
activity.
Well-informed recognition of how social,
legal, regulatory, and ethical issues both
influence and are influenced by business
and accounting decisions.
C Considered identification of a range of Considered analysis of financial and non- Competent application of identified Informed communication of some
accounting entities and main users of financial information for decision-making accounting concepts to generate financial financial information in a mostly clear
financial information. and problem-solving. reports. manner appropriate to the identified
needs of the user.
Informed recognition, understanding, Considered interpretation of financial and Appropriate application of the process
recording, and reporting of financial non-financial information. required to maintain financial information Generally appropriate and informed use
information in a manner appropriate to in order to report the results of business of accounting terminology.
the identified needs of the user. activity.
Informed recognition that accounting
information.
Competent understanding of the process
activity.
Informed recognition of how social, legal,
regulatory, and ethical issues both
37
38
D Identification of some accounting entities Some recognition and basic use of Basic application of some identified Some clarity of communication about
and/or the main users of financial financial and non-financial information for accounting concepts to generate one or some aspects of financial information.
information. decision-making and problem-solving. more financial reports.
Inconsistent use of some accounting
Recognition, recording, and reporting of Some endeavour to interpret financial Partial application of the process required terminology.
basic financial information. and non-financial information. to maintain financial information in order
to report the results of business activity.
Some recognition that accounting
information.
Some understanding of the process
activity, with evidence of some
inconsistencies.
Some recognition that social, legal,
regulatory, and/or ethical issues both
E Limited identification of accounting Limited recognition or use of financial Attempted application of one or more Limited communication of one or more
entities or main users of financial and non-financial information for identified accounting concepts to aspects of financial information.
information. decision-making and problem-solving. generate a financial report.
Attempted use of a limited range of
Limited recognition, recording, or Description of some financial or non- Recognition of one or more aspects of accounting terminology.
reporting of some basic financial financial information. the process required to maintain financial
information. information in order to report the results
of business activity.
Emerging awareness of the role of
accounting concepts and standards.
Emerging awareness of the process
activity.
Emerging awareness of how social, legal,
regulatory, and/or ethical issues influence
business and accounting decisions.
ASSESSMENT INTEGRITY
The SACE Assuring Assessment Integrity Policy outlines the principles and processes
that teachers and assessors follow to assure the integrity of student assessments. This
policy is available on the SACE website (www.sace.sa.edu.au) as part of the SACE
Policy Framework.
The SACE Board uses a range of quality assurance processes so that the grades
awarded for student achievement, in both the school assessment and the external
assessment, are applied consistently and fairly against the performance standards for a
subject, and are comparable across all schools.
Information and guidelines on quality assurance in assessment at Stage 2 are available
on the SACE website (www.sace.sa.edu.au).

SUPPORT MATERIALS
SUBJECT-SPECIFIC ADVICE
Online support materials are provided for each subject and updated regularly on the
SACE website (www.sace.sa.edu.au). Examples of support materials are sample learning
and assessment plans, annotated assessment tasks, annotated student responses, and
recommended resource materials.
ADVICE ON ETHICAL STUDY AND RESEARCH

Advice for students and teachers on ethical study and research practices is available in
the guidelines on the ethical conduct of research in the SACE on the SACE website

Accounting Subject Outline (For Teaching in 2018)

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Accounting

2018 Subject Outline

Accounting 2018 Subject Outline — Stage 1 and Stage 2 1

2 Accounting 2018 Subject Outline — Stage 1 and Stage 2

ABORIGINAL AND TORRES STRAIT ISLANDER KNOWLEDGE,

Accounting 2018 Subject Outline — Stage 1 and Stage 2 3

4 Accounting 2018 Subject Outline — Stage 1 and Stage 2

A 20-credit subject consists of:

The option topics are as follows:

6 Stage 1 Accounting 2018

Personal Financial Management

Stage 1 Accounting 2018 7

Keeping Cash Records

Analysis and Interpretation of Financial Reports

8 Stage 1 Accounting 2018

Stage 1 Accounting 2018 9

Assessment at Stage 1 is school based.

ASSESSMENT DESIGN CRITERIA

For this subject the assessment design criteria are:

10 Stage 1 Accounting 2018

Analysis and Interpretation

Stage 1 Accounting 2018 11

Assessment Type 2: Investigation

12 Stage 1 Accounting 2018

Stage 1 Accounting 2018 13

- Understanding Analysis and Interpretation Application Communication

- Understanding Analysis and Interpretation Application Communication

16 Stage 1 Accounting 2018

ADVICE ON ETHICAL STUDY AND RESEARCH

Stage 1 Accounting 2018 17

Section 1: The Environment of Accounting

20 Stage 2 Accounting 2018

What is the accounting process?

Which entities use accounting information?

Students should identify the:

Students should know the functions and structure of:

Stage 2 Accounting 2018 21

External Users Internal Users

What uses are made of accounting information?

How can decisions be made by external and internal users?

What influences the production of accounting information?

22 Stage 2 Accounting 2018

Stage 2 Accounting 2018 23

Report and Purpose Information

The measurement of profit or loss  Classification of the components for service

24 Stage 2 Accounting 2018

How are financial data organised into report format?

How do reports vary for different accounting entities?

What uses are made of the reports?

Stage 2 Accounting 2018 25

Profitability (Return) Expressed as

Return on total assets net profit  interest expense %

Financial Stability (Risk)

26 Stage 2 Accounting 2018

What are the limitations of the information in these reports?

Stage 2 Accounting 2018 27

What types of data and information are used in making decisions?

What types of social and ethical issues influence management in decision-making?

How can management use accounting information in planning and control?

28 Stage 2 Accounting 2018

fixed costs of production

Stage 2 Accounting 2018 29

How does technology help in the control of assets and liabilities?