IIE Learn Module Outline
FIAC5112
Financial Accounting 1B
FIAC5112
MODULE OUTLINE 2022
(First Edition: 2017)
This guide enjoys copyright under the Berne Convention. In terms of the Copyright Act, no 98
of 1978, no part of this manual may be reproduced or transmitted in any form or by any
means, electronic or mechanical, including photocopying, recording or by any other
information storage and retrieval system without permission in writing from the proprietor.
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institution under the Higher Education Act, 1997 (reg. no. 2007/HE07/002).
Company registration number: 1987/004754/07.
© The Independent Institute of Education (Pty) Ltd 2022
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IIE Learn Module Outline
FIAC5112
Table of Contents
Introduction ............................................................................................................................... 3
Using this Module Outline .......................................................................................................... 4
This Module on Learn ................................................................................................................. 5
Icons Used in this Document and on Learn ................................................................................ 6
Module Resources ...................................................................................................................... 7
Module Purpose ......................................................................................................................... 8
Module Outcomes ...................................................................................................................... 8
Assessments ............................................................................................................................... 9
Module Pacer ........................................................................................................................... 11
Glossary of Key Terms for this Module .................................................................................... 21
© The Independent Institute of Education (Pty) Ltd 2022
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IIE Learn Module Outline
FIAC5112
Introduction
Congratulations on passing FIAC5111, a pre-requisite for attempting FIAC5112
You should not forget anything that you learnt in FIAC5111, for example, the basic accounting
equation, both inventory systems, i.e., the periodic inventory system and the perpetual
inventory system and VAT, amongst other sections of Accounting.
In this module, we do not completely leave behind the sole trader, but the focus is on
discovering how the other forms of ownership record their transactions. Accounting for
partnerships and companies make up the largest part of the syllabus for this semester.
Here is the flow of this module:
We begin with drawing up the annual financial statements of a partnership, with special
reference to the statement of changes in equity. We continue in week two with how to
record the admittance or withdrawal of a partner or partners as well as the dissolution of a
partnership.
The next three weeks focusses on companies as a form of ownership. We look at the
different types of companies and an introduction to the Companies Act. We will then move
on to recording transactions relating to the sale of shares, as well as the understanding and
application of other basic financial instruments.
Next, we will define and unpack the framework, objectives and assumptions upon which the
financial statements are prepared, which will then lead to us preparing the annual financial
statements for companies using the structure and content of IAS 1.
Finally, the preparation of cash flow statements will be studied. This statement and its notes,
perhaps reveal the most important information to the owners, as it deals with what monies
they received and spent during the financial period. This information is vital to an entity if
they wish to stay afloat.
All learning units are examinable. Your assessments will be in line with the activities in the
textbook, as well as the exercises provided in the Workbook.
© The Independent Institute of Education (Pty) Ltd 2022
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IIE Learn Module Outline
FIAC5112
Using this Module Outline
This module outline has been developed to support your learning. Please note that the
content of this module is on Learn as well as in the prescribed material. You will not succeed
in this module if you focus on this document alone.
•
•
This document does not reflect all the content on Learn, the links to different
resources, nor the specific instructions for the group and individual activities.
Your lecturer will decide when activities are available/open for submission and when
these submissions or contributions are due. Ensure that you take note of
announcements made during lectures and/or posted within Learn in this regard.
© The Independent Institute of Education (Pty) Ltd 2022
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FIAC5112
This Module on Learn
Learn is an online space, designed to support and maximise your learning in an active
manner. Its main purpose is to guide and pace you through the module. In addition to the
information provided in this document, you will find the following when you access Learn:
•
•
•
•
•
•
An assessment brief;
A list of prescribed material;
A variety of additional online resources (articles, videos, audio, interactive graphics,
etc.) in each learning unit that will further help to explain theoretical concepts;
Critical questions to guide you through the module’s objectives;
Collaborative and individual activities (all of which are gradable) with time-on-task
estimates to assist you in managing your time around these;
Revision questions, or references to revision questions, after each learning unit.
Kindly note:
•
•
•
•
Unless you are completing this as a distance module, Learn does not replace your
contact time with your lecturers and/or tutors.
FIAC5112 is a Learn module, and as such, you are required to engage extensively with
the content on the Learn platform. Effective use of this tool will provide you with
opportunities to discuss, debate, and consolidate your understanding of the content
presented in this module.
You are expected to work through the learning units on Learn in your own time –
especially before class. Any contact sessions will therefore be used to raise and
address any questions or interesting points with your lecturer, and not to cover every
aspect of this module.
Your lecturer will communicate submission dates for specific activities in class and/or
on Learn.
© The Independent Institute of Education (Pty) Ltd 2022
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FIAC5112
Icons Used in this Document and on Learn
The following icons are used in all your modules on Learn:
Icon
Description
A list of what you should be able to do after working through the learning
unit.
Specific references to sections in the prescribed work.
Questions to help you recognise or think about theoretical concepts to be
covered.
Sections where you get to grapple with the content/ theory. This is mainly
presented in the form of questions which focus your attention and are
aimed at helping you to understand the content better. You will be
presented with online resources to work through (in addition to the
textbook or manual references) and find some of the answers to the
questions posed.
Opportunities to make connections between different chunks of theory in
the module or to real life.
Real life or world of work information or examples of application of theory,
using online resources for self-exploration.
REMEMBER:
You need to log onto Learn to:
• Access online resources such as articles, interactive graphics, explanations, video clips,
etc. which will assist you in mastering the content; and
• View instructions and submit or post your contributions to individual or group activities
which are managed and tracked on Learn.
© The Independent Institute of Education (Pty) Ltd 2022
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IIE Learn Module Outline
FIAC5112
Module Resources
Prescribed
Material (PM)
for this Module
Recommended
Readings,
Digital, and
Web Resources
Module
Overview
Assessments
Dempsey, A., Britz, P.M., Joubert, J.A. and Watson, S.A. 2016. Introduction
to Financial Accounting. 10th edition. LexisNexis.
AND
This module uses an IIE Module workbook that you will find in the
[FIAC5112, 2020] folder on the Student Portal.
Please note that a number of additional resources and links to resources
are provided throughout this module on the Learn platform. You are
encouraged to engage with these as they will assist you in mastering the
various objectives of this module. They may also be useful resources for
completing any assignments. You will not, however, be assessed under
examination conditions on any additional or recommended reading
material.
You will find an overview of this module on Learn under the Module
Information link in the Course Menu.
Find more information on this module’s assessments in this document and
on the Student Portal.
© The Independent Institute of Education (Pty) Ltd 2022
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IIE Learn Module Outline
FIAC5112
Module Purpose
The purpose of this module is to introduce students to financial accounting and reporting,
with reference to International Financial Reporting Standards as they are applied to
partnerships and companies. In addition, students will examine the concepts relating to
capital structure and the accounting of companies.
Module Outcomes
MO1 Demonstrate knowledge and understanding of the financial reporting framework in
terms of International Financial Reporting Standards (IFRS) and companies in terms of
the Companies Act (Act 71 of 2008).
MO2 Demonstrate an understanding of the statutory requirements in preparing annual
financial statements for a range of business entities.
MO3 Prepare annual financial statements for a range of business entities.
MO4 Interpret company financial statements in the accounting records of business entities.
© The Independent Institute of Education (Pty) Ltd 2022
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IIE Learn Module Outline
FIAC5112
Assessments
Integrated Curriculum Engagement (ICE)
Minimum number of ICE activities to complete
Weighting towards the final module mark
Tests/Examination
Weighting
Duration
Total marks
Open/ closed book
Resources required
Learning Units covered
Test 1
20%
1 hour
60
Closed
Calculator
LU1 & 2
© The Independent Institute of Education (Pty) Ltd 2022
4
10%
Test 2
20%
1 hour
60
Closed
Calculator
LU3, 4 & 5
Examination
50%
3 hours
180
Closed
Calculator
LU 1 to 5
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IIE Learn Module Outline
FIAC5112
Assessment Preparation Guidelines
Format of the Assessment
(The Focus/ Approach/ Objectives)
Tests and
Examination
The tests and exam will comprise
of theory and application of
theory (practical) questions
involving calculations.
Theory-based questions will
consist of a variety of formats.
However, the majority of
questions will test the application
of theory and will be practical
questions with calculations.
Preparation Hints
(How to Prepare, Resources to Use,
etc.)
To prepare effectively for the
assessments you can include the
following in your preparation:
•
•
•
•
© The Independent Institute of Education (Pty) Ltd 2022
Ensure that you work
through all the examples and
questions in your textbook.
Revision exercises in the
Workbook.
Check if you are confident
that you could answer
questions relating to all of
the Learning Objectives for
the Learning Units tested.
Work through Mock
Assessments or previous
assessments.
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IIE Learn Module Outline
FIAC5112
Module Pacer
Code
FIAC5112
Programme
BAC1
Learning Unit 1
Partnerships
Contact Sessions
45 + 15 LAC = 60
sessions
Credits
18
Overview:
In this learning unit, we study the particular accounts relating to a new type of entity –
Partnerships. Partnerships have certain advantages over that of a Sole Trader. Two or more
individuals draw up an oral or written agreement to work together for a common goal. These
individuals combine their money, talents, skills and experience to share in the ownership of
the entity and to share in the future profits or losses.
In this learning unit, we will look at the legal aspects of a partnership, the financial statements
used in a partnership as well as the legal requirements for a partnership. We will also look at
how to prepare statements of equity, profit/loss as well as preparation of the statement of
financial position. We will conclude by looking at the procedures which are applied in
partnerships for change of ownership and dissolutions thereof.
If you are a contact student, you will likely spend 10 sessions on this learning unit.
Please work through the themes on Learn, together with the relevant sections of your
prescribed source/s. To ensure that you are working towards mastering the objectives for this
learning unit, please also ensure that you complete the activities on Learn.
The challenge you may experience in this learning unit relates to applying the procedures for
change in ownership of partnerships.
© The Independent Institute of Education (Pty) Ltd 2022
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IIE Learn Module Outline
Learning Unit 1: PARTNERSHIPS
Sessions:
1 – 10
Academic Week: On completion of this learning unit,
1–2
you should be able to:
Related
Outcomes:
•
Discuss the legal aspects of a
MO2
partnership;
MO3
•
Discuss the accounting
treatment of a partnership;
•
Record transactions particular
to the distribution of profit/loss;
•
Prepare the statement of
changes in equity;
•
Prepare the statement of profit
or loss;
•
Prepare the statement of
financial position;
•
Apply the procedure for a
change in ownership;
•
Apply the procedure for the
dissolution of a partnership.
© The Independent Institute of Education (Pty) Ltd 2022
FIAC5112
Prescribed Material (PM)
Refer to Chapter 14 of the
prescribed textbook.
LU1 of the Workbook
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IIE Learn Module Outline
Learning Unit 2
FIAC5112
Introduction to Company Financial Statements
Overview:
In the previous learning unit, we discussed aspects relating to partnerships.
A company is a legal entity and is incorporated according to the terms of the Companies Act
(Act 71 of 2008). In this learning unit, we will focus on the different types of companies, the
shareholders as well as the rules and regulations that govern the annual financial statements.
If you are a contact student, you will likely spend 12 sessions on this learning unit.
Please work through the themes on Learn, together with the relevant sections of your
prescribed source/s. To ensure that you are working towards mastering the objectives for
this learning unit, please complete the activities on Learn.
This learning unit is mainly theory-based.
© The Independent Institute of Education (Pty) Ltd 2022
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IIE Learn Module Outline
FIAC5112
Learning Unit 2: INTRODUCTION TO COMPANY FINANCIAL STATEMENTS
Sessions:
Prescribed Material (PM)
11-23
Academic
On completion of this learning unit, you Refer to Chapter 15 of the
Week:
should be able to:
prescribed textbook.
3-5
LU2 of the Workbook
Related
•
Identify different categories of
Outcomes:
companies according to section 8
MO1
of the Companies Act No 71 of
MO2
2008;
MO4
•
Explain the characteristics of
companies and their shareholders;
•
Explain the requirements to issue
shares in terms of section 38 of
the Companies Act No 71 of 2008;
•
Explain the requirements to
prepare financial statements in
terms of sections 29 and 30 of the
Companies Act No 71 of 2008;
© The Independent Institute of Education (Pty) Ltd 2022
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IIE Learn Module Outline
Learning Unit 3
FIAC5112
The Accounting Framework
Overview:
In this learning unit, we will cover the accounting framework. We will look at the objectives
and assumptions in preparing financial statements as well as the characteristics that these
financial statements should incorporate to make them useful to the viewer. We will then
identify and define the elements of financial statements along with their recognition criteria.
If you are a contact student, you will likely spend 8 sessions on this learning unit.
Please work through the themes on Learn, together with the relevant sections of your
prescribed source/s. To ensure that you are working towards mastering the objectives for
this learning unit, please complete the activities on Learn.
The challenge you may experience in this learning unit relates to distinguishing between the
various elements of the financial statements and which element is addressed.
© The Independent Institute of Education (Pty) Ltd 2022
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IIE Learn Module Outline
FIAC5112
Learning Unit 3: THE ACCOUNTING FRAMEWORK
Sessions:
Prescribed Material (PM)
23– 31
Academic Week: On completion of this learning unit, you
Refer to:
5-6
should be able to:
- Chapter 1 of the
prescribed textbook.
Related
- LU 3 of the Workbook
Outcomes:
•
Discuss the underlying objectives
MO1
and assumptions in preparing
financial statements;
•
Discuss the qualitative
characteristics of useful financial
information;
•
Define the elements of the financial
statements;
•
Identify whether an item meets the
definition of an element of the
financial statements;
•
Define the recognition criteria of the
elements of the financial statements;
•
Identify whether an element of the
financial statements meets the
recognition criteria.
© The Independent Institute of Education (Pty) Ltd 2022
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IIE Learn Module Outline
Learning Unit 4
FIAC5112
Company Financial Statements
Overview:
Companies are compelled to produce annual financial statements. In this learning unit, we
will explore the preparation of the various company financial statements, including the
financial position, profit or loss and other comprehensive income, changes in equity and
selected notes. We will Conclude by explaining the objectives of the IFRS Foundation as well
as defining the components of financial statements in accordance with IAS1.
If you are a contact student, you will likely spend 15 sessions on this learning unit.
Please work through the themes on Learn, together with the relevant sections of your
prescribed source/s. To ensure that you are working towards mastering the objectives for this
learning unit, please complete the activities on Learn.
The challenge you may experience in this learning unit relates to distinguishing between the
concepts “presentation of financial statements” and “disclosure in financial statements”.
© The Independent Institute of Education (Pty) Ltd 2022
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IIE Learn Module Outline
FIAC5112
Learning Unit 4: COMPANY FINANCIAL STATEMENTS
Sessions:
32–47
Academic Week: On completion of this learning unit, you
7-9
should be able to:
•
•
•
•
•
•
Prepare the statement of financial
position;
Prepare the statement of profit or
loss and other comprehensive
income;
Prepare the statement of changes in
equity; and
Prepare selected notes to the annual
financial statements.
Explain the objectives of the IFRS
Foundation; and
Define the components of financial
statements in accordance with IAS1.
© The Independent Institute of Education (Pty) Ltd 2022
Prescribed Material (PM)
Refer to:
- Chapter 16 of the
prescribed textbook.
LU 4 of the Workbook
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IIE Learn Module Outline
Learning Unit 5
FIAC5112
The Statements of Cashflows
Overview:
A healthy cash flow is imperative to successful business entities. Controlling the cash flow of a
business is essential to ensure that all receipts of cash are accounted for correctly as well as
any payments made by the business. Unlike the other financial statements, information
involving the inflow and outflow of cash is reported in the statement of cash flows.
In this learning unit, we will look at the purpose of cash flows as well as distinguish between
the elements of the statement of cash flow. Finally, we will look at how to prepare a
statement of cash flows and its notes.
If you are a contact student, you will likely spend 10 sessions on this learning unit.
Please work through the themes on Learn, together with the relevant sections of your
prescribed source/s. To ensure that you are working towards mastering the objectives for this
learning unit, please complete the activities on Learn.
The challenge you may experience in this learning unit relates to distinguishing between the
cash basis and the accrual basis of accounting.
© The Independent Institute of Education (Pty) Ltd 2022
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IIE Learn Module Outline
Learning Unit 5: THE STATEMENT OF CASHFLOWS
Sessions:
47 – 57
Academic Week: On completion of this learning unit, you
10-11
should be able to:
Related
Outcomes:
•
Recognise the purpose of the
MO2
statement of cash flows;
MO3
•
Distinguish between the elements of
MO4
the statement of cash flows;
•
Prepare the statement of cash flows;
and
•
Prepare the notes to the statement
of cash flows.
© The Independent Institute of Education (Pty) Ltd 2022
FIAC5112
Prescribed Material (PM)
Refer to Chapter 18 of the
prescribed textbook.
LU5 of the workbook
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IIE Learn Module Outline
FIAC5112
Glossary of Key Terms for this Module
Term
Abridged tax
invoice
Accounting cycle
Accounting
equation
Accumulated
depreciation
account
Assets
Asset register
Statement of
financial position
Statement of
financial position
section
Definition
A source document that is issued when a VAT
vendor makes a sale of goods or services for
less than R50.
The accounting cycle commences with a
transaction, which needs to be analysed in
journals. Journals are then summarised and
posted to the ledger, where after a trial
balance is drawn up. These three steps are
repeated for every subsequent month in the
financial year – until the final month. In the
final month of the financial year (usually
month 12), the trial balance is followed by
year-end adjustments, a post-adjustment
trial balance, a post-closing trial balance and
the preparation of financial statements.
The equation on which the main framework
of accounting is based. It is a mathematical
equation that must always balance.
A negative asset account that holds the
accumulated pool of depreciation that has
been written off on a specific asset or group
of assets since they were acquired.
An asset is a present economic resource
controlled by the entity as a result of past
events.
Shows all the important details pertaining to
a particular asset, from the date of purchase
to the date of sale.
A financial statement that reflects the
accounting equation (the financial position of
the business).
The section of the general ledger and trial
balance that includes all the accounts that
will end up in the statement of financial
position, i.e., the proprietary accounts
(capital and drawings), asset accounts and
liability accounts.
© The Independent Institute of Education (Pty) Ltd 2022
My Notes
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IIE Learn Module Outline
Balancing
Bank deposit slip
Bank statement
Bank
reconciliation
statement
Break-even
Budget period
Budget guidelines
Budgets
Budget
committee
Budget variance
Business ethics
Capital account
Carrying value
Cash invoice
Cash receipt
FIAC5112
The month-end process of totalling the
accounts.
Supporting document used as proof that
cash was banked.
Statement drawn up by the bank that shows
all the transactions affecting the business’s
bank account.
A statement drawn up by the business to
remind them of debits and credits that still
need to be passed in the bank account by the
bank.
Describes a situation where neither a profit
nor a loss is generated.
Period for which the budget has been drawn
up.
Guidelines for the budget, based on the
firm’s strategic goals and long-term plan.
Used as a tool for future planning as well as a
tool for exercising control over cash receipts
and payments.
Responsible for holistic policy matters
relating to the budget programme.
The difference between the actual and
budgeted figures.
The question of how managers decide what
is right or wrong in conducting the business
of their organisation and how they aim to
achieve the “right” and to “avoid the wrong”.
Account used when the owner makes
contributions of cash or other assets to the
business.
The book value or depreciated value of a
non-current asset. The carrying value is equal
to the cost of the asset less its accumulated
depreciation.
A document that indicates that the sale has
taken place and been paid for immediately.
Source document used to record the receipt
of cash in cases where no VAT should be
charged.
© The Independent Institute of Education (Pty) Ltd 2022
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IIE Learn Module Outline
Cash receipts
journal
Cash receipts
transaction
Cash payments
journal
Cash payments
transaction
Cash slip
Cheque
counterfoil
Code of conduct
Contra-account
Credit column
Credit invoice
Credit note
Creditor
Creditors journal
Creditors
allowances
journal
FIAC5112
The journal in which transactions that
increase the balance of the current bank
account are recorded.
Any transaction that causes an increase in
the bank account balance.
The journal in which transactions that
decrease the balance of the current bank
account are recorded.
Any transaction that causes a decrease in the
bank account balance.
An abridged tax invoice that may be used
only for sales that do not exceed R3 000.
“Stub” that remains in the cheque book after
issuance of a cheque; used as source
document for the recording of cheque
payments from the cheque book.
Document outlining the common set of
values and morals for management and
employees within an organisation.
The opposite account that is debited or
credited as the opposite double entry.
The credit column in a debtor’s individual
account is used to enter the amount of the
transaction in cases where the particular
transaction decreases the amount owing to
our business by the debtor. The converse
applied for a creditor’s individual account.
A document that indicates that a sale has
taken place, but that money owed for the
transaction is still outstanding.
Document that records the cancellation of a
sale or part thereof.
A person or entity our business owes money
to. The modern term for creditors is
“accounts payable”.
Journal used to record credit purchases and
other transactions with creditors.
Journal used to record the returns/rebates
with regard to transactions previously
entered into the Creditors journal (CJ).
© The Independent Institute of Education (Pty) Ltd 2022
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Creditors control
account
Creditors for
wages account
Creditors for
salaries account
Creditors ledger
Creditors list
Current assets
Current liabilities
Debtor
Debtors journal
Debtors
allowances
journal
Discounts
Double entry
system
Drawings account
Electronic Funds
Transfer
FIAC5112
A general ledger account used as a control
mechanism for accounts payable.
A temporary liability account held in the
books of account reflecting the net
remuneration payable to all employees that
are remunerated in the form of wages.
A temporary liability account held in the
books of account reflecting the net
remuneration payable to all salaried
employees.
A subsidiary ledger that includes all the
individual creditors’ accounts.
A list of the individual balances in the
creditors’ ledger.
Resources that are cash or likely to be turned
into cash within one year. Also referred to as
short-term assets
Short-term debts
A person or entity that owes our business
money. “Accounts receivable” is a modern
term for debtors.
Journal used to record credit sales.
Journal used to record the returns/rebates
with regard to transactions previously
entered into the Debtors journal (DJ).
Discounts are reductions in selling prices
offered to customers/ clients. Discounts
usually take the form of either a trade
discount (a discount offered at the point of
sale) as well as a settlement discount (a
discount offered for early settlement of
account by a debtor).
A system whereby the total value of the
debits in a transaction must equal the total
value of the credits.
Account used when the owner withdraws
valuables from the business.
Electronic transfer of money from one bank
account to another.
© The Independent Institute of Education (Pty) Ltd 2022
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Ethics
EFT confirmation
slip
Exempt supplies
Expense accounts
Final accounts
Financial
accounting
Financial
management
Financial
statements
Financial year
Fixed costs
Full tax invoice
General journal
General ledger
FIAC5112
Thinking about or pondering a certain kind of
behaviour.
Proof of Electronic Funds Transfer (EFT).
Non-taxable supplies.
Accounts used to record decreases in equity.
These are accounts used to facilitate the
year-end accounting procedures, where
income and expense accounts are closed off
and owner’s equity is updated at the
financial year-end. There are two final
accounts used in the books of a sole trader,
namely the trading account and the profitand-loss account.
Discipline involving recording of transactions
that have happened in the past.
A process involving the effective planning,
organizing, co-ordinating and controlling of
the financial activities of a venture.
These are reports set up by an accountant
outlining the financial position and
performance of the business for a specific
financial period.
12-month reporting period for a business.
Expenses which do not vary with production
and are incurred irrespective of the volume
of production.
Required from a VAT vendor whenever a
supply total exceeds R3 000.
Journal used to record sundry transactions
that cannot be recorded in any of the above
seven journals.
The general ledger summarises the
subsidiary journals, and accumulated running
balances that are listed on the trial balance.
The general ledger is also the official records
of account as it is the book in which business
transactions are ultimately recorded.
© The Independent Institute of Education (Pty) Ltd 2022
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IIE Learn Module Outline
General ledger
reconciliation
statement
Gross profit
Imprest system
Income accounts
Income
statement
Internal control
Input VAT
Invoice
Invoice basis
Journal
Journal voucher
Language of
business
Legal persons
Liabilities
FIAC5112
A statement showing corrective debits and
credits to ensure the balancing of a trial
balance.
The difference between the selling price and
the cost price of a product.
A system employed in petty cash that
requires the restoring of a standard cash
float at regular intervals by replacing cash
that has been taken from the petty cash box.
Accounts used to record increases in equity.
Statement of financial performance. The
modern term for an income statement is the
“statement of profit or loss and other
comprehensive income”.
A system of controls – a set of methods and
procedures which can be auctioned to
ensure that the objectives and goals of the
organisation are achieved.
VAT charged to a registered vendor on
purchases of goods or services from another
registered vendor.
A document that records that a sale of goods
or services has taken place, either for cash or
on credit.
The basis according to which VAT is
accounted for upon the issue and receipt of
invoices, regardless of whether they’ve been
paid.
A book of prime entry, in tabular form.
Internal source document from which
transactions are recorded in the general
journal.
Accounting is often referred to as the
language of business, an “international”
language that crosses many borders.
Companies, Close Corporations, trusts and
deceased estates.
A liability is a present obligation of the entity
to transfer an economic resource as a result
of past events.
© The Independent Institute of Education (Pty) Ltd 2022
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IIE Learn Module Outline
Managerial
accounting
Management
accounts
Marginal cost
Marginal cost
ratio
Marginal income
ratio
Mark-up
FIAC5112
Discipline involving management and
strategic input, linked to operational outputs.
Reporting based on future expectations and
strategic decision-making.
Accounting records that report on the
current trading status of the business.
The sum of all variable costs, irrespective of
whether these costs comprise
manufacturing, selling or administrative
costs.
An expression of marginal cost as a fraction.
An expression of marginal income as a
fraction.
The amount added to the cost price of a
product to arrive at its selling price.
Master budget
The integrated, holistic budget – the
comprehensive, all-encompassing budget for
the enterprise.
Morals
Standard rules of behaviour.
Net profit
The difference between the total income and
total expenses of a business.
Net working
The net difference between the current
capital
assets and current liabilities of a business.
Nominal accounts The section of the general ledger and trial
section
balance that includes all the accounts that
will end up in the income statement, i.e., the
income and expense accounts.
Non-current
Resources that are not expected to be turned
assets
into cash within one year.
Non-current
Long-term debts.
liabilities
Normal time
Legislation governs the total number of
hours an employee may be required to work
during a period. This is known as normal
time. It is also the point at which an
employer should start paying employees at
an overtime rate.
Original credit
Source documents used to record credit
invoices
purchases in the creditor’s journal.
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IIE Learn Module Outline
FIAC5112
Original credit
notes
Source documents used to record returns
to/rebates on goods or services previously
recorded in the creditor’s journal.
Output VAT
VAT charged to customers by a VAT vendor.
Overtime
The number of hours worked and
remunerated over and above the set number
of hours for normal time as governed by
legislation.
Owner’s equity
Wealth of the owner in his or her business.
Assets less liabilities = Owner’s equity.
Payments (cash)
The basis according to which VAT is
basis
accounted for upon receipt of the actual cash
from customers, or when suppliers are paid
in cash.
Pension Fund
A group scheme formed for the employees of
a company, aimed at providing much needed
retirement savings, life cover and disability
cover.
Pension fund
Contributions by the employer to the
contributions
pension fund for the benefit of employees.
Perpetual
A system of inventory keeping whereby stock
inventory system levels are updated at the point of sale.
Perpetual inventory has two main benefits. It
improves record-keeping practices, making it
simple to calculate cost of goods sold in a
certain period. Secondly, it allows businesses
to see accurate inventory at a given moment,
making it easier to know when to order
more. This higher degree of control can make
companies more dynamic and helps keep up
with customer demand. Its major
disadvantage is the upfront cost of
implementation.
Petty cash journal Journal to record purchases from the petty
cash box.
Petty cash
Any transaction that causes a decrease in the
transaction
cash on hand in the petty cash box.
Petty cash
Internal source document used to record
voucher
payments out of the petty cash box.
Personal budget
A budget of expected personal income and
expenditure for the future.
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IIE Learn Module Outline
Post-closing trial
balance
Profit
Profit and loss
account
Pro- forma
invoice
Projected income
statement
Rules of double
entry
Sales budget
Salaries journal
Skills
Development
Levy
Source
documents
South African
Revenue Service
Standard rate
Standard rated
FIAC5112
Index of accounts in the general ledger that
outlines the financial position of the business
as at the last day of the financial year. With
closing entries all nominal accounts and
drawings are closed off and only statement
of financial position accounts remain open.
The post-closing trial balance is prepared
after closing entries and therefore only
consists of statement of financial position
accounts, excluding drawings.
The amount by which the total income
exceeds the total expenses for a financial
period.
A final account that is used in the manual
system of accounting to facilitate the closing
transfers needed to close off additional
income and expense accounts.
Not the actual tax invoice, but rather an
additional document to confirm an order.
A budgeted income statement showing
projected items of income and expenditure.
The rules whereby assets, drawings and
expenses are debited when they are
increased; whereas liabilities, income and
capital are credited when they are increased.
The starting point in setting up the master
budget, outlining the expected sales for the
budget period.
A subsidiary journal used to account for the
monthly payroll creditors for salaries.
A levy that has been introduced to assist with
the shortage of skilled labour in South Africa.
The original records of transactions. Normally
completed in duplicate.
Established by legislation to collect tax
revenue and to ensure that individuals and
businesses comply with tax laws.
The normal VAT rate charged on standardrated goods and services (currently 14%).
Goods or services on which the vendor
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IIE Learn Module Outline
supplies
Statement of
profit or loss and
other
comprehensive
income
Statement of
financial position
Sundry accounts
Sundry columns
T-account
Timing
differences
Trading account
Trading stock
Trading inventory
Trial balance
Unemployment
Insurance Fund
FIAC5112
charges VAT and on which the consumer can
claim the full VAT amount back if they are a
VAT vendor themselves.
Modern term for “income statement”. This is
a statement of income and expenditure and
measures financial performance.
Modern term for “balance sheet”. This is a
statement of equity, assets and liabilities and
measures financial position.
Used when there is no column available for
the contra-account in a journal.
These columns are use when there is no
designated column for the contra-account in
a journal.
A structure used for general ledger accounts,
clearly showing a left-hand side (debit) and a
right-hand side (credit).
These differences occur when the bank is not
aware of a particular transaction recorded by
the business.
A final account used in the manual system of
accounting to facilitate the closing transfers
of all accounts related to the calculation of
gross profit for the financial year.
The traditional term used as a synonym for
trading inventory.
The merchandise sold by a trading business.
This is the modern term for “trading stock”.
List of the totals or balances on the accounts
in the general ledger (index of accounts). The
trial balance must be in balance to prove that
the rules of double entry have been applied
throughout.
UIF – A fund established to assist people that
are temporarily unemployed for reasons
ranging from maternity and structural
unemployment (individuals that find
themselves between jobs), to temporary
disability.
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IIE Learn Module Outline
UIF contributions
Value Added Tax
(VAT)
Variable costs
VAT exclusive
amount
VAT inclusive
amount
VAT vendor
Wages journal
Working capital
Zero-rated
supplies
FIAC5112
Contributions made by the employer towards
the unemployment insurance fund.
Indirect tax levied by vendors on the supply
of certain goods and services.
Expenses which will vary (more or less
proportionally) with production.
The amount excluding VAT, constituting the
true cost price (expense) of selling price
(income) of the product or service.
The amount including VAT, being the amount
which the client or customer pays at the
point of sale.
Person or business that is registered for
Value Added Tax.
A subsidiary journal used to account for the
monthly payroll creditors for wages.
This refers to the current assets of the
business.
Goods and services on which a VAT rate of
0% is charged.
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