Accounting and Finance
Scope and sequence
For teaching and examination in 2013 and 2014
2008/14989[v5]
Accounting and Finance: Scope and sequence
For teaching and examination in 2013 and 2014
1
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2
Accounting and Finance: Scope and sequence
For teaching and examination in 2013 and 2014
Accounting and Finance—Scope and sequence of content
UNIT 1A
Personal finance
UNIT 1B
Small cash entities
UNIT 2A
Double entry accounting
for small businesses
UNIT 2B
Accrual accounting
UNIT 3A
Internal management for
business
UNIT 3B
Australian reporting
entities
Financial institutions and systems
Financial
institutions
Financial
systems and
fundamental
principles
 the role of financial
institutions that meet the
personal needs of
individuals e.g. banks
(include internet and
phone banking), credit
unions, retail stores and
telecommunications
companies.
 identify the functions of
the various institutions
that service the financial
needs of small entities
e.g. banks, insurance
companies and other
finance sources.
 sources of finance, other
than equity, available to
small businesses
 advantages and
disadvantages of these
sources of finance
 identify the factors
financial institutions
consider when approving
finance
 risk (collateral,
liquidity, history,
guarantors) and
return (interest rate,
future business).
 nature, benefits and risks
to small business of
electronic processing
 EFTPOS
 bill payments—
electronic payment
system
 credit cards
 online banking
 direct debits.
 role of financial institutions
and the management of
business finance
 short-term: cash
management trusts,
money market and
term deposits
 long-term: shares,
debentures,
unsecured notes,
trusts and term
deposits.
 nature and purpose of
documents for recording
and communicating of
personal financial
information e.g. cheques,
bank and credit card
statements, Automatic
Teller Machine (ATM),
EFTPOS slips and
internet receipts
 systems and types of
bank accounts and
sources of borrowing for
personal financial
management e.g. types of
credit cards
 the concept of security on
investment
 risk of return
 security on
borrowings
 explain the relationship
between risk and rate of
return e.g. interest rates
 the importance of proper
disclosure e.g. reading
fine print on contracts,
providing accurate
financial information
 role and benefits of
insurance e.g. car, travel
insurance
 nature of the systems that
businesses use to carry
out banking, investment,
purchases, borrowing and
other financial
transactions
 nature and purpose of
source documents in a
cash accounting system
 tax invoices/receipts
 bank deposit slips
 cheque butts
 EFTPOS receipts
 Business Activity
Statement
 principles of single-entry
cash accounting practices
and entries e.g. cash
book, petty cash and bank
reconciliation systems
 methods of recording and
maintaining single-entry
accounting systems using
manual or electronic tools
 purpose and advantages
of multi-columnar cash
books/journals
 definition of the
accounting equation
 accepted accounting
principles
 accounting entity
 monetary
 characteristics of the main
types of small business
ownership: sole trader,
partnership and small
proprietary company
 number of owners
 liability of owners
 ability to raise capital
or borrow funds
 distribution of profits
 transfer of ownership
 separate accounting
or legal entity
 continuity of existence
 advantages and
disadvantages of the main
types of small business
ownership
 different types and
characteristics of business
undertakings
 manufacturing
 trading/retailing
 service providing
 fundamental concepts and
conventions of financial
accounting
 the accounting
equation
 double entry
accounting
 the accounting cycle:
documents, journals,
ledger, adjusting
entries, closing
 accrual basis assumption
as per the Framework
 distinction between
cash and accrual
methods of
accounting
 recognition criteria of
o assets
o liabilities
o incomes
o expenses
 classification of incomes,
expenses, assets and
liabilities by nature and
function
 purpose and nature of
balance day adjustments
 accrued expenses
 prepaid
expenses/stock of
supplies
 accrued income
 income in advance
 doubtful debts
 depreciation
 nature of depreciable noncurrent assets
 nature of depreciation
expense
 determining the cost of a
depreciable non-current
asset
 distinguish between
management accounting
and financial accounting
 the nature of cost
concepts
 materials, labour and
overheads
 cost behaviours:
fixed, variable and
mixed costs
 relationships to cost
objects: direct and
indirect costs
 treatment of costs:
product and period
 time orientation of
costs: past and future
 the concept of mark-up
and the calculation of the
unit price of a product
 the nature and importance
of the master budget
 operating
 capital expenditure
 financial
 the important financial
principles of asset
management
 appropriate levels of
investment in noncurrent assets
Accounting and Finance: Scope and sequence
For teaching and examination in 2013 and 2014
 characteristics of
companies: public and
large proprietary
companies
 liability of owners
 number of members
and directors
 continuity of existence
 legal entity
 transferability of
ownership
 separation of
ownership and
management
 the purpose and
importance of accounting
standards
 protection of external
users
 assist directors in
discharging their
obligations
 facilitate the
Australian capital
markets
 the role of the conceptual
framework in Australia
 the nature of the
reporting entity
3
UNIT 1A
Personal finance
UNIT 2A
Double entry accounting
for small businesses
UNIT 1B
Small cash entities
UNIT 2B
Accrual accounting
UNIT 3A
Internal management for
business
UNIT 3B
Australian reporting
entities
Financial institutions and systems
 sources of youth debt:
credit cards, mobile
telephone contracts, rent
and student fee loans
 implications of personal
credit ratings.
 accounting period
 going concern
 simple definitions of
assets, liabilities,
expense, income and
equity
 characteristics,
administration and types
of records for incorporated
not-for-profit
organisations.








4
entries and financial
statements
 principles of the
perpetual inventory
system
definition of GST and the
GST system
principles and features of
GST
 taxable supplies,
GST-free supplies
and input taxed
supplies
 accounting and
reporting for GST
including the BAS
accounting assumptions
as per the Framework for
the Preparation and
Presentation of General
Purpose Financial Reports
(hereafter referred to as
the Framework): accrual
basis and going concern
accepted accounting
principles and conventions
 accounting entity
 monetary
 historical cost
 materiality
 accounting period
accounting for inventory
 perpetual versus
periodic inventory
methods
elements of financial
statements as per the
Framework
 assets, liabilities,
equity, income and
expenses
importance of financial
statements to determine
 performance
 financial position
 liquidity
considerations when
supplying credit to
customers
 credit history
 employment history
 security
 bad debts.
 identification of the more
appropriate method of
depreciation to apply
 straight-line
 reducing/diminishing
balance
 identification of over- or
under-depreciation on
sale of non-current asset
 concept of inventory
costing methods
 weighted average
 First-in First-out.
Accounting and Finance: Scope and sequence
For teaching and examination in 2013 and 2014

appropriate
management of
accounts receivable,
inventory and cash
 appropriate
management of shortand long-term debt
 appropriate level of
equity capital
 nature and importance of
capital investment
decisions
 concept of the time
value of money
 factors affecting capital
investment decisions
 consumer
preferences
 competition
 government
regulation
 explain the relationship
between volume of
activity, costs and profit.





evaluation and
application of the
qualitative
characteristics of
financial information
 the objectives of
general purpose
financial reports and
their usefulness
 evaluation and
application of asset,
liability, income and
expense recognition
and measurement
criteria
the purpose of disclosure
in financial reports
 changes in
accounting policy
 comparability and
understandability
purpose and nature of the
cash flow statement
concept of cash and cash
equivalents
classification of cash flow
activities.
UNIT 1A
Personal finance
UNIT 1B
Small cash entities
UNIT 2A
Double entry accounting
for small businesses
UNIT 2B
Accrual accounting
UNIT 3A
Internal management for
business
UNIT 3B
Australian reporting
entities
 cost accounting limited to
calculation of the unit
price of a product/service
using only job order
costing processes (GST
NOT included)
 calculation of direct
materials, direct
labour and overhead
costs
 calculation and
application of
predetermined
overhead recovery
rates only using
normal capacity
 calculation of unit cost
and the setting of
selling/quotation
prices for a job
costing
product/service
 use of standard
costing and variance
analysis for:
o materials i.e.
price and usage
o labour i.e. rate
and efficiency
 Cost-Volume-Profit (CVP)
processing for a single
and multi-product
(maximum 3 products)
business
 calculation of
contribution margin
 calculation of
contribution margin
per unit
 calculation of
weighted average
contribution per unit
 calculation of margin
of safety
 calculation of selling
price, variable cost,
fixed cost, profit or
sales volume
 preparation of the general
journal and general ledger
for
 issue of ordinary
shares payable in full
on application
 bonus share issues
 interim and final
dividends
(recommended,
declared or paid)
 share issue costs
 preparation of the retained
earnings ledger account
 profit
 dividends
 transfers to and from
reserve accounts
 debit or credit
opening balances
 preparation of financial
statements in accordance
with the Framework and in
accordance with the
standards
 statement of
comprehensive
income (one
statement version
ONLY: notes NOT
required)
 statement of financial
position and the
following notes:
o share capital
o other reserves
o property, plant
and equipment
o dividends
 statement of changes
in equity (notes NOT
required)
o retained earnings
o equity
o share capital
o reserves
 cash flow statement from
comparative balance
sheets and income
statements using the
direct method only (notes
NOT required and GST
NOT included)
 preparation of the above
financial statements is
Recording, using and evaluating financial information
Recording,
processing and
communicating
financial
information
 preparation of documents
associated with personal
financial information e.g.
cheques, application for
bank account or credit
card, mobile phone
 preparation of personal
budgets
 preparation of personal
bank reconciliation
statements
 maintenance of personal
financial records for
personal income tax and
calculation of tax payable
including only:
 assessable income
(limited to salaries
and wages and
interest)
 allowable deductions
(limited to union fees,
professional
associations,
donations and uniform
and motor vehicle
expenses)
 tax offset (limited to
health insurance).
 preparation of documents
manually or electronically
to record business
financial information
 order forms
 tax invoices/receipts
 delivery notes
 cheques
 bank deposit slips
 preparation of cash
receipts and payment
journals or cash book with
separate columns for
GST; cash
sales/purchases;
commonly recurring
receipts/payments
 preparation of petty cash
book
 preparation of payroll
records for a small cash
based business e.g. pay
advice slip, wages book
 preparation of simple cash
budgets
 preparation of bank
reconciliation statements
 presentation of financial
information in the form of
simple unclassified reports
applying the accounting
equation for small cash
based entities
 statement of receipts
and payments
 income statement
 balance sheet.
 calculation of GST
receivable or payable
 manual preparation of the
general journal to process
financial transactions to
the general ledger and
trial balance including:
 errors disclosed/not
disclosed by trial
balance
 GST
 closing entries
 perpetual inventory
system given the cost
of sales (NOTE: No
requirement to teach
inventory costing
systems such as Lastin First-out, First-in
First-out and weighted
average)
 manual preparation of the
general journal and
general ledger to include:
 cash and credit
transactions to
include cash receipts,
cash payments, sales,
purchases, sales
returns, purchases
returns, discount
allowed, discount
received
 entries to commence
business
 purchase of noncurrent assets
 write-off bad debts
 withdrawal of
inventory or cash by
the proprietor
 correction of errors
 manual preparation of
simple classified financial
statements for a sole
trader excluding balance
day adjustments

income statements
 manual preparation of
general journal and ledger
entries for balance day
adjustments (asset and
liability method only) to
prepare financial reports
(GST not included)
 manual preparation of
general journal and
general ledger entries for
recording of depreciation
and disposal of a single
depreciable asset
(including cost of a
depreciable non-current
asset, depreciation
expense, disposal of
depreciable asset using
the Sale of Asset Method)
 manual preparation of
closing general journal
entries
 manual preparation of trial
balance
 manual preparation of
classified financial
statements for a sole
trader including balance
day adjustments
 income statements
 balance sheets for a
trading/
merchandising/
service business
 using an established chart
of accounts and the
perpetual inventory
system, apply double
entry principles using
MYOB Mind Your Own
Business or QuickBooks®
to electronically record
financial data and produce
financial reports after
considering adjusting
entries
Accounting and Finance: Scope and sequence
For teaching and examination in 2013 and 2014
5
UNIT 1A
Personal finance
UNIT 1B
Small cash entities
UNIT 2A
Double entry accounting
for small businesses
UNIT 2B
Accrual accounting
UNIT 3A
Internal management for
business
UNIT 3B
Australian reporting
entities
Recording, using and evaluating financial information

6
balance sheets for
a trading/
merchandising/
service business.
 preparation of the
following ratios:

calculation of breakeven point
 calculation of the
effect on profit/loss of
 profitability:
make or buy
o profit formula:
decisions
 calculation of the
profit
effect on profit/loss of
net sales
closing a
department/dropping
o gross profit formula:
a segment product
gross profit
decision
net sales
 calculation of the gain
or loss on special
o expense formula:
order decisions
operating expenses
 preparation of cash
net sales
budgets including debtors’
o rate of return on assets formula:and creditors’ schedules
(GST NOT included)
profit
 preparation of budgeted
average total assets
income statements (GST
 liquidity:
NOT included)
 preparation of
o working capital formula:
performance reports for
cash budgets and
current assets
budgeted income
current liabilities
statement
o quick asset formula:
 capital
investment/budgeting
current assets –
techniques for capital
inventory and prepayments
expenditure, limited to
current liabilities –
calculations for cash flows
bank overdraft
using straight-line
depreciation method
 leverage:
ONLY and net of taxation:
 discounted cash flows
o debt to equity formula:
[net present value
total liabilities
(NPV) ONLY]
total equity
 payback period.
Note: Application of GST is
NOT required
Accounting and Finance: Scope and sequence
For teaching and examination in 2013 and 2014
restricted to the following
issues:
 revaluation of
property, plant and
equipment (nondepreciable assets
ONLY)
 cash dividends
 bonus share issues
 transfers to or from
general reserve
 preliminary expenses
 issue of ordinary
shares including
share issue costs
 balance day
adjustments as per
those in Unit 2B
 for the purpose of
calculating income tax
expense, profit before
tax will be deemed to
equal taxable income
 preparation of the
following ratios:
 liquidity:
o working
capital/current
o quick asset
 efficiency:
o debtor’s
collection
o inventory/stock
turnover
 profitability:
o profit
o rate of return on
assets
o times interest
earned
 leverage:
o debt to equity
 market:
o earnings per
share
o price/earnings
o dividend yield.
Note: Application of GST is
NOT required
UNIT 1A
Personal finance
UNIT 1B
Small cash entities
UNIT 2A
Double entry accounting
for small businesses
UNIT 2B
Accrual accounting
 nature and importance of
internal control
 application of the
principles of internal
control over cash,
inventory, accounts
receivable, accounts
payable and non-current
assets
 administrative
controls
 accounting controls
 limitations of internal
control.
 interpretation of the
following ratios to evaluate
the profitability and
stability of a business:
 profitability:
o profit
o gross profit
o expense
o rate of return on
assets
 liquidity:
o working capital
o quick asset
 leverage:
o debt to equity.
UNIT 3A
Internal management for
business
UNIT 3B
Australian reporting
entities
 differences between
internal and external
reporting
 internal and external
users
 regulation—
Accounting Standards
 types of financial
statements
 types of reports
 internal audit and control
 purpose of internal
control
 review of procedures
and policies
 detection and
correction of errors
and deficiencies
 relationship to the
external audit process
 the role and function of
the accountant in
managing business
operations
 purpose and function of
cash budgets
 importance of cash to
business viability
 interpretation of cash
budgets
 purpose and function of
budgeted income
statement
 interpretation of
budgeted income
statement
 difference between cash
and accrual performance
 purpose and function of
performance reports
 interpretation of
performance reports
for cash budgets and
budgeted income
statements
 interpretation of capital
investment/budgeting
techniques to evaluate
capital expenditure
 examination and
interpretation of annual
reports, financial
statements and stock
exchange data to assess
the position and
performance of a public
company
 purpose of annual
reporting and the use of
key performance
indicators by directors for
accountability and
decision-making purposes
 interpretation of the
following ratios:
 liquidity:
o working
capital/current
o quick asset
 efficiency:
o debtor’s
collection
o inventory/stock
turnover
 profitability:
o profit
o rate of return on
assets
o times interest
earned
 leverage:
o debt to equity
 market:
o earnings per
share
o price/earnings
o dividend yield
 interpretation of the
movements in cash flow
items
 limitations in assessing
performance from
financial statement
analysis and from
traditional financial
accounting
 historical cost
accounting
 lack of comparability
between entities
 lack of disclosure.
Recording, using and evaluating financial information
Evaluating
financial
information for
planning
coordination,
controlling and
investing
 interpretation of
information relevant to
personal financial
management e.g. pay
slips, bank statements,
EFTPOS and other media
 importance of personal
financial planning,
(including short- and longterm goal setting), and the
financial factors affecting
financial decision making
e.g. the importance of
compounding interest
versus simple interest
 investment options
available to individuals
e.g. superannuation,
share market, property,
cash deposits and longterm investments
 sources of financial advice
e.g. banks, media, and
financial advisors.
 interpretation of
information presented in
simple financial
statements and the
analysis of this information
to assess profitability and
liquidity
 interpretation of simple
cash budgets
 importance of liquidity to
the entity
 principles of internal
control over cash.
Accounting and Finance: Scope and sequence
For teaching and examination in 2013 and 2014
7
UNIT 1A
Personal finance
UNIT 1B
Small cash entities
UNIT 2A
Double entry accounting
for small businesses
UNIT 2B
Accrual accounting
UNIT 3A
Internal management for
business
Recording, using and evaluating financial information
 importance of business
planning including a
consideration of
 goals, objectives and
generic business
strategies: cost
leadership versus
differentiation,
strategic initiatives
and performance
management
 reduce costs and
risks
 Cost-Volume-Profit (CVP)
analysis for decisionmaking purposes
 cost behaviour
 contribution margin
 break-even point
 margin of safety
 interpretation of CVP
results and testing of
sensitivity to changing
decisions about
 volumes, product
mixes, pricing and
costs and the impact
of capacity constraints
 make or buy
decisions
 close down
product/business unit
decisions
 accept or reject
special orders
decisions.
8
Accounting and Finance: Scope and sequence
For teaching and examination in 2013 and 2014
UNIT 3B
Australian reporting
entities
UNIT 1A
Personal finance
UNIT 1B
Small cash entities
UNIT 2A
Double entry accounting
for small businesses
UNIT 2B
Accrual accounting
UNIT 3A
Internal management for
business
UNIT 3B
Australian reporting
entities
 role and function of the
professional accounting
and financial associations
e.g. Certified Practising
Accountants of Australia,
Institute of Chartered
Accountants of Australia,
National Institute of
Accountants, Financial
Planning Association of
Australia Limited.
 the importance and impact
of legislation relating to
the financial management
of business
 the concept of
insolvency as applied
according to the
Bankruptcy Act and
Corporations Act
 order of repayment to
creditors.
 the purpose and nature of
the Corporations Act, and
its impact on company
formation and operations
 powers and duties of
directors
 a written constitution
 replaceable rules
 prospectus
 rights of shareholders
 the nature and importance
of the Financial Reporting
Council (FRC), Australian
Securities and
Investments Commission
(ASIC), International
Accounting Standards
Board (IASB), Australian
Accounting Standards
Board (AASB), Australian
Securities Exchange
(ASX) and lobby groups
which regulate and
influence the general
purpose financial
reporting of companies in
Australia
 the role and function of
external auditors
 protection of external
users
 to perform an
independent audit of
the financial
statements
 appointed by the
shareholders and
reappointed at the
Annual General
Meeting (AGM).
Government and the community
The role and
influence of
governments
and other bodies
 types of taxation affecting
individuals e.g. income
tax, GST, capital gains
and fringe benefits such
as cars, mobile phones
 identity and function of
government agencies in
relation to personal
finance e.g. Department of
Consumer and
Employment Protection.
 impact of governments
(local, state and federal)
on the operations of small
businesses e.g. taxation,
financial assistance,
regulations
 impact on small business
entities by other bodies
e.g. consumer groups,
trade unions, professional
associations and industry
groups, accountants.
 legislation relating to the
formation of sole trader,
partnership and small
proprietary companies
e.g. GST Act (1999),
Business Names
Registration Act (2011),
Partnership Act of WA
(1895), Corporations Act
(2001)
 the impact of GST legal
requirements on small
businesses
 registering for GST
 Australian Business
Number (ABN).
Accounting and Finance: Scope and sequence
For teaching and examination in 2013 and 2014
9
UNIT 1A
Personal finance
UNIT 1B
Small cash entities
UNIT 2A
Double entry accounting
for small businesses
 how social, environmental
and ethical factors
influence the
establishment and
operations of small cash
entities
 impact of costs associated
with setting up small cash
entities.
 costs and benefits for
small business of
engaging in socially,
environmentally and
ethically responsible
behaviour
 sponsorship
 resource conservation
 taxation responsibility.
UNIT 2B
Accrual accounting
UNIT 3A
Internal management for
business
UNIT 3B
Australian reporting
entities
 identification of the costs
and potential income
associated with engaging
in socially and
environmentally
responsible practices
 the ethical issues
encountered in financial
dealings between
business
owners/managers and
their employees, clients
and investors.
 the extent, nature and
usefulness of corporate
social disclosure
 the difficulties faced by
accountants in producing
social and environmental
information
 the use made of corporate
social disclosure by the
company and other users
 critical evaluation of
corporate social
disclosure as made by
Australian companies.
Government and the community
The influence of
social,
environmental
and ethical
factors
10
 factors affecting personal
financial decision making
e.g. influence of media,
peer group pressure,
beliefs and values.
 the role and nature of the
professional codes of
conduct for accounting
practitioners and financial
service providers.
Accounting and Finance: Scope and sequence
For teaching and examination in 2013 and 2014