A Level 1 Accounting programme
Note: This outline was prepared for teacher trainees in 2012
The outline covers reference to all achievement standards at Level 1. A programme of work
should comprise standards with the equivalent total credit value of between 16 and 20.
Some options include:
Option one
A personal and internal focus, total 16 credits internal
AS 90981 Make a financial decision for an individual or group (3 credits, internal)
AS90982 Demonstrate understanding of cash management for a small entity (4 credits, internal)
AS 90979 Prepare financial information for a community organisation’s annual general meeting (4
credits, internal)
Assessment: AS 90977 Process financial transactions for a small entity (5 credits, internal)
Option two
A personal and internal major focus, total 21 credits (16 internal, 5 external)
Option one plus AS 90978 Prepare financial statements for sole proprietors (5 credits, external)
Option three
An community organisation and sole proprietor focus, total 17 or 18 credits (9 internal, 8 or 9
external)
AS 90979 Prepare financial information for a community organisation’s annual general meeting (4
credits, internal)
AS 90977 Process financial transactions for a small entity (5 credits, internal)
AS 90978 Prepare financial statements for sole proprietors (5 credits, external)
One of:
AS 90976 Demonstrate understanding of accounting concepts for small entities (3 credits, external)
AS 90980 Interpret accounting information for sole proprietors (4 credits, external)
Option four (a narrow focus, not recommended)
An external, sole proprietor focus, total 17 credits (5 internal, 12 external)
AS 90977 Process financial transactions for a small entity (5 credits, internal)
AS 90978 Prepare financial statements for sole proprietors (5 credits, external)
AS 90976 Demonstrate understanding of accounting concepts for small entities (3 credits, external)
AS 90980 Interpret accounting information for sole proprietors (4 credits, external)
Option five, total 17 credits plus one internal (3 or 4 credits)
Option four with any one more internal provides for a broader programme than a singular focus
on sole proprietor entities.
Objectives at curriculum level 6 from the Curriculum Guide on TKI
6-1:
Manage the financial affairs of individuals, whānau, and local small entities, including community
organisations, while acting with integrity.
6-2:
Make use of appropriate communication tools and skills to process, report and interpret financial
information for individuals, whānau, and local small entities, including community organisations.
It is easy to focus on small business at the expense of individuals and community organisations.
Consider the needs of the students in your class at Year 11. If this is the only time these students
take accounting, what knowledge and skills do you really want them to walk away with?
Unit 1: Individuals and households
What does your teaching and learning need to cover:
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Types of income such as wages/salary, rent, commission etc
Receiving income via direct credit and/or other methods
Types of spending understanding the difference between essential/fixed and nonessential/variable spending
Banking and saving options
Different methods of payment such as cash, EFTPOS, direct debit, internet banking etc
Managing credit cards, hire purchase, store credit, personal loans etc
Understanding the purpose of managing individual or household income and spending
Preparation of a individual or household budget
Preparation of a statement of affairs setting out individual or household assets, liabilities and
net worth
Financial documents individuals or households receive from businesses and/or community
organisations
Making decisions about the best way to spend limited income or keep spending within a
budget
What assessments can you use?
AS 90981 Make a financial decision for an individual or group
Accounting 1.6 (Internal)
3 credits
This assessment involves comparing and contrasting at least two different options when making a
financial decision. Students have to compare the two different options using both financial and
non-financial information. They have to make a decision by selecting one of the two options.
Then they must justify (Excellence) the reason they chose the selected option instead of the
alternative.
AS90982 Demonstrate understanding of cash management for a small entity
Accounting 1.7 (Internal)
4 credits
This assessment is normally undertaken with the student’s own household. Students need to
collect four different financial documents, identify the key information on the documents and for
excellence explain why the information is important for the household. Additionally students
need to interview the person in the household who makes most of the purchasing decisions/pays
most of the bills and write a report about how income is received, cash on hand is managed and
how different methods of payment used by the household help to manage and safeguard cash.
Other cash management procedures used by the household should be discussed such as
knowledge of bank account balance, keeping/filing of financial documents.
Using a different context
Note this assessment can be undertaken in a community organisation or small business. The focus
would be on how the entity manages its cash incomings and outgoings – what methods does it use
to receive and/or bank cash, what methods does it use to make payments and why does it use
these methods. Eg a small sports club might receive some subscriptions in cash, write a receipt
and then bank the money on a weekly basis, it might also encourage members to pay their
subscription using online banking so the treasurer needs to monitor the bank statement (online?)
to see who has paid their subscriptions. Payments may be by cheque with two signatures or by
online banking requiring two authorisations.
Unit 2: Community organisations
AS 90979 Prepare financial information for a community organisation’s annual general meeting
Accounting 1.4 (Internal)
4 credits
What does your teaching and learning programme need to include:
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Understanding the role of community organisations in society – can introduce notion of
accounting entity – the community organisation is separate from its members
Incorporation option for community organisations that own assets and have/need any debt so
members have limited liability for the community organisation debts (ie are not personally
liable once they have paid their subscriptions)
Understanding how community organisations raise money, what they spend their money on
and how they ensure a sound financial base from which to continue to operate
Recording a variety of relevant cash receipts and cash payments transactions including the
purchase of assets
Understanding community organisation incomes, expenses, assets and liabilities
Understanding basic year end accrual adjustments and straight line depreciation for assets
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Preparation of financial statements incorporating balance day adjustments for presentation at
a community organisation’s AGM including
o Cash Flow (Receipts and Payments),
o Income Statement
o Supplementary (to the income statement) Activity or Trading statement,
o Balance Sheet
Preparation of a Treasurer’s report for the AGM explaining the financial statements and
financial direction of the community organisation using both financial and non-financial
information.
What does your assessment need to cover:
The financial statements including balance day adjustments and a comprehensive treasurer’s
report.
Unit 3: Sole proprietor businesses
The remaining level one standards have a sole proprietor business focus. It is best to teach the
standards in a holistic way, rather than trying to teach standard by standard. Students need to be
introduced to a number of basic accounting concepts and the accounting equation before they can
successfully process cash transactions, prepare financial statements with balance day adjustments
for small service and trading firms and analyse and interprest small sole proprietor financial
statements.
What does your teaching and learning need to cover:
Introduction
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Describing the purpose of accounting
Role of accountants including specialist areas of accounting
Nature of sole proprietor and community organisation entities including incorporated and
unincorporated community organisations
Users of accounting information
Uses the users make of accounting information
Introduction to accounting entity concept
Monetary measurement and historical cost
Introduction to assets, liabilities and equity and the relationship between them
Understanding the nature of assets, liabilities and equity (essential characteristics)
Basic statement of financial position classified into current and non-current assets and
liabilities
Understanding the purpose of a statement of financial position
Recording transactions on a basic accounting equation (A=L+E) – note GST can be ignored
Introduction to incomes and expenses including essential characteristics
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Introduction to capital and revenue expenditure distinction – capital expenditure to purchase
assets with economic benefit over more than one year, revenue expenditure day-to-day / ongoing / annual expenses
Recording a wide range of transactions, both cash and credit on an expanded accounting
equation (A+Ex=L+E+I) – note GST can be ignored
Preparing an income statement for a service firm with relevant classification for expenses
Preparing a trading statement including detailed calculation of cost of goods sold and
determining gross profit
Complete income statement for a trading firm
Understand the purpose of an income statement for a service firm or a trading firm
Using a trial balance to complete income statement and statement of financial position for
small sole proprietor service and trading firms
Processing cash transactions
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Introduction to GST – calculating GST from a GST inclusive price and from a GST exclusive cost
Processing cash and credit transactions including GST on source documents including an
invoice, payment voucher, credit note, receipt
Processing transactions on an accounting equation that includes GST to show the increases
and decreases that are occuring to assets, liabilities, incomes, expenses, equity accounts
Process some simple three column ledger entries from the accounting equation – Note it is
often easier for students to understand ledgers if they meet them before they used the cash
journals but this is not necessary.
Processing cash transactions including GST in cash receipts and cash payments journals
Completing general ledger entries using 3-column formal for all the transactions recorded in
the cash journals – must cover all financial elements
General ledger accounts need to be numbered according to a chart of accounts
A trial balance extracted from the closing balances in the general ledger accounts
Completing a bank reconciliation by comparing entries in cash journals with the bank
statement, updating the cash journals, completing a bank account and completing a pro-forma
bank reconciliation statement to agree the bank statement balance with the (updated bank
account balance)
Assessment: AS 90977 Process financial transactions for a small entity
Accounting 1.2
5 credits
This assessment covers
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Completing source documents – invoice and two of payment voucher, credit note, receipt,
cheque with cheque butt
Entering a wide range of cash transactions including GST where appropriate into cash receipts
and cash payments journals.
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Cash receipts journal must show
o two different types of cash received eg goods and repairs; tour fees and hire fees; book
sales and toy sales etc
o both physical cash and EFTPOD receipts on the same day
Cash receipts journal can include direct credits (eg for fees)
Cash payments journal must include payments for a range of expenses - both GST and non-GST,
cash drawings, loan or GST Payable payment, and the purchase of an asset
Comparing the cash journal entries to the bank statement and updating the cash journal as
required with direct entries on the bank statement
Posting cash journals to the general ledger organised according to a Chart of Accounts –
assigning account numbers to the accounts is assessed for good accounting practice (Merit and
Excellence grades)
Preparing a trial balance (good accounting practice so Merit and Excellence grades)
Completing a pro-forma bank reconciliation statement that agrees the bank statement balance
with the bank account balance
Preparing sole proprietor service and trading firm financial statements with
balance day adjustments including straight line depreciation; preparing a cash
budget
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Calculating depreciation on a straight line basis using
o Percentage of cost
o Cost less residual value divided by useful life
Creating a depreciation expense account for each item of PPE and creating/adjusting an
accumulated depreciation account for each item of PPE. Note both depreciation expense and
accumulated depreciation accounts must be named with the asset such as depreciation on
vehicle and accumulated depreciation on vehicle, depreciation on office equipment and
accumulated depreciation on office equipment
Recording depreciation in the income statement and accumulated depreciation in the PPE
note to the balance sheet
Understanding why depreciation is recorded as an expense and accumulated depreciation is
reported in the PPE note to the balance sheet – idea of carrying amount for assets
Understanding going concern, period reporting and accrual basis concepts
Completing the four accrual adjustments – accrued wages, accrued income, income in advance,
prepayments by adjusting the balances of the income and expense accounts in the trial
balance before reporting the income and expenses in the income statement and reporting the
associated asset or liability in the balance sheet
Understanding the accrual basis concept that requires assets and liabilities that exist on
balance day be reported in the balance sheet when they represent future economic benefit
(assets) or future outflows of resources (liabilities) and income and expenses for the period are
reported in the income statement of the period they related to
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Making accrual adjustments to cash based accounting records for GST inclusive invoices on
hand for sales/income, purchases and assets including adjusting GST
Using adjusted figures where required, completing fully classified income statement and
balance sheet with a PPE note for sole proprietor service or trading firms
Understand the purpose of preparing a cash budget
Prepare a cash budget – normally monthly recognising cash and non-cash transactions such as
direct debits, direct credits, internet banking bill payments, bank statement entries, invoices,
credit notes, drawings of cash, drawings of inventory, purchases with a deposit payment, sales
with a credit component, depreciation etc
Ensure students can recognise different types of cash transactions and when to ignore
transactions/information such as depreciation and invoices except for a payment component
Cash budget shows estimated cash receipts less estimated cash payments, surplus or deficit of
cash, add bank balance beginning equals bank balance end
Assessment: AS 90978 Prepare financial statements for sole proprietors
Accounting 1.3
5 credits
This assessment covers the fully classified sole proprietor financial statements with balance day
adjustments and the preparation of a cash budget.
Overarching assessment
Assessment: AS 90976 Demonstrate understanding of accounting concepts for small entities
Accounting 1.1
3 credits
See the Level 1 Accounting Appendix for coverage – it is there in a box on the right headed related
resources.
Analysis and interpretation for sole proprietors
The usual focus is on trading firms and coverage needs to include
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Context, context, context – students must use context in all their discussions
Calculations of analysis measure percentages and ratios are required from given formulae
Students need to
o understand the reason(s) for making the calculations,
o know what the analysis measures tell you,
o be able to recognise and describe/explain reasons for trends,
o know when an analysis measure represents a good situation or a situation that could
be cause for concern
o be able to make recommendations to improve situations that are cause for concern
Income statement analysis and interpretation
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Sales and increase in sales or other income statement item as a percentage
Mark-up and gross profit percentages and the relationship between them, include both cost
price (COGS) and selling price (sales) in explanations
Expense percentages – group eg distribution costs; individual eg advertising; total eg total
expense percentage
Profit for the year (net profit) percentage
Relationship between gross profit percentage, expense percentage and net profit percentage
Statement of financial position analysis and interpretation
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Current ratio and liquid ratio and the relationship between them – note particularly that
inventory is included in the current ratio and excluded from the liquid ratio so size of inventory
often explains the difference between the two
Equity ratio
Assessment: AS 90980 Interpret accounting information for sole proprietors
Accounting 1.5
4 credits
The assessment covers profitability, liquidity and financial stability – currently two questions cover
profitability and one question covers the financial position ratios