Section 1 Topics (Cambridge (CIE) A Level Accounting): Revision Note

1.1 Types of business entity

1.1.1 Types of business entity

• Sole Traders, Partnerships & Limited Companies

• Sources of Finance

1.2 The accounting system

1.2.1 The accounting system

• The Accounting Process

• Transactions with Cash, Credit & Discounts

• Books of Prime Entry

• The Ledger

• The Accounting Equation

• The Double Entry System

• Double Entry for Sale Transactions

• Double Entry for Purchase Transactions

• Double Entry for Dishonoured Cheques

• Double Entry for Refunds

• Double Entry for Other Transactions

• Balancing Accounts

• The Cash Book

• Interpreting Accounts and Their Balances (opens in a new tab)

• Transferring Balances at the End of an Accounting Period

• Accounting Concepts

• Computerised Accounting Systems

• Full & Incomplete Records

1.3 Accounting for non-current assets

1.3.1 Capital and revenue income and expenditure

• Capital & Revenue Expenditure

• Capital & Revenue Income

• Effects of Incorrect Treatment of Expenditure & Income (opens in a new tab)

1.3.2 Changing asset values

• Introduction to Depreciation

• Straight-Line Method of Depreciation

• Reducing Balance Method of Depreciation

• Revaluation Method of Depreciation

• Provision for Depreciation

• Profit or Loss on a Sale of a Non-Current Asset

• Disposal Account

• Journal Entries for Non-current Assets

• Matching Costs & Revenues

• Accrued & Prepaid Expenses

• Accrued & Prepaid Incomes

• Amount Due & Amount Paid/Received

• Expense Accounts with Accruals & Prepayments

• Income Accounts with Accruals & Prepayments

• Irrecoverable Debts

• Allowance for Irrecoverable Debts

1.4 Reconciliation and verification

1.4.1 Reconciliation and verification

• Methods of Reconciliation & Verification

1.4.2 Trial balance

• The Trial Balance

• Types of Errors

• Correction of Errors Using Journal Entries

• Omission, Original Entry, Reversal, Commission, Principle & Compensating Errors

• The Suspense Account

• Impact of Errors on Profit & Financial Position

1.4.3 Bank reconciliation statements

• Using a Bank Statement to Update the Cash Book

• Bank Reconciliation Statements

1.4.4 Control accounts

• Sales Ledger Control Accounts

• Purchases Ledger Control Accounts

• Reconciliation Statements Between Control & Ledger Accounts

• Impact of Errors on Profit & Financial Position

1.5 Preparation of financial statements

1.5.1 Adjustments to draft financial statements

• Adjustments for Depreciation

• Adjustments for Allowances for Irrecoverable Debts

• Adjustments for Accrued & Prepaid Expenses

• Adjustments for Accrued & Prepaid Income

• Adjustments for Inventory Valuation

• Adjustments to Financial Statements

1.5.2 Sole traders

• Statement of Profit or Loss

• Statement of Financial Position

• Statement of Affairs

• Calculating Values using Control Accounts

• Calculating Values using Accounting Ratios

1.5.3 Partnerships

• Partnership Agreement & Partnership Act 1890

• Statement of Profit or Loss

• Appropriation Account

• Capital & Current Accounts

• Statement of Financial Position

1.5.4 Limited companies

• Share Capital & Reserves

• Ordinary Shares & Debentures

• Rights & Bonus Issues

• Statement of Profit or Loss

• Statement of Changes in Equity

• Statement of Financial Position

• Journal Entries for Equity Accounts

1.6 Analysis and communication of accounting information

1.6.1 Users of accounting information

• Stakeholders

1.6.2 Calculation and evaluation of ratios

• Profitability Ratios

• Liquidity Ratios

• Efficiency Ratios

• Evaluating Profitability, Liquidity & Efficiency

• Limitations of Accounting Information