LEVEL 1

BUSINESS ACCOUNTING -PAPER 1

SYLLABUS CHART

Financial Accounting Paper 10

Business Accounting Paper 1

OVERALL AIM
To provide the learner with knowledge and skills of basic accounting concepts
and how they can be applied to financial statements providing useful
information for business evaluation and decision-making

LEARNING OUTCOMES
On completion of this course, the learner should be able to:
1. Define the different terms used in accountancy
2. Describe the purpose and relevance of the main areas of accounting i.e.
financial accounting, cost accounting and management accounting
3. Categorise business organisations
4. Record transactions in the books of prime entry using a double entry
book-keeping system
ACCOUNTING TECHNICIANS DIPLOMA (ATD)

5. Extract a trial balance

6. Describe the accounting cycle
7. Make end of year adjustments
8. Prepare simple financial statements for business entities and non-profit
making organisations
9. Analyse and interpret the information contained in the financial
statements for effective decision making

LEVEL OF ASSESSMENT
The examination will mainly test knowledge, comprehension and application

EXAMINATION SYLLABUS, 2016 9

 EXAMINATIONS STRUCTURE
There will be a three hour examination made up sections A and B. Section A will
comprise of 20 compulsory multiple-choice questions of 20 marks. Section B
will comprise of five questions of 20 marks each, of which the candidate will
be required to attempt any four.

DETAILED SYLLABUS

A. INTRODUCTION
1. Meaning and differences between: book-keeping, financial accounting,
cost accounting and management accounting
2. Users of financial statements and their information needs
3. The accounting equation and statement of financial position
4. The role of accountants and accounting technicians

B. FORMS OF BUSINESS ENTITY

1. Meaning of ‘business entity’

2. Categories of business entities
(a) Sole proprietorships:
(i) Characteristics
(ii) Benefits and limitations
(b) Partnerships:
(i) Meaning
(ii) Formation
(iii) Characteristics
(iv) Partnership agreement/ deed
(v) Benefits and limitations
(c) Limited liability companies:
(i) Characteristics
ACCOUNTING TECHNICIANS DIPLOMA (ATD)

(ii) Companies limited by shares and/or by guarantee

(iii) Benefits and limitations
(iv) Partnerships versus limited liability company
(v) Public versus private companies

C. PRINCIPLES OF DOUBLE ENTRY BOOK-KEEPING AND BOOKS

OF ORIGINAL ENTRY

1. Meaning of double entry

2. Merits of double entry system
3. Recording of transactions within the double entry framework

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 (a) Explanation of the accounting equation and effect of transactions
on statement of financial position
(i) Double entry system for assets, liabilities and capital
(ii) The double entry system for expenses and revenues
(iii) The effect of profit and loss on capital
(b) Classification of accounts
(i) Personal (natural, artificial/ legal and representatives),
impersonal (real and nominal)
(ii) Golden rules of accounting
(c) Elements of financial statements
(d) Capital and revenue transactions

4. Source documents and records

(a) Receipts
(b) Vouchers
(c) Invoices
(d) Credit and debit notes

5. Books of original entry

(a) Cash book:
(i) Two column and three column
(ii) Petty cash book and imprest system
(iii) Analysed cashbook
(b) Journals
(i) General journal
(ii) Sales journal
(iii) Purchases journal
(iv) Returns inwards and returns outwards journals
(c) Preparation of books of original entry and transfer to the ledger
accounts
ACCOUNTING TECHNICIANS DIPLOMA (ATD)

6. Ledgers and extraction of a trial balance

(a) Meaning of a ledger and ledger accounts
(b) Debit and credit entries
(c) Posting and balancing ledger accounts
(d) Sales Ledger, Purchases Ledger, General or Nominal Ledger
(e) Preparation of principal and subsidiary ledgers
(f) Balancing off ledger accounts and extraction of a trial balance

EXAMINATION SYLLABUS, 2016 11

 7. Accounting cycle
(a) Collecting data using source documents
(b) Recording transactions in books of original entry
(c) Posting from journals to ledger accounts
(d) Preparation of a trial balance
(e) End of period adjustments
(f) Financial statements

D. ERRORS AND THEIR CORRECTION

1. Types of errors:
(a) Errors which cannot be revealed by a trial balance
(b) Errors that can be revealed by a trial balance
2. Correction of errors using the journal
3. Errors and the suspense account
4. Preparation of revised statement of profit or loss and other comprehensive
income and statement of financial position after correction of errors

E. BANK RECONCILIATION STATEMENTS

1. Nature and purpose

2. Causes of differences between bank statement and cash book
balance
3. Cheque system
4. Bank statement format and terms involved
5. Methods of bank reconciliation
6. Preparation of adjusted cash book
7. Merits of bank reconciliation statements

F. FINANCIAL STATEMENTS FOR INTERNAL USE

ACCOUNTING TECHNICIANS DIPLOMA (ATD)

Preparation of simple statements of profit or loss and other comprehensive

income and financial position for sole traders, partnerships and limited
companies (excluding manufacturing entities)

G. END OF PERIOD ADJUSTMENTS

1. Need for period end adjustments

2. Accruals and prepayments of incomes and expenses (application of
accrual and matching concepts)
3. Provision for bad and doubtful debts

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 (a) Need for provisions for bad and doubtful debts
(b) Distinction between:
(i) Definite and doubtful debts
(ii) Specific and general debts
(c) Determination of provisions for bad and doubtful debts
(d) Movement in the provisions for bad and doubtful debts account
(e) Accounting treatment of provision for bad debts, increase in bad
debts, decrease in bad debts, bad debts written off and recovered
in ledger accounts and financial statements
4. Discounts
(a) Meaning and different types of discounts (cash discount, trade
discount)
(b) Accounting treatment of movements in provisions for discounts
allowed and discounts received in the ledger accounts and financial
statements
5. Depreciation
(a) Objectives of providing for depreciation
(b) Identification of depreciable assets
(c) Methods of depreciating and amortising non-current assets
(d) Accounting for depreciation
(e) Recording of acquisition and disposal of non-current assets

H. PREPARATION OF FINANCIAL STATEMENTS FROM INCOMPLETE

RECORDS

1. Meaning of incomplete records

(a) Reasons/ circumstances which give rise to incomplete records
(b) Need for complete records
(c) Accounting process
(d) Sources of information
ACCOUNTING TECHNICIANS DIPLOMA (ATD)

2. Transformation of incomplete records into proper books of account

(a) Preparation of statements of affairs
(b) Analysis of cash and bank transactions
(c) Control accounts
(i) Meaning and need for control accounts
(ii) Sources of information for control accounts
(iii) Preparation of schedules of accounts receivable and
accounts payable
(iv) Determination of purchases and sales amounts
(v) Determination of expenses and income amounts

EXAMINATION SYLLABUS, 2016 13

 (d) Computation of and relationship between mark-up and margin
(e) Preparation of trial balance
(f) End of period adjustments
(g) Preparation of statements of profit or loss and other comprehensive
income and financial position from incomplete records

I. FINANCIAL STATEMENTS FOR NON-PROFIT MAKING ORGANISATIONS

1. Meaning and types of non-profit making organisations

2. Non-profit versus profit making organisations
3. Ordinary and life membership subscriptions
4. Receipts and payments account
5. Income and expenditure account/ statement
6. Accumulated fund
(a) Meaning
(b) Determination
(c) Effects of surplus or deficit on accumulated fund
7. Statement of financial position
8. Income and expenditure account/ statement of non-profit organisation
versus statement of profit or loss and other comprehensive income of a
profit-making organisation

J. INTRODUCTION TO PARTNERSHIP ACCOUNTS

1. Treatment of partnership profits and losses, partners’ salaries and

drawings
2. Preparation of partners’ capital and current accounts
3. Preparation of statements of profit or loss and other comprehensive
income and financial position
ACCOUNTING TECHNICIANS DIPLOMA (ATD)

K. SIMPLE COMPANY ACCOUNTS

1. The legal and financial framework of a limited company

2. Requirements of the Companies Act
3. Preparation of profit or loss and other comprehensive income and
statement of financial position for internal use

14 EXAMINATION SYLLABUS, 2016

REFERENCES

1. Wood Frank & Alan Sangster (2011), Business Accounting, Prentice Hall,
Great Britain, 12th Edition.
2. Wood Frank & Sheila Robinson (2009), Book keeping and Accounts,
Financial Times Management, Prentice Hall Great Britain, 7th Edition.
3. Wood Frank (2008), Business Accounting 1, Financial Times Management,
Prentice Hall Great Britain, 11th Edition.

ACCOUNTING TECHNICIANS DIPLOMA (ATD)

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