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1.1 Demonstrate understanding of accounting concepts for small entities 3 credits EXTERNAL
Achievement Merit Excellence
Demonstrate understanding of
accounting concepts for small entities.
Demonstrate in-depth understanding of
accounting concepts for small entities.
Demonstrate comprehensive
understanding of accounting concepts for
small entities.
Demonstrate understanding means describing accounting concepts for small entities
Demonstrate in-depth understanding means explaining accounting concepts for small entities
Demonstrate comprehensive understanding means applying accounting concepts, showing a clear relationship to the small entity.
1.1 Demonstrate understanding of accounting concepts for small entities 3 credits EXTERNAL
Context: small entity
• service sole proprietor registered for GST
• trading sole proprietor registered for GST
• incorporated community organisation
• unincorporated community organisation
Limited to nature of
accounting
1.1 Demonstrate understanding of accounting concepts for small entities 3 credits
What needs to be covered?• Nature of accounting• Purpose of financial statements• Concepts• Elements• Equation
These four for sole proprietor
only
Content
Nature
of
Accounting
Nature
of
Accounting
What is accounting?
uses
users
Specialised areas
Types of entities
Content
Purpose of Financial
Statements
Purpose of Financial
Statements
Income Statement
Statement of Financial Position
Policies
Cash Budget
Content
ConceptsConcepts
capital and revenue
expenditure
monetary
period
reporting
going
concern
historical
cost
entity
accrual
Content
ElementsElements
asset
expense
liabilities
owner’s
equity
income
Content
Accounting equation
Accounting equation
numbers
sentences
Concepts example
Exemplar – qn 2 (d)
The Balance Sheet of 31 March 2010 shows there was a prepayment of $300 for insurance.
Fully explain how the reporting of prepaid insurance in the financial statements illustrates the accrual basis of accounting for Simply Sports.
Concepts example
Achieved
Simply Sports must report their transactions in the period to which they relate
Merit
Simply Sports must report the insurance in the period to which it relates so they decrease the insurance expense in this accounting period
Excellence
Simply Sports must report the insurance in the period to which it relates so they decrease the insurance expense to be reported in the Income Statement by $300 because $300 has been prepaid so that expense relates to the next accounting period
Concepts example
Exemplar – qn 3 (d)
Fully explain how Simply Sports would demonstrate the concept of going concern
Achieved:
Merit:
Excellence:
Concepts example
Achieved
Simply Sports will continue into the foreseeable future
Merit
Simply Sports will prepare financial statements assuming that they will continue into the foreseeable future
Excellence
Simply Sports prepares their financial statements based on the assumption that they will continue into the foreseeable future so when they prepare their Statement of Financial Position they classify their assets as current and non-current.
Unit PlanCETA resource 1.1
