Spec Detail

p1 Paper 1 - Multiple Choice

Duration 90 min · Marks 40 · Weighting 30.00 · Structure fixed_items · Question count fixed 40 · Assembly exact_fixed_count

Patterns: 40

p2 Paper 2 - Structured Written Paper

Duration 105 min · Marks 100 · Weighting 70.00 · Structure fixed_question_blocks_with_flexible_parts · Question count fixed 5 · Assembly fixed_question_blocks_with_flexible_parts

Patterns: 5

1 The fundamentals of accounting

• 1.1 The purpose of accounting 5 outcomes
  • 1.1.1 Describe the difference between book-keeping and accounting p1, p2
  • 1.1.2 Explain the purposes of measuring business profit and loss p1, p2
  • 1.1.3 Describe the role of accounting in providing information for monitoring progress and decision-making p1, p2
  • 1.1.4 Identify accounting users and information needs p1, p2
  • 1.1.5 Describe accounting as a basis for business decisions p1, p2
• 1.2 The accounting equation 5 outcomes
  • 1.2.1 Define assets, liabilities and owner’s equity p1, p2
  • 1.2.2 State the accounting equation p1, p2
  • 1.2.3 Apply the accounting equation to calculate assets, liabilities or owner’s equity p1, p2
  • 1.2.4 Calculate the effect of transactions on the accounting equation p1, p2
  • 1.2.5 Demonstrate why the accounting equation remains balanced p1, p2

2 Sources and recording of data

• 2.1 The double entry system of book-keeping 10 outcomes
  • 2.1.1 Describe the double entry system of book-keeping p1, p2
  • 2.1.2 Prepare ledger accounts p1, p2
  • 2.1.3 Post transactions to ledger accounts p1, p2
  • 2.1.4 Calculate ledger account balances p1, p2
  • 2.1.5 Make transfers from ledger accounts to financial statements p1, p2
• 2.2 Business documents 5 outcomes
  • 2.2.1 Identify invoices, debit notes, credit notes, cheque counterfoils, paying-in slips, receipts, bank statements and statements of account p1, p2
  • 2.2.2 Explain how business documents are used as sources of information p1, p2
  • 2.2.3 Describe how business documents may be produced and recorded manually or digitally p1, p2
  • 2.2.4 Match business documents to transactions and books of prime entry p1, p2
  • 2.2.5 Explain the purpose of a statement of account p1, p2
• 2.3 Books of prime entry 14 outcomes
  • 2.3.1 Process accounting data in the cash book p1, p2
  • 2.3.2 Process accounting data in the petty cash book p1, p2
  • 2.3.3 Process accounting data in sales and purchases journals p1, p2
  • 2.3.4 Process accounting data in sales returns and purchases returns journals p1, p2
  • 2.3.5 Process accounting data in the general journal p1, p2

3 Verification of accounting records

• 3.1 The trial balance 5 outcomes
  • 3.1.1 Explain the purposes and limitations of a trial balance p2
  • 3.1.2 Prepare a trial balance from a given list of balances p1, p2
  • 3.1.3 Amend a trial balance which contains errors p1, p2
  • 3.1.4 Identify errors that do not affect trial balance agreement p1, p2
  • 3.1.5 Describe commission, compensating, complete reversal, omission, original entry and principle errors p1, p2
• 3.2 Correction of errors 6 outcomes
  • 3.2.1 Correct errors using journal entries p1, p2
  • 3.2.2 Explain the use of a suspense account as a temporary measure p1, p2
  • 3.2.3 Correct errors using a suspense account p1, p2
  • 3.2.4 Adjust profit or loss after correction of errors p1, p2
  • 3.2.5 Explain the effect of correction of errors on a statement of financial position p1, p2
• 3.3 Bank reconciliation 5 outcomes
  • 3.3.1 Describe the use and purpose of a bank statement p1, p2
  • 3.3.2 Update the cash book for bank charges and bank interest p1, p2
  • 3.3.3 Update the cash book for correction of errors, credit transfers, direct debits and standing orders p1, p2
  • 3.3.4 Prepare a bank reconciliation statement including bank errors, uncredited deposits and unpresented cheques p1, p2
  • 3.3.5 Explain the impact of digital business transactions on the bank reconciliation process p2
• 3.4 Control accounts 7 outcomes
  • 3.4.1 Explain the purposes of purchases ledger and sales ledger control accounts p1, p2
  • 3.4.2 Identify books of prime entry as sources for control account entries p1, p2
  • 3.4.3 Prepare purchases ledger control accounts p1, p2
  • 3.4.4 Prepare sales ledger control accounts p1, p2
  • 3.4.5 Record credit purchases, credit sales, receipts, payments, cash discounts and returns in control accounts p1, p2

4 Accounting procedures

• 4.1 Capital and revenue expenditure and receipts 6 outcomes
  • 4.1.1 Distinguish capital expenditure from revenue expenditure p1, p2
  • 4.1.2 Account for capital expenditure and revenue expenditure p1, p2
  • 4.1.3 Distinguish capital receipts from revenue receipts p1, p2
  • 4.1.4 Account for capital receipts and revenue receipts p1, p2
  • 4.1.5 Identify and calculate the effect on profit of incorrect treatment p1, p2
• 4.2 Accounting for depreciation and disposal of non-current assets 8 outcomes
  • 4.2.1 Define depreciation p1, p2
  • 4.2.2 Explain the need to account for depreciation p1, p2
  • 4.2.3 Calculate depreciation using straight-line, reducing balance and revaluation methods p1, p2
  • 4.2.4 Select appropriate depreciation methods for different non-current assets p1, p2
  • 4.2.5 Prepare journal entries and ledger accounts to record depreciation p1, p2
• 4.3 Other payables and other receivables 4 outcomes
  • 4.3.1 Explain the importance of matching costs and revenues p1, p2
  • 4.3.2 Apply matching and accruals concepts using accruals and prepayments p1, p2
  • 4.3.3 Prepare journal entries and ledger accounts for accrued and prepaid expenses p1, p2
  • 4.3.4 Prepare journal entries and ledger accounts for accrued and prepaid incomes p1, p2
• 4.4 Irrecoverable debts and allowance for irrecoverable debts 5 outcomes
  • 4.4.1 Define irrecoverable debts and irrecoverable debts recovered p1, p2
  • 4.4.2 Prepare journal entries and ledger accounts for irrecoverable debts p1, p2
  • 4.4.3 Prepare journal entries and ledger accounts for irrecoverable debts recovered p1, p2
  • 4.4.4 Explain the need for an allowance for irrecoverable debts p1, p2
  • 4.4.5 Prepare journal entries and ledger accounts for creating and adjusting an allowance for irrecoverable debts p1, p2
• 4.5 Valuation of inventory 4 outcomes
  • 4.5.1 Explain valuation of inventory at the lower of cost and net realisable value p1, p2
  • 4.5.2 Calculate the value of inventory p1, p2
  • 4.5.3 Explain the effect of incorrect inventory valuation on gross profit, profit for the year, equity and asset valuation p1, p2
  • 4.5.4 Apply inventory valuation to financial statement extracts p1, p2

5 Preparation of financial statements

• 5.1 Sole traders 12 outcomes
  • 5.1.1 Evaluate advantages and disadvantages of operating as a sole trader p2
  • 5.1.2 Describe how a sole trader may be trading, service, manufacturing or a combination business p1, p2
  • 5.1.3 Explain the importance of preparing statements of profit or loss and statements of financial position p1, p2
  • 5.1.4 Prepare statements of profit or loss for trading, service, manufacturing and combined businesses p1, p2
  • 5.1.5 Explain the importance of statements of financial position p1, p2
• 5.2 Partnerships 9 outcomes
  • 5.2.1 Describe how a partnership may be trading, service, manufacturing or a combination business p1, p2
  • 5.2.2 Evaluate advantages and disadvantages of forming a partnership p2
  • 5.2.3 Explain the importance and contents of a partnership agreement p1, p2
  • 5.2.4 Explain the purpose of an appropriation account p1, p2
  • 5.2.5 Prepare statements of profit or loss, appropriation accounts and statements of financial position p1, p2
• 5.3 Limited companies 9 outcomes
  • 5.3.1 Describe how a limited company may be trading, service, manufacturing or a combination business p1, p2
  • 5.3.2 Evaluate advantages and disadvantages of operating as a limited company p2
  • 5.3.3 Define limited liability p1, p2
  • 5.3.4 Define equity p1, p2
  • 5.3.5 Describe the capital structure of a limited company p1, p2
• 5.4 Manufacturing accounts 6 outcomes
  • 5.4.1 Distinguish direct and indirect costs p1, p2
  • 5.4.2 Define direct material, direct labour, prime cost and factory overheads p1, p2
  • 5.4.3 Make adjustments for work in progress p1, p2
  • 5.4.4 Calculate factory cost of production p1, p2
  • 5.4.5 Prepare manufacturing accounts, statements of profit or loss and statements of financial position p1, p2
• 5.5 Clubs and societies 6 outcomes
  • 5.5.1 Describe receipts and payments accounts and income and expenditure accounts p1, p2
  • 5.5.2 Prepare receipts and payments accounts p1, p2
  • 5.5.3 Prepare accounts for revenue-generating activities such as refreshments and subscriptions p1, p2
  • 5.5.4 Prepare income and expenditure accounts and statements of financial position p1, p2
  • 5.5.5 Make adjustments to clubs and societies financial statements p1, p2
• 5.6 Incomplete records 8 outcomes
  • 5.6.1 Explain why businesses keep different types of records rather than full double entry p1, p2
  • 5.6.2 Evaluate advantages and disadvantages of not maintaining a full set of accounting records p2
  • 5.6.3 Prepare opening and closing statements of affairs p1, p2
  • 5.6.4 Calculate profit or loss from changes in capital over time p1, p2
  • 5.6.5 Calculate sales, purchases, gross profit, trade receivables, trade payables and other figures from incomplete information p1, p2

6 Analysis and interpretation

• 6.1 Calculation and understanding of accounting ratios 11 outcomes
  • 6.1.1 Calculate gross profit margin p1, p2
  • 6.1.2 Calculate mark-up p1, p2
  • 6.1.3 Calculate profit margin p1, p2
  • 6.1.4 Calculate return on capital employed (ROCE) p1, p2
  • 6.1.5 Calculate current (working capital) ratio p1, p2
• 6.2 Interpretation of accounting ratios 7 outcomes
  • 6.2.1 Prepare and comment on statements comparing results for different years p2
  • 6.2.2 Interpret the ratios calculated in Topic 6.1 p2
  • 6.2.3 Suggest recommendations for improving profitability, liquidity and working capital p2
  • 6.2.4 Explain gross profit margin and profit margin as indicators of profitability p2
  • 6.2.5 Analyse how inventory valuation, sales quantity and price changes affect gross profit p2
• 6.3 Inter-business comparison 4 outcomes
  • 6.3.1 Analyse factors that may affect the ratios of two businesses p2
  • 6.3.2 Evaluate problems of inter-business comparison p2
  • 6.3.3 Compare accounting ratios for different businesses p2
  • 6.3.4 Justify conclusions drawn from inter-business comparison p2
• 6.4 Interested parties 9 outcomes
  • 6.4.1 Explain how owners use accounting information for decision-making p2
  • 6.4.2 Explain how managers use accounting information p2
  • 6.4.3 Explain how employees use accounting information p2
  • 6.4.4 Explain how banks use accounting information p2
  • 6.4.5 Explain how investors and lenders use accounting information p2
• 6.5 Limitations of accounting statements 4 outcomes
  • 6.5.1 Evaluate limitations of accounting statements p2
  • 6.5.2 Explain why accounting statements may not show non-financial factors p2
  • 6.5.3 Analyse the effect of historical cost and judgement on accounting statements p2
  • 6.5.4 Discuss why accounting statements need interpretation before decisions are made p2

7 Accounting concepts and modern practice

• 7.1 Accounting concepts 8 outcomes
  • 7.1.1 Explain the business entity concept p1, p2
  • 7.1.2 Explain the going concern concept p1, p2
  • 7.1.3 Explain the accounting period concept p1, p2
  • 7.1.4 Explain the historical cost concept p1, p2
  • 7.1.5 Explain the matching/accruals concept p1, p2
• 7.2 Ethical considerations 4 outcomes
  • 7.2.1 Discuss ethical considerations for accountants p2
  • 7.2.2 Evaluate the impact of ethical behaviour on stakeholders and society p2
  • 7.2.3 Explain confidentiality, integrity and objectivity in accounting contexts p2
  • 7.2.4 Suggest ethical courses of action in accounting scenarios p2
• 7.3 Technology and sustainability 5 outcomes
  • 7.3.1 Discuss the impact of technology on accounting practice p2
  • 7.3.2 Evaluate benefits and limitations of digital accounting systems p2
  • 7.3.3 Explain how technology can improve accounting information and problem solving p2
  • 7.3.4 Discuss sustainability considerations affecting accountants and business owners p2
  • 7.3.5 Suggest how accounting information can support sustainable decision-making p2