Accounting: AS Level and A Level -...

Accounting: AS Level and A Level

© Cambridge University Press www.cambridge.org

Cambridge University Press978-0-521-53993-7 - Accounting: AS Level and a LevelHarold RandallFrontmatterMore information

http://www.cambridge.org/0521539935

http://www.cambridge.org


AS Level and A Level

AccountingHarold Randall






CAMBRIDGE UNIVERSITY PRESS

Cambridge, New York, Melbourne, Madrid, Cape Town, Singapore, São Paulo

Cambridge University Press The Edinburgh Building, Cambridge CB2 8RU, UK

www.cambridge.orgInformation on this title: www.cambridge.org/9780521539937

© Cambridge University Press 2005

First published 2005

A catalogue record for this publication is available from the British Library

ISBN 978-0-521-53993-7 paperback

ACKNOWLEDGMENTS

Cover image © Philip James Corwin/CORBIS

Past examination questions are reproduced by permission of the University of Cambridge LocalExaminations Syndicate.

This publication is in copyright. Subject to statutory exception

no reproduction of any part may take place without the written permission of Cambridge University Press.

Printed in Dubai by Oriental Press

and to the provisions of relevant collective licensing agreements,

74th printing 200






Contents

v

Preface vii

Topics grid ix

I The accounting system 1

1 Double-entry bookkeeping: cash transactions 2

2 Double-entry bookkeeping: credit transactions 7

3 Books of prime (or original) entry 12

4 Balancing accounts 19

5 The classification of accounts and division of the ledger 21

6 The trial balance 23

II Financial accounting 27

7 Trading and Profit and Loss Accounts for sole traders 28

8 Balance Sheets for sole traders 36

9 Accounting principles or concepts 39

10 Accruals and prepayments (the matching concept) 43

11 Provisions for the depreciation of fixed assets 48

12 Bad and doubtful debts 56

13 Bank reconciliation statements 62

14 Control accounts 66

15 Suspense accounts 76

16 Incomplete records 84

17 Non-profit-making organisations (clubs and societies) 94

18 Departmental accounts 103

19 Manufacturing Accounts 110

20 Valuation of stock 117

Contents






21 Partnership accounts 125

22 Partnership changes 133

23 An introduction to the accounts of limited companies 148

24 Cash flow statements 164

25 Limited companies: more about share capital and debentures; capital reductions and reconstructions 181

26 Business purchase 192

27 Published company accounts 200

III Financial reporting and interpretation 209

28 Interpretation and analysis 210

29 Company financing 227

IV Elements of managerial accounting 233

30 Costing principles and systems: total (or absorption) costing 234

31 Unit, job and batch costing 245

32 Process costing 249

33 Marginal costing 255

34 Budgeting 266

35 Standard costing 277

36 Investment appraisal 288

Appendix 1: Table showing net present value of $1 295

Answers to exercises and multiple-choice questions 297

Index 353

vi Contents






This book is written for students of accounting whoface problems by asking ‘How do I do this?’. Here arethe approaches to the problems that such students arelikely to meet in the CIE AS and A level accountingexaminations. Students need to practise the approachesuntil they have mastered them. No textbook can do thestudents’ work for them!

Accounting AS Level and A Level covers the entire CIEsyllabus. Ideally, students should already have taken O level or IGCSE accounting before starting on AS levelor A level studies. Many do not have such abackground and this text has such students in mind inthe early chapters. The essentials of double-entrybookkeeping are covered in sufficient detail to equipstudents to progress to more advanced work. It must beemphasised, however, that thorough mastery of thebasics is absolutely necessary if real progress is to bemade with the subsequent chapters.

The text follows the order of the CIE syllabus butallows for some flexibility in the sequence in which thetopics are studied. Whichever the order in which thechapters are taken, it is of paramount importance thatthe whole of the syllabus is covered before theexamination. Every topic is likely to find its place in atleast one of the papers each session. It is invariably thecase that too many candidates enter the examinationsinadequately prepared – with inevitably disappointingresults. A grid is provided to show how the chapterscover the AS level and A level syllabuses.

vii

Answers to exercises within chapters, and answers to multiple-choice questions, are provided at the end of the textbook. The answers to theadditional exercises at the ends of chapters areprovided in a teacher’s supplement available on the Cambridge University Press website athttp://www.cambridge.org/accounting_as_alevel

Many years as an examiner (and lecturer) have mademe keenly aware of the difficulties experienced byexamination candidates, and the text seeks to addressthese difficulties as they arise in the topics covered.Particular difficulties are identified as they occur in thechapters; in addition, every chapter has ‘Examinationhints’. My approach has been from the dualstandpoints of teacher and student. If it is anyconsolation and encouragement to students, I haveexperienced the frustrations and difficulties that manyencounter in their studies, but I hope I have provedthat determination to succeed brings its reward.Students should ask the question ‘Why?’ even moretimes than they ask ‘How?’ because an understandingof the reasons underlying accounting practices makesthe rules more memorable. ‘How do I do this’ will giveway to ‘I know how to do this!’

I wish to express my great appreciation to GeorgeBrownlee, Ken Frame, Ian Harrison and Don Payne forreading my manuscript and making many helpfulsuggestions.

To my readers, I send my best wishes for success.

Harold Randall

Preface

Preface






ix

The grid below show how the chapters of this text coverthe topics in the syllabuses for AS level and A levelaccounting. The syllabuses do not present the topics ortheir contents in the order in which they should betaught, and the order in which the chapters are shownin the grid is intended only to show how the syllabusesare covered. Teachers will decide their own order to suittheir particular teaching plans, which will usuallyfollow, more or less, the chapters in sequence.

Some topics are either wholly or partly outside the AS level syllabus but none of the topics is outside the A level syllabus.

Syllabus Chapter AS level A level

THE ACCOUNTING SYSTEM

A. Recording Financial Information 1 All All

2 All All

3 All All

4 All All

5 All All

10 All All

11 All All

12 All All

B. Accounting Principles 9 All All

C. Control Systems 6 All All

13 All All

14 All All

15 All All

FINANCIAL ACCOUNTING

D. Preparation of Financial Statements 7 All All

8 All All

16 All All

17 All All

18 All All

19 All All

20 All All

21 All All

22 All All

23 All All

24 N/A All

E. Capital 25 §§25.1– All25.5,25.11

F. Business Purchase 26 N/A All

G. Published Company Accounts 27 N/A All

FINANCIAL REPORTING AND INTERPRETATION

H. Interpretation and Analysis 28 §§28.1– All28.6,28.8, 28.9, 28.10, 28.11

I. Company Financing 29 N/A All

ELEMENTS OF MANAGERIAL ACCOUNTING

J. Costing Principles and Systems 30 All All

31 All All

32 N/A All

33 §§33.1– All33.5,33.10

K. Budgeting 34 N/A All

L. Standard Costing 35 N/A All

M. Investment Appraisal 36 N/A All

Topics grid

Topics grid






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