This foundation level unit covers the knowledge of fundamental accounting concepts for different types of business entities, including the purpose of accounting, the users of accounting information and an introduction to recording transactional accounting data in the double entry bookkeeping system.

It also covers the acquisition and disposal of assets and the production of financial statements.

Topics

1. Understand the purpose of accounting

1.1 Explain the role and purpose of accounting
1.2 Explain the meaning of Generally Accepted Accounting Principles (GAAP)
1.3 Apply key accounting concepts
1.4 Apply the accounting equation
1.5 Compare different types of business entities
1.6 Identify different types of financial statements and explain their purpose for business entities

2. Describe the accounting record-keeping system and apply double journal entry to business transactions

2.1 Classify main sources of accounting data
2.2 Identify the main types of business transactions
2.3 Illustrate the use of journals and ledgers
2.4 Apply the double-entry accounting system to record common transactions
2.5 Prepare a trial balance
2.6 Discuss the use of an accounting software package

3. Analyse the accounting impacts from implementing accrual accounting

3.1 Explain how the matching principle applies to accruals and prepayments
3.2 Calculate and prepare journal entries required for accruals and prepayments, including ledger posting
3.3 Explain how revenue recognition affects account receivables and payables
3.4 Calculate and prepare journal entries required for irrecoverable debt, including ledger posting
3.5 Calculate and prepare journal entries required for settlement discounts, including ledger posting

4. Account for inventories

4.1 Define inventories
4.2 Apply FIFO and AVCO valuation methods to calculate the cost of inventory
4.3 Prepare journal entries for the adjustments for opening and closing inventory

5. Account for property plant and equipment

5.1 Define property, plant and equipment and differentiate capital expenditure from revenue expenditure
5.2 Prepare journal entries for the purchase of property, plant and equipment
5.3 Prepare journal entries for the revaluation of property, plant and equipment
5.4 Calculate depreciation using the straight line method and diminishing value method
5.5 Calculate and prepare journal entries for property, plant and equipment disposal

6. Internal control and reconciliations

6.1 Discuss the purpose of internal control procedures and outline the common methods
6.2 Explain the purpose of control accounts for receivables and payables
6.3 Prepare journal entries in control accounts for receivables and payables
6.4 Perform control account reconciliations for receivables and payables
6.5 Explain the need for a record of petty cash transactions and a separate petty cash book
6.6 Illustrate how an imprest system for petty cash operates
6.7 Explain the purpose of a bank reconciliation
6.8 Prepare a bank reconciliation

7. Prepare and present financial statements

7.1 Prepare and present the statement of financial position: Assets
7.2 Prepare and present the statement of financial position: Liabilities
7.3 Prepare and present the statement of financial position: Equity
7.4 Prepare and present the statement of profit and loss or comprehensive income: Revenues
7.5 Prepare and present the statement of profit and loss or comprehensive income: Expenses

Foundations of Accounting – exam topic weightings
Understand the purpose of accounting 15%
Describe the accounting record-keeping system and apply double journal entry to business transactions 35%
Analyse the accounting impacts from implementing accrual accounting 10%
Account for inventories 5%
Account for property plant and equipment 10%
Internal control and reconciliations 15%
Prepare and present financial statements 10%
Total  100%