VCE Accounting

Units 3 & 4 (Year 12)

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WHAT DO STUDENTS STUDY IN VCE ACCOUNTING UNITS 3&4?

Unit 3: Financial accounting for a Trading business

This unit focuses on financial accounting for a trading business owned by a sole proprietor, and highlights the role of accounting as an information system. Students use the double entry system of recording financial data and prepare reports using the accrual basis of accounting and the perpetual method of inventory recording.

Students develop their understanding of the accounting processes for recording and reporting and consider the effect of decisions made on the performance of the business. They interpret reports and information presented in a variety of formats and suggest strategies to the owner to improve the performance of the business.

Where appropriate, the accounting procedures developed in each area of study should incorporate the application of the Conceptual Framework, financial indicators to measure business performance, as well as the ethical considerations of business owners when making decisions, including financial, social and environmental.

Area of Study 1: Recording and analysing financial data (60%)

In this area of study students focus on identifying and recording financial data for a business. They use double entry accounting to record data and generate accounting information in the form of accounting reports and graphical representations. This information is used to assist the owner in making informed decisions about the operation of the business. Students should also consider strategies to improve the performance of the business, taking into account the ethical considerations relevant to the business owner

On completion of this outcome the student should be able to record financial data using a double entry system; explain the role of the General Journal, General Ledger and inventory cards in the recording process; and describe, discuss and analyse various aspects of the accounting system, including ethical considerations.

Area of Study 2: Preparing and interpreting accounting reports (40%)

The preparation of financial reports at the end of the reporting period provides information to be used as a basis for planning and decision-making by the business owner. Students develop their understanding of the accounting processes and complete those processes that are applicable to the end of a reporting period for a trading business.

They apply the accrual method of accounting to the preparation of accounting reports and draw a distinction between cash and profit, considering the implications of these differences when using reports to make decisions. Students undertake an analysis of accounting reports and interpret the information, taking into account relevant ethical considerations, in order to evaluate the performance of the business.

On completion of this outcome the student should be able to record transactions and prepare, interpret and analyse accounting reports for a trading business.

Unit 4: Recording, reporting, budgeting and decision-making

In this unit students further develop their understanding of accounting for a trading business owned by a sole proprietor and the role of accounting as an information system. Students use the double entry system of recording financial data, and prepare reports using the accrual basis of accounting and the perpetual method of inventory recording. Both manual methods and ICT are used to record and report.

Students extend their understanding of the recording and reporting process with the inclusion of balance day adjustments and alternative depreciation methods. They investigate both the role and importance of budgeting in decision-making for a business. They analyse and interpret accounting reports and graphical representations to evaluate the performance of a business. From this evaluation, students suggest strategies to business owners to improve business performance.

Where appropriate, the accounting procedures developed in each area of study should incorporate application of the Conceptual Framework and financial indicators to measure business performance, as well as the ethical considerations of business owners when making decisions, including financial, social and environmental.

Area of Study 1: Extension of recording and reporting (50%)

In this area of study students further develop their understanding of the recording and reporting of financial data in the General Journal and General Ledger by focusing on balance day adjustments and the alternative methods of depreciating for non-current depreciable assets. Students prepare accounting reports using manual methods and ICT. They consider the effect of balance day adjustments on the accounting reports, and the implications of using alternative methods of depreciation on the accounting reports and on the performance of the business. They also examine ethical considerations that may effect the recording and reporting of financial data and business performance.

On completion of this outcome the student should be able to record financial data and balance day adjustments using a double entry system, report accounting information using an accrual-based system and evaluate the effect of balance day adjustments and alternative methods of depreciation on accounting reports.

Area of Study 2: Budgeting and decision-making (50%)

Business owners must plan for future activities if they are to successfully manage the business. Preparing budgeted accounting reports provides the owner with information that will assist in managing and developing strategies to improve business performance. Students prepare and analyse budgeted accounting reports, both manually and using ICT, and suggest strategies to improve the performance of the business. They also discuss and evaluate the ethical considerations associated with business decision-making and business improvement.

On completion of this outcome the student should be able to prepare budgeted accounting reports and variance reports for a trading business using financial and other relevant information, and model, analyse and discuss the effect of alternative strategies on the performance of a business.