Course Structure
There are 10 lessons as follows
1. Introduction to Bookkeeping Applications
- Stock defines a trading business
- Bookkeeping requirements for a trading business
- Steps in processing stock transactions
- Books required for a trading business
- Trading businesses and accounting rules
- Accounting doctrines
- Accounting standards
2. Decision Making -How to manage bookkeeping
- Bookkeepers Terminology
- Using bookkeeping as a management tool
- What are business structures
- Business requirements of companies
- Financial information, and who uses it
- Alternative approaches to accounting systems
- Definitions and bookkeeping processes
- Double entry bookkeeping
- Single entry bookkeeping
- Cash accounting
- Modified cash accounting
- Accrual accounting
- Choosing depreciation methods
- Depreciation calculation
- Calculating depreciation with the straight line method
- What if there is no residual value
- How to enter depreciation in the books
- Declining balance method of depreciation
- Calculating percentage rate of depreciation
- Units of activity depreciation method
- Intangible assets
- Tracking assets and depreciation
- Closing stock control methods
- Functional profit and loss in a trading business
- Informative profit and loss presentation - segmentation, grouping expenses
- Showing Extraordinary Revenue and Expenses
3. Managing Cash Flow, Obtaining Finance, Managing Bad Debts and Accounts Payable
- Definition of cash
- The cash cycle
- Cash flow and liquidity
- Analysing a businesses cash flow
- Cash flow margin
- Statements of cash flow
- Managing costs in a business
- Financing a business
- Rules for business funding
- Business set up costs
- Thinking outside the box
- Loss of time and income
- Managing bad debt
- Initiating collection
- Bookkeeping procedures for bad and doubtful debts
- Accounts payable procedures
- Accounts payable schedule
- Ageing report
- Source Documents -invoice, monthly statement
- Credit purchasers journal
- Creditors subsidiary ledger and schedule
- Cash payments journal and creditors control account
4. Managing Inventory Part 1
- Difference between goods and commodities
- Role of stock in a trading business
- Purpose of physical stock take
- Costing goods
- When an articles cost changes
- How cost relates to gross profit
- Difference between cost of goods sold and selling expenses
- Pricing stock
- Mark up
- Margin
- Stock coding system
- Stock sheets
- Journals used in businesses that carry stock
- Common journals
- Examples of journal entries
- Recording purchase returns in the general journal
- Closing books
- Closing ledger accounts
- Preparing for new accounting period
- Transferring balance day closing entries
- Profit and loss account
- Balance sheet
5. Managing Inventory Part 2
- Perpetual stock control
- Stock cards and subsidiary ledger
- Records on stock cards
- Stock gains and losses
- Adjustments
- Errors in stock taking
- Bar codes
- Costing sales
- Inventory turnover ratio
- Modified general journals for perpetual stock control
- Valuing stock methods -FIFO, LIFO, Identified cost method, weighted average, etc.
- Terminology
6. Establishing and Managing Control Accounts
- Introduction
- Grouping accounts
- Advantages of control accounts
- Debtors control accounts
- Debtors subsidiary ledger and control account
- Cash receipts journal and debtors control account
- Credit purchasers journal
- Creditors subsidiary ledger and control account
- Cash payments journal and creditors control account
- Control accounts relationship to non current assets
- What happens at the end of assets useful life
- Assets register
- Disposal of non current assets
- Creditors control accounts relationship to subsidiary accounts
- Control accounts and expenses
- Control accounts and inventory
7. Budgeting Part 1
- Introduction
- Budget types
- Cash budget
- Capital budget
- Sales budget
- Marketing budget
- Production budget
- Expense budget
- Project budget
- Master budget
- Inter-relationships between budgets
- The cash budget
- Preparing a cash budget
- Factoring in safety margins
- Variable Costs
- Using net profit to evaluate business performaNCE
- What is profitability?
- What is gross profit?
- What is net profit?
- Cash flow margin
- Return on assets margin
- Gearing ratio
- Owners equity margin
- Budgeted profit and loss statements
- Budgeted balance sheets
- Variances in budgets
- Budget reviews and performance reports
8. Budgeting Part 2
- A problem based learning project (ie. PBL) where you will prepare budgeting for a retail business.
- PBL project is carefully designed by experts to expose you to the information and skills that we want you to learn.
- In undertaking the project, you are given: • A statement of the problem (e.g. diseased animal; failing business; anorexia case study); • Questions to consider when solving the problem; • A framework for the time and effort you should spend on the project; • Support from the school.
9. Payroll, PAYG Taxation, Taxation for Trading Businesses
- How to set up a payroll system
- Types of payments made for work done
- Employee records to be kept
- Other records
- Fringe benefits and taxation
- Recording wage payments
- Employee payment summary
- PAYG Taxation
- Using time sheets
- Superannuation or pension funds
- Taxation law terminology
- Tax related expenses
10. Financial Statement Analysis
- Analysis and interpretation
- Why do we analyze financial data
- Using net profit figures to evaluate business performance
- Analyzing cost centres in business
- Functional classification on P & L Statement
- Difference between analysis and interpretation
- Ratio analysis
- Trend analysis Vertical analysis
- Horizontal analysis
- When should financial data be analyzed
- Calculating investment returns
- Return on assets margin, equity margin
- Cash flow ratio operation
- Accounts receivable turnover ration
- Evaluating business performance using net profit ratio
- Profitability
Course Aims
- Describe the nature of different businesses, and the differences between recording and reporting for trading businesses and service businesses.
- Describe the nature of stock and the physical system of recording inventory.
- Explain the perpetual or continuous system of recording for inventory, the use of stock cards and methods of stock valuation.
- Distinguish between the main methods for valuing merchandise on hand and the procedures that need to be set up in order to maintain the different systems.
- Distinguish between bad debts and doubtful debts
- Explain how to prepare the journal entries and understand the effect of bad debts on final accounting reports.
- Extend your knowledge of the classification in accounting reports and how it is applied to trading firms.
- Acquire an understanding of control accounts and their uses.
- Explain of the use of budgets and to apply the skills learned.
- Explain the use and role played by statements of cash flows.
- Explain the different accounting alternatives available to business and the advantages and disadvantages of the various alternatives.
- Describe the tools used to measure the key areas of performance and financial position of a business and how they can aid in decision making.
- Describe the different sources of finance available to businesses, other methods of expanding a business.
Develop Skills to take your accounting skill beyond a foundation course
This course will teach you to:
-
Outline and implement a recording system for an enterprise, including the ‘physical’ and ‘continuous’ methods of recording transactions involving stock.
-
Describe and use control accounts.
-
Prepare, analyse and interpret financial reports for trading firms, including those with more than one selling department.
-
Outline alternatives in financing for small businesses including alternative business structures.
-
Describe and illustrate alternative accounting approaches available to a variety of business.
Learn and Apply the Conventions Common to Accounting across the World
There are many conventions (rules) which cover a range of situations using accepted accounting methods (conventions). The most important used by bookkeepers include the following:
The historical cost convention
As with all basic accounting this rule deals with what has happened in the past (within a business). It is possibly the most commonly used accounting convention. Transactions for assets within the business must be recorded at their original cost i.e. the amount paid at the time of purchase less depreciation (if applicable). With some exceptions, for example land which commonly (but not always) appreciates with time, the value of an asset cannot increase - i.e. Inflation or the amount an item could potentially be sold for, are not taken into account. This can have the effect of distorting the true value of a business on the balance sheet – for example a business may buy a warehouse for £150,000. 10 years later the business owner may have an offer of £300,000 for the same building.
On the balance sheet however it still has to appear at its original cost. This is because values are nebulous i.e. you can’t really predict the future value of anything and it is deemed a better approach to record historical value then it would be to guess at a market value. Assets however can from time to time be re-valued to reflect their current worth and appear on the balance sheet with the new value (noted on the balance sheet).
The business entity convention
This separates the business owner (of any type of business entities) from the business, in accounting terms. So any transactions within the business, relate to the business and not to the owner (e.g. when a business owner invests money into the business, it is recorded as a liability that the business has to the owner. If the owner buys withdraws cash (or takes home goods) it is not recorded as a business expense. The owner can’t use the purchase of goods (for private use) as a business expense. This rule ensures that the personal and the business dealings of the owners are always separated.
The going concern convention
This assumes that the business will continue its activities indefinitely and are therefore able to meet its current and future commitments. Because of this assumption, a business can classify assets and also liabilities as short, medium or long term and report them as such on the balance sheet; this prevents the write-off as costs of long term assets, within one accounting period, instead of over many years. This convention also allows assets to appear at book value (at purchase) rather than market value.
The accounting period convention
In order to compare past to present business performance we need to produce accounting reports for a business at meaningful intervals. The length of an accounting period may be a week, a month, a quarter, or a full year, but must not be any longer due to taxation requirements. It may be set to start and end on a certain date for example the 1st of July each year and end on the 30th of June each year – known as the ‘financial year’. Note: in some countries ‘financial years’ differ.
A business’s profit and loss account should show the expenses or the income relating to the period in which they were incurred or generated rather than when an account was paid or income was received. This system is sometimes also referred to as the accruals concept (see the definition given earlier this lesson. The net profit a business makes is therefore more realistic to a given period of time. Accruals are part of the bookkeeping process.
Monetary entity convention
This states that the monetary unit that is used is relevant to the country the business is operating in. In other words in the USA it is the US dollar and Australia the Australian dollar in the UK the pound and so on.
Recognition of Law
Financial reporting in a business is accountable by law. Books must be kept correctly reports must be accurate and correctly reflect the financial transactions of a business.
This is a unique and comprehensive course compiled by a team of bookkeepers and accountants from both Australia and the UK.
If you work in bookkeeping (or in a trading business), this is an excellent way to upskill and differentiate yourself from others in the industry.
Who Should Study this Course?
- Bookkeepers seeking to upskill in areas covered here (Professional Development).
- Administration staff in a trading business (retailer or wholesaler).
- Owners of trading businesses.
- Graduates of our Bookkeeping Foundations course seeking to take their skills to the next level.
What Next?
It's easy to enrol - just go to the top of this page. If you have any questions, please get in touch with us today, by -
Phone on (UK) 01384 442752, or (International) +44 (0) 1384 442752, or use our FREE COURSE COUNSELLING SERVICE.