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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
AS Level and A Level
AccountingHarold Randall
© Cambridge University Press www.cambridge.org
Cambridge University Press978-0-521-53993-7 - Accounting: AS Level and a LevelHarold RandallFrontmatterMore information
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
© Cambridge University Press www.cambridge.org
Cambridge University Press978-0-521-53993-7 - Accounting: AS Level and a LevelHarold RandallFrontmatterMore information
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
© Cambridge University Press www.cambridge.org
Cambridge University Press978-0-521-53993-7 - Accounting: AS Level and a LevelHarold RandallFrontmatterMore information
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
© Cambridge University Press www.cambridge.org
Cambridge University Press978-0-521-53993-7 - Accounting: AS Level and a LevelHarold RandallFrontmatterMore information
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
© Cambridge University Press www.cambridge.org
Cambridge University Press978-0-521-53993-7 - Accounting: AS Level and a LevelHarold RandallFrontmatterMore information
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
© Cambridge University Press www.cambridge.org
Cambridge University Press978-0-521-53993-7 - Accounting: AS Level and a LevelHarold RandallFrontmatterMore information