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Prepared by: Minhaz Ahmed Ador (01720482001)

A LEVEL PAPER 1 THEORY



Accounting concepts and conventions

a. Explain and apply the concepts of going concern, prudence, accruals, and consistency.

b. Explain and apply the concepts and conventions of historic cost, materiality, money
measurement, realisation and business entity.

c. Explain the importance of accounting standards.


Capital and revenue expenditure

a. Distinguish between capital and revenue expenditure.

b. Explain the importance of the correct accounting treatment of capital and revenue
expenditure with reference to relevant accounting concepts.

Depreciation

a. Define depreciation.

b. Explain the reasons for accounting for depreciation.

c. Explain depreciation using reducing balance, straight line and revaluation methods.

Control accounts

a. Explain that control accounts are an independent check on sales and purchases ledgers.

b. Differentiate between trial balance and control accounts.




Prepared by: Minhaz Ahmed Ador (01720482001)

Error and Suspense

a. Identify and explain errors that do and do not affect the balancing of the trial balance

b. Outline the limitations of a trial balance.


Departmental

a. Decision for closing an existing department altogether or replacing it with another
department.



Single Entry

a. Evaluation of the case for keeping a full set of accounts.

b. Decision of a sole trader to employ an accountant.



Partnership

a. Define goodwill. Evaluation on keeping goodwill in the books or removing it. Possible
treatments of goodwill.

b. Evaluate the case of admitting a new partner.

c. What does the partnership act 1980 state in order to deal with a partnership business
with no agreement?


Nonprofit organization

a. Accounting treatment of life time membership.

b. Evaluate whether lifetime membership should be offered.

c. Difference between nonprofit organizations and profit making businesses.








Prepared by: Minhaz Ahmed Ador (01720482001)

Manufacturing account

a. Evaluation of whether a product should be produced or bought from a third party.

b. Calculate cost per unit.

c. Explain the accounting treatment for unrealised profit resulting from goods
manufactured.


Stock Valuation

a. Explain the characteristics of Last in First out (LIFO), First in First out (FIFO), and Net
Realisable Value (NRV) as methods of stock valuation.

b. Explain the impact on net profit due to difference in stock valuation methods during
periods of inflation.

c. Evaluate the decision of carrying out a physical stock take.

d. Difference between perpetual and periodic basis of stock valuation.

Labour Costing

a. Explain the concept of labour productivity.

b. Discuss ways in which productivity can be increased. Calculation of most cost effective
method and finding the annual cost savings.

c. Explain the advantages and disadvantages of day-work, piece-work and bonus
schemes.


Overheads

a. Explain the characteristics of overhead expenses, fixed and semifixed, allocation,
apportionment and absorption of overheads.

b. Evaluate the importance of preparing separate departmental overhead absorption rates
rather than preparing a single overhead rate for the whole business.

c. Differentiate between over and under recovery of overheads.

d. Difference between service and productive departments.

e. Distinguish between labour intensive and capital intensive departments.
Prepared by: Minhaz Ahmed Ador (01720482001)

f. Explain the characteristics of job costing.


Ratio analysis

a. Apply ratios and comment upon the profitability, liquidity and use of assets in appraising
sole trader and partnership final accounts.

b. Comment upon the gross profit and net profit as: a percentage of sales; return on capital
employed; fixed assets to sales; stock turnover; current ratio; liquid (acid test) ratio;
debtors payment and creditors collection periods.

c. Explain the importance of using ratio analysis for decision making purpose.


Social Accounting

a. Consider the implications of accounting decisions in the social context of the local
community, the environment, the workforce, health and safety and use of natural
resources.






THESE ARE ONLY THE DEFINITIVE ONES AND PURELY IDENTIFYABLE EVALUATIVE
ONES. YOU ARE STRICTLY ADVISED TO BE PREPARED FOR OTHER ANALYTICAL AND
EVALUATIVE THEORIES WHICH WILL BE BASED OR RELATED ON THAT PARTICULAR
PROBLEM BEING ATTEMPTED.

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