Cambridge VCE Accounting Units 3 & 4

Contents
About the authors
Author acknowledgements
Foreword
Features of this resource
Unit 3 
Financial Accounting for a trading business
	Chapter 1 
The role of Accounting
		1.1 The purpose of Accounting
		1.2 Users of financial information
		1.3 The Accounting process
		1.4 Accounting assumptions
		1.5 Qualitative characteristics
		1.6 Elements of Accounting reports
	Chapter 2 
The Accounting equation
		2.1 Assets, liabilities and owner’s equity
		2.2 The Balance Sheet
		2.3 Classification in the Balance Sheet
		2.4 Double-entry Accounting
	Chapter 3 
The General Ledger
		3.1 Ledger accounts and the General Ledger
		3.2 Double-entry recording in ledger accounts
		3.3 Recording revenues and expenses
		3.4 Specific transactions
		3.5 The Trial Balance
		3.6 Balancing
	Chapter 4 
Cash transactions: documents, the GST and the General Journal
		4.1 Source documents and the Goods and Services Tax
		4.2 GST
		4.3 The General Journal
		4.4 Cash receipts
		4.5 Cash sales and the GST
		4.6 Cash payments
		4.7 Cash payments and the GST
		4.8 The GST Clearing account
	Chapter 5 
Accounts Payable: documents, the GST and the General Journal
		5.1 Credit purchases and the GST
		5.2 Payments to Accounts Payable
		5.3 Purchase returns
		5.4 Discount revenue
		5.5 Statement of Account
		5.6 Accounts Payable Turnover
	Chapter 6 
Accounts Receivable: documents, the GST and the General Journal
		6.1 Credit sales and the GST
		6.2 Receipts from Accounts Receivable
		6.3 Sales returns
		6.4 Discount expense
		6.5 Statement of Account
		6.6 The GST Clearing account
		6.7 Accounts Receivable Turnover
	Chapter 7 
Other transactions: documents, the GST and the General Journal
		7.1 Memos and the General Journal
		7.2 Non-cash contributions by the owner
		7.3 Non-cash drawings by the owner
		7.4 Establishing a double-entry system (for an existing business)
		7.5 Correcting entries
		7.6 Other business documents
	Chapter 8 
Recording and reporting for inventory
		8.1 Trading firms and inventory
		8.2 Inventory cards
		8.3 Recording in inventory cards
		8.4 Valuing inventory: changing cost prices
		8.5 Valuing inventory at the time of sale: Identified Cost
		8.6 Inventory losses and gains: identified cost
		8.7 Valuing inventory at the time of sale: FIFO
		8.8 Inventory losses and gains: FIFO
		8.9 Identified cost versus FIFO
		8.10 Reporting for inventory
		8.11 Benefits of the perpetual system
	Chapter 9 
Valuing and managing inventory
		9.1 The ‘cost’ of inventory
		9.2 Product costs
		9.3 Period costs and other expenses
		9.4 Reporting product and period costs
		9.5 The lower of ‘Cost’ and ‘net realisable value’ (NRV) rule
		9.6 Inventory write-down
		9.7 Reporting an inventory write-down
		9.8 Inventory Turnover (ITO)
	Chapter 10 
Reporting for profit
		10.1 Determining profit or loss
		10.2 Closing the ledger
		10.3 Transferring Drawings
		10.4 The Income Statement
		10.5 Uses of the Income Statement
		10.6 Financial indicators
		10.7 Communicating information: graphical representations
	Chapter 11 
Reporting for cash
		11.1 Reporting for cash
		11.2 The Cash Flow Statement
		11.3 Uses of the Cash Flow Statement *
		11.4 Financial indicators
		11.5 Cash versus profit
Unit 4 
Recording, reporting, budgeting and decision-making
	Chapter 12
  Balance day adjustments: prepaid and accrued expenses
		12.1 The need for balance day adjustments
		12.2 Prepaid expenses
		12.3 Accrued expenses
		12.4 The Post-adjustment Trial Balance
	Chapter 13 
Accounting for non-current assets 1
		13.1 Non-current assets
		13.2 Calculating depreciation expense: straight-line method
		13.3 Calculation issues: straight-line method
		13.4 Recording depreciation
		13.5 Reporting depreciation
		13.6 Purchasing non-current assets
	Chapter 14 
Accounting for non-current assets 2
		14.1 Methods of depreciation
		14.2 Calculating depreciation expense: reducing balance method
		14.3 Comparing depreciation methods
		14.4 Disposal of a non-current asset
		14.5 Profit or loss on disposal of a non-current asset
		14.6 Trade-in of a non-current asset
		14.7 Reporting profit or loss on disposal of a non-current asset
	Chapter 15 
Bad and doubtful debts
		15.1 Credit sales and Accounts Receivable
		15.2 Balance day adjustment: Bad debts expense (Allowance for doubtful debts)
		15.3 Subsequent periods
	Chapter 16 
Balance day adjustments: Revenues
		16.1 The need for balance day adjustments
		16.2 Unearned revenues
		16.3 Unearned sales revenue: sales of inventory involving a deposit
		16.4 Accrued revenue
	Chapter 17 
Budgeting
		17.1 Budgeting
		17.2 The budgeting process
		17.3 The Budgeted Cash Flow Statement
		17.4 Calculating cash flows
		17.5 The Budgeted Income Statement
		17.6 The Budgeted Balance Sheet
		17.7 Account reconstruction
		17.8 Variance reports: cash and profit
	Chapter 18 
Evaluating performance: profitability
		18.1 Analysis and interpretation of profitability
		18.2 Tools for assessing profitability
		18.3 Return on Owner’s Investment (ROI)
		18.4 Debt Ratio
		18.5 Return on Assets (ROA)
		18.6 Earning revenue: Asset Turnover (ATO)
		18.7 Controlling expenses
		18.8 Net Profit Margin (NPM)
		18.9 Gross Profit Margin (GPM)
		18.10 Vertical analysis of the income statement
		18.11 Non-financial information
		18.12 Strategies to improve profitability
	Chapter 19 
Evaluating liquidity
		19.1 Assessing liquidity
		19.2 Working Capital Ratio (WCR)
		19.3 Quick Asset Ratio (QAR)
		19.4 Cash Flow Cover (CFC)
		19.5 The speed of liquidity
		19.6 Inventory Turnover (ITO)
		19.7 Accounts Receivable Turnover (ARTO)
		19.8 Accounts Payable Turnover (APTO)
Glossary
Selected answers
Acknowledgements