Teaching and learning

Accredited from 2025

Unit 1 The role of accounting in business

Outcome 1:

Describe the resources required to establish and operate a business, and select and use accounting reports and other information to discuss the success or otherwise of the business.

Examples of learning activities

Case studies: Using case studies of businesses where accounting has played a pivotal role in decision-making, financial management, and business success, analyse how accounting principles were applied in different scenarios.
Guest speaker: Listen to an invited professional accountant, financial manager, or local business owner speaking to the class. Ask them to share their real-world insight into the accounting functions within a business and provide examples of the importance of accounting.
Role-playing: Working in groups allocate each student a role within a group in a fictious business (e.g. owner, accountant, manager), then simulate scenarios that involve interacting and making decisions based on financial information.
Financial statements analysis: Analyse financial statements from a company (e.g. balance sheet, income statement, cash flow statement). Discuss how each statement reflects the financial health and performance of the business.
Interactive online modules: Using interactive online modules or tutorials that simulate business situations, make accounting-related decisions. Platforms such as Coursera, Khan Academy, or educational software specifically designed for accounting are all useful.
Industry research: Use teacher-assigned industries for research. Choose industries where accounting practices differ significantly (e.g. retail vs. manufacturing). Present findings on how accounting practices vary based on industry-specific needs and regulations.
Excursions or virtual tours: Visit a business in the local community to observe first-hand how accounting systems are implemented and used in real-world settings.
Conduct research on the ownership structure of a range of businesses. Describe the ownership structure of each one and explain the advantages and disadvantages of each structure identified.
Prepare a visual representation depicting the accounting equation and the accounting elements it is comprised of (assets, liabilities, owner’s equity, revenues and expenses).
Select a business that has decided to make itself more environmentally, socially or ethically responsible. Examples include: adopting a method to recycle resources, reducing packaging, adopting the Fairtrade model or using only socially responsible suppliers. Research and critically analyse the impact of this decision on the business; i.e. on its reputation and financial performance. This activity could be done via an interview with a small business owner or by listening to a guest speaker address the class.
Interview an accountant, a business advisor or a representative of a professional association. Prepare a presentation about the role of an accountant or financial advisor in a business enterprise.
Interview a business owner and discuss and determine the factors they consider when setting prices. Identify any ethical considerations involved in setting prices.
Calculate a range of prices using different price-setting methods, such as recommended retail price, mark up and cost- volume- profit analysis
Calculate the breakeven point for a product, and then explain the impact that a change in a range of fixed and variable costs could have on the final selling price. For example, how might switching to recyclable packaging, sourcing key ingredients from sustainable sources, and changing to fixed costs (such as rent) affect the final price?
Discuss the topic of ethical considerations when making decisions in relation to operating a business.

Detailed example

Visit a business in the local community

Identify suitable local businesses:
Research small businesses in your area that might be willing to accommodate student visits. Ideally, choose a business that connects with students’ interests. Possibilities might include:
- Beautician
- Photographer
- Giftware shop
- Health food shop
- Fitness or personal training.
Contact the business:
Reach out to the selected businesses via phone, email, or in person. Explain the purpose of the visit, the age group of the students, and the topics they are learning about in VCE Accounting. Ask if they are willing to host students for a visit.
Plan the visit date and time:
Liaise with the business to schedule a date and time for the visit that works for both parties. Ensure it aligns with the students' school schedule. Organise transport if required. Complete the excursion paperwork.
Develop an itinerary:
Create a detailed itinerary for the visit, including activities the students will engage in and the topics that will be covered. Consider including a tour of the business premises, presentations by staff members about their roles and how accounting is used in their day-to-day operations, and Q&A sessions.
Prepare students:
Brief students about the purpose of the visit, the expectations for their behaviour, and discuss specific questions they may want to ask during the visit. Encourage them to research the business and prepare thoughtful inquiries.
Explain the assessment task connected to this excursion:
Folio or digital presentation explaining what they have learned covering the key knowledge points of Outcome 1.
Follow-up:
After the excursion, debrief with students, discussing what they learned and any insights gained about accounting in small businesses.

Students who are absent on the day of the excursion can research a business for their digital presentation assessment.

To assess the students' digital presentation covering the specified topics, create a rubric with criteria aligned with the key learning objectives. See below.

Criteria	(0 marks) Not shown	(1 mark) Very Low Allocation	(2 marks) Below Standard	(3 marks) Standard	Exemplary (4 marks)
Coverage of topics	Very few dot points covered	Adequate dot points covered, with some attempt at examples provided	Most dot points covered incorporating adequate explanations	All dot points covered with accurate explanations and examples to demonstrate satisfactory understanding of all concepts	All dot points thoroughly addressed with detailed explanations and examples demonstrating a deep understanding of each
Accuracy	No appropriate links to excursion or business shown	Some attempt at links to the excursion or business shown; information presented is partially accurate and partially supported	Clear and relevant links to the business or excursion shown; information presented is mostly accurate and supported	Information presented is accurate and explicitly linked to the business or excursion in nearly all aspects	All Information presented is accurate and comprehensively supported by appropriate sources and examples from the excursion or researched business
Presentation organisation	No evidence of organisation of material	Some organisation and coherence demonstrated throughout	Content is mostly logically organised with structure and coherence	Content is all logically organised with a clear introduction, some flow, and an attempt at a conclusion	Content is comprehensive and logically organised with a clear introduction, logical flow, and a logical conclusion
Visuals	Visuals are absent	Visuals are present but do not contribute to the presentation	Visuals are included but do not significantly contribute to understanding	Visuals are mostly correctly used to support key points	Visuals (such as slides, images, charts, etc.) are effectively used to enhance understanding and presentation
Clarity of expression	Clarity of expression	Language is relevant but lacks clarity overall	Language is simple but clear and relevant throughout.	Language is clear, relevant, appropriate and complex in places	Language is clear, concise, and appropriate for the audience, throughout

Outcome 2:

Identify and record financial data, report and explain accounting information for a service business, and suggest and apply appropriate financial and non-financial indicators to measure business performance.

Examples of learning activities

Complete a folio of Journal entry practice.
Use interactive games (AI or group) such as Zapitalism.
Role-play scenarios where accounting is used; for example, use the game ‘Monopoly’ to record cash in a folio.
In groups, complete projects to compile financial data, prepare financial statements, and create a presentation to explain the financial performance of a chosen company. This collaborative activity reinforces an understanding of accounting principles.
Collect a range of documents used by a business to record financial transactions. Examine these, identify, describe and analyse the key data contained in each.
Record a range of financial transactions in the cash and credit journals for a business.
Describe the two-fold effect of a range of financial transactions.
Using a spreadsheet, record transactions in journals and prepare financial reports.
Design and run a small service business (as a class activity). Record transactions, manage supplies and then evaluate business performance.
Create and maintain a glossary of appropriate accounting terms. Include the accounting assumptions, qualitative characteristics and types of documents used to record financial transactions by a business. This could be displayed prominently in the classroom.
Use a spreadsheet representing an Income Statement to model the effects of various business decisions on the accounting equation. Construct appropriate graphical representations of the data. Provide advice to the business owner about how the business is performing and areas of potential improvement.
Complete a series of exercises using financial and non-financial data and indicators of business performance to evaluate business performance.
Use a spreadsheet to prepare a cash flow statement and prepare appropriate graphs depicting indicators of business performance using data from the cash flow statement.
Using the data provided in a spreadsheet for two businesses, design and prepare appropriate graphs. Compare the performance of the two businesses.
Prepare a YouTube information clip about the Goods and Services Tax (GST). Explain what it is, how it works and how it is recorded within a business’ financial records.
Use a spreadsheet to model how different strategies to improve business profitability might work. This should be based on a business scenario.
Using provided financial reports, evaluate the performance of a business and provide appropriate advice to the business owner.
Use a case study to discuss the internal control procedures used to safeguard resources against theft and fraud. Discuss the ethical considerations a business owner should take into account when recording transactions.
Discuss the ethical considerations faced by business owners when recording and reporting transactions.

Detailed example

Role-play and folio completion using ‘Monopoly’

Get game – board game or interactive version – and place the board on a table with groups of up to 8 people.
Supply journal templates for Cash Receipt Journal and Cash Payments journal (link to template page).
Players choose game pieces and start with a set amount of money – $1500 per person (2 each of $500, $100 and $50; 6 each of $20; 5 each of $10, $5 and $1).
Roll dice to move around the board.
Land on unowned property to buy it or auction it.
Pay rent when landing on opponent-owned properties.
Collect rent when opponents land on your properties.
Build houses and hotels to increase rent.
Jail: Go directly to jail, do not pass Go, do not collect $200, unless you roll doubles or use a "Get Out of Jail Free" card.
Chance and Community Chest cards provide opportunities or setbacks.
Income Tax and Luxury Tax are paid when landing on specific spaces.
Bankruptcy occurs when a player cannot afford to pay debts or expenses.
The last player remaining after bankrupting opponents wins the game.
Record all cash purchases in the Cash Payments Journal.
Record all cash received in the Cash Receipts Journal
Allow 20–30 minutes of game time in each class.
Allow 10–15 minutes at the end of each class to total the two journals:

Pretend each class is a week or month reporting period with the teacher guiding the dates changes throughout the class.

At the end of each class, students must have the following:

Completed Cash Payments Journal and Cash Receipts Journal including the totals
Summary calculation of cash at bank in readiness for the next session
- Cash at start + CRJ – CPJ
Include this detail as part of the folio to be submitted: handwritten, excel templates, online through the school’s intranet or digital suite.

Repeat for 1–2 weeks of classes (approximately 200–300 minutes).
Final class submission of folio:

3–5 Cash Receipt and Cash Payment Journals
3–5 summaries of cash balance.

Unit 2: Accounting and decision-making for a trading business

Outcome 1:

Record and report for inventory and discuss the effects of relevant financial and non-financial factors, and ethical considerations, on the results of business decisions.

Examples of learning activities

Simulation (an introductory activity): Using rewards (e.g. small lollies), work through a series of structured tasks designed to unpack terminology such as Inventory, Cost of Sales, Gross Profit, Inventory Loss/Inventory Gain.
Case studies: Examine case studies of selected businesses to learn how they do some or all of the following: recording and managing inventory, setting of re-order points, selection of suppliers, monitoring for fast- and slow-moving lines, tracking and reduction of inventory loss, storing and rotation of inventory, management of ethical issues. (Examples of suitable businesses include: IKEA, Lego (the toys that made us), Costco, JB HiFi.)
Modelling: Model the impact on costings and/or financial reports of different options, providing recommendations and advice; for example: consider whether to purchase inventory of different quality standards or from different locations; consider whether to purchase licensed inventory, create a new product line or use a different supplier; consider the costing of different options to improve inventory turnover.
Inventory card investigation: In order to develop a working knowledge of all aspects of accounting and to understand the links between inventory and other areas of the study, practise recording into an inventory card, as well as extracting and deciphering information. Use teacher-provided completed inventory cards and extract key information such as: Cash Sales, Credit Sales, Cost of Sales. Provide a written description of a transaction on a particular date and prepare inventory cards, an Income Statement as well as any relevant additional information.
Complete a task related to a fictitious business that takes you through each stage of the recording and reporting process in order to develop an understanding of how financial data moves through the accounting system to ultimately inform decision-making.
Financial statement analysis: Use financial statements (e.g. balance sheet, income statement, cash flow statement) of a business. Discuss how each statement reflects the financial health and performance of the business and consider what could be done to improve inventory management and, therefore, the overall performance of the business.
Graphical representations: Use a teacher-provided graph depicting inventory turnover for a fictitious or real business and analyse the results, suggesting strategies for improvement. Note that with inventory turnover, higher change/trend is actually slower and a worsening of the outcome.
Guest speaker: Listen to an invited professional accountant, financial manager or local business owner speaking to the class (either in person or online). Ask them to share real-world examples and insights into how inventory is managed within a real business.
Interactive online games: Use Tycoon-based games (such as Lemonade Tycoon) to experience a business simulation involving decision-making that directly impacts business growth and performance. Teachers should check with the school’s digital technology team to ensure students can access this at school.
Excursions or virtual tours: Visit a business in the local community to observe first-hand how accounting systems are used in real-world settings.

Detailed example 1

Simulation Task – Tracking Inventory

Materials: Allocate each student one box of smarties and one piece of plain paper.

Task One:

Open Smarties now – Don’t eat them yet!

Assume that all Smarties are very rare and you can sell them for $500 each.

Complete the table below showing how much Revenue you will make if you sell the following quantities.

Quantity sold	Revenue earned
1 Smartie
3 Smarties
7 Smarties
The full box

Explain the relationship between the quantity sold and the revenue earned.

Assume that each Smartie available for sale was purchased at a cost price of $300 and complete the table below showing the Cost of Sales given the following sales quantities.

Quantity sold	Revenue earned
1 Smartie
3 Smarties
7 Smarties
The full box

Explain the relationship between Cost of Sales and the quantity sold.

Define the term Cost of Sales.

When selling inventory, it is important to sell an item for more than was paid for it. Define the term Gross Profit.

Complete the table below showing the Gross Profit earned if the following quantities are sold. (Continue to assume that each Smartie is sold for $500 and has a cost price of $300.)

Quantity sold	Revenue earned
1 Smartie
3 Smarties
7 Smarties
The full box

The cost of sales is only one expense a business must pay. Using the expenses shown below, complete the Income Statement in the space provided, assuming that you sell all of your Smarties.

Revenue:
Sales
Less Cost of Sales
Gross Profit
Less Expenses:
Rent	400
Wages	1 300
Office Expenses	800
Advertising	250
Vehicle Expenses	300
Net Profit		$

With reference to one qualitative characteristic, justify the inclusion of the delivery expenses in the Income Statement.

Qualitative Characteristic:

Explanation:

Task Two:

In the competitive global market, demand for Smarties varies considerably. Customer demands for different colours vary according to fashions and trends of the season. You have set the following prices for the coming months.

Complete the table, showing the Gross Profit per item for each colour sold.

Colour	Cost Price	Selling Price
Brown	$150	$250
Green	$200	$300
Yellow	$250	$350
Orange	$300	$400
Purple	$400	$600
Pink	$450	$750
Blue	$600	$900
Red	$1,000	$1,400

Using the packet of Smarties, calculate the following assuming that all of your smarties are sold.

	Working Space	Answer
Revenue Earned
Cost of Sales
Gross Profit

Complete the Income Statement below using the information you calculated above.

Smartie Shop

Income Statement for the month ended 30 June 2029

Revenue:
Sales
Less Cost of Sales
Gross Profit
Less Expenses:
Wages	400
Security	1 300
Office Expenses	800
Advertising	250
Vehicle Expenses	300
Net Profit		$

Detailed example 2

The recording and reporting process – Toy Mania

Background information:

Yash owns a toy warehouse in Keilor Downs. He sells a wide range of the latest toys and games. He is hoping that his business will see a big increase in sales over the next few weeks when a new toy-related movie will be released. In anticipation of this, Yash has purchased the full range of movie-related toys.

Required actions:

Record the following transactions in the inventory cards provided for two of the items related to the movie.
Complete the questions listed below the inventory cards.

At the beginning of July 2029, the following items were on hand:

	Quantity	Cost Price	Selling Price
Movie Dolls	200	$51.00 + GST	$99.00 + GST
Movie Board Game	150	$49.00 + GST	$99.00 + GST

Transactions:

July 2	Sold 44 Movie Dolls and 35 Board Games for cash (EFT 5688)
5	Sold 30 Ken and 20 Movie Dolls (InvA99)
7	Purchased 40 Movie Dolls credit for $53 each plus GST (Inv 942)
8	Yash withdrew 15 Movie Dolls and 15 Board Games from the business to give to family members (Memo 301)
10	Cash sales included 85 Movie Dolls, 55 Board Games (EFT 5689)
12	Purchased 55 Movie Dolls at $54 each plus GST, 55 Board Games at $52 each pus GST (InvX342)
13	Cash Sales include: 77 Movie Dolls, 60 Board Games (EFT 5590)
14	Purchased 80 Movie Dolls at $53 plus GST and 40 Board Games at $48 plus GST (InvX39)
16	Credit Sales included 38 Movie Dolls and 20 Board Games (InvA100)
19	Yash donated 10 Board Games and 10 Movie Dolls to a local primary school for their raffle (Memo 302)
22	Cash sales included: 20 Movie Dolls, 10 Board Games (EFT 5591)
25	Purchased 30 Board Games at $54 each plus GST and 40 Movie Dolls at $54 each plus GST (Inv743)
27	Cash sales included 55 Movie Dolls, 25 Board Games (EFT 5592)
31	A physical stocktake revealed that 12 Movie Dolls and 6 Board Games were missing (Memo 303)

Heading ‘Transaction table’ with a list of transactions for Movie Dolls and Board Games dated from July 2 to July 31. Two columns, 14 rows / transactions listed. Preceded by table listing items on hand and followed by 2 inventory cards for Movie Dills and Board Games.

Please complete the questions below:

Calculate the Sales Revenue for each item of inventory using the inventory cards above.
(Hint: look down the quantities in the Out column and add up all the sales, then multiply by the sale price supplied in the question.)

Item	Working Space	Sales Revenue
Movie Dolls
Movie Board Game
Total Cost of Sales	$

Item

Working Space

Sales Revenue

Movie Dolls

Movie Board Game

Total Cost of Sales

Calculate the Cost of Sales for each item of inventory, using the inventory cards above.
(Hint: Using the out columns again, add up the amounts in the total column of the out columns for any sales, this will be the Cost of Sales. Beware of any memos – they are not sales and shouldn’t be included. They are usually drawings, or stock losses or gains)

Item	Working Space	Sales Revenue
Movie Dolls
Movie Board Game
Total Cost of Sales	$

Item

Working Space

Sales Revenue

Movie Dolls

Movie Board Game

Total Cost of Sales

Calculate the Gross Profit for July for the two dolls.
(Hint: Gross Profit = Sales – Cost of Sales)


Gross Profit		$

Calculate the overall inventory Loss/or Gain for July for the two dolls.


Inventory Loss or Inventory Gain		$

Explain two possible reasons for any inventory loss.

Using the expenses listed below and the calculations completed above, prepare an Income Statement for Yash’s Toy Warehouse for July 2029.

Additional expenses: Advertising $900, Sales Wages $2,400, Office Expenses $860, Vehicle Expenses $450, Bank Charges $35, Rent Expense $1,900.

Yash’s Toy Warehouse

Income statement for the two months ended 31 July 2029

Revenue:
Cash Sales
Credit Sales
Less Cost of Sales
Gross Profit
Less Expenses

Explain two disadvantages of holding excess inventory.

During the period, Yash withdrew some inventory from the business. With reference to one accounting principle, explain how you would treat (report) this.

Accounting Assumption:

Explanation:

Outcome 2:

Record and report for accounts receivable and accounts payable, and analyse and discuss the effects of relevant decisions, including the influence of ethical considerations, on the performance of the business.

Examples of learning activities

Case studies: Examine different businesses as case studies, look specifically at provide examples of how each does some or all of the following: recording and management of accounts receivable and accounts payable, decisions about whether to offer credit, the following up of accounts receivable, management of ethical issues. Note that publicly available case studies often focus on large-scale businesses with a variety of ownership structures; however, smaller businesses and sole proprietors are possibly more suitable for this activity
Modelling: Model the impact on costings and/or financial reports of different options; then provide recommendations and advice. Examples include: consideration of the purchase of supplies whether of different quality levels or from different locations or suppliers; assessment of the social and environmental effects of different models or options; decisions about how credit might be offered and to whom. Modelling options to replace ageing assets or move to a different option; for example: should the business replace a delivery van or should they use a delivery company? Should they buy a warehouse and move their business online or keep the shop they own?
Consider the cash cycle: Complete a task following the cash cycle of a business to develop an understanding of how inventory turnover, accounts receivable turnover and accounts payable turnover all impact the cash flow of a business.
Financial statement analysis: Examine financial statements (e.g. balance sheet, income statement, cash flow statement) from a fictitious or real business. Discuss how each statement reflects the financial health and performance of the business. Then consider what could be done to improve either the accounts receivable or accounts payable management and, therefore, the overall performance of the business.
Graphical representations: Unpack a graphical representation for items such as accounts receivable turnover, accounts payable turnover, credit sales.
Revision task: Use teacher-provided pieces of paper that represent the key elements of financial reports, reconstructing them into two reports: an Income Statement and a Balance Sheet.
Guest speaker: Listen to an invited professional accountant, financial manager or local business owner (even the school business manager) speaking to the class (either in person or online). Ask them to share real-world examples and insight into how accounts receivable and accounts payable are managed within a real busines

Detailed example 1

Understanding the cash cycle

Follow the instructions below to practise accounting for and managing non-current assets:

Using the cards below, lay out the cash cycle of the business.
Answer the questions on each card.
Provide a detailed discussion of the cash cycle.
Suggest strategies to improve the cash cycle of the business.

Nine cards depicted with the following nine headings on one of each. Each card have other individual information

Purchase Inventory on Credit
Cash Sales
Accounts Payable Turnover
Pay Accounts Payable
Purchase inventory for cash
Inventory turnover 45 days
Credit sales
Accounts receivable turnover
Receipts from Accounts receivable

Detailed example 2

Team Challenge

Using the information below, prepare an Income Statement and Balance Sheet for the business. Cut out the items (made from magnetic or poster paper) and arrange them into the two reports. Use the blank ones for your key headings in the reports.

Nguyen’s Designs

Capital	Vehicles 52 000
Cash Sales 19 000	Interest Expense 700
Accounts Payable 18 000	PDiscount Revenue 300
Inventory Loss 900	Credit Sales 42 000
	Loan 80 000 (repayable $4000 per month)
Computers 4 500	Drawings of Inventory 800
Vehicle Expenses 1 800	Packaging 1 600
Cost of Sales 24 500	Discount Expense 600
GST Liability 3 400	Gas and Water 2000
Rent Revenue 4 100	Equipment 30 000
Premises 420 000	Import Duties 1 800
Drawings of Cash 3 000	Sales Returns 3 500
Cartage In 2 000	Cash at Bank 3 900
Advertising 4 000	Inventory. 45 600
Tools 5 000	Wages 5 600
Electricity 6 100	Accounts Receivable 12 000

Outcome 3:

Record and report for non-current assets and depreciation.

Examples of learning activities

Case studies: Examine teacher-provided case studies of businesses with examples of how they conduct the following: record and manage non-current assets, predict useful life and residual value, track and minimise asset loss, maintain non-current assets over time and plan for their replacement, investigate and manage ethical issues.
Modelling: Model the impact on costings and/or financial reports of different options and then provide recommendations and advice. This might include consideration regarding purchase of non-current assets of different quality standards or from different locations or suppliers, consideration of the social and environmental impacts of different models/options. Also, the valuation of non-current assets and the financing of their replacements. Model options to replace ageing assets or move to a different option; for example, should a business replace a delivery van or should they use a delivery company? Should they buy a warehouse and move their business online or keep the shop they own?
Accounting for non current assets: Complete the worksheet, including the worked example below in class. (Detailed example 1)
Work through each stage of the recording and reporting process to demonstrate how financial data moves through the accounting system and ultimately informs decision-making.
Financial statement analysis: Using teacher-provided financial statements (e.g. balance sheet, income statement, cash flow statement) from a fictitious business, discuss how each statement reflects the financial health and performance of a business. Then, consider what might be done to improve non-current asset management and therefore overall business performance.
Graphical representations: Unpack a graphical representation of depreciation over time and label key points and other relevant items.
Guest Speaker: Invite a professional accountant, financial manager or local business owner to speak to the class (either in person or online). Ask them to share real-world examples and insights into how non-current assets are managed within a real business.
Excursions or virtual tours: Visit a business in the local community and observe / note the different types of non-current assets the business has. Discuss how the business maintains these, and then measure the contribution of each non-current asset to the revenue capacity of the business.

Detailed example

Accounting for Non-Current Assets

Define a Non-Current Asset.

Examples

Business	Fast Food Store
Fast Food Store
Hardware Store
Plant Nursery
Toy Store

Distinguish Between Historical Cost, Fair Value and Market Value

Valuation
Historical Cost
Fair Value
Market Value

Do assets change value over time? If so, how do we record this?
Ethical Considerations and Non-Current Assets

Valuation
Faithful Representationt
Fair Value
Market Value

What is depreciation?
Why depreciate?
Worked example:

A local hardware store purchased a van costing $45 000 (plus GST) on credit from AB Motors. Following this, they purchased shelving ($3 000 plus GST) and window tinting ($2 000 plus GST) to add value to the vehicle. They had to pay for registration and insurance (a total cost of $890 plus GST per annum) and roadside assistance for the first 12 months ($150 plus GST). The business plan was to keep the van for 5 years, after which they are hoping to trade it in for $10 000.

Working Space:

Depreciation Expense for 12 months

Watch out!

Always check dates carefully when doing these questions.
Distinguish between costs that add to the historical cost and ongoing/running expenses.

Unit 3

Outcome 1:

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 accounting reports and the accounting system, including ethical considerations.

Examples of learning activities

Using ICT, create a document to illustrate examples of the different documents used by a business when recording financial data. Identify and explain the transaction involved with each document and record this information on the table.
Create separate cards with the names, definitions and scenarios relating to the accounting assumptions, qualitative characteristics and accounting elements. Have students match terms to a correct definition and/or examples of each.
Design and create a bookmark depicting the accounting assumptions, qualitative characteristics and accounting element definitions.
Construct a table using General Ledger accounts to describe accounting information.
Using blank templates of an inventory card on a washable surface (laminated sheets of A4 paper) or mini whiteboards, practise recording different transactions related to inventory cards, using FIFO and the Identified Cost methods. Then discuss and evaluate the different cost methods.
Construct a table showing the effect of transactions on the accounting equation.
Using a small hypothetical scenario, work in pairs to record data into a spreadsheet, and then produce two relevant graphical representations of the data.
Record financial data into General journal and General Ledger
Visit a retail store to review lines of inventory to determine product costing and net realisable value. Identify items that are provided free with purchases, as well as inventory items where prices have been marked down. Discuss the reasons why retail stores have made such decisions around inventory.
Visit a range of retail stores and identify the internal controls used by the trading businesses. Explain why the business would use those internal controls and identify the strengths and weaknesses of the internal controls.
Using the internet, research similar lines of inventory that can be purchased from different suppliers. Discuss ethical considerations involved in selecting inventory for different types of trading businesses.( detailed example 4)
Using ICT, model the impact of purchasing inventory from a range of suppliers, considering the impact of delivery costs and the inventory turnover of a trading business. Outline the costs and benefits of purchasing from each supplier.
Complete activities related to General Ledger accounts. See Detailed examples 1a, 1b and 1c as illustration
Complete activities relating to recording and reporting of financial information
Discuss the ethical considerations involved in decisions made by owners of trading businesses.

Detailed example 1a

Balancing assets in a general ledger

Business scenario

Steve is the owner of Mocha Beans, a wholesaler selling coffee beans. Steve commenced operation using a single-entry accounting system but has since decided, on the recommendation of the business’s accountant, that he should operate a double-entry system. The business sells inventory using a 100% markup.

Suppliers’ terms are n30 and customers are terms are n30.

Mocha Beans

Assets $

Accounts Receivable – 2 400

Quench Café

Bank 18

000

GST Clearing 2 900

Inventory 30

000

Van 40

000

Liabilities $

Accounts Payable – 9 000

Roasted

Loan – EZE Bank 10

000

300

000

The following transactions occurred during June 2029:

June	1	Sold Coffee Beans to Quench Café for $5 000 (plus GST) (Inv 24)
	2	Paid $3 300 (plus GST) for rent to AusTenancy (EFT 9)
	5	Purchased $6 000 (plus GST) of coffee beans from Roasted (Inv 89)
	8	Paid $5 000 to Roasted for amount outstanding from May 2029 (EFT 10)
	10	Paid wages of $1 000 (EFT 10)
	12	Paid $4 000 (plus GST) to Coffee Online for advertising (EFT 11)
	15	Borrowed $20 000 from ABC – Bank (EFT Rec 8)
	17	Paid a $500 monthly loan repayment to EZE Bank (EFT 12)
	20	Steve took home $500 of coffee beans for personal use (Memo 9)
	22	Received $2 400 from Quench Café for balance from May 2029 (Rec 5)
	24	Incorrect labelling on coffee bean packs resulted in a $2 000 inventory write-down (Memo 9
	30	Stocktake identified that the business had a $1 000 inventory loss (Memo 10)

Explain the effect on the accounting equation of the transaction on 22 January 2029.
Referring to an accounting element, explain how the bank balance would be classified on 31 December 2029.
Identify the source document that would be used to verify the entry on 7 January 2029.
Referring to an accounting assumption, explain why the transaction on 29 January was recorded by the business.

Detailed example 1b

Recording and reporting

Business scenario

At 30 June 2029, the extract from the Trial Balance of Runners Planet showed the following:

Runners Planet

Trial Balance as at 30 June 2029

	$	$
Accounts Receivable	80 000
Allowance for Doubtful Debts		5 000

Additional information

During the financial year ending 30 June 2029 the business made credit sales of $160 000 (plus GST) and sales returns were $8 800 (including GST). Receipts from Accounts Receivable for June 2029 were $110 000.
On 15 June 2029 the owner received a solicitor’s letter informing him that their customer, Sprint, had been declared bankrupt and would not be able to pay any of the $11 000 they owed (Memo 4).
At 30 June 2029 the accountant estimated that 3% of Net credit sales were considered doubtful.

Tasks

Record Memo 19 in the General Journal of Runners Planet.
Calculate Doubtful Debts for Paintworks for the year ended 30 June 2029.
Record the balance day adjustment for Bad Debts expense for June 2029 in the General Journal of Runners Planet. A narration is required.
Show how the Bad Debts and Allowance for Doubtful Debts accounts would appear in the General Ledger of Runners Planet as at 30 June 2029 after all closing and balancing entries had been recorded.
Show how the Accounts Receivable would be reported in the Balance Sheet of Runners Planet as at 30 June 2029.

Outcome 2:

Record transactions and prepare, interpret and analyse accounting reports for a trading business.

Examples of learning activities

On a table constructed using ICT, depict examples of the different documents used when recording transactions and preparing, interpreting and analysing accounting reports, identify each document and explain the transaction involved.
Record the source documents provided into general ledger accounts.
Using a teacher-provided Trial Balance, explain which accounting element it relates to. Include the definition of the element to support your response.
On a table constructed using ICT, depict examples of the different documents used when recording transactions and preparing, interpreting and analysing accounting reports. Identify each document and explain the transaction involved.
Become familiar with the rules of balancing assets, liabilities and owner’s equity ledger accounts; then practise using these rules with a set of general ledger accounts. (Detailed example 1)
Individually, suggest a transaction for a selected trading business. Record all the class’s suggested transactions in a general journal and post to the general ledger. Use this information to prepare an Income Statement, Balance Sheet and Cash Flow Statement.
Using a teacher-provided list of transactions, analyse the impact of each transaction on each of the accounting reports.
Using magnetised items from a Cash Flow statement prepared by the teacher, restructure these on the board into a classified report, showing Operating, Investing and Financing Activities.
Using a completed Income Statement prepared by the teacher, use a spreadsheet to prepare graphs demonstrating the breakdown of Gross Profit to Adjusted Gross Profit and Net profit.
Analyse accounting reports for a business and explain decisions that could be made by business owners, taking into account relevant ethical considerations.
Using the provided example consider the Ethical considerations when recording and reporting (detailed example 2)

Detailed example 1

Commencing entries and recording transactions for a business

Business scenario

Suppliers’ terms are n30 and customers are terms are n30.

At 1 June 2029, Steve had the following assets and liabilities:

Mocha Beans

Assets $

Accounts Receivable – 2 400

Quench Café

Bank 18

000

GST Clearing 2 900

Inventory 30

000

Van 40

000

Liabilities $

Accounts Payable – 9 000

Roasted

Loan – EZE Bank 10

000

300

000

June	1	Sold Coffee Beans to Quench Café for $5 000 (plus GST) (Inv 24)
	2	Paid $3 300 (plus GST) for rent to AusTenancy (EFT 9)
	5	Purchased $6 000 (plus GST) of coffee beans from Roasted (Inv 89)
	8	Paid $5 000 to Roasted for amount outstanding from May 2029 (EFT 10)
	10	Paid wages of $1 000 (EFT 10)
	12	Paid $4 000 (plus GST) to Coffee Online for advertising (EFT 11)
	15	Borrowed $20 000 from ABC – Bank (EFT Rec 8)
	17	Paid a $500 monthly loan repayment to EZE Bank (EFT 12)
	20	Steve took home $500 of coffee beans for personal use (Memo 9)
	22	Received $2 400 from Quench Café for balance from May 2029 (Rec 5)
	24	Incorrect labelling on coffee bean packs resulted in a $2 000 inventory write-down (Memo 9
	30	Stocktake identified that the business had a $1 000 inventory loss (Memo 10)

Prepare the commencement entry on June 1 2029 in the General Journal of Mocha Beans
Record the transactions for Mocha Beans for June 2029
Referring to an accounting assumption, explain why the transaction on 20 June 2029 was recorded

Detailed example 2

Ethical considerations when recording bad debts

Business scenario

At 30 June 2029, the extract from the Trial Balance of Runners Planet showed the following:

Runners Planet

Trial Balance as at 30 June 2029

	$	$
Accounts Receivable	80 000
Allowance for Doubtful Debts		5 000

Additional information

During the financial year ending 30 June 2029 the business made credit sales of $160 000 (plus GST) and sales returns were $8 800 (including GST). Receipts from Accounts Receivable for June 2029 were $110 000.
On 15 June 2029 the owner received a solicitor’s letter informing him that their customer, Sprint, had been declared bankrupt and would not be able to pay any of the $11 000 they owed (Memo 4).
At 30 June 2029 the accountant estimated that 3% of Net credit sales were considered doubtful.

Tasks

Record Memo 19 in the General Journal of Runners Planet.
Calculate Doubtful Debts for Paintworks for the year ended 30 June 2029.
Record the balance day adjustment for Bad Debts expense for June 2029 in the General Journal of Runners Planet. A narration is required.
Show how the Bad Debts and Allowance for Doubtful Debts accounts would appear in the General Ledger of Runners Planet as at 30 June 2029 after all closing and balancing entries had been recorded.
Show how the Accounts Receivable would be reported in the Balance Sheet of Runners Planet as at 30 June 2029.

Unit 4

Outcome 1:

Record financial data and balance day adjustments using a double entry system, report accounting information using an accrual-based system, and evaluate the effects of balance day adjustments and alternative methods of depreciation on accounting reports.

Examples of learning activities

Using ICT, complete a survey including questions such as: If you have a part-time job when do you work and when do you get paid? When did the most recent electricity bill arrive at your home? Questions could also relate to car insurance and registration, as well as prepaid expenses, for example for mobile phones. After completing the survey, use the information gained to generate a discussion around cash versus profit, accrued wages and accrued expenses.
Discuss financial decisions made when recording financial data and balance day adjustments, as well as reporting accounting information using an accrual-based system. Construct a mind map evaluating the ethical implications of these financial decisions.
Brainstorm ideas before designing a poster highlighting the different types of non-financial information that could be used in business decision-making.
Using the internet, identify an asset that a business might purchase, including its delivery costs. Then prepare a spreadsheet to model the impacts of depreciation of the asset on the Income Statement and Balance Sheet of the business.
Discuss the impact of selecting a method of depreciation on the performance of a business over the life of the non-current asset.
Complete a Kahoot or other form of online quiz relating to determination of the cost price of a non-depreciable asset and balance day adjustments.
Record financial data into General Journal and General Ledger
Consider the impact of cash versus profit
Discuss and evaluate the ethical considerations relating to business decision-making and the recording and reporting of financial information.
Record a list of transactions in the General Journal and General Ledger for a business. Explain the impact of the transactions on accounting assumptions

Detailed example 1

Recording financial data into General Journal and General Ledger

Countdown sells timing equipment to sporting clubs. The Split Stop Watch sells for $300 (plus GST). Each watch is sold using a 100% markup and reports on a monthly basis. The business applies the deposit as each is delivered.

Customers are offered credit terms of 2/7, n30 and Essendon Sports paid a deposit of $3 000 for 20 Split Stop Watches on 30 November 2029.

The following transactions occurred during December 2029

December	6	Countdown delivered ten Split Stop Watches to Essendon Sports (Inv 8).
	18	Countdown delivered the remaining Split Stop Watches to Essendon Sports (Inv 12)
	23	Essendon Sports paid the amount owing to Countdown (Rec 12)

Record the General Journal entries for the transactions provided.
(Narrations are not required.)
Record the entries required in the following General Ledger accounts for December 2029.
- Account Receivable – Essendon Sports
- Bank
Referring to an accounting assumption, explain how the deposit would be reported by Countdown on 30 November 2029.

Detailed example 2

Recognising the impact of cash versus profit

Clean Sweep sells cleaning products. The business reports on a quarterly basis and pays rent six-months in advance.

On 29 July 2028, Clean Sweep paid rent of $13 200 (including GST) for the six months ended 31 January 2029.

The next payment, which was made on 29 January 2029, included a 5% increase from the rental period commencing 1 February 2029.

Calculate the rent paid during the quarter ended 31 March 2029.
Calculate the rent expense for the quarter ended 31 March 2029.
Referring to an accounting assumption explain the difference between the rent paid and rent expense.

Detailed example 3

Ethical considerations when recording and reporting

Business scenario

At 30 June 2023, the extract from the Trial Balance of Paintworks showed the following:

	$	$
Accounts Receivable	65,000
Allowance for Doubtful Debts		2,800

Additional information

During the financial year ended 30 June 2023 the business made credit sales of $140,000 plus GST and sales returns were $11,000 including GST. Receipts from Accounts Receivable for June 2023 amounted to $115,000.
On 27 June 2023 the owner received a solicitor’s letter informing him that his customer, Harry Hardware, had been declared bankrupt and would not be able to pay any of the $740 owed (Memo 19).
a 20-minute resistance circuit (sit-ups, lunges, push-ups, triceps dips, squats, plank, suicide sprints and Turkish get ups)
At 30 June 2023 the accountant estimated that 4% of Net credit sales were considered doubtful.

Tasks

Record Memo 19 in the General Journal of Paintworks.
Calculate Doubtful Debts for Paintworks for the year ended 30 June 2023.
Record the balance day adjustment for Bad Debts expense for June 2023 in the General Journal of Paintworks. A narration is required.
Show how the Bad Debts and Allowance for Doubtful Debts accounts would appear in the General Ledger of Paintworks as at 30 June 2023 after all closing and balancing entries had been recorded.
Show how the Accounts Receivable would be reported in the Balance Sheet of Paintworks as at 30 June 2023.

Outcome 1:

Prepare budgeted accounting reports and variance reports for a trading business, using financial and other relevant information, and model, analyse and discuss the effects of alternative strategies on the performance of a business.

Examples of learning activities

Construct an annotated flow chart depicting the budgeting process.
In groups, discuss and explain the difference between cash and profit.
Discuss transactions that occur in a business and prepare a table showing the following for these transactions:
- Cash inflows that are not revenues
- Cash outflows that are not expenses
- Revenues that are not cash inflows
- Expenses that are not cash outflows.
Explain how some items may fall into two categories but appear as different amounts:
- Revenue/Cash Receipts
- Expense/Cash Payment items
Use highlighters, to clearly delineate each of the elements in a trial balance prior to closing and transferring accounts. Use a consistent colour for each element.
Complete a reconstruction of general ledger accounts to find amounts for the inclusion of budgeted reports.
Use an Income Statement, Balance Sheet and Income Statement for consecutive years to show the impact on the financial indicators (using ICT). Discuss the relationships between each of the financial indicators, also taking into consideration non-financial information.
Discuss the ethical considerations for a business owner, with a focus on particular financial indicators. For example, a focus on Return on Investment could result in a higher risk if the owner is using debt to improve this indicator. Improving the net profit margin could result in job losses.
Using a list of titles for all possible entries in the key ledger accounts (Accounts Receivable, Accounts Payable, Inventory, GST Clearing), compile a set of ledger templates using these titles. The titles can be written on Post-it notes or laminated strips so they can be easily moved about.

Detailed example 1

Reconstruction of General Ledger accounts

Business scenario

Stapled is preparing a Budgeted Cash Flow Statement for the month endeing 30 June 2029 and has provided the following information.

Balance Sheet (extract) as at

31 May 2029
(actual)

30 June 2029
(actual)

Current assets

Accounts Receivable

Allowance Doubtful Debts

Inventory

Prepaid Advertising Expense

Prepaid Rent Expense

Current liabilities

Accounts Payable

GST Clearing

Accrued Wages

Estimated Income Statement items for the month ending 30 June 2029

Advertising
Bad Debts
Cost of Sales
Discount Expense
Discount Expense
Wages

15 000

(2 000)

10 000

5 000

4 000

15 000

3 000

400

2 000

1 000

11 000

300

200

6 000

22 000

(1 900)

15 000

4 000

16 000

20 000

3 300

1 500

Additional information

All sales and purchases of Inventory are on credit.
A payment of $3 000 will be made to the Australian Taxation Office (ATO) in June 2029.
Based on past experience the business expects that $1 000 of inventory will be returned by customers and this inventory will be returned to suppliers.

Tasks

Reconstruct ledger accounts to calculate the following for the month endeing30 June 2029:
1. Cash received from Accounts Receivable
2. Payments to Accounts Payable
3. GST paid on cash payments.
Using the information above, complete the Operating Activities section of the Budgeted Cash Flow Statement for the month ending 30 June 2029.

Teaching and learning

Unit 1 The role of accounting in business

Unit 1 Area of Study 1: The role of accounting

Outcome 1:

Examples of learning activities

Detailed example

Visit a business in the local community

Unit 1 Area of Study 2: Recording financial data and reporting accounting information for a service business

Outcome 2:

Examples of learning activities

Detailed example

Role-play and folio completion using ‘Monopoly’

Unit 2: Accounting and decision-making for a trading business

Unit 2: Area of Study 1: Accounting for and managing inventory

Outcome 1:

Examples of learning activities

Detailed example 1

Simulation Task – Tracking Inventory

Task One:

Task Two:

Detailed example 2

The recording and reporting process – Toy Mania

Unit 2 Area of Study 2: Accounting for and managing accounts receivable and accounts payable

Outcome 2:

Examples of learning activities

Detailed example 1

Understanding the cash cycle

Detailed example 2

Team Challenge

Unit 2 Area of Study 3: Accounting for and managing non-current assets

Outcome 3:

Examples of learning activities

Detailed example

Accounting for Non-Current Assets

Unit 3

Unit 1 Area of Study 1: Recording and analysing financial data

Outcome 1:

Examples of learning activities

Detailed example 1a

Balancing assets in a general ledger

Detailed example 1b

Recording and reporting

Unit 3 Area of Study 2: Preparing and interpreting accounting reports

Outcome 2:

Examples of learning activities

Detailed example 1

Commencing entries and recording transactions for a business

Detailed example 2

Ethical considerations when recording bad debts

Unit 4

Unit 4 Area of Study 1: Extension of recording and reporting

Outcome 1:

Examples of learning activities

Detailed example 1

Recording financial data into General Journal and General Ledger

Detailed example 2

Recognising the impact of cash versus profit

Detailed example 3

Ethical considerations when recording and reporting

Unit 4 Area of Study 2: Budgeting and decision-making

Outcome 1:

Examples of learning activities

Detailed example 1

Reconstruction of General Ledger accounts