Developing a program

VCE Accounting explores the financial recording, reporting, analysis and decision making of a sole proprietor operating a small business. Both theoretical and practical aspects of accounting are studied and assessed. Teachers should use the VCE Accounting Study Design (pdf - 844.06kb) and this advice to develop a teaching and learning program that includes appropriate learning activities that enable students to develop the key knowledge and key skills identified in the areas of study.

This study develops students’ understanding of how to process, collect, record, report, analyse and interpret financial and non-financial data and accounting information. This data and information assists students when they consider how to improve business performance while also taking into account the goals and ethical and social considerations of the business.

Teachers should provide students with the opportunity to develop and apply critical thinking skills to a range of business situations and to model alternative outcomes that may be available for the businesses.

The use of a range of assessment activities is encouraged. More than one assessment task can be used to assess satisfactory completion of each outcome in each of Units 1 to 4.

Units 1 and 2

In Unit 1 teachers are encouraged to incorporate the study of a range of business scenarios in order to provide opportunities for students to apply their knowledge and develop skills.

During Unit 2 the focus shifts to trading businesses, allowing opportunity to develop a deep understanding of inventory, accounts receivable and accounts payable and the management of non-current assets. Through this study, students develop an understanding of fundamental accounting concepts and processes.

Units 3 and 4

During Units 3 and 4 assessment is more structured. The types of assessment tasks that may be used to assess each outcome are listed in the study design. The contribution of each outcome to the total score for School-assessed Coursework is also clearly stipulated. Students study financial accounting for trading businesses, as well as recording, reporting, budgeting and business decision-making.

Terminology

The terminology used in the study design has been updated to reflect the International Accounting Standards Board (IASB) Conceptual Framework. The following key changes should be noted:

• Stock is now referred to as Inventory
• Debtors are now referred to as Accounts Receivable
• Creditors are now referred to as Accounts Payable
• Prepaid Revenue is now referred to as Unearned Revenue. ​

These changes are reflected in the relevant financial indicators in the Characteristics of the Study.

Qualitative characteristics and accounting assumptions

It is essential that students develop a sound knowledge of the IASB Conceptual Framework and are able to apply and justify use of the qualitative characteristics and the accounting assumptions. Teachers should incorporate these throughout each area of study rather than focusing on each one as a stand-alone topic.

Ethical considerations

Throughout Units 1 to 4 students should be provided with regular opportunities to take into account and consider the ethical considerations involved in business decision-making. Students should be encouraged to consider financial, social and environmental implications when undertaking business decision-making. Ethical issues will impact on fundamental business operations and therefore directly affect the overall performance of a business. For example, a decision made by the owner of a business manufacturing furniture to only use renewable timber, in spite of a higher cost, will directly affect business performance. Similarly, decisions that businesses make about the types of packaging materials used will have an environmental, as well as financial, impact. Ethical considerations will inevitably arise for an accountant and business owner when recording and reporting financial data and accounting information. For example, the choice of a depreciation method or timing of the recording of potential expenses can have significant ethical implications.

Some examples of ethical considerations the accountant may be required to incorporate into their business decision-making are:

• Where​ to source inventory items. Is it ethical to purchase from businesses that use sweatshops? Should only local or sustainable produce be sourced in order to reduce the carbon footprint of the business? (Unit 1 Area of Study 1)
• Whether to operate within the ‘cash economy’ and thereby avoid GST. (Unit 1 Area of Study 2)
• The application of internal control procedures and the ethical considerations involved. (Unit 1 Area of Study 2)
• Whether to import resources from overseas or to use local suppliers who are likely to be more expensive. (Unit 2 Area of Study 2)
• Whether to use debt collection procedures that may be unethical. (Unit 2 Area of Study 2)
• Whether to purchase or lease an electric car rather than a petrol-fuelled model, which is initially cheaper to purchase but has higher running costs and a more negative environmental impact. (Unit 2 Area of Study 3)
• Factors to be taken into account when undertaking asset valuation, such as inventory write-downs, doubtful debts and depreciation. (Unit 3 Area of Study 1)
• Whether to ‘window dress’ the figures in an accounting report in order to maximise the price of a business for sale. (Unit 3 Area of Study 2)
• The ethical implications of shifting revenue and expenses in order to manipulate profit, such as not recording transactions in the appropriate period (Balance Day Adjustment). (Unit 4 Area of Study 1)
• The social and/or environmental impact of a specific business decision and its implications for the goal of profit maximisation and optimisation of returns to the owners. (Unit 4 Area of Study 2)
• Consideration of disclosure in accounting reports. (Unit 4)

Relevant ethical considerations will arise throughout the life of the study. Teachers are encouraged to view this component of the study design as an opportunity to bring the real world into the VCE Accounting classroom and allow students to think about and apply the typical ethical considerations that an accountant must consider in the 21st century.

Financial indicators

Financial indicators, as a key tool in evaluating business performance, are studied throughout Units 1 to 4. It is important that students develop a strong working knowledge of a range of financial indicators as a means of evaluating different aspects of business performance effectively.

Documents for a business

The source documents potentially used by a business as records of transactions are specified on page 10 of the study design. These documents may either be prepared manually or computer generated. Many source documents satisfy the requirements of a tax invoice, which the Australian Taxation Office specifies must contain the following information:

• clear identification as being a tax invoice
• seller’s identity 
• seller’s Australian Business Number
• date the invoice was issued
• brief description of items sold, including quantity and price
• Goods and Services Tax (GST) amount payable
• extent to which each sale on the invoice is a taxable sale (including GST)
• buyer’s identity or Australian Business Number (ABN) (if the sale is more than $1,000).

Journals

Journals are an integral part of the accounting system. The use of special journals is covered in Units 1 and 2. In Units 3 and 4 the general journal is used exclusively for recording all transactions.

Goods and Services Tax (GST)

The Goods and Services Tax (GST) is to be included throughout the study, except where it has been specifically excluded, as indicated in the relevant key knowledge dot points. Students should develop skills required to record and integrate GST accurately into accounting recording, reporting, budgeting and decision-making.

Examples

A range of examples (docx - 60kb) are provided here.

Templates

These templates (docx - 63kb) are re​​​commended for use with teaching and learning activities.