Level 1
Certificate in
Book-keeping
Syllabus
Effective for examinations to be held after 1 January 2008
? Education Development International plc 2005-2007 Company Registration No: 3914767
All rights reserved. This publication in its entirety is the copyright of Education Development International plc.
Reproduction either in whole or in part is forbidden without written permission from Education Development International plc.
International House, Siskin Parkway East, Middlemarch Business Park, Coventry, CV3 4PE
Telephone: +44 (0) 8707 202909 Facsimile: + 44 (0) 24 7651 6566
Email: customerservice@https://www.sodocs.net/doc/4611756136.html,
INTRODUCTION
Education Development International (EDI) is a leading international awarding body that was formed through the merger of the London Chamber of Commerce and Industry Examinations Board (LCCIEB) and a leading online assessment provider GOAL. EDI now delivers LCCI International Qualifications (LCCI IQ) through a network of over 4000 registered centres in more than 100 countries worldwide. Our range of business-related qualifications are trusted and valued by employers worldwide and recognised by universities and professional bodies. Level 1 Certificate in Book-keeping
Aims
The aims of this qualification are enable candidates to develop:
z an understanding of the basic principles underlying the recording of business transactions
z the ability to maintain the books of, and prepare final accounts for, sole traders Assessment Objectives
The examination will assess the candidate’s ability to demonstrate:
z an understanding of the Accounting Equation and the basis of double-entry book-keeping z how to prepare journal entries and ledger accounts by using the double entry system
z how to prepare prime entry records for purchases, sales, returns and cash
z how to prepare journal entries
z how to prepare a trial balance and the final accounts for sole traders
z an understanding of banking facilities and the operation of the cash book
z how to prepare a bank reconciliation statement
z how to make adjustments for accruals and prepayments in the final accounts
z an understandinfg of the entries necessary for the depreciation of fixed assets
z how to make entries relating to the writing off of bad debts
z an understanding of the distinction between capital and revenue expenditure
z how to correct errors in the accounts of sole traders
z an understanding of the use of control accounts as a check on the sales and purchases ledger
Target Audience and Candidate Progression
The examination is suitable for candidates who work or wish to work in areas of business that will involve the recording of financial transactions. All businesses require accurate accounting records that are maintained on a regular basis. Consequently, there is a demand for employees who possess these skills.
Successful candidates can progress to the LCCI IQ Level 2 Certificate in Book-keeping and Accounts qualification.
Level of English Required
Candidates should have a standard of business English equivalent to LCCI IQ Level 1 English for Business.
Syllabus Topics
1. The Accounting Equation and the basis of double-entry book-keeping
2. Recording transactions through double entry
accounts
3. Balancing
4. Purchases/Sales/Returns
5. The Ledger: its subdivision
Books
6. Day
7. Bank facilities/methods of payment or receipt of money
8. Cash Book and cash discount
reconciliation
9. Bank
10. Petty Cash Book and the Imprest System
11. Trial Balance
12. Adjusting for accruals and prepayments in the final accounts
13. Depreciation of fixed assets
14. The entries relating to bad debts
15. The Journal
16. Capital and revenue expenditure
17. Errors in the accounts and their correction
18. Effect of Profit (or Loss) and drawings upon capital
19. Trading and Profit and Loss Accounts
20. The Balance Sheet
21. Control Accounts – an introduction
Coverage of Syllabus Topics in Examinations
At least 2 of the following syllabus topics will appear in each examination:
9. Bank reconciliation
10. Petty Cash Book and the Imprest System
16. Revenue and Capital Expenditure
19. Trading and Profit and Loss Accounts
20. Balance Sheet
Examination Format
z The time allowance for the examination is 2.5 hours
z There will be 4 questions on the examination paper
? All of the questions will be compulsory
z Each question will carry equal marks
Guided Learning Hours
EDI recommends that 140 - 160 Guided Learning Hours (GLHs) provide a suitable course duration for an ‘average’ candidate at this level. This figure includes direct contact hours as well as other time when candidates’ work is being supervised by teachers. Ultimately, however, it is the responsibility of training centres to determine the appropriate course duration based on their candidates’ ability and level of existing knowledge. EDI experience indicates that the number of GLHs can vary significantly from one training centre to another. Candidate Answer Guidance
Answer formats
The answers required will be predominantly of a quantitative nature but candidates will be expected to demonstrate their understanding of the subject at an appropriate level.
Candidate Performance Measurement
Pass Mark Information:
Pass 50%
Credit 60%
Distinction 75%
Mark Allocation
A positive marking approach is used. Although candidates will be penalised for initial calculation errors, they will gain marks for consequential ‘own figures’ as long as the correct use of principles has been demonstrated.
Skills
Candidates will need to show that they can:
z add, subtract, divide and multiply, calculate and use percentages
z prepare journal entries and ledger accounts
z present final accounts for sole traders
Recommended Reading List and Support Material
Reading List
Title Author(s) Publisher ISBN Code
How to Pass Book-keeping Keith F Bird LCCIEB 07121 0865 3 This book is essential reading for all candidates
Support Material
A Specimen paper with answers is available on the LCCI IQ website.
Syllabus Topic Items Covered
1 The Accounting Equation Candidates must be able to:
and the basis of double-entry
book-keeping 1.1 Explain and use the terms debtor,
creditor, asset, liability, capital
1.2 Apply the Accounting Equation:
Assets = Capital + Liabilities and its
expression in the Balance Sheet
1.3 Calculate the effect of basic business
transactions upon the accounting
equation
2 Recording transactions through Candidates must be able to:
entry
double
2.1 Complete debit and credit entries
recording individual transactions
2.2 Prepare T-type accounts
2.3 Prepare a transaction/entry within an
account, ie date together with, normally,
the name of the ‘other’ account involved
in that particular transaction/entry
accounts Candidates must be able to:
3 Balancing
3.1 Balance the T-type ledger account
including bringing the balance down for
the start of the next accounting period
3.2 Explain the significance of any particular
account balance, eg a credit balance on
a creditor account, a debit balance on
an expense account
3.3 Prepare accounts in running balance
form
3.4 Transfer a balance at period end to
Trading Account or Profit and Loss
Account, as appropriate (see 19.1)
3.5 Show the procedure for other end-of-
period balancing, and ruling off, of
accounts
4 Purchases/Sales/Returns Candidates must be able to:
4.1 Record the effects on double-entry
accounts of purchases of
goods/services:
cash
4.1.1
for
credit
4.1.2
on
4.2 Show the effects on double-entry
accounts of the sale of goods/services:
cash
for
4.2.1
credit
on
4.2.2
4.3 Record the return of goods previously
bought or sold (or alternatively of an
allowance being made in lieu of actual
return of goods)
4.4 Show the use of the term Returns, both
inwards and outwards; recognise the
alternative terms in use, sales returns
and purchases returns
4.5 Explain the part played in book-keeping
by the invoice and the credit note
4.6 Explain trade discount
4.7 Calculate trade discount, from list prices
to obtain net price
4.8 Explain the differences between trade
discount and cash discount and the
different book-keeping effects
5 The Ledger: its sub-division Candidates must be able to:
5.1 Explain the functions of the Ledger
5.2 Show how the Ledger might be sub-
divided, eg Sales Ledger, Purchases
Ledger, Cash Book, General Ledger
5.3 State the alternative names for the
different Ledgers, eg Debtors Ledger,
Creditors Ledger, Nominal Ledger
5.4 Identify from a list of accounts, or from
transaction details, the naming of the
Ledger(s) in which each would be
recorded
5.6 Distinguish between personal, real and
nominal accounts
5.6 Show how the Sales Ledger might be
sub-divided
Books Candidates must be able to:
6 Day
6.1 Prepare Purchases, Sales, Returns
Outwards and Returns Inwards Day
Books
6.2 Show the alternative names used for
these various Day Books, i.e. purchases
returns and sales returns
6.3 Record individual transactions in the
Day Books
6.4 Make individual postings from the Day
Books to personal accounts
6.5 Make postings of period Day Book totals
to the Purchases, Sales and Returns
Accounts in the General Ledger
7 Bank facilities/methods of Candidates must be able to:
payment or receipt of money
7.1 Differentiate between and explain the
main types of bank account and their
key features
7.2 Distinguish between the key aspects of
the following methods of payment and
receipt of money:
7.2.1
cash
cheque
7.2.2
transfer
credit
7.2.3
order
standing
7.2.4
debit
direct
7.2.5
7.3 Define a bank overdraft a nd explain how
an overdraft might arise
7.4 Record and state the differences
between:
7.4.1 interest receivable (by the
customer) on a bank account
7.4.2 interest payable on a bank loan
or overdraft
7.4.3 bank
charges as charged by a
bank for operating an account
7.5 State the name of and explain the use of
the following abbreviations:
7.5.1 DD or D/D - direct debit
7.5.2 CT or C/T - credit transfer
7.5.3 STO or S/O - standing order
7.5.4 Div - dividend
7.6 Explain the significance of the following
terms:
7.6.1 bank paying-in book
order
banker’s
7.6.2
7.6.3 cheque book counterfoils/stubs
drawer
7.6.4
7.6.5
drawee
remittance
7.6.6
8 Cash Book and cash discount Candidates must be able to:
8.1 Explain the dual role of the Cash Book
as a book of prime entry and an integral
part of the double-entry record
8.2 Prepare a three-column Cash Book (the
bank columns recording the Bank
Current Account only)
8.3 Record individual transactions from the
Cash Book to the Ledger
8.4 Record the differences in book-keeping
entries regarding the withdrawal of funds
from the bank, as between:
8.4.1 that for use in the business - a
contra entry
8.4.2 that for private use - drawings
(see 18.2)
8.5 Record the variations of entry arising on
and from the sale of goods for cash, eg
the immediate banking of cash as
against the delayed banking of cash
8.6 Record the book-keeping entries
required on the transfer of funds
between the Bank Current Account and
the Bank Deposit Account
8.7 Explain how Cash discount can be part
of the terms of sale
8.8 Calculate cash discount
8.9 Record the double-entry effect of
discount allowed and discount received
respectively
8.10 Record entries in the discount columns
in the Cash Book
8.11 Prepare the periodic updating of the
Cash Book from the bank statement
(see 9.2)
8.12 Explain the possible reasons for the
dishonouring of a cheque and its
significance
8.13 Record the book-keeping entries arising
on the dishonouring of a cheque
8.14 Balance the Cash Book, bringing the
balance down for the start of the new
period
8.16 Record the periodic posting of discount-
column totals from the Cash Book to the
Discount Allowed and Discount
Received Accounts in the General
Ledger
reconciliation Candidates must be able to:
9 Bank
9.1 Explain the need for periodic
reconciliation between the balance in
the Bank Statement and the balance in
the Cash Book (Bank Current Account)
9.2 Record the updating of the Cash Book
(bank column) with as yet non-recorded
items which are revealed in the Bank
Statement
9.3 Explain the terms:
cheques(or
9.3.1 unpresented
cheques drawn, not yet
presented)
9.3.2 cheques paid in (lodged), not
yet credited
9.4 Prepare a statement reconciling the
balance in the Cash Book (Bank Current
Account) with that shown in the Bank
Statement, in respect of items still
causing a difference
10 Petty Cash Book and the Candidates must be able to:
Imprest System
10.1 Explain the use of Petty Cash as a
system for effecting minor
disbursements
10.2 Use sequentially numbered vouchers
and be aware that they are an
authorisation for payment
10.3 Explain the practice of setting a limit to
the amount allowed in reimbursement
per claim/voucher
10.4 Apply the basis of the Imprest System:
i.e. the periodic reimbursement of the
(controlled) float
10.5 Record the incidental receipts of
money into petty cash, other than the
periodic reimbursement of the float
10.6 Balance the Petty Cash Book and
prepare the book-keeping entries
relating to the reimbursement of the
float as well as in respect of any
adjustment of the float
10.7 Analyse petty cash outlay, the totalling
of the analysis columns, and post
these totals as required to appropriate
Ledger accounts
10.8 Explain the dual role of the Petty Cash
Book as a book of prime entry and an
integral part of the double-entry record Balance Candidates must be able to:
11 Trial
11.1 Explain the purpose of the Trial
Balance
11.2 Prepare a Trial Balance from a list of
account balances
11.3 Prepare a revised Trial Balance from
one initially drafted incorrectly
11.4 Prepare a final Trial Balance after
taking account of adjustments
11.5 Identify and explain the limitations of
the Trial Balance as a means of
checking the accuracy of the double
entry
12 Adjusting for accruals and Candidates must be able to:
prepayments
12.1 Explain the meaning of an expense
accrual
12.2 Explain the meaning of an expense
prepayment
12.3 Make adjustments for end-of-period
expense accruals and expense
prepayments in the Profit and Loss
Account and Balance Sheet
12.4 Explain the meaning of an income
accrual
12.5 Explain the meaning of an income
prepayment
Exclusion:
Candidates will not be required to prepare end
of period adjustments in expense or income
accounts for a ccruals or prepayments
13 Depreciation of fixed assets Candidates must be able to:
13.1 Explain the nature of depreciation of
fixed assets and the need for making
provision in the accounts (with the
awareness that this is not the putting
by of cash for replacement)
13.2 Explain the basis of the straight line (or
fixed instalment) method of
depreciation
13.3 Calculate the amount of annual
depreciation and its effect on the book
value of a fixed asset, using the
straight line method
13.4 Explain the basis of the reducing
balance (or diminishing balance)
method of depreciation
13.5 Calculate the amount of annual
depreciation and its effect on the book
value of a fixed asset, using the
reducing balance method
13.6 Record the accounting entries for the
straight line and reducing balance
methods of depreciation, keeping the
fixed assets account at cost and using
a Provision for Depreciation Account to
accumulate the yearly depreciation
13.7 Compare, through basic calculation,
use of the straight line method and use
of the reducing balance method
13.8 Record the entries in the Profit and
Loss Account and Balance Sheet
relating to fixed assets and their
depreciation
13.9 Use the terms aggregate depreciation
and net book value in the Balance
Sheet
14 Bad
debts Candidates must be able to:
14.1 Record the accounting entries for
writing off individual debtor balances,
in whole or in part, using a Bad Debts
Account
14.2 Record the end-of-period transfer of
total debts written off from Bad Debts
Account to the Profit and Loss Account
14.3 Record the accounting entries relating
to the recovery of debts previously
written off:
14.3.1 if recovered within the same
financial period in which the
debt was written off; and/or
14.3.2 if recovered after the year of
writing off
Exclusion:
Candidates will not be required to prepare a
provision for doubtful debts account
15 The
Journal Candidates must be able to:
15.1 Explain that the Journal is one of the
Books of Original Entry
15.2 Explain the advantages of having a
Journal, as a support to the double-
entry system, and its main uses
15.3 Record journal entries, in standard
format, covering:
15.3.1 the purchase and sale on
credit of fixed assets
15.3.2 the correction of errors
entries
opening
15.3.3
15.3.4 other non-regular transactions
or adjustments
Note:
Each Journal entry should include the relevant
date. It should also include a suitable
narration, unless the question states that it is
not required
16 Capital and revenue Candidates must be able to:
expenditure
16.1 Define, in brief, capital expenditure and
revenue expenditure
16.2 Classify a list of items into capital
expenditure and revenue expenditure
respectively
16.3 Show the different ways in which
capital expenditure and revenue
expenditure items are dealt with in the
accounts
16.4 Calculate the effect on final accounts
of the incorrect treatment of capital
expenditure and/or revenue
expenditure
17 Errors in the accounts Candidates must be able to:
17.1 Explain the difference between errors
which affect agreement of the Trial
Balance and those errors which do not
affect such agreement
17.2 Identify those errors that do not affect
agreement of the Trial Balance; and
types of such errors
17.3 Select the relevant type of error from
data provided
17.4 Record adjusting Journal entries
17.5 Show the effect of errors and/or the
effect of the correction of errors both in
principle as well as by calculation on:
17.5.1 the Trial Balance (see 11.3)
Profit
Gross
17.5.2
Profit
17.5.3
Net
Balance
Sheet
the
17.5.4
Exclusion:
The preparation of a Suspense Account is not
required at this level
18 Effect of Profit (or Loss) and
drawings upon capital Candidates must be able to:
18.1 Explain and show that Profit (or Loss)
is the difference between opening and
closing capital balances (allowing for
any drawings or the introduction of
additional capital)
18.2 Explain the meaning of the term
drawings; the various forms of
drawings
18.3 Record the book-keeping entries for
drawings
18.4 Calculate the possible effect of
drawings upon the amount of capital
18.5 Record how drawings are stated in the
Balance Sheet and, where necessary,
in the Trading Account (where goods
are withdrawn for private benefit)
19 Trading and Profit and Loss Candidates must be able to:
Accounts
19.1 Explain that the Trading and Profit and
Loss Accounts are part of the double-
entry system
19.2 Record the basic structure of income,
costs and profit in a business
19.3 Record returns inwards and returns
outwards suitably deducted to reveal
net sales and net purchases
respectively
19.4 Explain and apply the valuation
concept of stock: the lower of cost or
net realisable value
19.5 Calculate cost of goods sold
19.6 Show the make-up of ‘cost of goods
sold’
Note:
Wages should be included in the Trading Account only if a particular question requires this to be done
19.7 Differentiate between trading income
and other income
19.8 Record in the Stock Account the
double-entry relationship between the
Trading Account and the Stock
Account
19.9 Record end-of-period transfer of
balances from the General Ledger to
the Trading Account (Purchase
Account, Sales Account, Returns
Outwards Account and Returns
Inwards Account)
19.10 Explain the difference between
carriage inwards and carriage
outwards and record them in the
Trading Account and Profit and Loss
Account respectively
19.11 Record the double-entries for expense
amounts between the Profit and Loss
Account and the individual expense
accounts
19.12 Show income and expenses within the
final accounts, with related items being
suitably brought together
19.13 Prepare a Trading and/or Profit and
Loss Account and calculate gross
profit/net profit. (The presentation in
the vertical format is preferred but the
horizontal format will also be
accepted).
20 The Balance Sheet Candidates must be able to:
20.1 Explain the function of the Balance
Sheet and, in particular, the
recognition that it stands outside the
double-entry system
20.2 Define the significance and use of the
terms fixed assets and current assets
20.3 Understand the difference between
long-term liabilities and amounts
payable within 12 months(current
liabilities); the naming of accounts
which might appear under each of
these headings
20.4 Prepare a Balance Sheet in effective
format. (The presentation in the
vertical format is preferred but the
horizontal format will also be
accepted).
20.5 Show the appropriate grouping of
items within the Balance Sheet:
Assets
20.5.1
Fixed
Assets
Current
20.5.2
20.5.3 Capital (or Proprietor’s
Interest)
Long-term
liabilities
20.5.4
20.5.5 Amounts payable within
12 months (Current Liabilities)
20.6 Show the effective presentation of
fixed assets to show, if appropriate:
cost, aggregate depreciation, net book
value
20.7 Show the appropriate inclusion of
prepayments and accruals under
‘Current Assets’ and ‘Amounts payable
within 12 months’ respectively
21 Control Accounts - Candidates must be able to:
an introduction
21.1 Explain that control accounts are an
independent check on the sales and
purchases ledgers
21.2 Explain that control accounts may be
used to provide totals of debtors and
creditors and locate errors
21.3 Identify and use the books of prime
entry as sources of information for the
control account entries
21.4 Record the following items into the
relevant control accounts:
21.4.1 Sales and purchases
21.4.2 Receipts and payments
21.4.3 Discounts
21.4.4 Returns
21.4.5 Bad debts
? Education Development International plc 2005 Company Registration No: 3914767 All rights reserved. This publication in its entirety is the copyright of Education Development International plc. Reproduction either in whole or in part is forbidden without written permission from Education Development International plc.
International House Siskin Parkway East Middlemarch Business Park Coventry CV3 4PE
Telephone: +44 (0) 8707 202909 Facsimile: + 44 (0) 24 7651 6566
Email: customerservice@https://www.sodocs.net/doc/4611756136.html,