PEARSON EDEXCEL INTERNATIONAL AS/A LEVEL ACCOUNTING Student Book 1 aT TTS aoa‘ane ool eee al Ee into yb od en hw ile by Pann Ean td ‘yon Peowon OSC gy es We anc Sah ah (ig stems © Pornn Ean Lint (coer sags oy PearonEaaonntos 2018 Pewereseben ynepe ner ogee Gty open sana rapes “sinc abcd an Hy Fos ob ti tar iar sb ‘Sota hace nb Cop esr an Parise 108. tah Lary Ca gngn ctn Dat cpio eee [Arpereia Nps Ws puiawen nay berpecoad netomat ama (aur seean/mg or aerg t ny mesurby sac rear oor ‘nce nace) oeone ce uno puesto wate ir pean the copr our arn asotewihhe ovan lb Copy Osim cs ns et acu ur oe een sand bye Capt evar ‘rey. Sh Pr tach Hows #Eatstg Lar Lar E24 el 2 ‘cscaton ernecoprtontersrie ebm #0 Se sn he aie Pity Naps site Pinoaedaorets peminon epic hoognetacas mara non ate: Wetton cane right ech 2 nty ope: aor Sarr re TA Rb emi FF 24 aan Sou) etayn 2a 2? Souter Vuze ‘niente Supe oonouibonac 32 aah as Ca! MbisrlevShanesooh 41 HORE Adah rsa 190.49 Shuts Ae! ‘Sueno a a asian 20 4 Serta is ase Shek {tan meee ate hterstoos Dy aor {joy Sutera: ban ion Shr 9 Sater Ree Sse ‘smatertoce raphy Shes St HORE Ma Bondo 2h ‘Sto Snes Suro S46) Soar: Sony Dn shone StizaeF: Pome Z2 89 Satan LS eosin (ie) Saitnac: Gar dOVSHunasock BRE ereahcapn Diy 2 {84 hater: Osorno, 6) Satantoo AL Ehlarok {28 hater: tet Rte Be Qnty pr Viens ty og 71 Strate: Nonna sutra TR ating ts FraichrtgistinenOaty rane TAH Bhatoteck Conan 1H shat Ealoc shat, 42 Bly ont 2 Sa er TS ery ws Tato ‘nr igs 6 2ORF Dogsch aR a Seutrtog eA {5 ta a Fann 99 Steve Syracuse {00 ty meen al Daa Caretta 14 WORF Sehr 2° 131 Saute ls Soa Sharooe 14 Sharad Vas ots ‘Shuto 47120 Yl Osta IA: MO Batre eu [Shuto HoShatrtek Zotar 14 shtartek Sette 151 Strout 19 oan EE +24 ty image Runa oy ages 175 Smateok Ova aba Shuto to shatrteok Mc Rurosae NYBNersts Se ‘Shutenac H0N7 Bhutan nearer 2 Sharon Pal, fe tne kommnst 08 huteraick Wet 7 HAAR “edna 2b ap Dayana 2 19 eo Desa ‘Shutonace 20 12 Aton Papen 202 AAR Span arto 2 £5 ety imap fon WarolCaarape Gey rages 204 12RF Dara 20 ‘ Shstowiace Doel/utwrteeh 206 Suerdeck Peterson ouch eck 41 Satentck lt Wtteek 214 Ghat Ops Rew un Kao Lat Marr Rar ann Seger uae aan nthe event ef eae maa ‘hora neue mah mcae aoe hgh spa ore ert aon ‘uation tar been toga mon peeee te anh eee harwora tc ttre evn feet an a Examen conse my gas mare SC em "aeare ror pcb ay parca ech 0 ac er 5s ‘othe av mad erate oars at eo etn er ‘Serva pepo rich yeep, yaner ‘owt he aati a ey eee dnd y he ag ye nateCONTENTS COURSE STRUCTURE Vv ABOUT THIS BOOK vl ASSESSMENT OVERVIEW vill UNIT 1 2 APPENDIX 221 GLOSSARY 223 INDEX 227Tea PRINCIPLES OF ACCOUNTING 2 1. ROLE AND PURPOSE OF ACCOUNTING 3 2. DOUBLE-ENTRY SYSTEM 1 8 3. DOUBLE-ENTRY SYSTEM 2 25 4, ACCOUNTING CONCEPTS AND CONVENTIONS 41 5. CAPITAL EXPENDITURE AND REVENUE EXPENDITURE 48 6, NON-CURRENT ASSET DEPRECIATION 54 CONTROL PROCEDURES 72 7. TRIAL BALANCE 2B 8. CONTROL ACCOUNTS 80 9. CORRECTION OF ERRORS 89 FINANCIAL STATEMENTS OF ORGANISATIONS 100 10. FINANCIAL STATEMENTS OF ‘SOLE TRADERS 101 11. YEAR-END ADJUSTMENTS 116 12. DEPARTMENTAL RECORDS 124 13. INCOMPLETE RECORDS 130 14, PARTNERSHIPS 141 15. CLUBS AND NON-PROFIT-MAKING ORGANISATIONS 156 16. MANUFACTURERS 166Cs v INTRODUCTION TO COSTING 174 17. VALUATION OF INVENTORY 175 18. LABOUR COSTS 183 19. OVERHEAD COSTS 188 20. JOB COSTING 199 ANALYSIS OF ACCOUNTING STATEMENTS 203 21. RATIOS 204 SOCIAL AND ETHICAL ACCOUNTING 215 22. SOCIAL ACCOUNTING AND ETHICS 216 APPENDIX 224 GLOSSARY 23 INDEX 227PRC TILg ABOUT THIS BOOK This book is for students following the Edexcel International Advanced Subsidiary (IAS) Accounting ‘The course has been structured so that teaching and leaming can take place in any order, both in the classroom and in any independent leaming. The book contains full coverage of the IAS unit. The six topic areas within this unit match the titles and order of those in the specification. Topic openers Introduce each ofthe key topesin the specication, Learning objectives Ech chapter stars witha tof kay assessment objectives Each topic area is divided into chapters to break the content down into manageable chunks. Each chapter features a mix of leaming and activities. Global case studies are embedded throughout to show a range of ‘examples within the context of the chapter. Checkpoint questions at the end of each chapter help you to assess Understanding of the key leaning points. There are ‘exam-style questions at the end of each chapter (except Chapter 1, which is introductory) to provide opportunities, for exam practice. Answers are provided in the online ‘eBook version of this textbook. ‘Specttication reference ‘The specication reference is ‘en atthe start of each chapter nd the running header PRINCIPLES OF ACCOUNTING ™ ‘ le 1 ROLE AND PURPOSE OF ACCOUNTING oy subject terme are colour od within the Getting started Anat to pr. (signed fo stimulate iscussion and us cf poor Knowle be tacked as individuals, pais, groups ore whole cas Questions are sdge. These canECU RSE ‘Skills Rolavant exam questions have been ‘Activity assigned key sis, alowing ora stiong Each chapter includes activites to Tecus on pariculr academe: quaios ‘embed undorstanding trough case | These transferable skis are highly valved studies and questons, in further etudy ane the workplace. Exam hint Tips give practical advice ane Guidance for exarn reparation. Exam practice Examiyle questions are found at the end ‘Subject vocabulary fof each chapter (except Chapter 1). They ae ‘An alphabetical Ist ot al the subject taloed tothe Parson Edoxee! spocifeation ferme in each chapter wih to alow for practice and development of ‘finitone for EAL leamers. Please te: | sxam wring tochrique. Tho alco alow for ‘alated glossary is avaiale atthe Dractice responding tone command words back ofthe book Used inthe exams, Evaluate ‘Soe page ix Checkpoint (Questions to check Understanding ofthe koy learning point n each chapter. ‘These ae NOT exam ye questions.ASSESSMENT OVERVIEW The following tables give an overview of the assessment for this course. You should study this information closely to help ensure that you are fully prepared for this course and know exactly what to expect in each part of the assessment. renee Ce ce cama THE ACCOUNTING SYSTEM AD COsTNG 100% where eran ret ten exam pepe pera ist assesrent Paper code WAC Fist asses ee single tet enty ASSESSMENT OBJECTIVES AND WEIGHTINGS eens pec) oa Demonstrate knowledge of accounting procedures and techniques and 20 ‘an understanding of the pxinciples and concepts upon which they are based 02 Select and apply knowledge and understanding of accounting 4944 41424249 procedures, techniques, concepts and principles to a varity of ‘accounting situations. Present accounting information in an appropriate Tormat 203, ‘Analyse financial information, interpret financial data and information and 1728-24202 ‘communicate reasoning, showing understanding 04 Evaluate financial and non-financial evidence and make informed e410 10-411 10 recommendations and decisions Note: Percentages may not add up to 100 due to counding RELATIONSHIP OF ASSESSMENT OBJECTIVES TO UNITS FOR THE INTERNATIONAL ADVANCED SUBSIDIARY QUALIFICATION rs) esses es Sa 201 ‘02 ‘803 08 Unit 1 30% 49-4495 17% 21036 Note: Percentages may not add up to 100 due to roundingPee ay ix ASSESSMENT SUMMARY THE ACCOUNTING SYSTEM Structure Theta number Questions i et th folowing ap cosTING Paper assesses 100 percent ofthe total ins marks aualable assessment cbjacve: Paper code WAG! ‘etountngcuiication ae 50 pr cet of he IAL, 01-14% Accounting austin 02-20% Ther wl bo mo sections, A and 8. Students must fects. answer all questions in Section A and select from a choice of questions in Section B 04-936 Section A: two compulsory mult-part questions (170 marks}; Section B:thvee mull-part questions from a choice of four (90 marks) ‘Assessment This isa singlo-tir exam paper “The assessment duration is hours Calculators may bo used inthe examinations EVALUATE QUESTIONS Inthe exam you will see questions that ask you to ‘Evaluate’, In your answer, you will need to compare two methods or ‘ways of working and state which one you think is the most suitable for the scenario given and why. In this book there are ‘Evaluate’ sections. They give examples of possible methods you might be asked to evaluate, as well as a table showing arguments for and against the method. You could use these tables to help you plan an essay answer on the topic. Remember in the exam to always develop your points; the examiner will not award full marks if you only write bullet points. To achieve the highest marks, you will need to write a conclusion in which you decide which method is best. You need to justify your decision with reasons and you will also be expacted to shaw a chain of reasoning — how your points have helped you to come to your conclusion. CURRENCY All of the examples in this textbook use GBP £ because all the examination papers also use GBP £ only. However, you might want to challenge yourself by creating examples using the currency from your own country or other major currencies, such as USD §.