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AAT level 3 unit ACPR Core topics - 2013 syllabus

Accounts Preparation

The exam consists of 6 tasks and it's 2 hours long:

  • Task 1: Non-current assets register
  • Task 2: Ledger accounting for non-current assets
  • Task 3: Accounting for accruals and prepayments of income and expenses
  • Task 4: Prepare a trial balance and reconciliations
  • Task 5: Accounting adjustments in extended trial balance (ETB) or journals
  • Task 6: Extend the trial balance and show knowledge of accounting framework, accounting equation, records and standards

In order to be successful, ensure you have a good understanding of double entry bookkeeping and all the accounting adjustments which are required at financial year end: accruals & payments, irrecoverable & doubtful debts, depreciation & disposals of non-current assets, closing inventory and finally suspense accounts.

Non-current assets register:

You will be required to complete a non-current assets register which will include an addition, disposal and calculation of depreciation (straight line or reducing balance). However, be aware that not all of the new asset will need capitalising as the examiner is testing your knowledge on capital and revenue expenditure. Therefore you need to be aware of what expenditure relates to capital and revenue.

Ledger accounting for non-current assets:

You must ensure that you have a good understanding of the journal entries for either an addition or disposal of a non-current asset and also be prepared to complete a disposal T account showing whether you have made a profit or loss on disposal. Also don’t forget that there are two types of disposals – straight disposal or part-exchange. Therefore part-exchange means that the new asset will require recording in the relevant nominal ledgers.

Once again you will be tested on depreciation so make sure you are able to distinguish between straight line and reducing balance as you will required to calculate both of them at some point in the exam.

Accounting for accruals and prepayments:

Ultimately you will be required to calculate the charge to the profit or loss account on an expense or income account. You must ensure that you are familiar with accrued expenses, accrued income, prepaid expenses and prepaid income but also how opening and closing accruals and prepayments affect the income and expense ledger accounts.

Prepare a Trial Balance (TB) and reconciliations:

You will be tested on your double entry knowledge by having to put a list of nominal ledger balances into a TB correctly identifying these items as a debit or credit item

The use of DEAD and CLIC is really useful:

DEBIT – Expenses, Assets and Drawings

CREDIT – Liabilities, Income and Capital

You will also be required to reconcile either control account or bank reconciliation.

For the control account it will either be the trade receivables or payables to the subsidiary sales or purchase ledger. In the exam you will be faced with the scenario that the control accounts will not reconcile. However, you will be given some additional information which you will need to decide whether these errors effect the control account reconciliation and if so does the error effect the control account or the subsidiary ledger or both.

Accounting adjustments in the Extended Trial Balance (ETB) or Journals

You will need to know the financial year end accounting adjustments as potentially you could be examined on any of them in this task. These adjustments will either need to be completed within a journal or in the ETB.

The typical accounting adjustments are:

Depreciation, disposal of non-current assets, accruals and prepayments, inventory, irrecoverable and doubtful debts, errors in the TB (suspense accounts).

So knowledge of how to deal with these will help you immensely in this task. Once again you will be examined on your knowledge of double entry.

Extend the trial balance and show knowledge of accounting framework, accounting equation, records, and standards

You will also be expected to complete the ETB so knowledge of this is absolutely essential, especially knowing which nominal ledger items belong in the statement of profit or loss or the statement of financial position. Once again DEAD and CLIC can help you with this:

DEAD
Eexpenses - PL
Assets - FP
Drawings - PF

CLIC
Liabilities - FP
Income - PL
Capital - FP

You could also be examined on some theoretical part of the syllabus in this task:

  • Accounting framework – knowledge of the qualitative characteristics required and the accruals, going concern and prudence concept
  • Accounting equation – ASSET – LIABILITIES = PROPRIETORS FUNDS
  • Accounting standards – I would suggest reading up on IAS2 Inventories and IAS 16 Non-current assets

To give you the best chance of passing, we recommend that you join a Kaplan course. There are various options available: Classroom, Live Online, and Distance Learning. Alternatively, you could purchase separate Kaplan Publishing study text and or revision kit.