Accounting Subject Outline Stage 2

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1 Accounting 2019 Subject Outline Stage 2 For teaching 2019 is the last year of teaching the current Stage 2 Accounting in Australian and SACE International schools from January 2018 to December 2018 For teaching in SACE International schools only, from May/June 2018 to March 2019 in Australian and SACE International schools from January 2019 to December 2019 in SACE International schools only, from May/June 2019 to March 2020

2 Published by the SACE Board of South Australia, 60 Greenhill Road, Wayville, South Australia 5034 Copyright SACE Board of South Australia 2010 First published 2010 Reissued for 2011 (published online October 2010, printed January 2011), 2012, 2013, 2014, 2015, 2016, 2017, 2018, 2019 ISBN (online Acrobat PDF version) ref: A This subject outline is accredited for teaching at Stage 2 from 2011

3 CONTENTS Introduction... 1 Subject Description... 1 Capabilities... 1 Literacy in Accounting... 3 Numeracy in Accounting... 3 Aboriginal and Torres Strait Islander Knowledge, Cultures, and Perspectives... 3 Learning Scope and Requirements... 5 Learning Requirements... 5 Content... 5 Assessment Scope and Requirements Evidence of Learning Assessment Design Criteria School Assessment External Assessment Performance Standards Assessment Integrity Support Materials Subject-specific Advice Advice on Ethical Study and Research... 25

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5 INTRODUCTION SUBJECT DESCRIPTION Accounting is a a 20-credit subject at Stage 2. The study of Accounting encompasses the successful management of financial affairs in business. It gives students opportunities to learn the practical skills needed to manage their own financial affairs and to develop an understanding of the ethical and regulatory considerations that affect financial decision-making in contemporary society. Students acquire knowledge and skills related to the accounting process for organisational and business applications. They understand the processes involved in generating, recording, classifying, analysing, interpreting, and reporting accounting information as a basis for planning, control, and effective decision-making. They learn how to interpret the financial information of an accounting entity and how to convey this information to interested users. Accounting enables students to participate effectively and responsibly in a changing social, legal, and economic environment. Students develop skills in critical thinking, problem-solving, and the use of information and communication technologies. These skills enable them to apply accounting information in financial decision-making. An understanding of accounting concepts in financial management and decision-making helps students to develop skills in, and an appreciation of, active and responsible citizenship. CAPABILITIES The capabilities connect student learning within and across subjects in a range of contexts. They include essential knowledge and skills that enable people to act in effective and successful ways. The five capabilities that have been identified are: communication citizenship personal development work learning. The capabilities, in particular those for communication, work, and learning, are reflected in the learning requirements, content, assessment design criteria, and performance standards in this subject. Understanding the relationship between accounting and social, legal, regulatory, and ethical considerations in business and enterprise helps to develop students capability for citizenship. Stage 2 Accounting

6 Communication In this subject, students develop their capability for communication by, for example: using accounting terminology accurately explaining influences on the recording of accounting information using accounting terminology to identify and explain possible and preferable outcomes interpreting and comparing results with those of competitors and/or other economic conditions commenting on results or findings, taking into consideration accountability as well as social, legal, regulatory, and ethical issues selecting and organising relevant and reliable accounting information from a variety of sources. Citizenship In this subject, students develop their capability for citizenship by, for example: considering the social, legal, and ethical implications of accounting decisions developing an understanding of accounting concepts in financial management and decision-making as they apply to active and responsible citizenship recognising that social, legal, regulatory, and ethical issues both influence and are influenced by business and accounting decisions. Personal Development In this subject, students develop their capability for personal development by, for example: developing an awareness of the importance of maintaining accurate financial records applying effective decision-making skills, using financial and non-financial information analysing and evaluating accounting information and making informed choices and decisions. Work In this subject, students develop their capability for work by, for example: developing an awareness of the importance of maintaining accurate financial records that meet social, legal, regulatory, and ethical requirements identifying key elements of accounting in practical situations understanding the existence and influence of the regulatory framework that underpins accounting developing skills in the use of information and communication technologies in the accounting process developing employability skills that can be used globally. 2 Stage 2 Accounting 2019

7 Learning In this subject, students develop their capability for learning by, for example: analysing and interpreting financial information to make recommendations and draw appropriate conclusions applying problem-solving skills understanding the impact of change on financial decisions explaining processes used in the completion of a task selecting, organising, and evaluating information for relevance and reliability using a variety of techniques such as data analysis and spreadsheets. LITERACY IN ACCOUNTING In Accounting, students have opportunities to develop the following literacy skills: understanding and appropriately using accounting terminology effectively communicating accounting information in appropriate forms discussing, explaining, comparing, contrasting, and examining questions or issues, using accounting information writing reports in the form of an analytical response to given data (e.g. financial statements) reporting information to users for planning, control, and decision-making demonstrating an ability to interpret specific accounting information in relation to a particular issue. NUMERACY IN ACCOUNTING In Accounting, students have opportunities to develop the following numeracy skills: collecting and processing financial data interpreting, analysing, and evaluating financial information displaying financial information, using appropriate accounting conventions predicting outcomes from data collected distinguishing between financial and non-financial information. ABORIGINAL AND TORRES STRAIT ISLANDER KNOWLEDGE, CULTURES, AND PERSPECTIVES In partnership with Aboriginal and Torres Strait Islander communities, and schools and school sectors, the SACE Board of South Australia supports the development of highquality learning and assessment design that respects the diverse knowledge, cultures, and perspectives of Indigenous Australians. The SACE Board encourages teachers to include Aboriginal and Torres Strait Islander knowledge and perspectives in the design, delivery, and assessment of teaching and learning programs by: providing opportunities in SACE subjects for students to learn about Aboriginal and Torres Strait Islander histories, cultures, and contemporary experiences recognising and respecting the significant contribution of Aboriginal and Torres Strait Islander peoples to Australian society Stage 2 Accounting

8 drawing students attention to the value of Aboriginal and Torres Strait Islander knowledge and perspectives from the past and the present promoting the use of culturally appropriate protocols when engaging with and learning from Aboriginal and Torres Strait Islander peoples and communities. 4 Stage 2 Accounting 2019

9 LEARNING SCOPE AND REQUIREMENTS LEARNING REQUIREMENTS The learning requirements summarise the knowledge, skills, and understanding that students are expected to develop and demonstrate through their learning in Stage 2 Accounting. In this subject, students are expected to: 1. identify various accounting entities and the main users of financial information 2. recognise, understand, record, report, and communicate financial information in a manner appropriate to the identified needs of the user 3. understand and apply the process required to maintain financial information in order to report the results of business activity 4. recognise that accounting concepts and standards determine the responsibilities and obligations of accounting entities to report financial information 5. apply identified accounting concepts and standards to generate financial reports 6. analyse and interpret financial and non-financial information for decision-making and problem-solving 7. recognise that social, legal, regulatory, and ethical issues both influence and are influenced by business and accounting decisions. CONTENT Stage 2 Accounting is a 20-credit subject. Students are required to study the following three sections: Section 1: The Environment of Accounting Section 2: Financial Accounting Section 3: Management Accounting. Section 1: The Environment of Accounting Section 1 provides knowledge and understanding of the role of accounting and its entities and decision-making structures. Section 1 is the basis of the practical application in Sections 2 and 3. Students develop a conceptual understanding, which they then apply in Sections 2 and 3. Section 1 emphasises the decision-making function of the accounting process. The accountability and control functions of accounting are further expanded in Sections 2 and 3. Stage 2 Accounting

10 What is the role of accounting? Accounting provides financial information for controlling resources and making judgments of accountability. What is the accounting process? The accounting process involves the collection, processing, and analysis of data, and the reporting of information to users for planning, control, and decision-making. Which entities use accounting information? Students should recognise the existence of the following entities: sole traders partnerships limited companies (private and public) individuals incorporated and unincorporated associations. Students should identify the: legal entity accounting entity. Students should know the functions and structure of: sole traders partnerships limited companies (private and public). 6 Stage 2 Accounting 2019

11 Who uses accounting information for decision-making? The users of accounting information make decisions. The table below includes the main types of users: External Users Present or potential investors Present or potential creditors Customers Employees and trade unions General public Regulatory agencies Stock exchange Taxation authorities Internal Users Owners/partners Boards of directors Managers What uses are made of accounting information? Uses will depend on the user, as the following examples show: A potential creditor: should credit be extended? A potential investor: should money be invested in the organisation? A taxation authority: is the firm paying appropriate levels of tax? A manager: should an advertising campaign be undertaken? How can decisions be made by external and internal users? Decisions are made by using a structured process in which the problem or situation that needs a decision is identified, the alternatives are considered, and a strategy for implementation is provided. The process includes the use of quantitative data provided in the accounting information and the use of qualitative data, such as recognising contemporary social and ethical issues. What influences the production of accounting information? The influences are: regulatory frameworks, including the Australian Securities and Investments Commission, the Australian Securities Exchange listing requirements, the Corporations Act 2001 (Cwlth), and other legal requirements conceptual frameworks, including the Australian Accounting Standards Board Conceptual Framework, which sets out the concepts that underlie the preparation and presentation of financial reports for external users the needs of the accounting entity technological development social and ethical issues. Stage 2 Accounting

12 Intended Learning At the end of this section, students should be able to: identify the interrelationship of the accountability, control, and decision-making functions of accounting describe the accounting process describe the functions and main features of a range of entities distinguish between legal entity and accounting entity identify owner s liability in a range of entity structures identify the various users of accounting information describe the uses made of accounting information distinguish between quantitative and qualitative data understand that decision-making can be analysed as a series of sequential steps recognise social, legal, regulatory, and ethical issues that affect financial decisions demonstrate knowledge of the existence and influence of the regulatory and conceptual frameworks appreciate the technological, social, regulatory, and ethical issues that influence the accounting information produced. 8 Stage 2 Accounting 2016

13 Section 2: Financial Accounting This section is concerned primarily with the provision of accounting information to satisfy the needs of external as well as internal users, and for accountability purposes. In this section students gain a working knowledge of the dual effects that transactions have on the accounting equation. It is therefore necessary for students to develop an understanding of debit and credit and the nature of accounts in order to record the changes that occur after each transaction. Students: develop a conceptual knowledge of the whole double-entry recording process construct an account in order to record the effects of transactions record transactions in the general journal construct accounts work from a list of given account balances to make adjustments and prepare accounting reports. The recording of specialised journals is not required. Students generate reports for a sole trader from a list of account balances and recognise reports for other business entities. The accounting concepts listed below affect the treatment of data and should be considered in the preparation of accounting reports. Students should understand the meaning, application, and interrelationship of the following accounting concepts: accounting entity accounting period accrual accounting consistency duality going concern historical cost materiality monetary prudence realisation relevance reliability. These accounting concepts provide the basis for current standards and practices. What is the purpose of accounting reports and what information do they contain? Report and Purpose Balance sheet: Statement of financial position Income statement: The measurement of profit or loss Statement of cash flows: Sources of cash inflows and outflows Information Components: assets, liabilities, and owner s equity The accounting equation The concept of duality, showing the effects of transactions on the balance sheet Classification of the components: current and non-current assets, liabilities, and owner s equity Components: revenue and expenses Classification of the components for service and trading entities Components: cash (sources and uses) Differences between net profit and net cash flows in an accrual accounting system Stage 2 Accounting

14 What are the links between the reports? Reports Income statement and balance sheet Income statement and statement of cash flows Statement of cash flows and balance sheet Links Transfer of profit Impact of the going concern concept Cash versus accrual representation of periodic flows (especially from operations) Flow analysis of change in cash position over a period How are financial data organised into report format? Students recognise and interpret reports of different accounting entities but generate reports only for a sole trader. Financial data can be organised through the preparation of an appropriately classified income statement, balance sheet, and statement of cash flows for a sole trader (for service and trading entities), taking into account: adjustments for prepayments and accruals of expenses and revenue (the adjustments for prepayments depend on the initial treatment of the transaction) accumulated depreciation and allowance for doubtful debts. How do reports vary for different accounting entities? Students recognise the similarities and differences in the reports of a range of accounting entities, including sole trader, partnership, and company. Variations in the reports include format, the names of reports, owner s equity, and terminology. The analysis and interpretation of authentic company reports should be included in this section. What uses are made of the reports? Reports can be used to convey: an analysis by calculation of the ratios used to measure return and risk an interpretation of ratio calculations an interpretation of statements by vertical, horizontal, and trend analyses defined as vertical analysis: the relationship of items within financial statements for one accounting period horizontal analysis: the relationship of items within financial statements for consecutive accounting periods trend analysis: the relationship of items within financial statements for a period of 3 or more years an interpretation by comparison of results with those of competitors and/or by other economic indicators comments on results or findings, taking into consideration accountability and social, legal, regulatory, and ethical issues. 10 Stage 2 Accounting 2019

15 Analysis Tools Students may use the following ratios for analysis of financial information: Profitability (Return) Expressed as For all entities: Return on equity net profit owner s equity* % Return on total assets net profit + interest expense total assets * % Net profit margin Expense Gross profit margin For companies: Earnings per ordinary share Earnings yield Dividend per ordinary share Dividend yield net profit net sales individual expenses net sales gross profit net sales net profit for ordinary shareholders number of ordinary shares earnings per ordinary share market price per ordinary share total ordinary dividend number of ordinary shares dividend per ordinary share market price per ordinary share % % % $ % $ % Financial Stability (Risk) Short Term (Liquidity) Quick asset (acid test) Working capital Debtors turnover Inventory turnover current assets inventory current liabilities current assets current liabilities net credit sales debtors * cost of goods sold inventory * ratio ratio times times * Averages are used for these values. However, the availability of information may necessitate the use of opening or closing values. It is acceptable also to deduct bank overdrafts from current liabilities when calculating this ratio, as appears in some textbooks and study guides. Stage 2 Accounting

16 Financial Stability (Risk), continued Long Term (Solvency) Total debt/total assets Debt/equity total liabilities total assets total liabilities owner s equity Times interest earned net profit + interest expense interest expense Expressed as % % times What are the limitations of the information in these reports? The limitations of the monetary, historical cost, consistency, prudence, and accounting period concepts should be considered when analysing and interpreting the reports. Intended Learning At the end of this section, students should be able to: demonstrate understanding of the reporting needs of a range of accounting entities use terminology relevant to accounting reports recognise the features of accounting reports and understand their use and purpose understand the effects of accounting concepts and conventions on the final reports identify the links between the reports understand the difference between profit and cash flow use the accounting equation to describe and record the effects of financial transactions on the reports prepare classified final reports from a list of account balances that have been adjusted recognise the limitations that are inherent in the accounting concepts and conventions identify the range of reports used by different entities recognise the impact of different ownership structures on reporting requirements calculate ratios to measure return and risk analyse and interpret financial statements and comment on the findings. 12 Stage 2 Accounting 2019

17 Section 3: Management Accounting This section concerns the provision of information to internal decision-makers for accountability and control. Management refers to those owners or employees of an entity who have direct or delegated responsibility for making business decisions. Reports are specific to the needs and responsibilities of management and include information on past, current, and estimated future positions. In this section students apply the conceptual knowledge that was introduced in Section 1. Students gain an understanding of how managers plan and control the business in order to make valid decisions. Students learn to recognise the effects of social and ethical issues on decisions. What types of data and information are used in making decisions? The types of data and information used in making decisions include: quantitative data (numeric, measurable) qualitative information (e.g. social, legal, regulatory, environmental, ethical, short-term versus long-term, and efficiency versus effectiveness) financial information (e.g. budgets, ratios, sales results, and current interest rates) non-financial information (e.g. benchmarks, staff turnover, and market share). What types of social and ethical issues influence management in decision-making? Management is influenced by: personal and social values environmental impact studies ethical investments technological developments. What social and ethical issues may result from accounting decisions? Issues that may arise as a result of accounting decisions include: changes in working conditions (e.g. job satisfaction and levels of employment) advantages or disadvantages to different groups in society non-disclosure or distortion of information to shareholders or creditors impact on the physical environment. How can management use accounting information in planning and control? Planning is needed for establishing goals and for monitoring and evaluating progress. Planning can include: calculating break-even point preparing cash budgets recognising the distinction between cash and profit comparing actual and planned performance recognising the purpose and use of the budgeted income statement and the balance sheet. Stage 2 Accounting

18 The formula for calculating the break-even point is: fixed costs of production (selling price variable cost price) per unit = number of units required to break even. How can accounting information help management to control assets and liabilities? Records must be kept in order to control the assets and liabilities of the business. These records are produced using a recording process that involves source documents, journals, and ledgers. Students gain an understanding of a recording process in which data from a variety of sources are used for the control of assets and liabilities. It is necessary for students to have conceptual knowledge of the double-entry recording process. For this purpose, an understanding of journals and ledgers is required. The control of assets and liabilities includes the following: Current Assets Inventories Preparation of perpetual inventory records using inventory cards and ledgers (first-in firstout and specific identification methods). Understanding of the role of a stocktake. Completion of stock adjustment on the inventory card, in the general journal, and in the inventory control account. Recognition of the concept of lower of cost or net realisable value. Understanding of inventory control procedures for monitoring storage and security, and turnover and inventory levels. Calculation of inventory turnover ratio and analysis of the results. Debtors Preparation of a debtors ledger, control account, and schedule of debtors. Interpretation of ageing analysis. Recognition of credit control procedures for screening debtors and determining credit limits, incentives to pay, and penalties for late payment. Distinction between bad and doubtful debts. Calculation of debtors turnover ratio and analysis of the results. Recording of bad debt write-off and creation of an allowance for doubtful debts. (The total bad debt account balance should be transferred to any existing allowance account.) Cash Recording of receipts and payments. Recognition that some entities use a columnar receipts-and-payments cash book. Reconciliation of cash records with the bank statement to prepare a bank reconciliation statement. Understanding of procedures used to improve and/or control the cash flow of a business. 14 Stage 2 Accounting 2019

19 Non-current Assets Understanding of the use of an asset register or schedule so that depreciation can be recorded. Recognition of the need to account for depreciation. Calculation of depreciation, using various methods, including straight-line, diminishing-balance, and units-of-use. Recording of depreciation in a general journal and ledger. Liabilities Recognition of distinctions between external and internal sources of funds and their costs, benefits, and risks. Understanding of reasons for short-term or long-term borrowing. Measurement and interpretation of level of debt or equity. How does technology help in the control of assets and liabilities? Technology helps in: the monitoring of assets (scanners, passwords, key cards) the timely recording of transactions and reporting of results improvements to the availability, communication, and analysis of accounting information the establishment of simulations. Intended Learning At the end of this section, students should be able to: explain how financial information is used in decision-making in a variety of situations recognise the importance of non-financial information in decision-making prepare cash budgets read and interpret budgeted income statements and budgeted balance sheets calculate the break-even point and understand its implications for budgeting decisions select suitable types and sources of finance for particular situations understand the principles of a double-entry recording process understand the need for, and procedures used to control, assets and liabilities record (for inventories) debtors, cash, and depreciation calculate and evaluate inventory turnover understand the application of prudence in inventory valuation calculate and evaluate debtors turnover understand the use of an asset register or schedule understand the need for depreciation and the suitability of different methods for different types of assets recognise the implications for an entity of using borrowed funds appreciate the use of technology to monitor and control assets recognise that social and ethical issues may influence and arise from decision-making. Stage 2 Accounting

20 ASSESSMENT SCOPE AND REQUIREMENTS All Stage 2 subjects have a school assessment component and an external assessment component. EVIDENCE OF LEARNING The following assessment types enable students to demonstrate their learning in Stage 2 Accounting: School Assessment (70%) Assessment Type 1: Skills and Applications Tasks (50%) Assessment Type 2: Report (20%) External Assessment (30%) Assessment Type 3: Examination (30%). Students should provide evidence of their learning through seven to ten assessments, including the external assessment component. Students undertake: five to eight skills and applications tasks one report one examination. ASSESSMENT DESIGN CRITERIA The assessment design criteria are based on the learning requirements and are used by: teachers to clarify for the student what he or she needs to learn teachers and assessors to design opportunities for the student to provide evidence of his or her learning at the highest possible level of achievement. The assessment design criteria consist of specific features that: students should demonstrate in their learning teachers and assessors look for as evidence that students have met the learning requirements. For this subject the assessment design criteria are: understanding analysis and interpretation application communication. 16 Stage 2 Accounting 2019

21 The specific features of these criteria are described below. The set of assessments, as a whole, must give students opportunities to demonstrate each of the specific features by the completion of study of the subject. Understanding The specific features are as follows: U1 Identification of various accounting entities and the main users of financial information. U2 Recognition, understanding, recording, and reporting of financial information in a manner appropriate to the identified needs of the user. U3 Recognition that accounting concepts and standards determine the responsibilities and obligations of accounting entities to report financial information. U4 Understanding of the process required to maintain financial information in order to report the results of business activity. U5 Recognition of how social, legal, regulatory, and ethical issues both influence and are influenced by business and accounting decisions. Analysis and Interpretation The specific features are as follows: AI1 Analysis of financial and non-financial information for decision-making and problem-solving. AI2 Interpretation of financial and non-financial information. Application The specific features are as follows: A1 Application of identified accounting concepts to generate financial reports. A2 Application of the process required to maintain financial information in order to report the results of business activity. Communication The specific features are as follows: C1 Communication of financial information in a manner appropriate to the identified needs of the user. C2 Use of appropriate accounting terminology. Stage 2 Accounting

22 SCHOOL ASSESSMENT Assessment Type 1: Skills and Applications Tasks (50%) Students undertake five to eight skills and applications tasks. Each skills and applications task should be based on unseen data and undertaken under timed, supervised conditions, to a maximum of 1 hour. Students solve accounting problems that may: be routine, analytical, and/or interpretative be posed in familiar and unfamiliar contexts require the appropriate use of information and communication technologies. In setting skills and applications tasks, teachers may provide students with information in written form or in the form of numerical data or tables. For this assessment type, students should: demonstrate an understanding of relevant accounting concepts, skills, and practices select appropriate accounting techniques to successfully solve routine, analytical, and/or interpretative problems provide explanations and use notation, terminology, and presentation correctly throughout the task. Students may be required to use information and communication technologies appropriately to aid and enhance the solution of some problems. It is recommended that teachers integrate appropriate accounting software packages into some of these assessments. For this assessment type, students provide evidence of their learning in relation to the following assessment design criteria: understanding analysis and interpretation application communication. Assessment Type 2: Report (20%) Students undertake an analytical response to unseen data, such as financial statements, under timed, supervised conditions, to a maximum of 1 hour. The report must include: clear headings and sections a brief introduction calculations, ratios, tables, and graphs, as appropriate interpretation of financial information a conclusion. For this assessment type, students provide evidence of their learning in relation to the following assessment design criteria: understanding analysis and interpretation communication. 18 Stage 2 Accounting 2019

23 EXTERNAL ASSESSMENT Assessment Type 3: Examination (30%) Students undertake a 2-hour external examination that consists of a range of problem questions, including short-answer and extended-response questions. Problem questions integrate knowledge, skills, and understanding from all sections of the content, with a focus on the knowledge, skills, applications, analysis, and interpretation involved in accounting practice. All specific features of the assessment design criteria for this subject may be assessed in the external examination. PERFORMANCE STANDARDS The performance standards describe five levels of achievement, A to E. Each level of achievement describes the knowledge, skills, and understanding that teachers and assessors refer to in deciding how well a student has demonstrated his or her learning on the basis of the evidence provided. During the teaching and learning program the teacher gives students feedback on their learning, with reference to the performance standards. At the student s completion of study of each school assessment type, the teacher makes a decision about the quality of the student s learning by: referring to the performance standards assigning a grade between A+ and E for the assessment type. The student s school assessment and external assessment are combined for a final result, which is reported as a grade between A+ and E. Stage 2 Accounting

24 Performance Standards for Stage 2 Accounting - Understanding Analysis and Interpretation Application Communication A Astute identification of various accounting entities and the main users of financial information. Comprehensive recognition, understanding, recording, and reporting of financial information in a manner appropriate to the identified needs of the user. Astute analysis of financial and nonfinancial information for decision-making and problem-solving. Perceptive and critical interpretation of financial and non-financial information. Comprehensive, logical, and astute application of identified accounting concepts to generate financial reports. Perceptive application of the process required to maintain financial information in order to report the results of business activity. Astute communication of financial information in a coherent manner most appropriate to the identified needs of the user. Highly appropriate and well-informed use of a range of accounting terminology. Insightful recognition that accounting concepts and standards determine the responsibilities and obligations of accounting entities to report financial information. Comprehensive and well-informed understanding of the process required to maintain financial information in order to report the results of business activity. Insightful and well-informed recognition of how social, legal, regulatory, and ethical issues both influence and are influenced by business and accounting decisions. 20 Stage 2 Accounting 2019

25 - Understanding Analysis and Interpretation Application Communication B Well-considered identification of various accounting entities and the main users of financial information. Thoughtful analysis of financial and nonfinancial information for decision-making and problem-solving. Capable and well-informed application of identified accounting concepts to generate financial reports. Well-informed communication of financial information in a clear manner appropriate to the identified needs of the user. Detailed recognition, understanding, recording, and reporting of financial information in a manner appropriate to the identified needs of the user. Well-considered and critical interpretation of financial and non-financial information. Thoughtful application of the process required to maintain financial information in order to report the results of business activity. Appropriate and well-informed use of accounting terminology. Clear and well-informed recognition that accounting concepts and standards determine the responsibilities and obligations of accounting entities to report financial information. Detailed understanding of the process required to maintain financial information in order to report the results of business activity. Well-informed recognition of how social, legal, regulatory, and ethical issues both influence and are influenced by business and accounting decisions. Stage 2 Accounting

26 - Understanding Analysis and Interpretation Application Communication C Considered identification of a range of accounting entities and main users of financial information. Informed recognition, understanding, recording, and reporting of financial information in a manner appropriate to the identified needs of the user. Considered analysis of financial and nonfinancial information for decision-making and problem-solving. Considered interpretation of financial and non-financial information. Competent application of identified accounting concepts to generate financial reports. Appropriate application of the process required to maintain financial information in order to report the results of business activity. Informed communication of some financial information in a mostly clear manner appropriate to the identified needs of the user. Generally appropriate and informed use of accounting terminology. Informed recognition that accounting concepts and standards determine the responsibilities and obligations of accounting entities to report financial information. Competent understanding of the process required to maintain financial information in order to report the results of business activity. Informed recognition of how social, legal, regulatory, and ethical issues both influence and are influenced by business and accounting decisions. 22 Stage 2 Accounting 2019

27 - Understanding Analysis and Interpretation Application Communication D Identification of some accounting entities and/or the main users of financial information. Recognition, recording, and reporting of basic financial information. Some recognition that accounting concepts and standards determine the responsibilities and obligations of accounting entities to report financial information. Some recognition and basic use of financial and non-financial information for decision-making and problem-solving. Some endeavour to interpret financial and non-financial information. Basic application of some identified accounting concepts to generate one or more financial reports. Partial application of the process required to maintain financial information in order to report the results of business activity. Some clarity of communication about some aspects of financial information. Inconsistent use of some accounting terminology. Some understanding of the process required to maintain financial information in order to report the results of business activity, with evidence of some inconsistencies. Some recognition that social, legal, regulatory, and/or ethical issues both influence and are influenced by business and accounting decisions. E Limited identification of accounting entities or main users of financial information. Limited recognition, recording, or reporting of some basic financial information. Emerging awareness of the role of accounting concepts and standards. Limited recognition or use of financial and non-financial information for decision-making and problem-solving. Description of some financial or nonfinancial information. Attempted application of one or more identified accounting concepts to generate a financial report. Recognition of one or more aspects of the process required to maintain financial information in order to report the results of business activity. Limited communication of one or more aspects of financial information. Attempted use of a limited range of accounting terminology. Emerging awareness of the process required to maintain financial information in order to report the results of business activity. Emerging awareness of how social, legal, regulatory, and/or ethical issues influence business and accounting decisions. Stage 2 Accounting

28 ASSESSMENT INTEGRITY The SACE Assuring Assessment Integrity Policy outlines the principles and processes that teachers and assessors follow to assure the integrity of student assessments. This policy is available on the SACE website ( as part of the SACE Policy Framework. The SACE Board uses a range of quality assurance processes so that the grades awarded for student achievement, in both the school assessment and the external assessment, are applied consistently and fairly against the performance standards for a subject, and are comparable across all schools. Information and guidelines on quality assurance in assessment at Stage 2 are available on the SACE website ( 24 Stage 2 Accounting 2019

29 SUPPORT MATERIALS SUBJECT-SPECIFIC ADVICE Online support materials are provided for each subject and updated regularly on the SACE website ( Examples of support materials are sample learning and assessment plans, annotated assessment tasks, annotated student responses, and recommended resource materials. ADVICE ON ETHICAL STUDY AND RESEARCH Advice for students and teachers on ethical study and research practices is available in the guidelines on the ethical conduct of research in the SACE on the SACE website ( Stage 2 Accounting