This Bookkeeping Foundations course can be taken as an online course or through correspondence.
- Regularly revised and updated (at least yearly) to maintain global relevance.
- Internationally applicable – many countries participate in standardised bookkeeping principles and practice; this course is based on current international standards.
ACS Student comment: Yes it is [a valuable learning experience], it is challenging and in turn rewarding. I am getting an extensive knowledge of the field and am learning how to apply concepts in an easy way. Brei Huggins - Bookkeeping student, Australia.
This sound foundation course is aimed at:
• Business owners
• Administration or accounts employees
• Anyone seeking a career as a bookkeeper
ACS Distance Education is an Accredited Training Centre by the Institute of Certified Bookkeepers. Students completing this course are eligible to join this institute which is the largest such institute in the bookkeeping industry – world-wide.
• 100 hour course offers self-paced learning
• Highly qualified tutors to support you in both Australia and the UK
• Extensive support services
• Recognised by IARC, affiliated with colleges around the world
Lesson Structure
There are 13 lessons in this course:
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Introduction – Nature, Scope and Function of Bookkeeping
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The Balance Sheet
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Analysing and Designing Accounting Systems
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Double Entry Bookkeeping
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Cash Receipts and Cash Payments Journal
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Credit Sales, Fees and Purchases Journals
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The General Journal
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The Closing of the General Ledger
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Profit and Loss Statements
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Depreciation of Non-current Assets
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Profit Determination and Balance Day Adjustments
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Cash Control: Bank Reconciliations and Petty Cash
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Cash Control: Budgeting
Each lesson culminates in an assignment which is submitted to the school, marked by the school's tutors and returned to you with any relevant suggestions, comments, and if necessary, extra reading.
Aims
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Outline the uses of financial information; accounting standards and conventions and the basic functions of bookkeeping for service businesses.
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Describe the use of balance sheets and their function.
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Outline setting procedures for a bookkeeping system; steps in its use; the flow of information and use of other business documents.
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Formulate procedures for the setting up of a double entry bookkeeping system
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Outline the functions and specific uses of ‘special journals’.
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Outline methods used to set up credit sales journal and credit purchases journals
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Outline the setting up procedures for a general journal and its use
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Describe methods used to close ledger accounts at the end of an accounting period.
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Describe profit and loss statement preparation methods.
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Outline the use of appropriate methods for the depreciation of non-current assets.
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Outline the fundamentals of cash and accrual accounting; the ‘matching process’; the necessity for balance day adjustments.
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Describe the cash cycle; the importance of cash control and its various methods including petty cash systems and bank reconciliation processes.
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Outline the role of budgets and their importance to business.
What You Will Do
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Describe the activities of service businesses.
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What is the difference between an accounting convention and a doctrine
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How is the accounting period convention important to making business decisions?
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Why might the accounting entity convention be important in business?
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What is the Doctrine of ‘Materiality’?
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Create a list of differences and a list of similarities between the goods and services tax system you investigated and Australia’s system.
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Define the term ‘Balance Sheet Equation’ .Describe what a balance sheet is made up of. Know where items appear on the balance sheet. Describe 3 balance sheet formats.
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Describe the meaning and importance of separating current assets from fixed current assets and current liabilities from long-term/deferred liabilities on the balance sheet.
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Prepare a balance sheet.
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Show the equations used for determining a business’s working capital.
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Explain what the difference between a ledger and a journal.
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Describe source documents.
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Describe a chart of accounts and its use; draw up a chart of accounts.
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List the journals used in an accounting system.
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Describe a Statement of Account and outline its use.
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Define double entry accounting.
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Describe a ledger account and the difference between balancing a ledger account and footing a ledger account.
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Define a trial balance; prepare a trial balance.
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Compare three-column ledger accounts with T-form ledger accounts; enter transactions into a ledger account; balance a ledger account.
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Describe the use of a drawing account, and how drawings are classified in the balance sheet
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Describe the functions of an analysis chart include an example using transactions to show A, L and OE.
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Prepare a T form Balance Sheet.
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Describe a Cash Receipts and Cash Payments journal their uses and their source documents.
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Differentiate between a general ledger and a special journal.
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Outline the benefits of a multi-column cash journal and a simple format cash journal.
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Design a cash payments journal and a cash receipts journal. Describe the functions of posting references and sundry columns. Post items to a cash receipts and cash payments journal.
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Explain the difference between a ‘discount allowed’ and a ‘discount received’
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Describe the difference between a credit sale and a credit purchase and state the source documents. Prepare a credit fees/sales and a credit purchases journal and do a range of appropriate postings.
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Describe the role and usefulness of a Subsidiary Ledger.
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Outline the role and usefulness of a ‘Debtors Control’ account.
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Show the double entry of goods bought on credit.
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Describe a Control Account
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Describe the aim of a general journal and its key sections. Change a general journal to accommodate subsidiary ledger. Correct errors in a general ledger account.
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Explain the term bad debt. Use the general journal to record a bad debt. Understand ‘cents in the dollar’ offer in relation to a bad debt. Write off bad debts. Prepare a general journal. Record entries to a general journal. Know how the general journal is used in preparing closing entries. Set up a general journal. Close off a general journal.
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Explain the term and use of ‘Contra Entries’
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Record non-current assets in a purchases journal
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Know the difference between closing and balancing a general ledger account.
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Identify which ledgers are closed off at the end of the accounting period.
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Describe a profit and loss account and how to work out a net profit or a net loss. Know which account does the net profit or loss is transferred to.
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Describe a profit and loss statement and how it relates to the balance sheet.
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Know why functional classification and segmentation used on profit and loss reports
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Describe extraordinary expenses and how they are listed on the profit and loss statement and why.
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Describe ‘Materials on Hand’ calculate materials on hand. State how they are reported on the profit and loss statement. Prepare a profit and loss statement.
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Describe the difference between cash accounting and accrual accounting.
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Describe Balance Day Adjustments and their importance to bookkeeping.
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Describe pre-paid expenses and outline the difference between the asset and expense approaches to the recording of prepaid expenses.
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Describe the importance of reversing entries and when they are done.
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Know a range of common balance day adjustments.
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Prepare a Trail Balance for a business that carries stock and has balance day adjustments. Create general journal for adjusting entries; Post the entries to the relevant general ledger accounts. Close off the accounts to profit and loss. Prepare a new trial balance; Prepare the profit and loss statement; Prepare the balance sheet.
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Enter reversing entries for the new accounting period.
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Outline the usefulness of a 10 column worksheet.
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Make entries into a cash book and present a reconciliation statement.
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Draw up and use a petty cash book.
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Describe bank reconciliation statements and their use.
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Describe methods of cash control; describe liquidity and its link to cash flow.
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Describe accounts receivable turnover ratio; operating cash flows ratio; Inventory turnover ratio.
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Outline the importance of budgets to a business; describe a range of budgets.
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Describe the term ‘safety margin’.
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Describe the term ‘cash budget’ and outline how debtors and creditors are included.
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Describe a range of variances in a budget.
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Describe the importance of budget reviews.
Bookkeeping provides a framework for the collection, preparation and recording of financial data from which information can be drawn, so that informed decisions can be made, implemented and evaluated.
The bookkeeping system can be tailored to the needs of any individual, non-profit organisation, small or large business. This course will concentrate on the needs of small business. A business is an economic entity created for the purpose of increasing the wealth of its owner or owners by generating profits from the provision of goods and/or services. A small business is one where all major decisions are the responsibility of one, two or a few people who are usually the owners.
Financial transactions are often referred to as ‘economic events’ where there has been an exchange of something of value between two or more entities. For example, a common business transaction could be the sale of a good or service by a business to an individual in exchange for cash.
A business can help control its financial future through its bookkeeping system. Information relating to financial transactions can be used to prepare budgets and set future financial goals. Businesses need this information to help answer a number of questions, such as:
• Will the business have enough cash to pay its bills?
• How much are the assets of the business worth?
• Can the business afford to borrow money?
• Is the business financial enough to expand its operation?
• Should the selling price be changed?
What is the Difference Between an Accountant and a Bookkeeper?
The difference between an accountant and a bookkeeper may differ from place to place around the world, depending upon the context in which the terminology is used. It is interesting to reflect upon differences in different definitions outlined below:
Definitions from the Collins Australian Dictionary:
‘Accountant’ - a person concerned with maintenance and auditing of business accounts.
‘Bookkeeping’ - the skill or occupation of systematically recording business transactions.
Definitions from the Oxford dictionary:
‘Accountant’ person whose job is to keep or inspect financial accounts.
‘Bookkeeping’ the activity or occupation of keeping records of the financial affairs of a business:
Definitions from the Cambridge Dictionary:
‘Accountant’ - someone who keeps or examines the records of money received, paid and owed by a company or person.
‘Bookkeeping’ - the job or activity of keeping an exact record of the money that has been spent or received by a business or other organization.
Definitions from Meriam Webster Dictionary:
‘Accountant’ - one that gives an account or is accountable
Or
One who is skilled in the practice of accounting or who is in charge of public or private accounts.
‘Bookkeeper’ - a person who records the accounts or transactions of a business.
THE HISTORY OF BOOKEEPING
Bookkeeping is a skill that probably started over 2,000 years before the advent of Christianity, possibly when payments for trading were still through bartering rather than the use of money. Some experts suggest bookkeeping started in the Middle East as early as 8000BC using stone counters.
In medieval times, ledgers were kept as a written record that could be used as proof of a transaction, should a dispute arise. However these were simple records, often more like a diary than what we might use as a modern set of accounts.
Until the renaissance (a period between the 14th and 17th centuries), bookkeeping was a single entry system.
An example of a single entry system would be that of a sales person who writes down what they sell, every time they sell it. The bookkeeping record may be a simple list of things sold with the value of each item sold and the total value added up at the end of the list.
The concept of double entry bookkeeping appears to have been conceived in the late 15th century.
There were two main characters that appear to have been involved:
• Benedetto Cotrugli wrote a manuscript in the mid15th century which included a short chapter on the advantages of double entry accounting. This manuscript was not published until the mid16th century.
• Friar Luca Bartolomes Pacioli, a friend of Leonardo De Vinci, believed that disciplines (including accounting and mathematics), exhibited principles of harmony and balance; and were interrelated. Pacioli was aware of Cotrugli's work and credited him with conceiving double entry bookkeeping.
A double entry system recognises that when a transaction is made, there is a "value" being taken from one place, and a value being put into another place. A transaction is recognised as involving "two actions" and not one; and the fact that those two actions must balance. This is the revelation made by Cotrugli and Pacoli.
Many experts consider Pacoli to be the father of modern bookkeeping; though Pacoli gave a great deal of credit to Cotrugli.
As businesses and economies became larger and more complex over the following centuries, accounting also developed greater complexity. The need developed for financial documentation that could assist with managing organisations and businesses. Accounting professionals were called upon to produce financial statements, balance sheets, profit and loss statements and other such documentation. There was a natural evolution driven by an increasingly more complex world which has led to an increasingly more complex system of financial records.
