Accounting Study Material

Teacher Guide
Cambridge IGCSE® and O Level

Accounting and Principles of Accounts
0452 and 7110
Cambridge Secondary 2
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© Cambridge International Examinations 2014

Contents
Introduction ....................................................................................................................... 2
The purpose of this teacher guide
Section 1: Syllabus overview of Cambridge IGCSE Accounting ........................................... 3

Cambridge IGCSE Accounting
1.1 Aims
1.2 Assessment objectives
1.3 Relationship between assessment objectives and syllabus topics
1.4 Assessment structure
1.5 Relationship between assessment objectives and components
Section 2: Syllabus overview of Cambridge O Level Principles of Accounts ....................... 5

2.1 Aims
2.3 Relationship between assessment objectives and syllabus topics
Section 3: Planning the course ............................................................................................ 7

3.1 Key factors
3.2 Long-term planning
3.3 Medium-term planning (scheme of work)
3.4 Planning lessons
Section 4: Assessment ...................................................................................................... 11

4.1 Types of assessment
4.2 The purpose and function of assessment
4.3 Techniques for formative assessment
4.4 Techniques for summative assessment
4.5 Feedback
Section 5: Preparing learners for the final assessment ...................................................... 15

5.1 Revision tips for learners
5.2 Key words in the examinations
5.3 Using best practice to avoid common errors in the exam room
5.4 Use of past papers, mark schemes, examiner reports and example candidate responses
Section 6: Teacher support ................................................................................................ 20

6.1 Teacher support – key features
6.2 Endorsed textbooks
6.3 Training
Appendices ...................................................................................................................... 22
Appendix 1: Sample IGCSE long-term plan
Appendix 2: Sample O Level long-term plan
Appendix 3: Long-term plan template
Appendix 4: Sample IGCSE scheme of work
Appendix 5: Sample O Level scheme of work
Appendix 6: Sample scheme of work (medium-term plan) template
Appendix 7: Sample lesson plan (A)
Appendix 8: Sample lesson plan (B)
Appendix 9: Lesson plan template
Introduction
Introduction
The purpose of this teacher guide

This teacher guide is designed to introduce you to the syllabus and support materials available from
Cambridge and to help you organise and plan your teaching. It also offers advice and guidance on delivery,
classroom practice and preparing your learners for the external examination.
When planning a course, you need to be familiar with the curriculum content, the assessment structure and
the support materials available.
The syllabus covers the overall aims, assessment objectives, descriptions of the examination components
and grade descriptions for the subject.
The sample scheme of work and lesson plans in the appendices provide examples of how we can break
down the curriculum into learning objectives. These also illustrate the planning principles outlined in
sections 2 and 3 of this guide. The secure online support for Cambridge teachers, Teacher Support,
(http://teachers.cie.org.uk) contains schemes of work which can be adapted to suit individual needs.
This site also contains a range of support materials for teachers such as past examination papers, mark
schemes, and examiner reports.
Making use of all the resources available will help you to understand:
• how the teaching relates to the assessment objectives

• how to prepare your learners for their external examination
• the standard of the assessment.
It will also save you time.
2 Cambridge IGCSE and O Level Principles of Accounts

Section 1: Syllabus overview of Cambridge IGCSE Accounting
Section 1: Syllabus overview of Cambridge IGCSE

Accounting
Cambridge IGCSE Accounting

The following section summarises the main structural aspects of the two qualifications from their respective
syllabus documents, purely for convenience within this guide. However, the syllabus documents themselves
should be referred to as the authoritative source of technical information on these qualifications. (Please
ensure that you are referring to the syllabus for the year in which the examination is to take place as small
variations may occur from year to year.)
1.1 Aims
The syllabus aims are to enable learners to develop:
• knowledge and understanding of the principles and purposes of accounting for individuals, businesses,
non-trading organisations and society as a whole
• an understanding of accounting principles, policies, techniques, procedures and terminology
• improved skills of numeracy, literacy, communication, enquiry, presentation and interpretation
• improved accuracy, orderliness and the ability to think logically
• an excellent foundation for advanced study.

Learners are assessed on three assessment objectives (AOs).
AO1 Knowledge with understanding

Learners should be able to
• demonstrate knowledge and understanding of facts, terms, principles, policies, procedures and
techniques that are in the syllabus
• demonstrate understanding of knowledge through numeracy, literacy, presentation and interpretation
• apply knowledge and information to various accounting situations and problems.
AO2 Analysis
• select data which is relevant to identified needs of business
• order, analyse and present information in an appropriate accounting form.
AO3 Evaluation
• develop an ability to interpret and evaluate accounting information and to draw reasoned conclusions.
Cambridge IGCSE and O Level Principles of Accounts 3

Section 1: Syllabus overview of Cambridge IGCSE Accounting
1.3 Relationship between assessment objectives and syllabus

topics
This assessment objective includes topics such as definitions, ledger accounts, business documents, books
of prime entry, trial balance, and control accounts.
AO2 Analysis
This assessment objective includes topics such as bank reconciliation statements, financial statements,
suspense accounts and correction of errors.
AO3 Evaluation
This assessment objective includes topics such as profit correction, calculation and interpretation of ratios,
application of principles and the impact of policies on the business.

There are two compulsory components: Paper 1 and Paper 2.
Component Description Duration Weighting
Paper 1 Unseen examination paper based on topics 1 ¾ hour 50%

from the whole of the syllabus containing
• 8–12 multiple choice items
• Some short-answer questions
• 4 or 5 structured questions
Answers are written on the question paper
Paper 2 Unseen examination paper based on topics 1 ¾ hour 50%

4 or 6 structured questions
The full range of grades (A*–G) is available.

The following table shows how the skills are weighted to give an indication of their relative importance. It is
not intended to provide a precise statement of the number of marks allocated to particular skills.
Component AO1 Knowledge AO2 Analysis AO3 Evaluation

with understanding
Paper 1 70% 20% 10%

Paper 2 45% 30% 25%
Total (approx.) 60% 25% 15%

Section 2: Syllabus overview of Cambridge O Level Principles of Accounts
Section 2: Syllabus overview of Cambridge O Level

Principles of Accounts
Again, please always refer to the syllabus document for the year in which the examination will be taken for
the most up to date information.
2.1 Aims
The syllabus aims are to enable learners to develop:
• an understanding of the role of accounting in providing an information system for monitoring progress
and decision-making
• an understanding of accounting concepts, principles, procedures and terminology
• skills in preparing and interpreting accounting information
• knowledge and understanding of the aims and activities of business and non-trading organisations, their
accounting implications and the accounting techniques and procedures appropriate to them
• skills of numeracy, literacy, communication and enquiry
• accuracy, orderliness, logical thought and an appreciation of professional ethics

Learners are assessed on three assessment objectives (AOs).

Learners should be able to:
• demonstrate knowledge and understanding of facts, terms, concepts, conventions, principles and
techniques appropriate to the syllabus
• demonstrate understanding of knowledge through numeracy, literacy, presentation and comprehension
• apply knowledge and information to various accounting situations and problems.
AO2 Analysis
• select, analyse and order information in written, numerical and diagrammatic form
• present appropriate information in an accepted accounting form.
AO3 Evaluation
• interpret and evaluate accounting information and to draw reasoned conclusions

Section 2: Syllabus overview of Cambridge O Level Principles of Accounts
2.3 Relationship between assessment objectives and syllabus

topics
This assessment objective includes topics such as definitions, ledger accounts, business documents, books
of prime entry, trial balance, and control accounts.
AO2 Analysis
This assessment objective includes topics such as bank reconciliation statements, financial statements,
suspense accounts and correction of errors.
AO3 Evaluation
This assessment objective includes topics such as profit correction, calculation and interpretation of ratios,
application of principles and impact of policies on the business.

There are two compulsory components: Paper 1 and Paper 2.
Paper 1 Unseen examination paper based on topics 1 hour 33.3%

• 30 multiple choice items
Answers are written on a pre-printed form
Paper 2 Unseen examination paper based on topics 2 hour 66.6%

• 4 or 6 structured questions one of
which involves the preparation of
financial statements
The full range of grades (A*–E) is available.

The following table shows how the skills are weighted to give an indication of their relative importance. It is
not intended to provide a precise statement of the number of marks allocated to particular skills.
Component AO1 Knowledge with AO2 Analysis AO3 Evaluation

Understanding
1 60% 40%
2 25% 55% 20%

Section 3: Planning the course
In this section we consider the kinds of issues you will need to think about in order to plan the delivery of
your course. Planning can be broken down into three levels of detail:
• long-term planning (coverage over the year)

• medium-term planning (breaking the content down into teaching units)
• short-term planning (creating lesson plans).
3.1 Key factors

Before starting on a plan for the course, it is necessary to consider:
• the number of lessons required to cover the syllabus (a total of 130 guided learning hours* is
recommended by the syllabus)
• the amount of teaching time available
• the learning outcomes for the course
• the methods of checking the learners’ understanding
• the dates of the external examination
• whether there are several teachers with classes following the same course
• the resources (such as textbooks) that are available.
* Guided learning hours include direct teaching and any other supervised or directed study time. They do not
include time spent by teachers preparing teaching materials and marking assessments. They do not include
private study time spent by the learner.
3.2 Long-term planning

It is necessary to consider:
• length of course (one year or two years)

• the number of weeks in the school year
• the number and length of lessons per week
• the number of assignments (classwork and homework) to be given
• the amount of time to be devoted to revision at the end of the course
• the composition of the classes (mixed ability or streamed)
• the dates of any internal examinations.
Where there are several teachers with classes following the course, an overall plan can be drawn up so
that all the classes follow the same scheme of work, complete the same assignments and so on. A group
of teachers working together allows for a sharing of ideas and experience which can be of benefit to every
member of the group, and, subsequently, of benefit to the learners.

If you are the only teacher of the course the plan will be an individual one, bearing in mind any school
policies about the setting of homework assignments and so on.
In either situation, it may be necessary to modify the plan in view of the actual situation. There may be
some unforeseen happenings over which you have no control. It may be that you find the plan needs to be
amended in view of the learning experience of a particular group of learners. If it is your first experience of
a scheme of work for this syllabus you can expect that the plan may have to be amended in light of actual
circumstances. Do keep a record of any changes to the plan as these will be invaluable when preparing the
plan for future courses.
The long-term plan should be regarded as a guide and not a rigid plan which has to be adhered to at all
costs.
The sample long-term plan in Appendix 1 is based on a course of 130 guided learning hours. It should be
regarded as an example only; it is not intended to be an “official” scheme of work.
When preparing a long-term plan it is necessary to consider the textbook being used. For example some
textbooks cover depreciation before accrued and prepaid income and expenses, so this may influence the
order in which the topics are taught.
The syllabus content is arranged according to topics: it is not intended to be a recommended teaching
order. For example, accounting principles are listed towards the end of the syllabus content, but these can
be taught at any appropriate point; the principle of accruals (matching) can be introduced when teaching
accrued and prepaid income and expenses.
3.3 Medium-term planning (scheme of work)

The next stage of planning is to break down the long-term plan into smaller sections. A medium-term plan
can vary in length: it can be a plan for a school term, or can be a plan for a few teaching weeks.
A medium-term plan allows you to consider the long-term plan in more detail and to decide how and when
key skills can be developed most effectively. You need to consider how each topic is going to be linked to
the following topic and how the necessary knowledge and understanding are going to be imparted. For
example, how are you going to link the preparation of financial statements to the previous topic of double
entry?
Medium-term planning allows you to break down the long-term plan into learning outcomes, teaching
activities and learning resources for each of the topics.
You can find suggested schemes of work on Teacher Support, http://teachers.cie.org.uk Two extracts from
the IGCSE scheme of work are shown in Appendix 4 and two extracts from the O Level scheme of work
are shown in Appendix 5. A template which can be used for a medium-term plan (scheme of work) is also
provided in Appendix 6.
Short-term planning – the creation of actual lesson plans – follows on from medium-term planning. It is then
when the actual details of the specific lesson activities takes place.
3.4 Planning lessons

In this section we take a closer look at the process of creating lesson plans. You can find a suggested lesson
plan template in Appendix 9.

3.4.1 Key ingredients

Lesson plans help you to focus on a number of areas:
• linking the assessment objectives to the specific syllabus content

• pinpointing opportunities for active learning
• establishing the timing of the activities to be completed within the lesson
• ensuring that formative and summative assessments take place at appropriate times
• considering general classroom management
• incorporating examples from local businesses.
Lesson plans
How each lesson is actually delivered depends not only on your own personality and experience, but also
on the particular topic. Some topics are necessarily based on teacher-led learning whilst other topics can be
based on learning through activities.
It is important to get the learners actively involved in the learning process as much as possible. Learners
often like lessons to follow a routine, but we should try to vary the pace of teaching and the activities within
the lesson. Learners will soon get to know you and your style of teaching and recognise the change of pace
and the different activities.
Two sample lesson plans are provided in appendices 7 and 8. A lesson plan template is provided in
Appendix 9.
It is useful to plan lessons for say a six-week period. This will allow you to check that the sequence is logical
and that the appropriate learning will be covered in the time allocated in the medium and long-term plans.
Every lesson cannot possibly be a ‘perfect’ lesson. You do not have the time to plan every lesson you teach
each week down to the last detail. However, it is important to prepare some detailed lesson plans especially
when a new topic is introduced.
Once you have developed a ‘bank’ of lesson plans these can form the basis of the lessons for the following
year and they can also be adapted for use on other syllabuses.
Teaching Aims
Teaching aims are the general aims you set for yourself to achieve during the lesson.
Lesson Objectives
Lesson objectives are what you are aiming for the learners to be able to do at the end of the lesson. You
may wish to share the lesson objectives with the learners by writing them on the board at the start of the
lesson. You might also ask them at the end of the lesson whether they think the objectives have been
achieved.
The syllabus assessment objectives
These are based on a combination of the assessment objectives and the curriculum content from the
syllabus.

The aims and objectives are clearly connected. They are designed to set targets for you and the learners and
to link these to the syllabus.
Other categories in the lesson plan are self-explanatory.
3.4.2 Evaluation of learning

A lesson plan should ideally include a section to be completed after the lesson which allows you to reflect
on the lesson and evaluate the learning.
As soon as possible after the lesson, take a little time to reflect on it. What aspects of the lesson worked
well? Which aspects of the lesson did not work as well as you would have liked? What would you do
differently next time?
Making brief notes on these and similar points will assist you when you are next preparing a lesson on that
particular topic.
Other ways of evaluating the effectiveness of a lesson are by peer evaluation (a colleague sitting and
observing the lesson) and by team-teaching (several classes are combined for a particular topic with the
class teachers leading the group for different aspects of the topic).

Section 4: Assessment
4.1 Types of assessment

Assessment can be divided into two – formative assessment and summative assessment.
4.1.1 Formative assessment

This can be regarded as assessment for learning, as it is a means of assessing the skills the learners have
acquired. Such assessment can take place at any time during the course and is a way of checking whether
the learners have achieved the learning objectives of a particular lesson or topic. It can consist of a question
and answer session in class or homework/classwork assignments.
4.1.2 Summative assessment

This can be regarded as assessment of learning as it is an assessment of what learners have achieved by
the end of the course or the end of the academic year. The external examination at the end of the course is
the summative assessment. Similar summative assessment in the form of an internal examination may take
place at the end of the academic year. This type of assessment is long-term.
4.2 The purpose and function of assessment

Type of Purpose Diagnostic function
assessment
Formative To establish whether learners have To identify why learners do not

met the learning objectives or are understand (or have difficulty
on track to do so. with) some topic or idea and
to use this information to take
appropriate action to correct
mistakes or misconceptions.
Summative To ‘sum up’ what learners have To establish what general level of
achieved. (These are long-term.) ability the learner has attained in
terms of understanding, selecting
and applying the knowledge and
skills they have been taught.
This kind of assessment is used

as a means of reporting to other
establishments and to parents on
the actual attainments of learners.

4.3 Techniques for formative assessment

Assessment can take many varied forms and it is important to try to make use of as many as possible. The
assessment does not have to be a formal written piece of work which is marked by the teacher and the
mark recorded. A number of ways of carrying out formative assessment are given below.
4.3.1 Question and answer techniques

No formal record is maintained of individual achievement in the following methods of assessment. They are
still valuable tools in the learning process and are a means of involving learners in their own learning.
Try to involve the class as a whole – not just the more able learners.
This can initially be a short series of questions to re-cap on the previous lesson.
During the lesson a series of simple questions can be asked e.g. “Which side of the cash book should this
be entered?”
This can then be developed into making learners reason things out for themselves. For example, having
shown a contra entry of cash to bank, ask learners to suggest an entry for bank to cash or having entered a
cheque from a debtor ask the learners to suggest an entry for a dishonoured cheque.
It is not necessary to wait until ratio analysis is taught before a little interpretation is introduced. For
example, having prepared a cash book resulting in a bank overdraft, learners can be asked to suggest how
this could have been avoided and could be remedied: having prepared a statement of financial position
showing a lack of net current assets, learners can be asked to discuss the significance of this and suggest
ways to improve the position.
The lesson can close with a short series of questions covering the main points of the lesson.
Group work
Group work can be a useful tool in the learning process. Groups preferably should be of mixed ability and
vary each time group work is undertaken.
A practical group activity could be to provide each group with a set of business documents (invoices, credit
notes, cheque counterfoils, paying-in counterfoils etc) and asked to record this information in a trader’s
accounting records.
A discussion group activity could be to ask each group to make a list of advantages and disadvantages of
partnerships (before the topic is taught formally) and then appoint a spokesperson to report back to the rest
of the class. A list could be compiled on the board as each group adds a new point.
Once ratio analysis has been taught, groups could be provided with trading results from two traders and
asked to provide a report comparing the two sets of results.
Incorporating ICT
If there is access to computers, a short period at the end of a lesson can be used to try out various quizzes
and short-answer tests which are available. Googling “games in accounting” will provide a list of some of
the materials available. It is always recommended that you try these for yourself to ensure that they are
suitable for learners at a particular stage of learning.

4.3.2 Formal assessment by means of assignments

Another useful method of formative assessment is the setting of assignments. These can be completed
either in the classroom or at home and consist of individual pieces of work which can be marked (and a
record kept).
Such assignments can range from 10 short-answer questions to be completed in the classroom in a set
period of time, an exercise from the textbook, or an examination question to be completed in the classroom
or at home.
These can be given at the end of a particular topic and can be used to assess whether learners have
understood and achieved the learning objectives of that particular topic.
Ideally an assignment should be constructed so that there are sections which test learners of all abilities.
Where possible, questions should be graded, starting with relatively easy items and progressing to more
difficult ones.
It is preferable to set tasks which are independent of each other. Constant carrying forward of learners’ own
figures means that marking is more difficult and more time-consuming. More importantly, a learner who
fails to complete the first task may be unable to attempt subsequent tasks.
The assessments can be marked in various ways. Short answer assessments can be structured so that the
learners can mark their own work or exchange books and mark the work of another learner.
It is more appropriate for a longer structured assessment to be marked by the teacher.
Schools have a formal homework timetable so it may be necessary to set the homework assignments
according to this pre-determined schedule.
4.4 Techniques for summative assessment

The final summative assessment is the externally set and marked examination. The school may have a
policy of setting internal examinations at the end of the academic year or at the end of term. These internal
examinations should be based on the format of the external examinations taking into account the amount of
the syllabus covered at that point.
4.5 Feedback
Whatever form the assessment takes, it should provide valuable feedback for both the learners and the
teacher.
By observing the learners in a general question and answer session or in group work the teacher is able
to see how groups or individuals are making progress. The participation of individual learners can also be
observed.
It is essential that learners receive feedback as this will show them which topics or aspects of a topic they
need to spend more time on in order to improve their skills.
Where the assessment is marked in class, you can provide explanations when going through the answers.
Where you have marked the assessment individually, it is important that you put corrections and comments
on each individual piece of work. Learners can then see not only where they have gone wrong, but also how
the answer could have been prepared.

The results of the assessment should also be used as feedback by the teacher. It can show which topics
need to be revised by the individual learner and which topics could be more profitably revised with the
whole class. This enables you to plan for feedback in the next lesson. It also allows you to consider
whether the assessment contributed to the learning process. If necessary you can make adjustments and
improvements before filing it away for use in the following year.

Section 5: Preparing learners for the final assessment
5.1 Revision tips for learners

The following section aims to offer some general guidance which may be useful to learners who are
preparing to sit the IGCSE Accounting or O Level Principles of Accounts examinations.
Before the examination

• Make sure you have covered all the topics on the syllabus in your revision. Check this with your teacher
if you are unsure.
• Study the past examination papers to get an idea of the sort of questions and the styles of paper that
are set.
• Work through as many examples and past examination papers as possible.
• Practise answering narrative questions as well as practical questions.
On the day of the examination
• Make sure you know exactly where the examination is taking place.
• Allow plenty of time to get to the venue.
• Remember to take a few pens, pencil, ruler and calculator.
In the examination
• Read each question very carefully so that you really do understand what is being asked.
• Take particular note of the command word in each question e.g. state, explain etc.
• Look at the number of lines provided: if only one or two lines are provided a short answer if obviously
expected. But remember that you do not necessarily have to use all the lines which are provided.
• You do not have to attempt the questions in the order in which they appear so you could start with the
question which you feel most confident about.
• Allocate the time according to the marks per question e.g. a 20 mark question on a paper with a total of
120 marks should take about 1/6 of the time.
• Try not to over-run on the time per question: you can always re-visit the question after you have
attempted the others.
• It is far better to attempt all the required questions and only partly complete them than to do one or two
questions perfectly.
• If there is an item within a question that you are not familiar with, do not abandon that question just omit
that item and continue. That way you can still earn some of the available marks.
• Do not be tempted to omit the narrative questions as this can seriously reduce your possible grade.
• Do not do more than is required. For example, if two reasons are required, do not provide four. You will
not lose marks but you will lose time. In such a situation the examiner will usually take the first two
answers: the examiner will not select the correct answers from your list.
• Do show calculations where appropriate. This may mean that you gain some of the available marks even
if the final answer is incorrect.

• If you wish to re-attempt an answer do not cross out the original until you have completed the new
version. If the second attempt is on another page remember to put a note indicating where the answer
may be found.
• If you finish the examination early, check your work thoroughly.
5.2 Key words in the examinations

In the examination papers you will find various key words (sometimes referred to as command words)
are used in the questions. These words direct learners on how to answer the question. Learners should
be familiar with instructions such as ‘prepare’, ‘write up’, ‘explain’ and so on. It is important to be able to
distinguish between commands such as ‘state’ and ‘state and explain’ as these indicate the depth of the
answer which is required. The number of lines provided for learners’ answers may also be a useful indicator
of the length of the answer required for narrative questions.
The main key (command) words in accounting examinations are:
Advise Write down a suggested course of action in a given situation. This is often
linked with ‘Suggest’.
Calculate Work out; often no format specified.
Comment Make relevant statements; usually on given figures or results of calculations.
Compare Write down the differences between two accounting statements of two
businesses or two methods of recording something etc.
Complete Fill in; often used in relation to tables, sentences or ‘boxes’.
Define Write down an explanation of the meaning of an accounting term.
Discuss Write down a reasoned explanation of the causes/effects of a course of action

or the difference between two sets of figures or between two accounting
statements etc. This is often linked with ‘Comment’.
Draw up Present something in statement or account format etc. This is sometimes

used in place of ‘Prepare’.
Enter Record given information in specified accounts, books or ledgers. This is

sometimes used in place of ‘Make entries’.
Explain Give a written account of what something means or why it is done or what the
outcome is.
Give Write down. This is sometimes used in place of ‘State’.
List Write down information in a number of points. Usually no further explanation is

required.
Make entries Record information in specified accounts. This is sometimes used in place of
‘Enter’.
Name Write down the name of.................
Outline Give a brief written account of something. This is often linked to ‘State’.

Prepare Present some accounting information in a suitable format. This is sometimes

used in place of ‘Draw up’.
Record Make the necessary entries in a set of accounting records. This may be used in
place of ‘Enter’ or ‘Write up’.
Select Choose relevant information from that given. This is often linked to a further
instruction.
Show Write down your calculations or write down how an item will appear in an
accounting statement.
State Write down. This is often used instead of ‘Give’ and when a written explanation
of something is required.
State and explain Usually requires a little more detail than just ‘State’ and often an explanation of
why/how.
Suggest Offer an explanation of why something has occurred or how a situation can be
improved or what methods are available to deal with a situation etc. It requires
knowledge to be related to a given situation.
Using Referring back to some previous information.
Write up Present accounting information in a suitable format. May be used in place of

‘Prepare’.
5.3 Using best practice to avoid common errors in the exam room
There are various ways in which learners may fall short of their full potential in an examination. Many of
these are simple and could easily be avoided by building the necessary skills and awareness into the general
teaching approach.
Below are a few examples of these to watch out for.
Careless errors
For example:
• the transposition of figures e.g. $4550 written as $5450

• the use of inappropriate symbols e.g. $40 instead of 40%
• adding a figure when it should be deducted and vice versa e.g. adding sales returns to the sales
• failing to label figures where appropriate e.g. cost of production not labelled in a manufacturing account.
Lack of attention to detail
Small but important errors can easily be avoided if learners become accustomed to paying close attention
to detail throughout the course (such as in the preparation of accounting statements). If this can be made a
habit then it is less likely to be an issue for learners in the actual examination.
For example:
• the omission of dates in ledger accounts and books of prime entry

• using inappropriate abbreviations e.g. ‘B’ or ‘BBD’ for ‘Balance’

• providing an incomplete answer e.g. putting ‘35’ for the collection period for trade receivables instead of
‘35 days’
• not presenting accounting statements correctly e.g. failing to display a statement of financial position
correctly with the assets and liabilities sub-divided with suitable section headings and sub-totals.
Giving ambiguous answers
Learners should be made aware that their answers need to be positive and clear as should be the case in all
their working. Where answers are ambiguous, they will not be credited.
For example:
• in theory questions where two items are required giving a list of items (some correct and some
incorrect)
• giving several words in the details column of a ledger account rather than just the name of the account
where the double entry appears e.g. ‘goods/sales/purchases’ instead of ‘sales’
• entering the same item on both sides of a ledger account
• entering the same item twice within a set of financial statements e.g. recording a partner’s salary in the
income statement as well as the appropriation account.
Failing to show calculations
Again, it is best practice to encourage learners to show their calculations as a matter of habit throughout the
course, so that in the examination they are able to access all the marks they can. Even when calculations
are not specifically asked for, learners are advised to show them. Where the final answer is incorrect, say
for the calculation of a ratio, it is important to point out that some marks may be earned for that part of the
workings which is correct. Examinations are marked positively, rewarding what is there, and candidates can
increase their chances generally by bearing this in mind.
Repetition
Learners should avoid making the same point twice. For example, in theory questions when the learner is
asked to list a number of points such as how to reduce the risk of bad debts they might say both “sell more
goods on a cash basis rather than on credit” and “reduce credit sales and increase cash sales”. These are
really the same thing and will count as only one point.
Not answering the question being asked
Throughout the course, learners should build skills in identifying and focusing on the issue in any given
question. They may make a factually correct statement in response to a theory question, but it must address
the question being asked.
Answers need to be focused and incisive and learners should avoid simply stating the obvious. For example,
the statement “the receipts and payments account shows receipts and payments”. Understanding what is
being asked is the key to avoiding such errors but this skill does require practice and should form part of the
general teaching environment in the classroom.

5.4 Use of past papers, mark schemes, examiner reports and

example candidate responses
It is important that learners are familiar with the format of examination papers so that the actual style and
presentation of the examination paper they are sitting does not come as a surprise. Learners should have
the opportunity to work through as many past examination papers as possible. The published mark schemes
should be applied to these examination questions. This enables both learners and teachers to understand
what is required to meet the criteria.
An examiner report is published for each examination paper, containing information about how learners
performed. These provide teachers with helpful commentary on all the questions on the paper, including
highlighting common errors and misunderstandings.
A booklet of example candidate responses (standards booklet) is also provided by Cambridge. This contains
actual extracts from learners’ answers to examination questions with comments from the examiner on the
quality of the answers.

Section 6: Teacher support
6.1 Teacher support – key features

Teacher Support provides access to:
• specimen examination papers, past examination papers and mark schemes, and example candidates
responses
• a suggested scheme of work
• a resource list
• a list of training events and conferences
• a community area where teachers can share and exchange information about the syllabus, share
teaching materials, exchange ideas about teaching strategies, and ask for help and suggestions from
other members of the community.
You can access Teacher Support at http://teachers.cie.org.uk
In addition to Teacher Support, you can also visit Ask CIE. This contains a bank of answers to frequently
asked questions from Cambridge principals, teachers, learners, parents, examination officers and other
customers. If you decide you would rather call or email, you may do so by visiting the Contact Us page.
You can access Ask CIE at http://ask.cie.org.uk
6.2 Endorsed textbooks

Endorsed textbooks are available in our resource list. Cambridge endorsement of a title means that it has
been written to closely follow the qualification it relates to, and is therefore suitable to be used as teaching
material for that specific syllabus. We also provide a list of other titles which may be useful as reference
resources when teaching or studying the subject but which have not been written specifically for that
syllabus. At the time of publication of this guide there are two main, endorsed textbooks.
Cambridge IGCSE Accounting, Coucom C, Cambridge University Press, India, 2012
Cambridge IGCSE Accounting Workbook, Coucom C, Cambridge University Press, India, 2012
Cambridge O Level Principles of Accounts, Coucom C, Cambridge University Press, India, 2012
Cambridge O Level Principles of Accounts Workbook, Coucom C, Cambridge University Press, India, 2012
6.3 Training
6.3.1 Online training
Online training is occasionally available to Cambridge schools, usually on a rolling schedule. The Cambridge
website www.cie.org.uk will provide a list of the dates on which courses are running together with
registration details.
Online tutor-led courses are led by a Cambridge expert. They focus on classroom practice. These
consist of a three-unit programme over six weeks in which participants can interact and share
resources with teachers from other Cambridge schools.
Online seminars are led by a Cambridge expert. They run for a short period only and focus on
specific issues such as syllabus changes or the recent examination session.

6.3.2 Face to face training

We run an extensive programme of short professional development courses for teachers at Cambridge
schools. These are held in many different countries throughout the world. Many of the workshops are run by
Cambridge trainers and some are run by highly experienced local teachers. These courses offer teachers the
chance to update their knowledge, learn new skills and network with other teachers.
You can see when courses are being held and find registration details on the Cambridge website
www.cie.org.uk
6.3.3 Professional development for teachers

We also offer professional qualifications for teachers who want to develop their thinking and practice. For
example, we offer the Cambridge International Certificate for Teachers and Trainers and the Cambridge
International Diploma for Teachers and Trainers.
You can find more details at www.cie.org.uk/qualifications/teacher

Appendices
Appendices

Appendix 4: Sample IGCSE scheme of work (Unit 7: Analysis and interpretation)
Sample IGCSE scheme of work (Unit 8: Accounting principles and policy)
Appendix 5: Sample O Level scheme of work (Unit 5: Financial statements – Sole trader)
Sample O Level scheme of work (Unit 8: Clubs and societies and incomplete records)
Appendix 7: Sample lesson Plan (A)


This plan is based on a two year course with three terms with the external examination being taken at the
end of the second year. It is based on the school year being divided into two terms of 11 weeks and one
term of 10 weeks.
Year 1
Term 1
Week Topic
1 Introduction to course and terminology

Introduction to elementary statements of financial positions
2 Introduction to double entry
3 {Double entry
4 {
5 {Double entry and trial balances

6 {
7 {Division of ledger
8 {2 and 3 column cash books
9 {
10 {Business documents
11 {
Term 2
Week Topic
12 {Books of prime entry (purchases, sales and returns)

13 {Posting to ledger
14 {
15 Petty cash books
16 {Income statements and statements of financial position

17 {
18 {
19 {
20 {Other receivables and other payables – ledger and financial

21 {statements
22 {

Term 3
Week Topic
23 {Depreciation and disposals of non-current assets – ledger and

24 {financial statements
25 {
26 {Bad debts, bad debts recovered and provisions for doubtful debts –
27 {ledger and financial statements
28 {
29 {Bank reconciliation
30 {
31 Revision
32 Internal examination
Year 2
Term 1
Week Topic
1 {Revision of Year 1 topics (to include more advanced exercises)

2 {
3 {
4 {Journal entries, correction of error, suspense accounts, profit

5 {correction
6 {
7 Control accounts
8 {Incomplete records
9 {
10 {
11 {

Term 2
Week Topic
12 {Accounting principles, accounting policies, capital and revenue

13 {expenditure and receipts, inventory valuation
14 {Clubs and societies

15 {
16 {
17 {Partnerships
18 {
19 {
20 {
21 {Manufacturing accounts
22 {
Term 3
Week Topic
23 (Limited companies
24 {
25 {
26 {
27 {Accounting ratios – calculation and interpretation, inter-firm

28 {comparison, interested parties, limitations of accounting statements
29 {
30 {Revision
31 {
32 {
Plans can easily be modified to suit unexpected events. Small “stand alone” topics such as petty cash
books, bank reconciliation and accounting principles can be moved into more convenient slots if required.
This can be useful if the original plan shows that you would be starting a new topic, which requires more
than one week, just before the end of a term.


This plan is based on a two year course with three terms with the external examination being taken at the
end of the second year. It is based on the school year being divided into two terms of 11 weeks and one
term of 10 weeks.
Year 1
Term 1
Week Topic
1 Introduction to course and terminology

Introduction to elementary statements of financial positions
2 Introduction to double entry
3 {Double entry
4 {
5 {Double entry and trial balances

6 {
7 {Division of ledger
8 {2 and 3 column cash books
9 {
10 {Bank reconciliation
11 {
Term 2
Week Topic
12 Business documents
13 {Books of prime entry (purchases, sales and returns)

14 {Posting to ledger
15 {
16 {Income statements and statements of financial position

17 {
18 {
19 {
20 {Other receivables and other payables – ledger and financial

21 {statements
22 {

Term 3
Week Topic
23 {Depreciation and disposals of non-current assets – ledger and financial

24 statements
25 {
26 {Bad debts, bad debts recovered and provisions for doubtful debts –
27 {ledger and financial statements
28 {
29 {Accounting principles, accounting policies, professional ethics, capital

30 {and revenue expenditure and receipts
31 Revision
32 Internal examination
Year 2
Term 1
Week Topic
1 {Revision of Year 1 topics (to include more advanced exercises)

2 {
3 {
4 {Journal entries, correction of error, suspense accounts, profit

5 {correction
6 {
7 Control accounts
8 {Incomplete records
9 {
10 {
11 {

Term 2
Week Topic
12 {Clubs and societies

13 {
14 {
15 {Partnerships
16 {
17 {
18 {
19 {Limited companies
20 {
21 {
22 {
Term 3
Week Topic
23 (Manufacturing accounts
24 {
25 {Accounting ratios – calculation and interpretation, inter-firm

26 {comparison, interested parties, limitations of accounting statements
27 {
28 {Revision
29 {
30 {
31 {
Plans can easily be modified to suit unexpected events. Small “stand alone” topics such as bank
reconciliation, accounting principles and payroll accounting can be moved into more convenient slots if
required. This can be useful if the original plan shows that you would be starting a new topic, which requires
more than one week, just before the end of a term.

Year 1
Term 1
Week Topic
10
11
Term 2
Week Topic
12
13
14
15
16
17
18
19
20
21
22

Term 3
Week Topic
23
24
25
26
27
28
29
30
31
32
Year 2
Term 1
Week Topic
10
11

Term 2
Week Topic
12
13
14
15
16
17
18
19
20
21
22
Term 3
Week Topic
23
24
25
26
27
28
29
30
31
32

32

Cambridge IGCSE and O Level Principles of Accounts

Cambridge IGCSE Accounting (0452)
Unit no 7: Analysis and interpretation
Recommended prior knowledge
A synoptic unit where students will be refining/improving their understanding of financial statements.
Context
Having prepared financial statements i.e. the income statement and the balance sheet the ability to interpret financial information is an important
aspect. This involves a detailed review of the information produced in order to assess the business’s performance with a previous year, to compare
against budget and with other businesses.
Outline
A further look at accounting ratios, their usefulness and limitations in decision making.
Learning outcomes Suggested teaching activities Learning resources
7.1 Summary of commonly used Textbooks

ratios Cambridge IGCSE Accounting, CUP
2012, Catherine Coucom, Chapter 22
Cambridge IGCSE Accounting Workbook,
CUP 2012, Catherine Coucom,
Questions 117–123
Frank Wood’s Book-keeping and
Accounts – Sheila Robinson & Frank
Wood Chapter 39
Frank Wood’s Business Accounting 1
Frank Wood and Alan Sangster
Chapter 47
Online
www.bized.co.uk/learn/business/
accounting/busaccounts/pizza/pr.htm
Candidates should be able to Visually and verbally demonstrate the Past examination question:
compute and explain the following following ratios: http://teachers.cie.org.uk/login/
ratios: • percentage of gross profit to sales = login_form?came_from=http%3A//
• percentage of gross profit gross profit/sales × 100 teachers.cie.org.uk/index_html
to sales percentage of net • percentage of net profit to sales = net P2 May 2009 Q1 (h)
profit to sales return on capital profit/sales × 100 P2 May 2009 Q3 (d)
employed (ROCE) • return on capital employed (ROCE) = net P2 May 2009 Q5 (c), (d)
• current ratio profit/capital × 100 P3 May 2009 Q5 (c), (e)
• quick ratio • current ratio = current assets/current P2 Oct 2009 Q3 (a)
• rate of inventory turnover liabilities P3 Oct 2009 Q3 (b), (c)
• collection period for trade • quick ratio = (current assets – inventory)/ P3 May 2008 Q1 (e), (f)
receivables current liabilities P3 May 2008 Q2 (c),(d),(e) (f)
• payment period for trade • rate of inventory turnover = cost of sales P2 Oct 2008 Q1 (h)
payables /average inventory P2 Oct 2008 Q4 (a)
or = average P3 Oct 2008 Q1 (d), (e), (f), (g)
inventory/cost of sales × 365 P3 May 2008 Q4 (e), (f)
• collection period for trade receivables =

trade receivables/credit sales × 365
• payment period for trade payables =
trade payables/credit purchases × 365
Students could prepare a presentation for

their class on how an organisation can
improve profitability and working capital.
Allow students to select their favourite club

or shop.
33
34

7.2 Interpretation of accounting

ratios
Candidates should be able to: Class to divide into two groups and prepare a
• prepare and comment on set of financial statements. Ask students to
simple statements showing prepare ratio analysis on large paper and to
comparison of results for compare results. This could take the form of
different years a debate resulting in asking students to vote
on the company they would invest in.
• make recommendations and Ask students to make short presentations Past examination question:
suggestions for improving illustrating changes/improvements made to http://teachers.cie.org.uk/login/
profitability and working capital working capital and the overall effect on the login_form?came_from=http%3A//
business. teachers.cie.org.uk/index_html
P3 May 2009 Q5 (a), (d), (f), (g)
P3 May 2008 3 (d)
• understand the significance

of the difference between
the gross profit percentage
and the net profit percentage
as an indicator of a business
efficiency
7.3 Inter-firm comparison
Candidates should be able to: Use class activities of two very different
businesses to demonstrate the unfairness of
• understand the problems of this type of comparison.
inter-firm comparison due
to factors such as differing
accounting policies
• apply accounting ratios to inter- Past examination question:

firm comparison http://teachers.cie.org.uk/login/
login_form?came_from=http%3A//
teachers.cie.org.uk/index_html
P2 Oct 2008 Q4 (b)
7.4 Interested parties
Candidates should be able to Students should look at all the interested Past examination question:
discuss the uses of accounting by parties to the financial statements and to http://teachers.cie.org.uk/login/
the following interested parties for suggest reasons why they are interested in login_form?came_from=http%3A//
decision-making: those statements. teachers.cie.org.uk/index_html
• owners P3 Oct 2009 Q2 (c)
• managers Students could take the part of the bank
• creditors manager and prepare a list of questions for a
• bank business seeking a loan.
• investors
• club members
• other interested parties
such as governments, tax
authorities, etc
7.5 Limitations of accounting

statements
Candidates should be able to Past examination question:

recognise the limitations of http://teachers.cie.org.uk/login/
accounting statements due to login_form?came_from=http%3A//
such factors as: teachers.cie.org.uk/index_html
• historic cost P3 May 2009 Q5 (h)
• difficulties of definition
• non-financial aspects
35
36

Cambridge IGCSE Accounting (0452) continued

Unit no 8: Accounting principles and policies
Students should have a good grounding of the preparation of financial statements. This should include accounting adjustments and the preparation of
the balance sheet.
Context
It may seem strange that the section dedicated to the accounting rules and principles is left until quite late in the syllabus. It is, however, necessary
that students are familiar with the various processes involved in preparing accounts and subsequently the rules and principles fall into place. Some of
the applications of the rules will already be familiar although no title will have been applied. Some principles will appear obvious but will be given their
formal title.
Outline
Students will learn the reasons why accounts are prepared with certain rules and principles. At this stage teachers can use the financial statements
prepared previously and engage students in making changes to those accounts to illustrate the rules and principles.
AO Learning outcomes Suggested teaching activities Learning resources
8.1 Accounting principles Textbooks

Cambridge IGCSE Accounting,
Candidates should be able to show Divide the class into two groups and present the CUP 2012, Catherine Coucom,
understanding of the following same problem to each. However, give different Chapter 10 Cambridge
accounting principles: criteria to each group (e.g. different depreciation IGCSE Accounting Workbook,
methods) and ask then to work through the task. CUP 2012, Catherine Coucom,
Look at the results and what the consequences Questions 46–55
are. This could lead to a lively debate! Frank Wood’s Book-keeping and
Accounts – Sheila Robinson & Frank
• accruals (matching): that costs Use examples to illustrate what happens to profit Wood Chapter 13
must be matched against figures without adjustments. Probably a good Frank Wood’s Business Accounting
related income idea to do two years and look at the impact on 1 Frank Wood and Alan Sangster
profit figures. Chapter 10
• business entity and A good way to explain this principle is by a Past examination question:
ownership: that a distinction diagram. The owner as a separate person from http://teachers.cie.org.uk/login/
is made between the financial the business – list all the assets the owner may login_form?came_from=http%3A//
transactions of a business and have and those the business will have. teachers.cie.org.uk/index_html
those of its owners P2 May 2009 Q1 (a) and (b)
P3 May 2009 Q3 (e)
P3 Oct 2009 Q1 (e)
P2 May 2008 Q1 (c)
P3 May 2008 Q5 (a)
P2 Oct 2008 Q1 (c), Q2 (d), Q3 (a)
P2 Oct 2008 Q5 (b)

37
38

• consistency: that the same An exercise on how different depreciation

accounting treatment should methods can distort profit figures and hence
be applied to similar items at disclosure on the balance sheet.
all times
• duality: the two-fold aspect of This could be illustrated by the giving/receiving

every transactions principle in conjunction with double entry.
• going-concern: that accounting Use an existing statement of financial position

assumes that a business will and look at the value of the business (revise how
continue to operate indefinitely assets are disclosed). Now substitute assets
with revised values as if the company was to be
sold/closed down.
• money measurement: Students will enjoy a discussion about football

that transactions must be clubs (particularly premier league) where the
expressed in monetary terms value of players is entered on the statement of
financial position but this does not apply to the
vast majority of businesses where no monetary
value is made of the work force.
• prudence: that profit should Work through an example using two different
not be overstated by ignoring inventory valuations and look at profits – ask
foreseeable losses or that students to suggest the possible consequences.
revenue should not be
recorded before it is earned
• realisation: that revenue is Re-visit the business documents required to

recognised as being earned create a transaction – order, goods received and
when legal liability to pay is invoice.
incurred by the customer (i.e.
when ownership of goods
passes to the customer)
8.2 Accounting policies
Candidates should be able to: Students could be presented with a variety of Past examination question:
financial statements and to prepare a number of http://teachers.cie.org.uk/login/
• recognise the influence of questions they would want to know the answers login_form?came_from=http%3A//
international accounting to before any financial decisions should be made. teachers.cie.org.uk/index_html
standards and understand P3 May 2009 Q3 (d)
the following objectives in P3 Oct 2009 Q2 (d)
selecting accounting policies: Use the phrase ‘what if’.
• comparability: to recognise
that a financial report can only
be compared with reports for
other periods if similarities and
differences can be identified
• relevance: that financial

information is relevant only if it
affects the business decisions
• reliability: that financial

information is reliable only if

it can be depended upon to
represent actual events and is
free from error and bias
• understandability: that a
financial report be capable of
being understood by the users
of that report
39
40

Useful general web links for notes and resources:
• www.bized.co.uk/learn/business/accounting/index.htm
• www.bbc.co.uk/dragonsden/business/glossary/d
• www.osbornebooks.co.uk/resources
• www.bbc.co.uk/schools/gcsebitesize/business/finance/
O Level Principles of Accounts (7110)
Unit 5: Financial Statements
Recommended Prior Knowledge
Students should have a thorough understanding of Units 1 to 4 before embarking on a study of this unit.
Context
Financial statements combine the knowledge gained in Units 1 and 4 and a test of this topic conventionally acts as a summary assessment of
knowledge acquired earlier. Financial statements are used in examinations and in practice to highlight organisational performance and position.
Outline
This unit concentrates on financial statements which measure performance in terms of gross and net profit and position (what an organisation owns,
owes and what is owed to it).

41
42

3.1 Candidates should be able to: Recap on the matching concept and how it Cambridge O Level Principles of
affects the: Accounts
• calculate the gross and Catherine Coucom, Chapter 7
net profits or losses, • Trading account section of the income Cambridge O Level Principles of
based on accounting statement Accounts Workbook
principles, for a specified • Profit and loss account section of the Catherine Coucom, Questions
period income statement 33–35, 37
Explain the differences between the two and

what each covers. When looking at the role
of closing inventory, consider introducing the
concept of cost or net realisable value.
It is helpful to students to show them how the www.staffs.ac.uk/schools/

information from the ledgers is transferred by business/bsadmin/staf f/s5/
‘closing’, for example, the sales and purchases accsys/wtwo.htm#l1
accounts and taking the balances to the
income statement.
A progressive approach assists students in

their understanding, for example:
1) gross profit = sales less cost of sales

(opening stock + purchases – closing
stock)
2) including sales returns and purchase

returns
3) including carriage inwards (emphasising

carriage outwards is not included in
the trading account section) and make
adjustments for goods taken by owner for
own use.
3.1 Candidates should be able to:
• recognise that profit (or

loss) for the year is the
increase (or decrease) in
the net value of assets
during that period
• prepare simple columnar Columnar trading account sections of an Cambridge O Level Principles of
trading account sections income statement will not be complex in the Accounts, Catherine Coucom,
of an income statement examination. Practice will help students gain Chapter 21
when dealing with a familiarity with them. Cambridge O Level Principles of
business which has two Accounts Workbook, Catherine
departments Coucom, Questions 112–113
3.2 Candidates should be able to:

• recognise that a Remind students about the accounting Cambridge O Level Principles of
Statement Financial equation and use it to illustrate the effect of Accounts, Catherine Coucom,
Position is a statement changes in assets and liabilities. Translate this Chapter 8
of balances of assets and into an expanded accounting equation using a Cambridge O Level Principles of
liabilities on a specified balance sheet format. Accounts Workbook, Catherine

date set out in any valid Coucom, Questions 38–42
layout This can be shown simply using the Quadrant:
• demonstrate knowledge Non-current Capital www.bized.ac.uk/

of the meaning, Assets stafsup/options/accounting/
importance and Current Current wor k02.htm
designation of non-current Assets Liabilities
assets, goodwill, current www.staffs.ac.uk/
assets, current liabilities, schools/business/bsadmin/
Take students through the implications f a
non-current liabilities and staf f/s5/accsys/wone.htm#l1
change in one quarter on the other quarters.
working capital
43
44

• comment upon the

significance of the
interrelationship of the
items
• relate working capital to Working capital is important to a business and Cambridge O Level Principles of
the liquidity of a business a question and answer session with students Accounts, Catherine Coucom,
allowing them to think through what would Chapter 23
happen to a business which is short of:
Past question papers available
Cash from Cambridge.
Inventory
Ability to obtain credit
Will help students understand the content and

importance of working capital.
Students often have difficulty seeing how

changes outside current assets and current
liabilities can affect working capital. The
quadrant may help understanding.
Candidates should be able to: Rules, such as those about asset valuation are Past question papers available
often easier to learn by considering examples. from Cambridge.
• explain the basis of Students should be able to explain terms e.g.
valuation of assets as the meaning of ‘cost’ or ‘net realisable value’
follow:
• non-current assets at
cost less accumulated
depreciation
• inventory at cost or
net realisable value,
whichever is lower
• trade receivables at
expected collectible
amount i.e. after

deduction of provision for
doubtful debts
• distinguish between, Students can easily become confused by the

and show understanding term capital when used in a different context:

of, capital and capital • Capital
employed • Capital employed
• Capital expenditure
• Working capital
Time is well spent testing students on the

differences so that they are clear about the
different terms and what they mean.
45
46

4.1 Candidates should be able to: Examples of local business can be used to Past question papers available
illustrate/check understanding. Students could from Cambridge
• explain the difference be asked to prepare a list of organisations
between a trading an a providing business and consumer services.
service business
• prepare Income At this stage, students have looked at the www.staffs.ac.uk/

Statements and Balance individual aspects of the financial statements. schools/business/bsadmin/
Sheets for trading Illustrate and provide practice for students to staf f/s5/mscproj/defn.htm
businesses help them see how the individual elements fit
together. Although much teaching will involve
• prepare Income sole trader businesses, students should be
Statements and Balance aware, as they progress through their studies,
Sheets for service that similar accounts and statements are used,
businesses as appropriate, for all organisations.
• make adjustments for There should be examples of all of these Cambridge O Level Principles
provision for depreciation various adjustments from earlier units which of Accounts Catherine Coucom,
using the straight line, can be brought in here to again illustrate to Chapters 10, 11 and 12
diminishing (reducing) students the interconnected nature of the Cambridge O Level Principles of
balance and revaluation ledger and financial statements and how Accounts Workbook
methods double entry principles are applied throughout. Catherine Coucom, Questions
56–57, 62–63, 68–70
• make adjustments for 22, Q5
provisions for doubtful November 2010, Paper 2, Q5
debts May 2009, Paper 2, Q5
• make adjustments for http://accounting10.tripod.com/

other payables and content.htm
other receivables to take
account of accrued and Past question papers available
prepaid expenses and from Cambridge.
outstanding and prepaid June 2012, Paper 21, Q5
income November 2011, Paper 22, Q5
November 2010, Paper 2, Q5
• make adjustments for May 2009, Paper 2, Q5
goods taken by owner for
own use

47
48

O Level Principles of Accounts (7110) continued

Unit 8: Clubs and Societies and Incomplete Records
Recommended Prior Knowledge
Students should have a thorough understanding of the format of financial statements before starting this unit. They will also find it helpful to have
excellent double entry skills and good understanding of cash books, control accounts and the typical adjustments which feature in financial statements.
Context
At this stage of their studies, students should be able to prepare financial statements of a variety of organisations beginning with a trial balance. This
unit challenges the understanding of candidates by looking at a variety of situations where a trial balance is unavailable.
Outline
Although clubs and societies are a form of organisation and incomplete records describe a situation of limited information, the skills required are
similar. Students will need to calculate amounts and reconstruct accounts and other statements to prepare relevant information to include in financial
statements.
AO Learning outcomes Suggested Teaching activities Learning resources
4.3 Candidates should be Explain that receipts and payments are cash based measures. Cambridge O Level Principles of
able to: Income and expenditure are based on accruals (explain the Accounts, Catherine Coucom,
• distinguish between concept and relate to accruals and prepayments). Chapter 17
Receipts and
Payments Accounts Cambridge O Level Principles of
and Income and Accounts Workbook, Catherine
Expenditure Accounts Coucom, Questions 91–91
A receipts and payments account is the equivalent of a cash http://accounting10.tripod.com/

book in a club or society. An income and expenditure account Slides25.1.ppt
is the club/society equivalent of the profit and loss account http://www.bized.ac.uk/stafsup/
section of an income statement. Illustrate by example. options/accounting/work09.htm
• prepare accounts Clubs and societies raise money from members by Past questions papers available
for the following subscription and it is very common to have to prepare a from Cambridge e.g.
– receipts and subscription account. Illustrate and practice this showing
payments, revenue how cash based measures and subscriptions in advance June 2012, Paper 21, Q3
generating activities and arrears are included in ledger accounts. This is used by Nov 2011, Paper 21, Q3
e.g. refreshments, examiners as a thorough test of double entry skills. June 2009, Paper 2, Q3
and subscriptions
4.3 Candidates should be Clubs and societies also generate income by activities
able to prepare accounts which are similar to trading, one common example being
for the following: through the provision of refreshments. In the same way as a
conventional trading account section of an income statement,
• receipts and a refreshments account includes income from sales,
payments, expenditure on purchases (of refreshments for resale) and
• revenue generating opening and closing inventories of refreshments.
activities e.g.
refreshments, and In the same way as with any type of business, the profit
subscriptions or loss on refreshments is brought into the Income and

Expenditure Account
• prepare Income and Illustrate the similarities and differences between club and
Expenditure Accounts society financial statements with those of businesses. The
and Balance Sheets main differences being:

• Calculation of surplus or deficit rather than profit or loss
• Minor differences in terminology
• A club or society has an Accumulated Fund rather than
capital.
A common task in examinations is to calculate the opening

accumulated fund as the difference between assets and
liabilities. Practice is helpful to students in clarifying matters
such as whether advance subscriptions are included as an
asset or a liability in such a calculation.
49
50

4.3 Candidates should be Students should practice preparing the

able to: accounts of clubs and societies including progressively
more adjustments adding to the complexity of the financial
• make the other statements.
adjustments as
detailed under 4.1 as
appropriate
4.4 Candidates should be Reconstructing information requires a definite set of past

able to: figures. This often involves preparing statements of affairs.
By illustrating these to students as being effectively balance
• prepare opening and sheets, the format will already be familiar and they can add to
closing Statements of what they already know.
Affairs
• calculate net profit/ In earlier Units students have seen how profits or losses can Cambridge O Level Principles of
loss from change in be calculated when computing capital. This skill is again used Accounts, Catherine Coucom,
capital over time here and students who see this as revision of earlier work Chapter 16
rather than new work may find it easier to apply.
• compute sales and Sales and purchases may be calculated by using ledger Cambridge O Level Principles of
purchases figures accounts or control accounts. Again this is drawing on and Accounts Workbook, Catherine
and gross profit revising earlier work and students are likely to find this more Coucom, Questions 85–90
from incomplete straightforward than taking an approach of making separate
information calculations as is seen in some texts.
• apply the following Explain mark-up and margin. Students often confuse the two. Past question papers available
techniques to arrive It may be useful to provide them with common equivalents to from Cambridge e.g.
at missing figures remember (e.g.
– mark up, margin, 100% mark-up is the same as a 50% margin; a 50% mark-up June 2011, Paper 22, Q3
stock turnover is a 33 1/3% June 2010, Paper 21, Q3
margin; 33 1/3% mark-up is a 25% margin; 25% mark-up is a Specimen paper 2010, Paper 2,
20%
Q3
margin)
Nov 2008, Paper 2, Q2
Turnover is a term used in some text as sales so it is important

that students understand what is meant by inventory turnover,
how it is calculated and expressed. Students should practice
making inventory turnover calculations in terms of times and in
days/weeks/months.
• comment upon Students should be aware that financial statements are

the importance of prepared to provide useful information and be ready to explain
providing information that usefulness. In class discussion can be useful to bring out
on profitability and relevant points.
financial position of
enterprises when the
books of account are
not compiled by the
double entry system
Questions on incomplete
records will only relate to

sole traders.

51

Context
Outline
Syllabus Learning outcomes Suggested teaching Learning resources

Ref activities


Topic: 6.2 Introduction to partnership businesses
Teacher Name: Date of lesson:
Class: Form 5A Business stream Number of learners: 20
TEACHING AIMS
(Hint: Do not be overambitious. 2 or 3 aims are quite adequate)
• understand the advantages and disadvantages of being a partner
• understand the desirability of drawing up a partnership agreement
• understand the financial aspects of a partnership agreement
LEARNING OBJECTIVES
(Hint: Once again do not be too ambitious. 2 or 3 outcomes are quite adequate)
• learners will be able to compare a partnership business with that of a sole trader
• learners will know the factors which partners must consider when the business is formed
SYLLABUS ASSESSMENT OBJECTIVES

Skill A
• explain the advantages and disadvantages of forming a partnership
• outline the importance and contents of a partnership agreement
Skill C
• appreciate the effects of not having a partnership agreement
ASSUMPTIONS ABOUT THE LEARNERS
Learners will be familiar

• with the preparation of the day-to-day accounting records and the year-end financial statements
of a sole trader
• with the principle of group activities rather than always having teacher-led learning
ANTICIPATED LEARNER PROBLEMS
• Learners may not take a full part in the group activities

• Groups may deviate from the topics they are asked to discuss
SOLUTIONS TO THE ANCITIPATED PROBLEMS
• Move around the classroom observing each group, making appropriate hints/comments as
required
• Keep reminding the groups of the discussion time still remaining

MATERIALS AND RESOURCES
Teacher and learners:

• Copy of textbook
Teacher:
• Pre-prepared lists on PowerPoint or OHP transparency (or list to write on board) of
advantages of partnership businesses
disadvantages of partnership businesses
contents of partnership agreement
• Simple example of partnership with different capitals, different workloads etc
DETAILED LESSON PLAN
Time
(minutes) Details
5 Learners to get out writing materials, books etc

Move furniture if necessary so they are seated in groups of four
5 Brief outline by teacher of previous work on accounting records of sole trader

Brief question and answer session to arrive at a definition of a partnership
Refer to definition in textbook
10 Working in groups of four, learners to make a list of

• 4 businesses known to them which are partnerships
• 4 advantages of being in a partnership rather than a sole trader
• 4 disadvantages of being in a partnership rather than a sole trader
10 A spokesperson from each group to state one of the businesses they have written
down.
Make a list on board and use this to illustrate the types of businesses where
partnerships are common
Follow a similar pattern with the advantages and disadvantages of partnerships.
The pre-prepared list can be used as a summary of these factors.
Refer to list in textbook
5 Working in groups of four, learners to make a list of what financial matters

partners should discuss before forming a partnership.
15 A spokesperson from each group to state one of the factors they have written
down.
Make list on board.
Display pre-prepared example.
Question and answer session to arrive at the reasons for interest on capital,
interest on drawings, partners’ salaries, profit-sharing ratios
Refer to reasons listed in textbook

5 Brief explanation of the need to modify the accounting records of a sole trader so
they are suitable for a partnership business:
• ledger – capital and current account for each partner
• financial statement – appropriation account
Brief explanation that these will be covered in future lessons
5 Brief resume of the main learning objectives of the lesson

Distribution of any homework assignment
EVALUATION
Which aspects of the lesson went well?
Which aspects of the lesson did not go well?
Did you have enough material?
Would you do things differently next time?


Topic: 3.3 Introduction to bank reconciliation
Class: Form 5A Business stream Number of learners: 20
TEACHING AIMS
(Hint: Do not be overambitious. 2 or 3 aims are quite adequate)
• understand why the bank’s records and those of the trader may differ
• understand how to update the cash book from the bank statement
• understand how to prepare a simple bank reconciliation statement
LEARNING OUTCOMES
(Hint: Once again do not be too ambitious. 2 or 3 outcomes are quite adequate)
• learners will be able to compare a bank statement with a cash book

• learners will be able to prepare a simple bank reconciliation statement
Skill A
• understand the use and purpose of a bank statement
• update the cash book for items appearing only on the bank statement
Skill B
• prepare a simple bank reconciliation statement
Learners will be familiar

• with double entry book-keeping
• with writing up and balancing a cash book
• Learners may not take a full part in the question and answer session
• Learners may not comprehend that the bank’s books are the reverse of those of the trader
• Ask individual learners direct questions rather than asking the whole group
• Provide a thorough explanation of why the bank’s books are the reverse of those of the trader.
Reinforce this when working through the activity

Teacher and learners:

• copy of textbook
Teacher:
• Pre-prepared short exercise on PowerPoint, OHP transparency or handout of a few
transactions involving bank accounts.
[e.g. 2 cheques paid (one near month end which is unpresented), 1 direct debit paid by
bank, one cheque received and banked later dishonoured, 1 item of bank charges. For
each item give date when recorded by trader and by bank]
Equipment:
• 2 boards or flip charts
Time
(minutes) Details
5 Learners to get out writing materials, books etc and settle
10 Brief outline by teacher of previous work on writing up and balancing cash books
Explanation that the bank will also maintain double entry records but that these are
from the bank’s view point
20 Display the pre-prepared exercise(or distribute handout)

Select two learners – one to act as a bank employee and one to act as a trader –
and ask them to stand by the boards/charts
Discuss each transaction with the class and ask them to decide what entries the
trader and the bank employee should make in their records
Once a decision has been made the scribes can then make the entries (limit these
entries to the bank account in the trader’s books and the trader’s account in the
bank’s books with a brief explanation of the double entry which would take place)
With “directions” from the class the scribes can balance the accounts and then
return to their places
15 Discuss with the class why the two closing balances do not agree.
Mark the items in each record which do not have a matching entry
Update the cash book and re-balance
On the board prepare a bank reconciliation statement (with one cheque not
presented and one amount not credited)
10 Encourage the class to summarise the reasons why the bank’s records differ from
those of the trader and build up a list on the board
Refer to reasons listed in textbook
Brief resume of the main learning objectives of the lesson

EVALUATION
Which aspects of the lesson went well?
Which aspects of the lesson did not go well?
Did you have enough material?
Would you do things differently next time?


Topic:
Class: Number of learners:
TEACHING AIMS
LEARNING OBJECTIVES

Time Details
(minutes)

EVALUATION

Cambridge International Examinations
1 Hills Road, Cambridge, CB1 2EU, United Kingdom
Tel: +44 (0)1223 553554 Fax: +44 (0)1223 553558
Email: info@cie.org.uk www.cie.org.uk
® IGCSE is the registered trademark of Cambridge International Examinations.
© Cambridge International Examinations 2014 v2 4Y08
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Teacher Guide

Cambridge IGCSE® and O Level

® IGCSE is the registered trademark of Cambridge International Examinations.

© Cambridge International Examinations 2014

Section 1: Syllabus overview of Cambridge IGCSE Accounting ........................................... 3

Section 2: Syllabus overview of Cambridge O Level Principles of Accounts ....................... 5

Section 3: Planning the course ............................................................................................ 7

Section 4: Assessment ...................................................................................................... 11

Section 5: Preparing learners for the final assessment ...................................................... 15

Section 6: Teacher support ................................................................................................ 20

The purpose of this teacher guide

• how the teaching relates to the assessment objectives

It will also save you time.

2 Cambridge IGCSE and O Level Principles of Accounts

Section 1: Syllabus overview of Cambridge IGCSE

Cambridge IGCSE Accounting

1.2 Assessment objectives

AO1 Knowledge with understanding

• select data which is relevant to identified needs of business

• order, analyse and present information in an appropriate accounting form.

Cambridge IGCSE and O Level Principles of Accounts 3

1.3 Relationship between assessment objectives and syllabus

1.4 Assessment structure

Component Description Duration Weighting

Paper 1 Unseen examination paper based on topics 1 ¾ hour 50%

Component Description Duration Weighting

Paper 2 Unseen examination paper based on topics 1 ¾ hour 50%

The full range of grades (A*–G) is available.

1.5 Relationship between assessment objectives and components

Component AO1 Knowledge AO2 Analysis AO3 Evaluation

Paper 1 70% 20% 10%

4 Cambridge IGCSE and O Level Principles of Accounts

Section 2: Syllabus overview of Cambridge O Level

2.2 Assessment objectives

AO1 Knowledge with understanding

• interpret and evaluate accounting information and to draw reasoned conclusions

Cambridge IGCSE and O Level Principles of Accounts 5

2.3 Relationship between assessment objectives and syllabus

2.4 Assessment structure

Component Description Duration Weighting

Paper 1 Unseen examination paper based on topics 1 hour 33.3%

Component Description Duration Weighting

Paper 2 Unseen examination paper based on topics 2 hour 66.6%

The full range of grades (A*–E) is available.

2.5 Relationship between assessment objectives and components

Component AO1 Knowledge with AO2 Analysis AO3 Evaluation

2 25% 55% 20%

6 Cambridge IGCSE and O Level Principles of Accounts

Section 3: Planning the course

• long-term planning (coverage over the year)

3.1 Key factors

3.2 Long-term planning

• length of course (one year or two years)

Cambridge IGCSE and O Level Principles of Accounts 7

3.3 Medium-term planning (scheme of work)

3.4 Planning lessons

8 Cambridge IGCSE and O Level Principles of Accounts

3.4.1 Key ingredients

• linking the assessment objectives to the specific syllabus content