Unit 5 Maintaining Financial Records and Preparing Accounts
Unit Commentary
This unit relates to the maintenance of accounts from the drafting of the initial trial balance through to the preparation of information required to produce a set of final accounts.
The first element is concerned with the records for capital items, how to deal with acquisitions, on-going depreciation and the rules for disposal.
The second element requires you to collect relevant information for preparing the final accounts and to present the information to your supervisor in the form of a trial balance or an extended trial balance.
The third element requires you to prepare final accounts for sole traders and partnerships. You must also be responsible for communication in relation to the handling of queries, for making suggestions for improvements and maintaining confidentiality.
Elements contained within this unit are:
Element: 5.1 Maintaining records relating to capital acquisition and disposal
Element: 5.2 Collecting and collating information for the preparation of final accounts
Element: 5.3 Preparing the final accounts of sole traders and partnerships
Element 5.1 Maintaining records relating to capital acquisition and disposal
Performance Criteria
In order to perform this element successfully you need to:
A. Record relevant details relating to capital expenditure in the appropriate records
B. Ensure that the organisation’s records agree with the physical presence of capital items
C. Correctly identify and record all acquisition and disposal costs and revenues in the appropriate records
D. Correctly calculate and record depreciation charges and other necessary entries and adjustments in the appropriate records
E. Ensure that the records clearly show the prior authority for capital expenditure and disposal and the approved method of funding and disposal
F. Correctly calculate and record the profit and loss on disposal in the appropriate records
G. Ensure that the organisation’s policies and procedures relating to the maintenance of capital records are adhered to
H. Identify and resolve or refer to the appropriate person any lack of agreement between physical items and records
I. Make suggestions for improvements in the way the organisation maintains its capital records where possible to the appropriate person
Range Statement
Performance in this element relates to the following contexts:
Records:
Asset register
Books of original entry
Ledgers
Depreciation:
Straight line
Reducing balance
Element 5.2 Collecting and collating information for the preparation of final accounts
Performance Criteria
In order to perform this element successfully you need to:
Correctly prepare reconciliations for the preparation of final accounts
Identify any discrepancies in the reconciliation process and either take steps to rectify them or refer them to the appropriate person
Accurately prepare a trial balance and open a suspense account to record any imbalance
Establish the reasons for any imbalance and clear the suspense account by correcting the errors, or reduce them and resolve outstanding items to the appropriate person
Correctly identify, calculate and record appropriate adjustments
Make the relevant journal entries to close off the revenue accounts in preparation for the transfer of balances to the final accounts
Conduct investigations into business transactions with tact and courtesy
Ensure that the organisation’s policies, regulations, procedures and timescales relating to preparing final accounts are observed
Range Statement
Performance in this element relates to the following contexts:
Reconciliations:
Purchase ledger reconciliation
Sales ledger reconciliation
Closing stock reconciliation
Reasons for imbalance:
Incorrect double entries
Missing entries
Numerical inconsistencies and wrong calculations
Insufficient data and incomplete records have been provided
Inconsistencies within the data
Adjustments:
Prepayments and accruals
Provisions for doubtful debts
Provisions for depreciation
Closing stock
Element 5.3 Preparing the final accounts of sole traders and partnerships
Performance Criteria
In order to perform this element successfully you need to:
Prepare final accounts of sole traders in proper form, from the trial balance
Prepare final accounts of partnerships in proper form and in compliance with partnership agreement, from the trial balance
Observe the organisation’s policies, regulations, procedures and timescales in relation to preparing final accounts of sole traders and partnerships
Identify and resolve or refer to the appropriate person discrepancies, unusual features or queries
Range Statement
Performance in this element relates to the following contexts:
Final accounts of sole traders:
Profit and loss account
Balance sheet
Final accounts of partnerships:
Profit and loss account
Balance sheet
Partnership appropriation account
Partners’ capital and current accounts
