An introduction to Final Accounts Preparation
This Advanced level unit is about preparing final accounts for sole traders and partnerships, and helping students to become aware of alternative business organisation structures.
This purpose of this unit is to provide the background knowledge and skills that a student needs in order to be capable of drafting accounts for sole traders and partnerships, and it provides the background knowledge of the regulations governing company accounts. A successful student will be able to complete tasks while being aware of potential ethical issues and know how to report information effectively. The student should become an accomplished member of the accounting team who is able to work with little supervision and who can see a financial picture of the organisation as a whole.
Students will be able to recognise the different types of organisations that need to prepare financial statements and will understand why such statements are important to users in the business environment. The financial accounting techniques and knowledge that they have already acquired will be developed to prepare accounting records when the records are incomplete, and students will become familiar with mark-up and margin.
Students will recognise special accounting requirements for partnerships. They will become aware of legislation and regulations governing financial statements, and will be able to recall and apply ethical knowledge to situations arising during the preparation of accounts. This unit also introduces students to the terminology and formats used by accountants in the financial statements of companies, working with the International Financial Reporting Standards (IFRS) terminology that is utilised across AAT.
Using all of this, the student will be able to prepare final accounts for sole traders and partnerships from an initial trial balance and present these to their line manager. They will then gain awareness of the more detailed requirements for the preparation of company financial statements.
Final Accounts Preparation is a mandatory unit in this qualification. It is closely linked to the Advanced level financial accounting unit, Advanced Bookkeeping, as well as to the Foundation level units, Bookkeeping Transactions and Bookkeeping Controls. In addition, it draws on the ethical principles from the Advanced level unit, Ethics for Accountants. On completion of this unit, students are prepared to start the Professional level unit, Financial Statements of Limited Companies.
It is recommended that this unit is taken after Advanced Bookkeeping and with or after Ethics for Accountants.
Learning outcomes for Final Accounts Preparation
1. Distinguish between the financial recording and reporting requirements of different types of organisation
2. Explain the need for final accounts and the accounting and ethical principles underlying their preparation
3. Prepare accounting records from incomplete information
4. Produce accounts for sole traders
5. Produce accounts for partnerships
6. Recognise the key differences between preparing accounts for a limited company and a sole trader