Introducing the RQF L 1 L 3 Bookkeeping

Introducing the RQF L 1 -L 3 Bookkeeping Qualifications Graham Ward

Overview of assessment • Knowledge Tests Open book, non controlled conditions but time constrained Learners must attempt all questions Learners must successfully complete a pilot before attempting live test Learners awarded Pass or Fail - 70% minimum level of achievement (all levels) • Results notified immediately • • • Assignment • Open book, non controlled conditions but time constrained • Learners must successfully complete pilot before attempting live assignment • Learners awarded a Pass or Fail - 70% minimum level of achievement (all levels) • Provisional result notified immediately, subject to IAB moderation • Examination • • Applies to level 2 and 3 qualifications only Time constrained and controlled conditions 60% minimum level of achievement Learners must successfully complete pilot before attempting live

L 1 Award in Bookkeeping (RQF) • GLH 25 hours TQT 50 hours • New Units: • • Introduction to double entry bookkeeping (Knowledge) – Knowledge Test • Keep double entry records and prepare a trial balance (Skills) Assignment • Prepare reconciliations (Skills) - Assignment N. B. Banking Procedures – no longer assessed at L 1

Introduction to double entry bookkeeping – Knowledge Test • • This unit now includes some learning outcomes and assessment criteria previously within QCF Units of Introduction to Bookkeeping and Working within Bookkeeping. It does NOT include the following: • Explain single entry bookkeeping • Outline the job role of a bookkeeper • Outline how the role of the bookkeeper fits within the business organisation • Outline how bookkeeping can become a career pathway • Identify the difference between a bookkeeper and an accountant • Outline the use of batch control • State where to find financial information for entry into the bookkeeping system • Outline the need to cross check totals for accuracy (day books and cash book) • Identify where to gain authorisation for expenditure and when dealing with queries related to various financial transactions

Keep double entry records and prepare a trial balance – Assignment • • Emphasis at L 1 is now on double entry bookkeeping – brings manual bookkeeping into line with the L 1 Computerised Bookkeeping qualification Learners required to demonstrate competence by completing tasks related to processing a range of bookkeeping transactions – All tasks within the assessment will be independent tasks. Learners must be able to prepare a journal entry to open accounts within a double entry bookkeeping system – will not be asked to use the journal for any other purpose Must have knowledge of accounting equation – but will not be required to calculate a missing value The bookkeeping system will consist of a main ledger and petty cash book Learners will be given source documents/extracts from which they will be asked to process capital and revenue income and expenditure transactions. Learners will NOT be required to prepare or check business documents

Keep double entry records and prepare a trial balance – Assignment (Cont. ) • • Learners must be able to calculate VAT given an amount net of VAT or VAT inclusive Learners must be able to process receipts and payments through a bank current account and main cash account kept in ledger – corresponding entries made in accounts within the double entry system Learners are NOT required to maintain a cash book or use day books Cash sales will be processed through a main cash account and sales account in the ledger Sales and purchases on credit will be processed through sales/purchases account in the ledger and the customer/supplier accounts in the main ledger There will be no sales or purchase ledgers and learners will not be required to keep control accounts Learners must be able to balance off ledger accounts and clearly show account balances carried down and brought down

Keep double entry records and prepare a trial balance – Assignment (Cont. ) • • • Learners must be able to keep a petty cash book Learners will be expected to record petty cash expenditure from vouchers, total and balance the petty cash book, make transfers from the petty cash book into the ledger and account for the top-up of the petty cash float Learners must be able to prepare a trial balance directly from ledger accounts and from a list of balances extracted from the bookkeeping system

Prepare reconciliations– Assignment • • • Learners must be able to reconcile petty cash with a physical count of cash Learners must be able to identify time-lag differences between the bank current account and the statement and prepare a bank reconciliation statement Learners must be able to update the bank current account following reconciliation

L 2 Certificate in Bookkeeping (RQF) • GLH – 50 hours TQT – 120 hours • New Units: • • Principles of bookkeeping and VAT (Knowledge) – Knowledge test • Financial services and payment methods (Knowledge) – Knowledge test • Prepare and check business documents (Skills) - Assignment • Record transactions in a sub-divided bookkeeping system (Skills) Examination • Prepare a trial balance and reconciliations (Skills) - Assignment

Principles of bookkeeping and VAT – Knowledge Test • • This unit includes some of the learning outcomes and assessment criteria previously contained within the QCF Units of Principles of recording and processing bookkeeping transactions, Professional values and basic business legislation and Principles of VAT. However, the following assessment criteria will no longer be assessed: • Identify systems for filing and sorting financial information • Identify the types of error in a bookkeeping system that are disclosed by preparing a Trial Balance • Explain how a suspense account is used as a temporary measure when the trial balance reveals bookkeeping errors • Identify and describe principles of data protection • Explain the main duties of employers and employees under health and safety regulations • Assessment criteria relating to money laundering • The VAT rules relating to import, exports, and VAT on supplies between EC member states

Principles of bookkeeping and VAT – Knowledge Test (Cont. ) • Additional/Expanded assessment criteria includes: • An understanding of the characteristics of sole trader, partnership, limited company and not for profit organisations in terms of ownership, control and the owners personal financial liability • Recognise the advantages of coding, know how codes are created (alpha, numerical and alpha-numerical) and understand how codes are used to identify products, supplier, customer and other accounts within the system • The current rules and options relating to accounting for VAT where prompt payment discounts are offered and taken up Some of the knowledge covered in this unit may be gained as learners progress through the course – may be best for learners to complete the knowledge test at the end of the course

Financial services and payment methods – Knowledge Test • The learning outcomes and assessment criteria of this unit is almost identical to QCF unit Banking Procedures However, learners will not need knowledge of the following: • Safety deposit boxes • Payment by telegraphic transfer They will require knowledge of: • • Faster Payments Service Contactless Payment Systems (Tap and Go) Pay. Pal Systems for processing card transactions (face to face and customer not present)

Prepare and check business documents - Assignment • Learners must be able to prepare: • Invoices & credit notes • Statement of account • Remittance advice • Cash receipt • Cheque • Petty cash voucher • Learners must be able to check the accuracy of invoices and credit notes received, identify errors, check payments received against supporting documentation and identify any under or over payment. They must also advise on course of action where a document contains errors.

Record transactions in a sub-divided bookkeeping system – examination • Learners must be able to: • • Record invoices and credit notes issued and received in day books Total and code day books Make transfers from the day books into the general ledger Includes use of control accounts and individual accounts of credit customers and suppliers in subsidiary ledgers Maintain an analysed cash book with separate pages for receipts and payments Total the cash book and transfer totals to appropriate accounts in the general ledger, including control accounts and subsidiary ledgers. Analysis columns will include VAT Receipts and payments can include automated receipts and payments The cash book will not include columns for discounts allowed or discounts received-these will be processed through the sales return day book and purchase return day book from credit notes

Record Transactions in a Subdivided Bookkeeping System – Examination (Cont. ) • Learners must be able to: • Maintain a petty cash book and record petty cash expenditure • Balance and total the petty cash book and make transfers to ledger accounts (will include VAT) • Restore the petty cash balance based on an imprest or non-imprest system • Use the journal to record opening account balances in a double entry bookkeeping system – learners will be required to • Use the journal to write off a bad debt and claim VAT bad debt relief • Use the journal to account for wages, salaries and employer on-costs • Use the journal to correct bookkeeping errors (omission, commission, principle, original entry and reversal of entries) • Learners must be able to record journal entries in appropriate ledger accounts • Learners are NOT required to process errors which have an impact on arithmetic accuracy or keep a suspense account Examination will comprise a series of independent questions

Prepare a trial balance and reconciliations – Assignment • This unit is a combination of the QCF units Processing Ledger Transactions and Extracting a Trial Balance and Maintaining Control Accounts. Learners must be able to: • Prepare a trial balance from a list of balances. Redraft a trial balance following correction of errors • Draw up sales ledger, purchase ledger and VAT control accounts and prepare reconciliations • Prepare a bank reconciliation statement

Level 2 Certificate in Bookkeeping (RQF) – General comments • Examination is on-demand – consider completing the examination before the unit Prepare a Trial Balance and Reconciliations • Financial Services and Payment Methods unit is ‘stand alone’ and learners can complete the knowledge test for this unit having studied the unit learning outcomes and assessment criteria • Principles of Bookkeeping and VAT contains some learning outcomes and assessment criteria which are ‘stand alone’, but most of the learning outcomes and assessment criteria underpin the three skills units – tutors may wish to schedule the Knowledge Test for this unit towards the end of the course

L 3 Certificate in Bookkeeping and Accounting (RQF) • GLH – 80 hours TQT – 220 hours • New Units: • • Principles of accounting (Knowledge) – Knowledge test • Make accounting adjustments (Skills) - Assignment • Prepare financial statements from double entry records (for sole traders and partnerships) (Skills) - Examination • Prepare financial statements from incomplete records (for sole traders and not for profit organisations) (Skills) - Assignment

Principles of accounting – Knowledge Test • This unit learning criteria replaces the five QCF knowledge based units Learners must have knowledge and understanding of: • General principles of accounting • Principles of accounting for partnerships, not for profit and the use of incomplete records • The knowledge and understanding required for this unit underpins the skills learners need to demonstrate in the other 3 RQF units at this level – as such this knowledge test would be best completed by learners at the end of their studies

Make accounting adjustments – Assignment • Learners must be able to: • Account for a stock valuation. At cost or NRV, adjust a stock valuation given mark-up or margin, prepare Journal entries to account for opening and closing stock and keep a stock account • Account for the acquisition, depreciation and disposal of fixed assets. Prepare journal entries to support acquisition, depreciation and disposal transactions and keep ledger accounts to record the cost of fixed assets, their accumulated depreciation, depreciation charges and disposals • Account for prepayments and accruals. Make calculations to account for prepayments and accruals, prepare journal entries to support period end prepayment and accrual adjustments. Transfer income earned and expenses incurred to the profit and loss account, record prepayment and accruals adjustments in prepaid and accrual ledger accounts specifically used for the purpose of accounting for prepayments and accruals • Account for bad and doubtful debts. Prepare journal entries to account for a bad debt, VAT bad debt relief. Calculate an increase or decrease in a provision for doubtful debts and prepare a journal entry to support the adjustment transaction. Record the adjustment in a provision for

Prepare financial statements from double entry records (for sole traders and partnership) – Examination • Learners must be able to: • Prepare a trial balance from a list of balances and correct errors. Introduce a suspense account as a temporary measure, prepare journal entries to correct errors and eliminate a suspense account balance. Redraft a trial balance following the correction of errors • Use a trial balance taken from the bookkeeping system of a sole trader, apply period end adjustments, and prepare a trading and profit and loss account and balance sheet • Prepare an extended trial balance. Extend balances from a trial balance column, apply period end adjustments, extend balances into profit or loss or balance sheet column. • Use a trial balance, or information taken from the double entry bookkeeping system of a partnership to prepare trading and profit and loss account, appropriation account, balance sheet, partner capital accounts and partner current accounts. Apply accounting adjustments and the provisions of a Partnership Agreement or the Partnership Act 1890

Prepare financial statements from double entry records (for sole traders and partnership) – Examination (Cont. ) • • Learners may be presented with a trial balance which includes the balance on a fixed asset disposal account Learners will not be required to account for changes in a profit sharing ratio or for partners joining or leaving a partnership part-way through a financial year

• • • Prepare financial statements from incomplete records (for sole traders and not for profit organisations) – Assignment No change to the learning outcomes and assessment criteria from the current QCF unit Learners will be required to prepare financial statements for a sole trader OR a club or society from incomplete records