AS Unit 1 ACCN1 - Introduction to Financial Accounting
Exam (elaborations)
Theory questions on Unit 1 for A level Accounting
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Course
AS Unit 1 ACCN1 - Introduction to Financial Accounting
Institution
AQA
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AS Unit 1 ACCN1 - Introduction to Financial Accounting
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UNIT 1 THEORY
QUESTIONS
AS / A Level ACCOUNTING
, UNIT 1 –POSSIBLE Qs ASKED IN AN EXAM
PURPOSE OF ACCOUNTING
Explain three reasons for keeping accounting records. (6 Marks)
1 mark for idea plus 1 mark for development
- To assess profitability (1) and solvency (1) by assessing what has happened in the
past.
- An aid to decision-making to enable the production of cash budgets (1), projected
profit and loss accounts and balance sheets (1).
- Monitoring and control (1). To monitor what has actually happened and compare
with forecasts (1) and take any necessary corrective action (1).
- To enable HM Revenue and Customs to assess the correct amount of income taxes
(1) and value added tax (1).
- Minimising the chances of fraud (1)
- Evidence for external borrowings (1) as when applying for a bank loan (1)
Explain 2 reasons why mark should keep accounting records (6 Marks)
Max 3 marks for each reason max 6 marks
- To record what has happened in the past (1) and to enable the production of an
- income statement (profit and loss account) (1) and a balance sheet (1).
- To enable the production of forecasts for the future (1), using data from previous
year(s) (1) in order to predict likely future outcomes (1).
- To monitor actual performance (1) comparing actual events with expected events (1)
and to take corrective action where necessary (1).
- To enable enough information (1) for HM Revenue and Customs (1) to collect all
amounts due to them in respect of taxes (1).
- To record amounts due from receivables (debtors) (1) and due to payables
(creditors) (1) and take appropriate action (1).
- To help reduce the risk (1) of fraud (1) by keeping detailed records maintained by
several individuals (1).
Identify 3 external stakeholders and state the interest they will have in the accounting
records (6 Marks)
1 mark for identification, 1 mark for development
- Bank (1): to ensure that they are repaid amounts due (1).
- Suppliers (1): to check that they will be paid amounts due (1).
- Customers (1): to check that they will be supplied with orders made (1).
- Government (1): to confirm the amount of taxes due (1).
- Local Community (1): to provide jobs in the local area (1).
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