← Accounting syllabus

ScotlandAccounting

Financial Accounting

9 dot points across 9 inquiry questions. Click any dot point for a focused answer with worked past exam questions where available.

How do you calculate and interpret the main accounting ratios for profitability, liquidity and efficiency?

Calculating and interpreting profitability ratios (gross profit percentage, profit for the year percentage), liquidity ratios (current ratio, acid test) and the efficiency ratio rate of inventory turnover.
A focused answer to the SQA National 5 Accounting content on ratio analysis, covering the gross profit percentage and profit for the year percentage, the current ratio and acid test ratio for liquidity, the rate of inventory turnover for efficiency, and how to interpret each ratio to judge business performance.
11 min answer →

How do you adjust expenses and income for accruals and prepayments at the year end, and how are bad debts treated?

Adjusting the income statement and statement of financial position for accrued and prepaid expenses and income at the year end, and writing off bad debts (irrecoverable debts).
A focused answer to the SQA National 5 Accounting content on year-end adjustments, covering accrued and prepaid expenses, accrued and prepaid income, how each adjusts the figure in the income statement and appears in the statement of financial position, and the writing off of bad (irrecoverable) debts.
11 min answer →

How do you prepare and use business documents such as invoices, credit notes and statements of account, including trade discount and VAT calculations?

Preparing and interpreting business documents - invoices, credit notes and statements of account - including trade discount and Value Added Tax (VAT) calculations.
A focused answer to the SQA National 5 Accounting content on business documents, covering the invoice, credit note and statement of account, how trade discount is applied, and how to calculate Value Added Tax (VAT) on the net price to find the total a customer pays.
10 min answer →

What types of error can occur in the accounting records, which ones a trial balance fails to reveal, and how are errors corrected?

Identifying the main types of bookkeeping error, recognising which errors a trial balance will not reveal, and correcting errors through the journal and a suspense account.
A focused answer to the SQA National 5 Accounting content on correcting errors, covering the main types of error (omission, commission, principle, original entry, reversal and compensating errors), which of them a trial balance does not reveal, and how errors are corrected using the journal and a suspense account.
10 min answer →

What is depreciation, and how do you calculate it using the straight-line method and the reducing balance method?

Calculating depreciation of non-current assets using the straight-line (fixed instalment) method and the reducing balance (diminishing balance) method, and showing its effect on profit and the carrying value of the asset.
A focused answer to the SQA National 5 Accounting content on depreciation, covering why non-current assets are depreciated, the straight-line method using cost, residual value and useful life, the reducing balance method using a percentage of carrying value, and the effect of depreciation on profit and on the statement of financial position.
11 min answer →

How does the accounting equation work, and how are transactions recorded using double entry in ledger accounts and checked with a trial balance?

The accounting equation, recording financial transactions using double entry in ledger accounts, balancing accounts, and preparing a trial balance to check the entries.
A focused answer to the SQA National 5 Accounting content on recording transactions, covering the accounting equation, the rules of double entry, posting to ledger accounts, balancing an account, and preparing a trial balance to check that total debits equal total credits.
11 min answer →

How do you prepare an income statement (trading and profit and loss account) for a sole trader, finding cost of goods sold, gross profit and profit for the year?

Preparing an income statement (trading, profit and loss account) for a sole trader, calculating cost of goods sold, gross profit, and profit for the year.
A focused answer to the SQA National 5 Accounting content on the income statement, covering the trading section that finds cost of goods sold and gross profit, the profit and loss section that deducts expenses and adds other income, and how the profit for the year is calculated for a sole trader.
11 min answer →

What is the purpose of accounting, and who are the users of accounting information and why do they need it?

The purpose of financial accounting for a business, and the internal and external users of accounting information and the decisions each group makes from it.
A focused answer to the SQA National 5 Accounting content on the purpose of financial accounting, covering why a business keeps accounting records and the internal and external users of accounting information - owners, managers, lenders, suppliers, HM Revenue and Customs, employees and customers - and the decisions each group makes.
9 min answer →

How do you prepare a statement of financial position (balance sheet) for a sole trader, classifying non-current and current assets, current and non-current liabilities, and the capital section?

Preparing a statement of financial position (balance sheet) for a sole trader, classifying non-current and current assets, current and non-current liabilities, and presenting the capital section with profit and drawings.
A focused answer to the SQA National 5 Accounting content on the statement of financial position, covering the classification of non-current and current assets, current and non-current liabilities, the calculation of working capital, and the capital section showing opening capital plus profit less drawings.
11 min answer →