Pearson LCCI Level 3 Certifi Cate In Accounting (VRQ)
L3PearsonLCCI Level 3 Certificatein Accounting (VRQ)(ASE20104)SPECIFICATIONIssue 4First teaching from October 2015
Edexcel, BTEC and LCCI qualificationsEdexcel, BTEC and LCCI qualifications are awarded by Pearson, the UK’s largestawarding body offering academic and vocational qualifications that are globallyrecognised and benchmarked. For further information, please visit our qualificationwebsite at qualifications.pearson.com. Alternatively, you can get in touch with ususing the details on our contact us page at qualifications.pearson.com/contactusAbout PearsonPearson is the world's leading learning company, with 35,000 employees in morethan 70 countries working to help people of all ages to make measurable progressin their lives through learning. We put the learner at the centre of everything wedo, because wherever learning flourishes, so do people. Find out more about howwe can help you and your learners at qualifications.pearson.comThis specification is Issue 4. Key changes are sidelined in the document. We willinform centres of any changes to this issue. The latest issue can be found on ourwebsite, qualifications.pearson.comAcknowledgementsThis specification has been produced by Pearson on the basis of consultation withteachers, examiners, consultants and other interested parties. Pearson would like tothank all those who contributed their time and expertise to the specification’sdevelopment.References to third party material made in this specification are made in good faith.Pearson does not endorse, approve or accept responsibility for the content ofmaterials, which may be subject to change, or any opinions expressed therein.(Material may include textbooks, journals, magazines and other publications andwebsites.)All information in this specification is correct at time of publication.ISBN 978 1 446 95290 0All the material in this publication is copyright Pearson Education Limited 2017
IntroductionLCCI qualificationsLCCI qualifications are widely regarded by employers to prepare learners for keyfunctions of modern international business. The qualifications are recognisedworldwide by employers, universities and professional bodies, such as theAssociation of Chartered Certified Accountants (ACCA).This new and engaging range of qualifications has been developed in collaborationwith professional bodies, employers and customers. We have conducted in-depth,independent consultation to ensure that the qualifications develop the breadth anddepth of knowledge, skills and understanding that students need to be effectiveemployees, and that the qualifications support progression pathways.LCCI offers a wide range of qualifications that are available at levels 1 to 4 acrossthe following subject areas: English Language Marketing and Customer Service Business, Administration and IT Financial and Quantitative.This specification is part of the Financial and Quantitative suite of LCCI qualifications.Please refer to the Pearson website for details of other qualifications in this suite.This qualification replaces the Pearson LCCI Level 3 Certificate in Accounting (VRQ)(ASE3012X) and the Pearson LCCI Level 3 Certificate in Accounting (IAS) (VRQ)(ASE3902).
Purpose of the specificationThis specification sets out: the objectives of the qualification any other qualification(s) that a student must have completed before taking thequalification any prior knowledge and skills that the student is required to have before takingthe qualification any other requirements that a student must have satisfied before they will beassessed or before the qualification will be awarded the knowledge, understanding and skills that will be assessed as part ofthe qualification the method of assessment and any associated requirements relating to it the criteria (such as assessment criteria) against which a student’s level ofattainment will be measured.
RationaleThe Pearson LCCI Level 3 Certificate in Accounting (VRQ) gives students anoverview of the fundamental accounting principles and concepts that underlie allfinancial accounting.Students are introduced to topic areas they are likely to encounter in their workinglives in practical, scenario-based situations. This qualification includes content onthese main functions: maintaining up-to-date records of all financial transactions in an appropriateformat using accounting record books (ledgers) preparation of extended trial balances preparation and interpretation of financial statements of different businesses(sole traders, partnerships, limited companies and groups of companies). preparation of financial records from incomplete records budgeting applying the principles of decision making.The qualification has been developed to allow students to progress to thePearson LCCI Level 4 Certificate in Financial Accounting (VRQ), which extends andintroduces new advanced topic areas in this field.This qualification is appropriate for students who are already in a related role. Thequalification is also appropriate for those aspiring to a role in which they areresponsible for the detailed recording of financial transactions, maintaining financialrecords using appropriate methods, and for ensuring that monetary transactionsare recorded accurately.
Qualification aimThis qualification aims to enable students to develop: an understanding of the basic principles underlying the recording of financialtransactions the ability to prepare and interpret accounts for sole traders, partnerships,limited companies and groups of companies in accordance with basic accountingconventions and current accounting practice the ability to apply the principles of decision making.This qualification is suitable for students who work, or who wish to work, in anadvanced area of accountancy.All businesses require suitably skilled people who are able to prepare and maintainaccurate accountancy records. They must also be able to produce regularaccountancy statements and explain their meaning to management.This qualification is trusted and valued by employers worldwide and is recognisedby universities and professional bodies. This will increase students’ employability inthe sector and allow them to continue their academic development by progressingto the Pearson LCCI Level 4 Certificate in Financial Accounting (VRQ) or otherprofessional accountancy qualifications.
ContentsSpecification at a glance1Knowledge, skills and understanding2ContentAssessment212Assessment summary12Assessment Objectives13Performance descriptors14Entry and assessment information15Student entry15Combinations of entry15Age15Resitting the qualification15Awarding and reporting15Access arrangements, reasonable adjustments and specialconsideration16Equality Act 2010 and Pearson equality policy17Malpractice18Language of assessment18Other information19Total Qualification Time and Guided Learning Hours19Student recruitment19Prior learning and other ort, training and resources21Appendix 1: Glossary of International AccountingStandards (IAS) terminology25
Specification at a glanceThe Pearson LCCI Level 3 Certificate in Accounting (VRQ) consists of oneexternally-examined paper.Title: Pearson LCCI Level 3 Certificate in Accounting (VRQ) Externally assessed.100% of thetotalqualificationOverview of content: accounting concepts and framework recording financial transactions preparation of an extended trial balance preparation of financial statements preparation of accounting from incomplete records interpretation of financial statements budgetary control introduction to decision making.Overview of assessment one written, externally-set and marked paper, contributing 100% of the overallgrade of the qualification the examination will be 3 hours the examination will consist of 100 marks students will be graded Pass/Merit/Distinction. A result of Fail will be recordedwhere students do not achieve the required marks for a Pass the paper comprises five questions students should answer all questions questions comprise short written questions, calculations, preparation ofaccounts, financial statements, analysis and evaluation of results obtained andnotes to financial statements.Pearson LCCI Level 3 Certificate in Accounting (VRQ)Specification – Issue 4 – October 2017 Pearson Education Limited 20171
Knowledge, skills and understandingContentThe following content must be covered to prepare students for the final assessmentof this qualification.1. Accounting concepts and frameworkSubject contentWhat students need to learn:1.1 The financialaccountingfunctiona) The differences between financial accounting andmanagement accounting.b) The principles incorporated in the following accountingstandard: IAS 1 – presentation of financial statements.c) The elements, nature and purpose of financialstatements, including: statement of profit or loss statement of changes in equity statement of financial position statement of cash flows.d) The understanding and application of the followingaccounting concepts:2 accruals business entity consistency going concern materiality prudence realisation.Pearson LCCI Level 3 Certificate in Accounting (VRQ)Specification – Issue 4 – October 2017 Pearson Education Limited 2017
Subject contentWhat students need to learn:e) Understanding the characteristics of financial reportingunder the International Accounting Standards Board(IASB) framework, including: relevance faithful representation comparability verifiability timeliness understandability.Pearson LCCI Level 3 Certificate in Accounting (VRQ)Specification – Issue 4 – October 2017 Pearson Education Limited 20173
Subject contentWhat students need to learn:1.2 Types ofbusinessorganisationsa) The purpose, advantages and disadvantages ofdifferent types of businesses, including:1.3 How financialstatementscontributetowardsmeeting theneeds ofdifferentstakeholdersand users1.4 Introductionto ethicalbehaviour inaccountingpractices sole trader partnership limited liability partnership private limited companies (Ltd) public limited companies (plc).a) An understanding of the main stakeholders in businessand reasons for their interests (needs) in financialstatements. Stakeholders to include: owners managers suppliers customers employees government investors providers of external finance competitors local community trade associations trade unions.a) An understanding of the fundamental principles ofprofessional ethics, including: professional behaviour professional/technical competence and due care confidentiality integrity objectivity.b) An understanding of the impact of professional ethics inaccounting roles and functions.4Pearson LCCI Level 3 Certificate in Accounting (VRQ)Specification – Issue 4 – October 2017 Pearson Education Limited 2017
2. Recording financial transactionsSubject contentWhat students need to learn:2.1 Account forinventorya) The objectives of inventory control and accounts,including perpetual and periodic inventory valuationand the methods of inventory valuation which may beused by businesses: first-in, first-out (FIFO) last-in, first-out (LIFO) weighted average cost (AVCO) standard cost.Learners will not be required to prepare the stock ledgerusing these methods.b) The principles incorporated in the following accountingstandard: IAS 2 – inventories.c) The effect on profit or loss of business due to change inthe method of inventory valuation.d) The adjustments of inventory movement before orafter the end of accounting period in the absence ofphysical inventory count.e) The reconciliation of inventory ledger balance withphysical inventory count.f) The adjustments at period end in relation to inventory.2.2 Account fortangible andintangiblenon-currentassetsa) Understand the differences between tangible andintangible non-current assets.b) The principles incorporated in the following accountingstandard: IAS 16 – property, plant and equipment.c) The capital expenditure on purchase of non-currentassets, including all costs.d) An understanding of the methods of funding thepurchase of non-current assets, including: internal sources (owner’s capital, bank, cash) external sources (borrowed capital, bank loan,commercial mortgage) hire purchase/leasing trade-in allowance.Pearson LCCI Level 3 Certificate in Accounting (VRQ)Specification – Issue 4 – October 2017 Pearson Education Limited 20175
Subject contentWhat students need to learn:e) The accounting treatment, including journals andledger postings for acquisition and disposal ofnon-current assets.f) The importance and maintenance of an up-to-datenon-current assets register for acquisition and disposalof non-current assets and its contents.2.3 Account fordepreciationa) The purpose of depreciation.b) The principles and operation of depreciation fornon-current assets, including journals and ledgerpostings, using the following methods: straight line revaluation reducing (diminishing) balance.c) The importance and maintenance of an up-to-datenon-current assets register for depreciation andaccumulated depreciation.d) The effect on profit or loss of business due to change inthe basis of depreciation of non-current assets.e) The effect on the depreciation charge due to change inthe life and/or residual value of non-current assets.3. Preparation of an extended trial balanceSubject contentWhat students need to learn:3.1 Thepreparation ofthe extendedtrial balancea) To process adjustments of trial balance figures at theperiod end to prepare financial statements forbusiness: inventory accrued and prepaid income and expenditure depreciation of non-current assets irrecoverable debts and allowance for doubtful debts correction of errors.b) The extension of the ledger balance and adjustmentcolumn into the statement of profit or loss and thestatement of financial position columns.c) Calculate the profit or loss for the period from thestatement of profit or loss columns of the extendedtrial balance6Pearson LCCI Level 3 Certificate in Accounting (VRQ)Specification – Issue 4 – October 2017 Pearson Education Limited 2017
4. Preparation of financial statementsSubject contentWhat students need to learn:4.1 Partnershipsa) The purpose of a partnership agreement.b) The purpose and preparation of: current accounts capital accounts.Including drawings for the partners in columnar formatfor ledgers, and as a part of the statement of financialposition.c) The statement of profit or loss appropriation account,including changes in partnership interests during theyear, including: interest on drawings interest on capitals partners’ salaries share of profits or losses.d) The merger of sole traders to form a partnership.e) The merger of partnerships, or conversion of apartnership into a limited company or partnershiptaken over by a limited company, including: purchase consideration accounting treatment – journal and ledger postings inrelation to realisation account distribution of proceeds between partners closure of ledger accounts relating to partners’ currentand capital accounts in partnership books ondissolution of partnership.f) Preparation of statements from given data set forsingle entities and partnership4.2 LimitedLiabilityCompanies statement of profit or loss statement of financial positiona) The differences between: redeemable and irredeemable shares rights issues and bonus issuesb) The preparation of financial statements (for externaluse) with adjustments, including: statement of profit or loss statement of changes in equity statement of financial position statement of cash flows (IAS 7 format).Pearson LCCI Level 3 Certificate in Accounting (VRQ)Specification – Issue 4 – October 2017 Pearson Education Limited 20177
Subject contentWhat students need to learn:4.3 Accounting forgroups ofcompaniesa) The principles incorporated in the following accountingstandards: IFRS 3 – accounting for business combinations IAS 27 – consolidated financial statements.b) The understanding of the following terms: parent subsidiary non-controlling interest goodwill fair values pre- and post-acquisition profits.c) The calculation of goodwill arising on consolidation.d) The calculation and treatment of pre- andpost-acquisition profits, including non-controllinginterest.e) Preparation of a consolidated statement of profit or losswith one subsidiary (acquisition taking place at thebeginning of the financial year) (IFRS 10).f) Preparation of a consolidated statement of financialposition with one subsidiary (acquisition taking place atthe beginning of the financial year) (IFRS 10).5. Preparation of accounting from incomplete recordsSubject contentWhat students need to learn:5.1 Preparation ofaccountingrecords fromincompleterecordsa) The use of accounting ratios to calculate revenue, costof purchases, inventory, gross profit and profit for theyear due to loss of records as a result of theft, fire ornatural disaster, including: gross profit as a percentage of revenue (margin) gross profit as a percentage of cost of sales (markup) profit for the year as a percentage of revenue opening and closing statement of affairs to calculatecapital or profit for the year.b) The statement of profit or loss and statement offinancial position from incomplete records for differenttypes of businesses, including sole traders.8Pearson LCCI Level 3 Certificate in Accounting (VRQ)Specification – Issue 4 – October 2017 Pearson Education Limited 2017
6. Interpretation of financial statementsSubject contentWhat students need to learn:6.1 Thecalculationandinterpretationof accountingratiosa) The importance of measuring business performanceand the elements of business performance that can bemeasured by the main financial statement used inbusiness.b) The calculation and use of the following ratios toproduce financial statements: gross profit percentage/margin profit for the year as a percentage of revenue current ratio quick ratio (acid test) return on capital employed (ROCE) trade receivables collection period trade payables payment period inventory turnover asset turnover.c) The analysis of results obtained from different ratios tomake recommendations and decisions.7. Budgetary controlSubject contentWhat students need to learn:7.1 Budgetsa) The benefits and limitations of budgetary controlb) The preparation and interpretation of the followingbudgets for a given period: cash budget inventory budget trade receivables budget trade payables budget.c) The preparation and interpretation of the followingbudgeted statements: statement of profit or loss statement of financial position.Pearson LCCI Level 3 Certificate in Accounting (VRQ)Specification – Issue 4 – October 2017 Pearson Education Limited 20179
8. Introduction to decision makingSubject contentWhat students need to learn:8.1 Short-termdecisionmakinga) Benefits and limitations of marginal and absorptioncosting8.2 Long-termdecisionmakingb) The use of marginal costing for calculating: breakeven point, both in sales units and sales value profit or loss for a given number of units sold number of units required in order to generate targetedprofit the interpretation of the results obtained by usingmarginal costing techniques and makingrecommendations.a) The characteristics, advantages and disadvantages ofthe following methods of investment appraisal: payback period accounting rate of return net present value.b) The calculation and interpretation of the resultsobtained for different projects to makerecommendations and decisions by using the followingmethods:10 payback period accounting rate of return net present value.Pearson LCCI Level 3 Certificate in Accounting (VRQ)Specification – Issue 4 – October 2017 Pearson Education Limited 2017
The following skills should be developed throughout the course of study.SkillsStudents should:a) Demonstrate accuracy, orderliness and appropriatepresentation of accounting information.b) Demonstrate an understanding of the principles ofprofessi
LCCI Level 3 Certifi cate in Accounting (VRQ) (ASE20104) Edexcel, BTEC and LCCI qualifications Edexcel, BTEC and LCCI qualifications are awarded by Pearson, the UK’s largest awarding body offering academic and vocational qualifications that are globally recognised and benchmarked. For further information, please visit our qualificationFile Size: 429KB
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