Pearson LCCI Level 3 Certifi Cate In Financial Accounting
L3PearsonLCCI Level 3 Certificatein Financial Accounting(VRQ)(ASE20097)SPECIFICATIONIssue 4First teaching from September 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/contact usAbout 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 95288 7All the material in this publication is copyright Pearson Education Limited 2017
IntroductionLCCI qualificationsLCCI qualifications are widely regarded by employers as preparing students to carryout the key functions of modern international business. The qualifications arerecognised worldwide by employers, universities and professional bodies such asthe Association 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 wider range of qualifications; they are available at levels1 to 4 across the 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 LCCIqualifications.Please refer to the Pearson website for details of other qualifications in the suite.
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 of thequalification the method of assessment and any associated requirements relating to it the criteria against which a student’s level of attainment will be measured (suchas assessment criteria).
RationaleThe Pearson LCCI Level 3 Certificate in Financial Accounting (VRQ) meets thefollowing purpose:This brand new qualification gives students an overview of the fundamentalaccounting principles and concepts that underlie all financial accounting.Students are introduced to topic areas they are likely to encounter in their workinglives in practical, scenario based situations.The qualification has been developed with a view to allow progression on to thePearson LCCI Level 4 Certificate in Financial Accounting (VRQ), which introducesstudents to advanced topic areas in this field.
Qualification aimThe Pearson LCCI Level 3 Financial Accounting (VRQ) qualification is for studentswho work in, or want to work in, accounting environments.The qualification provides students with the key knowledge and understanding ofaccounting principles and concepts underlying all financial accounting including thepreparation of accounting entries for non-current assets; advanced bookkeeping;the preparation of journals for correction of errors and year-end adjustments; thepreparation of the extended trial balance to incorporate these adjustments and thepreparation of financial statements for unincorporated businesses (sole traders andpartnerships).Students will gain skills to produce financial records, summarising an organisation’sfinancial transactions over a specific accounting period, and its current financialposition in terms of assets, liabilities and capital.This qualification is trusted and valued by employers worldwide and recognised byuniversities and professional bodies. This will increase students’ employability in thesector and allow them to continue their academic development by progressing tothe Pearson LCCI Level 4 Certificate in Financial Accounting (VRQ) or otherprofessional accountancy qualifications.
ContentsSpecification at a glance1Knowledge, skills and understanding2Content2Assessment9Assessment summary9Assessment Objectives10Performance descriptors11Entry and assessment information12Student entry12Combinations of entry12Age12Resitting the qualification12Awarding and reporting12Access arrangements, reasonable adjustments and specialconsideration13Equality Act 2010 and Pearson equality policy14Malpractice15Language of assessment16Other information17Total Qualification Time and Guided Learning Hours17Student recruitment17Prior learning and other requirements17Progression18Exemptions18National Occupational Standards18Codes18Support, training and resources19Appendix 1: Glossary of International AccountingStandards terminology23
Specification at a glanceThe Pearson LCCI Level 3 Certificate in Financial Accounting (VRQ) consists of oneexternally examined paper.Title: Pearson LCCI Level 3 Certificate in Financial Accounting (VRQ) Externally assessed100% of thetotalqualificationOverview of content1The purpose of maintaining financial records2Recording financial transactions3Balancing accounts and the trial balance4Adjustments and the extended trial balance5Produce financial statements of a sole trader and partnership6Introduction to interpretation of financial statements.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 statement and completion of tables, analysis and evaluationof results obtained.Pearson LCCI Level 3 Certificate in Financial 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. The purpose of maintaining financial recordsSubject contentWhat students need to learn:1.1 The scope ofthe financialaccountingfunctiona) An understanding of the differences between financialaccounting and management accountingb) An understanding of financial statements and theirpurposec) The understanding and application of the followingaccounting concepts: accruals business entity consistency going concern materiality prudence realisationd) Identify the qualitative characteristics of financialreporting under the International Accounting StandardsBoard (IASB) framework:1.2 Differenttypes ofbusinessorganisations2 relevance faithful representation comparability verifiability timeliness understandability.a) The difference between the public and private sectorsb) The understanding of the characteristics of differenttypes of private sector business organisations: sole trader partnershipPearson LCCI Level 3 Certificate in Financial Accounting (VRQ)Specification – Issue 4 – October 2017 Pearson Education Limited 2017
Subject contentWhat students need to learn: limited partnership private limited companies (Ltd) public limited companies (Plc)c) The advantages and disadvantages of different types ofprivate sector business entitiesPearson LCCI Level 3 Certificate in Financial Accounting (VRQ)Specification – Issue 4 – October 2017 Pearson Education Limited 20173
Subject contentWhat students need to learn:1.3 How financialstatementscontributetowardsmeeting theneeds ofdifferentstakeholdersand usersa) The main stakeholders in business and other users offinancial statements:1.4 Theimportance ofethicalbehaviour inaccountingpractices owners managers suppliers customers employees trade associations government investors providers of external finance competitors local community trade uniona) The principles of professional ethics: honesty integrity objectivity independenceb) The application of professional ethics when undertakingaccounting roles and functions2. Recording financial transactionsSubject contentWhat students need to learn:2.1 The principlesof doubleentryaccountinga) Understanding and application of the ledger (generalledger and subsidiary ledger)4Pearson LCCI Level 3 Certificate in Financial Accounting (VRQ)Specification – Issue 4 – October 2017 Pearson Education Limited 2017
Subject contentWhat students need to learn:2.2 Recordingsales andpurchasesa) Recording sales, sales returns, purchases and purchasereturns in the relevant ledger accounts2.3 Recordingcashtransactionsa) The role and operation of the cash book in theaccounting system2.4 Undertake abankreconciliationa) The role and operations of bank reconciliation2.5 Recordingreceivablesand payablesa) The principles and operation of receivables and payables2.6 Recordingchanges ininventorya) The principles and valuation of inventory in accordancewith the relevant international financial reportingstandards (IAS 2 – inventories)2.7 Makeadjustmentsfor accrualsandprepaymentsa) The principles and operation of accruals andprepayments2.8 Theaccountingtreatment oftangible andnon-currentassetsa) The classification of revenue and capital in accountingsystems2.9 Account fordepreciationcostsa) The principles and operation of depreciation fornon-current assets, including journals and ledgerpostings, using the following methods:b) The understanding and application for recordingdiscounts in respect of sales and purchasesb) The preparation of a bank reconciliation statement froma given data setb) The principles and operation of irrecoverable receivablesand allowance for doubtful debtb) The principles and operation of non-current assets,including acquisitions, disposals and depreciationc) The importance and maintenance of an up-to-datenon-current asset register straight line revaluation reducing (diminishing) balancePearson LCCI Level 3 Certificate in Financial Accounting (VRQ)Specification – Issue 4 – October 2017 Pearson Education Limited 20175
3. Balancing accounts and the trial balanceSubject contentWhat students need to learn:3.1 The purposeof the trialbalancea) The errors which may be made in a double-entryaccounting system3.2 Correction oferrors intransactionrecordinga) Errors following the preparation of the trial balance3.3 Operate acontrolaccounta) The principles and operations of control accounts3.4 Operate asuspenseaccounta) The principles and operation of a suspense accountb) The purpose and limitations of a trial balanceb) Balancing control accounts, following the correction oferrors4. Adjustments and the extended trial balanceSubject contentWhat students need to learn:4.1 The purposeof theextended trialbalancea) To process adjustments of trial balance figures at theperiod end to prepare financial statements for business: inventory accrued and prepaid income and expenditure depreciation of non-current assets irrecoverable debts and allowance for doubtful debts correction of errorsb) The extension of the ledger balance and adjustmentcolumn into the statement of profit or loss, and thestatement of financial position columnsc) Calculate the profit or loss for the period from thestatement of profit or loss columns of the extended trialbalance6Pearson LCCI Level 3 Certificate in Financial Accounting (VRQ)Specification – Issue 4 – October 2017 Pearson Education Limited 2017
5. Produce financial statements of a sole trader and partnershipSubject contentWhat students need to learn:5.1 Prepare themain financialstatementsa) The purpose of the main financial statementsb) The preparation of a statement of financial position froma given data set for a sole trader and partnershipc) The preparation of a statement of profit or loss from agiven data set for a sole trader and partnershipd) The preparation of a statement of financial position andstatement of profit or loss from incomplete records,including mark-up and margine) The preparation of an appropriation account for apartnershipf) The preparation of a statement of cash flows for acompany from a given data set6. Introduction to interpretation of financial statementsSubject contentWhat students need to learn:6.1 Thecontributionof financialstatementsmeasuringbusinessperformancea) The importance of measuring business performanceb) The elements of business performance which can bemeasured by the main financial statement used inbusinessc) The calculation and use of the following ratios to producefinancial 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 turnoverPearson LCCI Level 3 Certificate in Financial Accounting (VRQ)Specification – Issue 4 – October 2017 Pearson Education Limited 20177
The following skills should be developed throughout the course of study.SkillsStudents should:a) Record financial transactions and understand theirimportanceb) Understand and record transactions undertaken by abusiness, including: double-entry accounting sales and purchases cash and credit transactions accounting for receivables, irrecoverable debts andallowance for receivables accruals and prepayments accounting for tangible non-current assets, includingacquisitions, disposals and depreciationc) Construct a trial balance including correction of errorsand bank reconciliationd) Prepare the statement of profit or loss and thestatement of financial position for a sole tradere) Calculate main ratios for the measurement of financialperformance8Pearson LCCI Level 3 Certificate in Financial Accounting (VRQ)Specification – Issue 4 – October 2017 Pearson Education Limited 2017
AssessmentAssessment summaryPearson LCCI Level 3 Certificate in Financial Accounting (VRQ)First teaching: September 2015Number of series: 8Overview of content1The purpose of maintaining financial records2Recording financial transactions3Balancing accounts and the trial balance4Adjustments and the extended trial balance5Produce final statements of a sole trader and partnership6Introduction to interpretation of financial statementsOverview 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 statement and completion of tables, analysis and evaluationof results obtained. Calculators may be used in the exam Bilingual dictionaries are permitted for use in the examPearson LCCI Level 3 Certificate in Financial Accounting (VRQ)Specification – Issue 4 – October 2017 Pearson Education Limited 20179
Assessment ObjectivesAssessment objectives have been developed for this qualification to ensure thatexaminations are appropriately targeted. They describe the abilities that studentsshould be able to demonstrate. Each question targets one or more assessmentobjectives. They are applied to the examination in the proportions ll accounting facts, terms, definitions,processes and formulae.AO2Perform Procedures74Record business transactionsUse accounting techniquesPrepare financial statementsAO3Demonstrate Understanding8Demonstrate understanding of accountingprocesses, procedures and techniquesAO4Analyse4Compare, classify and deconstruct informationInterpret financial data and informationRecognise patterns and correlationsAO5Evaluate2Build a reasoned decisionMake judgments about significance ofinformationPredict consequences10Pearson LCCI Level 3 Certificate in Financial Accounting (VRQ)Specification – Issue 4 – October 2017 Pearson Education Limited 2017
Performance descriptorsGradeDescriptorPassCandidates can recall, use and apply bookkeeping and accountingfacts, terms definitions, processes and formulae.Candidates can demonstrate basic understanding of accountingprocesses, procedures and techniques.Candidates can record business transactions using correctaccounting techniques.Candidates can prepare financial statements with routinetransactions for different organisations.Candidates can select and use accounting information.Candidates can make judgements which are supported withlimited evidence.DistinctionCandidates can demonstrate a detailed knowledge of bookkeepingand accounting facts, terms, definitions, processes and formulaeusing them consistently and effectively in given scenarios.Candidates can demonstrate a detailed understanding ofaccounting processes, procedures and techniques.Candidates can record business transactions using correctaccounting techniques with precision.Candidates can prepare financial statements with non-routinetransactions for different organisations.Candidates can select and use relevant information fromredundant information.Candidates can select and use relevant accounting information toanalyse accounting problems.Candidates can make judgements that are supported and justifiedwith evidence.Performance descriptors may be revised following the first award.Pearson LCCI Level 3 Certificate in Financial Accounting (VRQ)Specification – Issue 4 – October 2017 Pearson Education Limited 201711
Entry and assessment informationPlease see the LCCI International Qualification Operations Guide for centres and theLCCI Examination Regulations, available from our website:qualifications.pearson.com/lcciStudent entryDetails on how to enter candidates for the examination for thisqualification can be found at: qualifications.pearson.com/lcciThe closing date for entries is approximately six weeks beforethe start of each examination series. Centres should refer to thepublished examination timetable for examination dates.Combinations of entryThere are no forbidden combinations of entry for thisqualification.AgeThis qualification is intended for learners aged 16 and above.Resitting the qualificationCandidates can resit the examination for t
The Pearson LCCI Level 3 Certificate in Financial Accounting (VRQ) meets the following purpose: . 3.2 Correction of errors in transaction recording . a) Errors following the preparation of the trial balance . 3.3 Operate a control account . a) Th
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