Understanding financial sustainability

In the focus area of understanding financial sustainability, students apply their understanding of accounting concepts and conventions to create accounting information. They develop an understanding of the role of accounting information in decision-making. They understand the social and ethical considerations that may impact decision-making. Students explore the use of qualitative and quantitative information for financial sustainability. Students develop an understanding that local and global perspectives impact financial sustainability.

Financial literacy

Students understand the purpose and procedures to report assets, liabilities, owners’ equity, revenue, and expenses.

Students understand the difference between accrual profit and cash. (Balance-day adjustments are not a requirement of Stage 1 Accounting.)

Students prepare classified reports for sole traders, including:

• income statements
• statements of changes in equity
• balance sheets.

Students develop an understanding of accounting analysis tools (such as ratios). They use information from classified reports to calculate appropriate ratios to review the performance of the business.

Students explore types and sources of finance.

Stakeholder information and decision-making

Students understand the role of accounting reports in decision-making. They explore the use of qualitative and quantitative information in decision-making by stakeholders.

Students develop an understanding of how the information provided by the calculation of ratios can meet the needs of different stakeholders.

Innovation

Students recognise the use of digital and emerging technologies^* to manage financial sustainability, such as, but not limited to:

• the real-time availability of financial information facilitated by cloud-based and webbased accounting systems
• the changing nature of a stakeholder’s requirements for the preparation, interpretation, and analysis of financial information, such as:
  • the (decreasing) reliance on accounting professionals for the preparation of accounting information
  • the (increasing) requirement for the interpretation and analysis of accounting information
• the nature of communication with accounting professionals.

^* There is no requirement for students to use accounting software to prepare, interpret, analyse, and communicate accounting information.