Understanding accounting concepts and conventions

Accounting concepts and conventions underpin accounting practice.

In the focus area of understanding accounting concepts and conventions, students develop the foundational understanding of accounting and explore how accounting concepts and conventions impact accounting activities. They examine emerging accounting and business trends and opportunities, taking into account local and global perspectives. Students develop and extend their understanding of the existence and influence of regulatory frameworks on accounting activities.

Financial literacy

Students develop an understanding of the functions and main features of a range of entities. They distinguish between the accounting entity and the legal entity in a range of structures.

Students understand, apply, and explain the accounting process, the accounting equation, and the principles of a double-entry recording process (the duality concept). They understand and explore the various elements of accounting reports, as well as the role of qualitative and quantitative information. Students understand and apply the faithful representation, relevance, consistency, and materiality of that information.

Students understand and apply the terminology and features of a range of reports used by different entities to communicate accounting information. They explore:

• how financial transactions impact on the accounting information within reports
• the links between reports
• the effects of accrual accounting, historical cost, and prudence
• the implications of the accounting period on the preparation of final reports.

Stakeholder information and decision-making

Students consider the users of accounting information and explore the reporting needs of a range of accounting entities. They analyse the impact of the legal entity concept on reports and stakeholder information needs.

Students examine the interrelationship of accounting concepts and conventions in preparing information to achieve the accountability, control, and decision-making functions of accounting.

Students understand that accounting information is the result of the accounting process; that it has a purpose, and that it is used by stakeholders to inform decision-making.

Innovation

Students develop and extend their understanding of the changing uses and forms of accounting information in the context of the evolving needs of a range of stakeholders. They focus on emerging trends and opportunities in accounting and business.

Students examine the impact of digital technologies^* on:

• accounting activities
• the creation of and access to accounting information.

Students explore innovative methods of communicating accounting information to meet specific needs of stakeholders.

^*There is no requirement for students to use accounting software to examine, create, and access accounting information.