Bookkeeping Applications BBS203

Develop Bookkeeping Skills, For Your Business or as a Consultant

Better bookkeepers not only know more about bookkeeping; but they are more able to work to specification, have developed better networks within their industry and have better problem solving skills. This course is also suitable for those who wish to further develop their accounting skills and become more involved in analysing and reporting.

In this course, you'll improve your skills, and increase the number of services you can offer clients or employers. An excellent course for people who have completed a foundation course in bookkeeping; and wish to move to the next level, or a natural progression from Bookkeeping Foundations.

Course Duration: 100 hours

Course Structure

There are 10 lessons in this course.

  1. Introduction - Review of Accounting Foundations
    • Stock defines a trading business
    • Bookkeeping requirements for a trading business
    • Steps in processing stock transactions
    • Books required for a trading business
    • Trading businesses and accounting rules
    • Accounting doctrines
    • Accounting standards
  2. Decision Making: How to Manage Your Bookkeeping
    • Bookkeepers Terminology
    • Using bookkeeping as a management tool
    • What are business structures
    • Business requirements of companies
    • Financial information, and who uses it
    • Alternative approaches to accounting systems
    • Definitions and bookkeeping processes
    • Double entry bookkeeping
    • Single entry bookkeeping
    • Cash accounting
    • Modified cash accounting
    • Accrual accounting
    • Choosing depreciation methods
    • Depreciation calculation
    • Calculating depreciation with the straight line method
    • What if there is no residual value
    • How to enter depreciation in the books
    • Declining balance method of depreciation
    • Calculating percentage rate of depreciation
    • Units of activity depreciation method
    • Intangible assets
    • Tracking assets and depreciation
    • Closing stock control methods
    • Functional profit and loss in a trading business
    • Informative profit and loss presentation: segmentation, grouping expenses
    • Showing Extraordinary Revenue and Expenses
  3. Managing Cash Flow, Obtaining Finance and Managing Bad Debts
    • Definition of cash
    • The cash cycle
    • Cash flow and liquidity
    • Analysing a businesses cash flow
    • Cash flow margin
    • Statements of cash flow
    • Managing costs in a business
    • Financing a business
    • Rules for business funding
    • Business set up costs
    • Thinking outside the box
    • Loss of time and income
    • Managing bad debt
    • Initiating collection
    • Bookkeeping procedures for bad and doubtful debts
    • Accounts payable procedures
    • Accounts payable schedule
    • Ageing report
    • Source Documents: invoice, monthly statement
    • Credit purchasers journal
    • Creditors subsidiary ledger and schedule
    • Cash payments journal and creditors control account
  4. Managing the Inventory Part 1
    • Difference between goods and commodities
    • Role of stock in a trading business
    • Purpose of physical stock take
    • Costing goods
    • When an articles cost changes
    • How cost relates to gross profit
    • Difference between cost of goods sold and selling expenses
    • Pricing stock
    • Mark up
    • Margin
    • Stock coding system
    • Stock sheets
    • Journals used in businesses that carry stock
    • Common journals
    • Examples of journal entries
    • Recording purchase returns in the general journal
    • Closing books
    • Closing ledger accounts
    • Preparing for new accounting period
    • Transferring balance day closing entries
    • Profit and loss account
    • Balance sheet
  5. Managing the Inventory Part 2
    • Perpetual stock control
    • Stock cards and subsidiary ledger
    • Records on stock cards
    • Stock gains and losses
    • Adjustments
    • Errors in stock taking
    • Bar codes
    • Costing sales
    • Inventory turnover ratio
    • Modified general journals for perpetual stock control
    • Valuing stock methods -FIFO, LIFO, Identified cost method, weighted average, etc.
    • Terminology
  6. Establishing and Managing Control Accounts
    • Introduction
    • Grouping accounts
    • Advantages of control accounts
    • Debtors control accounts
    • Debtors subsidiary ledger and control account
    • Cash receipts journal and debtors control account
    • Credit purchasers journal
    • Creditors subsidiary ledger and control account
    • Cash payments journal and creditors control account
    • Control accounts relationship to non current assets
    • What happens at the end of assets useful life
    • Assets register
    • Disposal of non current assets
    • Creditors control accounts relationship to subsidiary accounts
    • Control accounts and expenses
    • Control accounts and inventory
  7. Budgeting Part 1
    • Introduction
    • Budget types
    • Cash budget
    • Capital budget
    • Sales budget
    • Marketing budget
    • Production budget
    • Expense budget
    • Project budget
    • Master budget
    • Inter-relationships between budgets
    • The cash budget
    • Preparing a cash budget
    • Factoring in safety margins
    • Variable Costs
    • Using net profit to evaluate business performance
    • What is profitability?
    • What is gross profit?
    • What is net profit?
    • Cash flow margin
    • Return on assets margin
    • Gearing ratio
    • Owners equity margin
    • Budgeted profit and loss statements
    • Budgeted balance sheets
    • Variances in budgets
    • Budget reviews and performance reports
  8. Budgeting Part 2
    • A problem based learning project (ie. PBL) where you will prepare budgeting for a retail business. PBL project is carefully designed by experts to expose you to the information and skills that we want you to learn. In undertaking the project, you are given:
      • A statement of the problem (e.g. diseased animal; failing business; anorexia case study);
      • Questions to consider when solving the problem;
      • A framework for the time and effort you should spend on the project;
      • Support from the school
  9. Payroll, PAYG Taxation, Taxation for Trading Businesses
    • How to set up a payroll system
    • Types of payments made for work done
    • Employee records to be kept
    • Other records
    • Fringe benefits and taxation
    • Recording wage payments
    • Employee payment summary
    • PAYG Taxation
    • Using time sheets
    • Superannuation or pension funds
    • Taxation law terminology
    • Tax-related expenses
  10. Financial Statement Analysis
    • Analysis and interpretation
    • Why do we analyze financial data
    • Using net profit figures to evaluate business performance
    • Analyzing cost centres in business
    • Functional classification on P & L Statement
    • Difference between analysis and interpretation
    • Ratio analysis
    • Trend analysis Vertical analysis
    • Horizontal analysis
    • When should financial data be analyzed
    • Calculating investment returns
    • Return on assets margin, equity margin
    • Cash flow ratio operation
    • Accounts receivable turnover ration
    • Evaluating business performance using net profit ratio
    • Profitability

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How Much Do You Understand about  Cash and Accrual Accounting?

The payment of expenses rarely coincides neatly with the financial year. As a result, some expenses will be owing to suppliers (accruals), while others will have been paid in advance (pre-payments).

The object of a Profit and Loss Account is to show the expenses which should have been paid in the given trading period, and not to show the expenses which have actually been paid.

If accounting was just simply revenue less expenses paid = profit then this would be known as cash accounting. 

Cash Accounting

Cash accounting works on the principle that income does not exist until the cash is received and an expense is not an expense until it is paid. It is a simple way of recording transactions especially for smaller businesses that may not employ a bookkeeper; it means that there are no balance day adjustments made and it is easy to determine

In cash accounting all the transactions are entered into the accounts as they occur.

The same applies to expenses – so if you paid advertising of $1,000 in June that is recorded as an expense for June irrelevant of whether some of the actual advertising was to be run in later months. 

This method is valid for a business that deals in cash rather than on credit. 

How does this take depreciation and the value of stock into account?

In cash accounting we will still need to take into account depreciation of assets, of intangible assets, and the value of stock (even though they are not current expenses). This is done by modifying the cash accounting process used by the business to include the expenses of depreciation and amortisation and to include the value of stock in the businesses books, before the preparation of the profit and loss statement.

Modified Cash Accounting


Many businesses carry stock – even a service business will have office supplies and/or other items (such as parts) that are of value and that need to be accounted for in the books on balance day. 

Adjusting for ‘stock/supplies on hand’ is similar to adjusting for prepaid expenses because you have bought and paid for the stock in one accounting period but part of the asset still exists at the end of the period. So you need to reduce the expense account, thereby creating a temporary current asset ‘Stock on Hand’. 

Say for example a car service business bought $3,000 worth of small parts on hand during the accounting period; at the end of the accounting period (after conducting a ‘stock-take” they still have $1,000 worth on hand. 

Original entry was $3,000 debit to Parts Account as an expense, and $3,000 credit entry to Cash at Bank.

The adjusting entries on balance day:

  • Dr: Parts Account $2,000 (expense for the accounting period)
  • Cr. Stock of Parts (Temporary asset account) $1,000 (the amount left for the period)
  • Close off the Stock of Parts account to Profit and Loss account with the adjusting entry.
  • Do a reversal on the first day of the new accounting period to open with the $1,000 balance.


This is the decrease in value of fixed assets caused by use, wear and tear, passage of time or obsolescence.

At the end of the period, depreciation expense must be calculated (see the last lesson for ways to calculate depreciation) and the depreciation entries made.  

The debit entry to depreciation is required because depreciation is an expense item. Therefore, the above entry increases the expense account for depreciation. The credit entry to accumulated depreciation is an increase in a negative asset account.  The accumulated depreciation account is used to accumulate or add up the total depreciation written off an asset so far.  It is known as a negative asset account as it is deducted from the related asset account.

Accruals Accounting 

Accrual accounting takes into account those overlaps in payments (prepayments of accounts or amounts outstanding at the end of the accounting period). An example of this would be insurance a business may pay an insurance bill for the following 12 month period but in April so that only 2 months of the payment is allocated into the current financial year and 10 months needs to be accrued for the following year’s expenses. These accruals affect the profit and loss statement. 

Thus if wages of $300 are still owing at the end of the financial year, they must be added to the amount which has already been paid when listing the expenses in the Profit and Loss Account; and they should be shown as a current liability in the Balance Sheet (accruals).

Conversely, if rates of $700 have been paid in advance, they should be subtracted from the amount which was actually paid when the expenses were listed in the Profit and Loss Account, and they should be shown as a current asset in the Balance Sheet (pre-payments).

In accrual accounting if payments (income) are outstanding it still recognises this as income and the transactions are recorded as they occur, irrelevant of whether cash is received or not. Say for example a mechanic does repairs on a car – once he has finished the job he enters the outstanding amount into his books i.e. even before the customer pays. Once he has invoiced the customer it is recorded as revenue. 

Accrual accounting gives a business a more realistic picture of where it stands financially because all revenue and expenses are relevant to the accounting period in question. 

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Fee Information (S2)
Prices in Australian Dollars

PlanAust. PriceOverseas Price
A 1 x $781.66  1 x $710.60
B 2 x $416.96  2 x $379.05

Note: Australian prices include GST. 

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