LGCSE Accounting (0187) study guide
LGCSE Accounting (0187) · Work through your exam, one topic at a time.
LGCSE Accounting (0187) is a school-level qualification in bookkeeping and financial reporting, taken by learners who are usually in the mid-years of secondary schooling and who want a formal, externally marked record of their accounting ability. It suits candidates aiming at further study in accounting, business or finance, and it also gives a credible grounding for anyone who will keep books in a family business or move into entry-level finance work. The LGCSE Accounting (0187) study guide has 7 sections and about 1,787 words.
01The Fundamentals of Accounting
Accounting records transactions in money terms so that owners and other users can judge performance and position. Learn the accounting equation (Assets = Capital + Liabilities), the dual aspect idea that every transaction affects two items, and the classification of items into assets, liabilities, capital, income and expenses.
273 words, about 1 min02Sources and Recording of Data
Transactions are first recorded in books of prime entry : sales day book, purchases day book, sales returns day book, purchases returns day book, cash book and the general journal. From these, entries are posted to the ledger using the double-entry system.
267 words, about 1 min03Verification of Accounting Records
The trial balance lists ledger balances and checks arithmetic accuracy, but it does not prove the records are free from error. Learn the errors that a trial balance will not reveal: error of omission , commission , principle , original entry , reversal of entries , and compensating errors .
289 words, about 1 min04Financial Statements of Sole Traders
Prepare an income statement (trading and profit and loss account) to find gross profit and net profit, and a statement of financial position (balance sheet). Know the trading account structure: opening inventory + purchases − closing inventory = cost of sales; sales − cost of sales = gross profit.
259 words, about 1 min05Financial Statements of Partnerships and Limited Companies
For a partnership , prepare an appropriation account showing interest on capital, partners' salaries, interest on drawings, and the sharing of residual profit or loss in the agreed ratio. Know the partners' capital and current accounts .
248 words, about 1 min06Analysis and Interpretation of Accounting Information
Calculate and interpret profitability ratios (gross profit margin, net profit margin, return on capital employed), liquidity ratios (current ratio, quick ratio), efficiency ratios (inventory turnover, trade receivable days, trade payable days) and gearing . Know how to comment on results: compare with prior years, budgets or competitors, and explain causes and consequences.
228 words, about 1 min07Accounting Principles and Controls
Apply the accounting concepts : going concern, accruals (matching), consistency, prudence, business entity, materiality, realisation, and historical cost. Understand internal control over cash, inventory and receivables, including segregation of duties, authorisation, and bank reconciliation as a control.
223 words, about 1 min