NCEA Level 2 Accounting cheat sheet

Level 2 Accounting achievement standards are unit-standard-based credits assessed against New Zealand Curriculum Level 7-8 accounting concepts; each standard specifies its own evidence requirements and credit value.

A statement of financial position reports assets, liabilities and equity at a point in time; the accounting equation Assets = Liabilities + Equity must balance after every transaction is recorded.

Current assets and current liabilities are those expected to be realised or settled within 12 months of balance date; the current ratio = current assets / current liabilities.

The income statement reports revenue and expenses for a period on an accrual basis: revenue is recognised when earned, expenses when incurred, not when cash moves.

Depreciation is the systematic allocation of a non-current asset's cost less residual value over its useful life; straight-line = (cost - residual value) / useful life in years.

The diminishing-value (reducing balance) method applies a constant percentage to the carrying amount each period, giving higher depreciation in early years than straight-line.

Inventory under the perpetual method is updated at each purchase and sale; the weighted average cost per unit = total cost of goods available for sale / total units available.

Gross profit = sales revenue - cost of goods sold; cost of goods sold = opening inventory + purchases - closing inventory (adjusting for returns and freight inward).

Internal assessment evidence must be produced under the conditions stated in the standard: some standards permit research and drafting outside class time, while others require supervised conditions for the final response.

Authenticity requirements mean the assessor must verify the work is the candidate's own; drafts, source documents and teacher observation records are typical evidence.

A common internally assessed task is preparing and processing financial information for a small entity - journals, ledger accounts and a trial balance - from supplied source documents.

For an accounting report standard, the report must state a purpose, present processed information (e.g. ratios or cash budgets), interpret it, and give justified recommendations linked to the interpretation.

Ratio analysis evidence is only sufficient when each ratio is calculated from the entity's figures, stated with units, and interpreted against a comparison such as a prior period, budget, or industry benchmark.

A cash budget is prepared from expected receipts and payments by month; the closing bank balance of one month becomes the opening balance of the next, and the minimum balance line is stated.

Community or entity financial statements used for internal assessment must be current, sourced and referenced; the candidate must not simply reproduce the statement without processing and interpreting it.

Assessment judgements are made against the standard's explanatory notes and grade descriptors; a Merit or Excellence judgement requires evidence of the higher-level criteria, not just more calculations.