Internal Assessment: Accounting Processing Using Accounting Software
What internal assessment requires
Internally assessed Level 2 Accounting standards, particularly accounting processing using accounting software, are assessed through a portfolio of evidence. You set up an entity, enter opening balances, process transactions from source documents, reconcile the bank account, correct errors and generate reports. Marks come from both accurate processing and explanations: why a transaction is recorded a certain way, how software controls such as edit checks, audit trails and reconciliation reduce error, and how reports connect to the accounting equation.
Core rules
- Match every entry to a source document and the correct date and period.
- Set GST correctly: in New Zealand GST is 15%; record sales and purchases net and GST in its own account unless the software does it for you.
- Post all transactions before taking reports; draft or unposted entries make reports wrong.
- Reconcile the bank monthly: bank statement balance adjusted for timing differences should equal the cash book balance.
- Keep an audit trail: no unexplained deletions; correct errors by journal or reversal.
- Explain, do not just click: link reports to A = L + E and to profit.
Worked example
A credit sale invoice is $2,300 including 15% GST. Net sale = 2,300 / 1.15 = $2,000; GST = $300. Entry: Dr Accounts receivable 2,300; Cr Sales 2,000; Cr GST payable 300. When paid: Dr Bank 2,300; Cr Accounts receivable 2,300. The income statement shows sales of $2,000, not $2,300; the statement of financial position shows the receivable until paid and the GST liability. If the bank statement shows the receipt but the cash book does not, it is a timing difference in the reconciliation, not an error to force.
Traps that cost marks
Entering GST-inclusive amounts as net; processing after reports are generated without re-running them; mixing owner's personal payments with business expenses; leaving transactions unposted; treating a bank reconciliation difference as a plug; failing to explain software controls.