A Level Accounting OCR

This subject is broken down into 18 topics in 4 modules:

  1. Introduction to financial accounting 6 topics
  2. Financial and management accounting 4 topics
  3. Advanced financial accounting 5 topics
  4. Specialty optional topics (choose one) 3 topics
Study this subject in the Adapt App →
  • 4
    modules
  • 18
    topics
  • 6,732
    words of revision content
  • 52+
    minutes of audio lessons

This page was last modified on 28 September 2024.

A preview of A Level Accounting OCR in the Adapt app

Adapt is a revision planning app with full content coverage and unlimited past paper questions for 1,200+ GCSE and A Level subjects.

Study this subject in the Adapt app →

Accounting

Introduction to financial accounting

The context and purpose of financial reporting

🤓 Study

📖 Quiz

Play audio lesson

The context and purpose of financial reporting

The Context and Purpose of Financial Reporting

Understanding Financial Reporting

  • Financial Reporting involves the disclosure of financial information to the various stakeholders about the financial performance and financial position of the organisation over a specific period of time.

  • The individuals or entities who have interest in the company’s financial performance are referred to as stakeholders. This includes employees, managers, investors, suppliers, customers, regulators, and others.

  • Financial Reporting is essential to provide information that demonstrates if the company is making a profit or a loss, what is the company’s worth, where the funds are being allocated etc.

Purpose of Financial Reporting

  • The primary objective of financial reporting is to provide high-quality financial reporting information concerning economic entities, primarily financial in nature, useful for economic decision making.

  • To communicate financial information to stakeholders which helps them in decision making. Stakeholders decide on whether to keep on investing in the company based on the financial health of the company.

  • To maintain transparency in financial reporting process. It is achieved through the disclosure of financial statements, annual reports etc.

  • To make sure companies adhere to the relevant legislation and standards, like International Financial Reporting Standards (IFRS).

Components of Financial Statements

  • Balance Sheet / Statement of Financial Position: Snapshot of what a company owns (assets), owes (liabilities), and the shareholder equity at a specific point in time.

  • Income Statement: Shows the company's revenue and expenses over a period of time. It tells whether a company made profit or not during the reporting period.

  • Cash Flow Statement: Outlines the inflows and outflows of cash and cash equivalents from various activities like operating, investing and financing activities.

  • Statement of Changes in Equity: Also known as the statement of retained earnings, it gives a detailed report on the changes in the company's retained earnings during a period.

Role of Accounting Standards

  • Accounting standards aim to provide a uniformity and consistency in the financial statements of a company.

  • They safeguard the interest of the users who rely on such financial documents, instilling trust and confidence.

  • The Accounting Standards Board issues and updates accounting standards. IFRS and UK GAAP are widely accepted standards.

Course material for Accounting, module Introduction to financial accounting, topic The context and purpose of financial reporting

Accounting

Financial and management accounting

Decision-making

🤓 Study

📖 Quiz

Play audio lesson

Decision-making

Decision-Making in Financial and Management Accounting

The Role of Decision-Making

  • Understand the importance of decision-making within financial and management accounting.
  • Explore the various methodologies and tools available for making confident, informed decisions.
  • Recognise the role of both qualitative and quantitative data in the decision-making process.
  • Get to grips with the key decision-making models used within the field, such as Cost-Volume-Profit (CVP) analysis.

Relevant Costs and Benefits

  • Develop an understanding of the concept of relevant costs and how it aids in decision-making.
  • Distinguish between relevant costs and irrelevant costs, and learn how to factor these into your decision-making process.
  • Explore the idea of opportunity cost and understand its role in the decision-making process.
  • Grasp the importance of considering the relevant benefits associated with each decision.

Break-Even Analysis

  • Familiarise yourself with the concept of break-even analysis and its importance in the decision-making process.
  • Understand how to calculate the break-even point and what it indicates about a business's profitability.
  • Recognise the limitations of break-even analysis and why it should only be one tool among many in the decision-making process.

Capital Investment Decisions

  • Gain knowledge about how businesses make capital investment decisions, usually involving large amounts of money and long time horizons.
  • Understand various investment appraisal techniques, such as Net Present Value (NPV), Internal Rate of Return (IRR), and Payback Period.
  • Learn how to apply these techniques and interpret the results to inform the decision-making process.
  • Grasp the impact of risk and uncertainty on capital investment decisions and the strategies to manage them.

Budgeting and Control

  • Explore the role of budgeting in business decision-making.
  • Understand how budgets can aid in performance management and control within an organisation.
  • Learn about the various types of budgets, including operating budgets, financial budgets, and cash budgets.
  • Acknowledge the process of budget monitoring and the importance of taking corrective actions when necessary.

Course material for Accounting, module Financial and management accounting, topic Decision-making

Can I trust Adapt’s expertise?

Adapt is already used by over 600,000 students and trusted by over 3,000 schools. Our exam-specific content and assessments are meticulously crafted by expert teachers and examiners.

Find out more about the Adapt app →

Planner

An always up-to-date revision timetable.

A personalised, flexible revision timetable that stays up-to-date automatically.

Content

All the exam resources, in one place.

Over 20,000 topics broken down into manageable lessons with teacher-written, exam-specific lessons.

Assessment

Past-paper questions, with instant feedback.

Unlimited past paper questions with instant examiner feedback on how to improve.

Progress

Track progress, together.

Progress tracking to stay motivated, with real-time updates to the Parent Portal.

Download the app today to start revising for free.