Syllabus for AAT Levels 2, 3 & 4 in Accounting

LEVEL 2

• Understand how to set up bookkeeping systems
• Process customer transactions
• Process supplier transactions
• Process receipts and payments
• Process transactions into the ledger accounts:

• Use control accounts
• Reconcile a bank statement with the cash book
• Use the journal
• Produce trial balances

• Understand the cost recording system within an organisation
• Use cost recording techniques
• Provide information on actual and budgeted costs and income
• Use tools and techniques to support cost calculations

• Understand the principles of contract law
• Understand the external business environment
• Understand the principles of corporate social responsibility (CSR), ethics and sustainability
• Understand the impact of setting up different types of business entity
• Understand the finance function within an organisation
• Produce work in appropriate formats and communicate effectively
• Understand the importance of information to business operations

LEVEL 3

• Understand the accounting principles underlying final accounts preparation
• Understand the principles of advanced double-entry bookkeeping
• Implement procedures for the acquisition and disposal of non-current assets
• Prepare and record depreciation calculations
• Record period end adjustments
• Produce and extend the trial balance
• Produce financial statements for sole traders and partnerships
• Interpret financial statements using profitability ratios
• Prepare accounting records from incomplete information

• Understand legislation requirements relating to VAT
• Calculate VAT
• Review and verify VAT returns
• Understand principles of payroll
• Report information within the organisation

• Understand the purpose and use of management accounting within organisations
• Use techniques required for dealing with costs
• Attribute costs according to organisational requirements
• Investigate deviations from budgets
• Use spreadsheet techniques to provide management accounting information
• Use management accounting techniques to support short-term decision making
• Understand principles of cash management

• Understand business types, structures and governance, and the legal framework in which they operate
• Understand the impact of the external and internal environment on businesses, their performance and decisions
• Understand how businesses and accountants comply with principles of professional ethics
• Understand the impact of new technologies in accounting and the risks associated with data security
• Communicate information to stakeholders

LEVEL 4: Mandatory Subjects

• Understand and implement the organisational planning process
• Use internal processes to enhance operational control
• Use techniques to aid short-term and long-term decision making
• Analyse and report business Performance

• Understand the reporting frameworks that underpin financial reporting
• Draft statutory financial statements for limited companies
• Draft consolidated financial statements
• Interpret financial statements using ratio analysis

• Understand the role and responsibilities of the accounting function within an organisation
• Evaluate internal control systems
• Evaluate an organisation’s accounting system and underpinning procedures
• Understand the impact of technology on accounting systems
• Recommend improvements to an organisations accounting systems

LEVEL 4: Optional Subjects (choose two from three)

• Prepare tax computations for sole traders and partnerships
• Prepare tax computations for limited companies
• Prepare tax computations for the sale of capital assets by limited companies
• Understand administrative requirements of the UK’s tax regime
• Understand the tax implications of business disposals
• Understand tax relief, tax planning opportunities and agent’s responsibilities in reporting to HMRC

• Understand the principles and rules that underpin taxation systems
• Calculate UK taxpayers’ total income
• Calculate Income Tax and national Insurance (NICs) payable by UK taxpayers
• Calculate capital Gains Tax payable by UK taxpayers
• Understand the principles of Inheritance tax

• Prepare forecasts for cash receipts and payments
• prepare cash budgets and monitor cash flows
• Understand the importance of managing finance and liquidity
• Understand the way of raising finances and investing funds
• Understand regulations and organisational policies that influence decisions in managing cash and finance