7

LCCI qualifications
LCCI qualifications are awarded by the IAB, the UK’s largest awarding body offering academic and
vocational qualifications that are globally recognised and benchmarked. For further information,
please visit our qualifications website at https://www.iab.org.uk/iab-qualifications/

About IAB
LCCI qualifications have been offered internationally for over 120 years and were started by the London
Chamber of Commerce and Industry to meet the need for reliable, high-quality standards across
international workforces.

As the way we do business evolves and becomes more fluid on a global scale the demand for internationally
recognised standards has never been greater and is a sentiment that is echoed by the IAB who have been
supporting financial professionals globally for 50 years.

Based on these shared values from September 2023, the IAB and LCCI will join to continue to offer and
develop high-quality, professional qualifications for the finance sector and a range of other professions.

This specification is Issue 4. We will inform centres of any changes to this issue. The latest issue can
be found on our website, qualifications.iab.com

Acknowledgements
This specification has been produced by IAB based on consultation with teachers, examiners,
consultants and other interested parties. IAB would like to thank all those who contributed their time
and expertise to the specification’s development.

References to third party material made in this specification are made in good faith. IAB does not
endorse, approve or accept responsibility for the content of materials, which may be subject to
change, or any opinions expressed therein. (Material may include textbooks, journals, magazines and
other publications and websites.)

All information in this specification is correct at the time of publication.

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Introduction

LCCI qualifications
LCCI qualifications are widely regarded by employers as preparing students to carry out the key
functions of modern international business. The qualifications are recognised worldwide by
employers, universities and professional bodies such as the Association of Chartered Certified
Accountants (ACCA).
This new and engaging range of qualifications has been developed in collaboration with professional
bodies, employers and customers. We have conducted in-depth, independent consultation to
ensure that the qualifications develop the breadth and depth of knowledge, skills and understanding
that students need to be effective employees, and that the qualifications support progression
pathways.
IAB LCCI offers a wide range of qualifications; they are available at Levels 1 to 4 across the following
subject areas:
● Business
● Financial accounting and Payroll

Purpose of the specification

This specification sets out:
● the objectives of the qualification
● any other qualification(s) that a student must have completed before taking the
qualification
● any prior knowledge and skills that the student is required to have before taking the
qualification
● any other requirements that a student must have satisfied before they will be assessed
or before the qualification will be awarded
● the knowledge, understanding and skills that will be assessed as part of the
qualification
● the method of assessment and any associated requirements relating to it
● the criteria against which a student’s level of attainment will be measured (such as
assessment criteria).

Rationale
The IAB LCCI Level 2 Certificate in Bookkeeping and Accounting (VRQ) meets the following
purpose.
The purpose of this qualification is to give students a thorough foundation in bookkeeping
and basic accounting practices, including double-entry bookkeeping.
A review of the qualification requirements at this level identified the main functions of
bookkeeping and accounting in a business. This qualification therefore includes content on
these main functions:

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● double-entry bookkeeping
● maintain up-to-date records of all financial transactions in an appropriate format using
accounting record books (the ledgers)
● financial statements
● financial statements of different enterprises (sole traders, partnerships,
companies, manufacturers).
This qualification is appropriate for students who are already in a role, and for those aspiring to
a role where they are responsible for the detailed recording of all the financial transactions of a
business, maintaining these records using double-entry bookkeeping and for ensuring that all
monetary transactions made by the business are recorded accurately.

Qualification aim
The IAB LCCI Level 2 Certificate in Bookkeeping and Accounting (VRQ) and the legacy
qualification are established and valued by employers worldwide and recognised by
professional bodies. All businesses require accurate bookkeeping records that are maintained
on a regular basis. Consequently, there is a demand for employees who possess these skills.
This qualification is intended for students who wish to gain a thorough foundation in
bookkeeping and accounting practices, including double-entry bookkeeping. It is also for
students who wish to understand bookkeeping and accounting in accordance with the
International Accounting Standards Board (IASB). The qualification is also for those who are
working, or who are preparing to work, in an accounting environment maintaining financial
records and preparing accounts.
This qualification will give students the opportunity to develop an understanding of the basic
principles underlying the recording of business transactions. It will also give students the
ability to prepare and interpret accounts for sole traders, partnerships, limited companies,
manufacturing and non-profit making organisations.
The IAB LCCI Level 2 Certificate in Bookkeeping and Accounting (VRQ) will allow progression
to other LCCI Level 3 Accounting qualifications and professional body qualifications, as well as
supporting progression to the job market, for example to a bookkeeping and accounting role
within a large company’s finance department. The IAB LCCI Level 2 Certificate in Bookkeeping
and Accounting (VRQ) will support students who run their own business and who need to
carry out their own bookkeeping and those already working in accounting who would like to
enhance their skills.

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Contents
Specification at a glance .......................................................................................................................... 6
Knowledge, skills and understanding ........................................................................................................ 7
Content .................................................................................................................................................. 7
Assessment ........................................................................................................................................... 15
Assessment summary .......................................................................................................................... 15
Assessment Objectives......................................................................................................................... 16
Performance descriptors...................................................................................................................... 17
Entry and assessment information ...................................................................................................... 18
Other information ................................................................................................................................. 22
Total Qualification Time and Guided Learning Hours .......................................................................... 22
Student recruitment............................................................................................................................. 22
Prior learning and other requirements ................................................................................................ 22
Progression........................................................................................................................................... 23
Exemptions........................................................................................................................................... 23
National Occupational Standards......................................................................................................... 23
Codes ................................................................................................................................................... 23
Support, training and resources ............................................................................................................. 24

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 Specification at a glance
The IAB LCCI Level 2 Certificate in Bookkeeping and Accounting (VRQ) consists of one online
examination.

Title: IAB LCCI Level 2 Certificate in Bookkeeping and Accounting (VRQ)

● Externally assessed. 100% of the

total
qualification
Overview of content
● Recording Financial Transactions
● Control Accounts
● Correction of Errors and the Journal
● Adjustments in Financial Statements
● Preparation of Financial Statements
● Accounting Ratios
Overview of assessment
• One online, externally set and marked examination, contributing to 100% of the overall
grade of the qualification.
● The examination will be 3 hours.
● The examination will consist of 100 marks.
● Candidates will be graded Pass/Merit/Distinction. A result of Fail will be
recorded where candidates do not achieve the required marks for
a Pass.
● The examination contains five questions.
● Candidates should answer all questions.
● The questions comprise table completion, account preparation, calculations,
multiple choice, short open response and medium open response questions.

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 Knowledge, skills and understanding

Content
The following content must be covered to prepare students for the final assessment of this
qualification.

1. Recording Financial Transactions

Subject content What students need to learn:

1.1 The principles of a) The functions of the ledger (general ledger and subsidiary
double- entry ledgers)
accounting b) The importance of the documentation used in recording and
monitoring business transactions

2. Control Accounts

Subject content What students need to learn:

2.1 The a) Understanding of the sources of information for control

preparation of accounts
control b) Preparation of control accounts, to include dealing with
accounts minority balances
c) Recording control account balances in the statement of
financial position
2.2 Reconciliation of a) Preparation of a statement reconciling the trade receivables
control ledger control account to the sum of the balances in the
accounts trade receivables ledger, including correction of errors.

b) Preparation of a statement reconciling the trade payables

ledger control account to sum of the balances in the trade
payables ledger, including correction
of errors

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 3. Correction of Errors and the Journal

Subject content What students need to learn:

3.1 Correction of a) Identification and correction of errors that do not affect the
errors not trial balance
affecting the b) Preparation of journal entries to record correction of errors
trial balance

3.2 Correction of a) Identification and correction of errors that affect the trial
errors affecting balance
the trial b) Opening and posting entries to a suspense account
balance
c) Preparation of journal entries to record correction of errors

d) Preparation of a revised statement of profit or loss after

correction of errors
e) Preparation of a revised statement of financial position
3.3 The Journal a) Understand other uses of the journal:

● to open or close a set of books

● purchase or sale of a non-current asset
● transfer of period end balances to the financial
statements
● internal transfers of balances

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 4. Adjustments in Financial Statements

Subject content What students need to learn:

4.1 Accounting a) The understanding and application of the following

concepts accounting concepts:
● accruals
● business entity
● consistency
● going concern
● materiality
● prudence
● realisation
4.2 Accounting for a) What is depreciation and what are the causes of depreciation?
depreciation
b) Understanding of the need to account for depreciation of non-
current assets
c) The recording of the depreciation charge and
accumulated depreciation in the ledger using:
● straight line method
● reducing (diminishing) balance method
● revaluation method
d) accounting entries for the acquisition and disposal of non-
current assets, to include the calculation of profit or loss on
disposal
4.3 Accounting for a) Understanding of the need to account for irrecoverable debts
irrecoverable
debts and b) Understanding of the need for maintaining an allowance for
allowance for doubtful debts
doubtful debts
c) accounting entries for irrecoverable debts and the allowance
for doubtful debts
d) accounting entries for irrecoverable debts recovered
4.4 Accounting for a) Understanding of the need to account for accrued and prepaid
accruals and expenses and income
prepayments b) accounting entries for accrued and prepaid expenses and
income

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 5. Preparation of Financial Statements

Subject content What students need to learn:

5.1 Partnerships a) Understand the advantages and disadvantages of forming

partnerships
b) Understanding of the need for a partnership agreement and
the implications for the business if one is not drawn up

c) The correct treatment of interest on partners’ loans

d) Purpose and preparation of:

● current accounts
● capital accounts
in both ledger format and as part of the statement of financial
position
e) Understanding of the nature and purpose of an
appropriation account
f) Preparation of:

an appropriation account to include:

● interest on drawings
● interest on capitals
● partners’ salaries
● share of profits
a statement of financial position to include:
● partners’ capital balances
● partners’ current account balances
g) accounting entries on the admission of a new partner,
including the correct treatment of goodwill to include the
preparation of a revaluation account
h) accounting entries on retirement of partners to include the
correct treatment of goodwill to include the preparation of
a revaluation account
i) Accounting entries for a change in partnership interests, to
include preparation of a revaluation account
j) accounting entries for the dissolution of a partnership, to
include the preparation of a realisation account

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Subject content What students need to learn:

5.2 Limited liability a) Understanding of the term ‘limited liability’

companies b) Understand the difference between:

● public limited company (PLC) and private limited

company (Ltd)
● ordinary shares and preference shares
● share capital and loan capital
● capital reserves and provisions
c) Preparation for internal uses of:

● statement of profit or loss

● statement of changes in equity
● statement of financial position
5.3 Incomplete a) Preparation of opening and closing statements of affairs to
records of a calculate capital or profit for the year
sole trader b) Calculation of revenue and cost of purchases from
incomplete data
c) Calculation and application of accounting ratios to calculate
gross profit and profit for the year, to include:
● gross profit as a percentage of revenue (margin)
● gross profit as a percentage of cost of sales
(mark-up)
● profit for the year as a percentage of revenue
d) Preparation of:

● statement of profit or loss

● statement of financial position

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Subject content What students need to learn:

5.4 Manufacturing a) Understanding of the difference between direct and indirect

businesses costs
b) Understanding of the difference between the following
inventories:
● raw materials
● work in progress
● finished goods
Candidates will not be required to carry out detailed inventory
valuation calculations
c) Preparation of a manufacturing account to show:

● prime cost
● production cost
● total cost
Candidates will not be required to make entries for unrealised
profit, or make entries for manufacturing profit (transfer
pricing)
d) Preparation of:

● statement of profit or loss

● statement of financial position
for a manufacturing business

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Subject content What students need to learn:

5.5 Non-profit making a) The nature of the accumulated fund

organisations b) The calculation of the accumulated fund
c) Preparation of a subscriptions account, including the
correct treatment of:
● subscriptions in arrears
● subscriptions in advance
● subscriptions unpaid
● life subscriptions
d) Understanding of the difference between:

● receipts and payments account

● income and expenditure account
e) Preparation of a receipts and payment account to show:

● closing cash and bank balances

f) Preparation of a trading account for fund raising activities to
identify profit from fund raising activity
g) Preparation of an income and expenditure account to
show:
● surplus/deficit of income over expenditure for the year
h) Preparation of a statement of financial position

6. Accounting Ratios

Subject content What students need to learn:

6.1 The calculation a) Profitability and liquidity ratios:

and
 gross profit as a percentage of revenue (margin)
interpretation of
accounting  gross profit as a percentage of cost of sales sold
ratios (markup)
 profit for the year as a percentage of revenue
 Return on Capital Employed (ROCE)
 current (working capital) ratio
 liquid (decisive test) ratio
 accounts receivables collection period
 accounts payables payment period
 rate of inventory turnover

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 The following skills should be developed throughout the course of study.

Skills Students Should:

a) demonstrate accuracy, orderliness and appropriate

presentation of accounting information
b) use appropriate numeracy skills for the calculation of
accounting data
c) prepare control accounts for trade receivables and trade
payables
d) prepare journal entries and ledger accounts with accuracy

e) correct errors in accounts and show the use of a suspense

account
f) adjust financial statements after the correction of errors
g) Adjust given data at period end for:

● irrecoverable debts and allowance for doubtful debts

● depreciation of non-current assets
● accrued and prepaid income and expenditure
h) prepare financial statements for sole traders,
partnerships, limited companies, manufacturing, and
non-trading organisations
i) calculate and interpret ratios

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 Assessment

Assessment summary

IAB LCCI Level 2 Certificate in Bookkeeping and Accounting (VRQ)

First teaching: September 2015
Number of series: 6
Overview of content
● Recording Financial Transactions
● Control Accounts
● Correction of Errors and the Journal
● Adjustments in Financial Statements
● Preparation of Financial Statements
● Accounting Ratios.
Overview of assessment
• One online, externally set and marked examination, contributing to 100% of the overall
grade of the qualification
● The examination will be 3 hours.
● The examination will consist of 100 marks.
● Candidates will be graded Pass/Merit/Distinction. A result of Fail will be
recorded where candidates do not achieve the required marks for
a Pass.
● The examination contains five questions.
● Candidates answer all questions.
● The questions comprise table completion, account preparation, calculations,
multiple choice, short open response and medium open response questions.
● Calculators may be used in the examination.
● Bilingual dictionaries are permitted for use in the examination.

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Assessment Objectives
Assessment Objectives have been developed for this qualification to ensure that
examinations are appropriately targeted. They describe the abilities that students should be
able to demonstrate. Each question targets one or more assessment objectives. They are
applied to the examination in the proportions below.

Assessment Weighting
Objective
AO1 Recall 12%
Recall accounting facts, terms, definitions, processes
and formulae
AO2 Perform procedures Record 78%
business transactions Use
accounting techniques
Prepare financial statements
AO3 Demonstrate understanding 6%
Demonstrate understanding of accounting processes,
procedures and techniques
AO4 Analyse 4%
Compare, classify and deconstruct information
Interpret financial data and information
Recognise patterns and correlations

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Performance descriptors

Grade Descriptor
Pass Candidates can recall, use and apply bookkeeping and accounting facts,
terms definitions, processes and formulae.
Candidates can demonstrate a basic understanding of accounting processes,
procedures and techniques.
Candidates can record business transactions using correct accounting
techniques.
Candidates can prepare financial statements with routine transactions for
different organisations.
Candidates can select and use accounting information.
Distinction Candidates can demonstrate a detailed knowledge of bookkeeping and
accounting facts, terms, definitions, processes and formulae using them
consistently and effectively in given scenarios.
Candidates can demonstrate a detailed understanding of accounting
processes, procedures and techniques.
Candidates can record business transactions using correct accounting
techniques with precision.
Candidates can prepare financial statements with non-routine transactions
for different organisations.
Candidates can select and use relevant information from redundant
information.
Candidates can select and use relevant accounting information to analyse
accounting problems.
Candidates can make limited judgements.

Performance descriptors may be revised following the first award.

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Entry and assessment information
Please see the LCCI International Qualification Operations Guide for centres and the LCCI Examination
Regulations, available through our awarding team at [email protected] or the website
https://www.iab.org.uk/lcci/

Student entry
Details on how to enter candidates for the examination for this
qualification can be found at awarding team at [email protected]
The closing date for entries is approximately six weeks before the start
of each examination series. Centres should refer to the published
examination timetable for examination dates.
Combinations of entry
There are no forbidden combinations of entry for this qualification.

Age
This qualification is intended for learners aged 16 and above.
Resitting the qualification
Candidates can resit the examination for the IAB LCCI Level 2
Certificate in Bookkeeping and Accounting (VRQ).
It is strongly advised that candidates do not register to undertake a resit
until they have received the results from their previous examination.
Awarding and reporting
The IAB LCCI Level 2 Certificate in Bookkeeping and Accounting (VRQ)
qualification is certificated on a three-grade scale:
Pass/Merit/Distinction. Pass and Distinction are awarded, Merit is
arithmetically calculated.

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Access arrangements, reasonable adjustments and special
consideration

Access arrangements
Access arrangements are agreed before an assessment. They allow
students with special educational needs, disabilities or temporary injuries
to:
● access the assessment
● show what they know and can do without changing the
demands of the assessment.
The intention behind an access arrangement is to meet the needs of an
individual student with a disability without affecting the integrity of the
assessment. Access arrangements are the principal way in which
awarding bodies comply with the duty under the Equality Act 2010 to
make ‘reasonable adjustments.’
Access arrangements should always be processed at the start of the
course. Students will then know what is available and have the access
arrangement(s) in place for assessment.

Reasonable adjustments
The Equality Act 2010 requires an awarding organisation to make
reasonable adjustments where a person with a disability would be at a
substantial disadvantage in undertaking an assessment. The awarding
organisation is required to take reasonable steps to overcome that
disadvantage.
A reasonable adjustment for a particular person may be unique to that
individual and therefore might not be in the list of available access
arrangements.
Whether an adjustment will be considered reasonable will depend
on several factors, which will include:
● the needs of the student with the disability
● the effectiveness of the adjustment
● the cost of the adjustment; and
● the impact of the adjustment on the student with the disability
and other students.
An adjustment will not be approved if it involves unreasonable costs to
the awarding organisation, timeframes or affects the security or
integrity of the assessment. This is because the adjustment is not
‘reasonable’.

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Special consideration
Special consideration is a post-examination adjustment to a student's
mark or grade to reflect temporary injury, illness or other indisposition
at the time of the examination/assessment, which has had, or is likely to
have had, a material effect on a candidate’s ability to take an
assessment or demonstrate his or her level of attainment in an
assessment.

Further information
Please see our website or email our awarding team [email protected] for
further information about how to apply for access arrangements and
special consideration.
For further information about access arrangements, reasonable
adjustments and special consideration please refer to the JCQ website:
http://www.jcq.org.uk/examination-system/access- arrangements-and-
special-consideration

Equality Act 2010 and IAB equality policy

Equality and fairness are central to our work. Our equality policy requires all
students to have equal opportunity to access our qualifications and
assessments, and our qualifications to be awarded in a way that is fair to
every student.
We are committed to making sure that:
● Students with a protected characteristic (as defined by the Equality
Act 2010) are not, when they are undertaking one of our
qualifications, disadvantaged in comparison to students who do not
share that characteristic
● All students achieve the recognition they deserve for undertaking a
qualification and that this achievement can be compared fairly to
the achievement of their peers.
You can find details on how to make adjustments for students with
protected characteristics in the policy document accessed by
contacting our awarding team [email protected]

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 Malpractice
For up-to-date information on malpractice please refer to the latest Joint
Council for Qualifications (JCQ) Suspected Malpractice in Examinations
and Assessments document, available on the JCQ website:
http://www.jcq.org.uk/exams- office/malpractice/

Candidate malpractice
Candidate malpractice refers to any act by a candidate that compromises
or seeks to compromise the process of assessment or which undermines
the integrity of the qualifications or the validity of results/certificates.
Candidate malpractice in examinations must be reported to IAB
awarding team by email [email protected] clearly identifying the title or posted
to the registered office 110 Bishopsgate, London, EC2N 4AY. Please provide as
much information and supporting documentation as possible. Note that the
final decision regarding appropriate sanctions lies with IAB.

Failure to report malpractice constitutes staff or centre malpractice.

Staff/centre malpractice
Staff and centre malpractice includes both deliberate malpractice and
maladministration of our qualifications. As with candidate malpractice,
staff and centre malpractice is any act that compromises or seeks to
compromise the process of assessment, or which undermines the
integrity of the qualifications or the validity of results/certificates.
All cases of suspected staff malpractice and maladministration must be
reported immediately, before any investigation is undertaken by the
centre, to IAB awarding team by email [email protected] clearly marked
malpractice or posted to the registered office 110 Bishopsgate, London, EC2N
4AY. Please provide as much information and supporting documentation as
possible. Note that the final decision regarding appropriate sanctions lies with
IAB.
Failure to report malpractice itself constitutes malpractice. More detailed
guidance on malpractice can be found in the latest version of the
document JCQ General and Vocational Qualifications Suspected
Malpractice in Examinations and Assessments, available at
www.jcq.org.uk/exams- office/malpractice

Language of assessment
Assessment of this specification will be in English only. Assessment
materials will be published in English only and all work submitted for
examination must be in English only.

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Other information
Total Qualification Time and Guided Learning Hours
For all regulated qualifications, we specify the total number of hours
that learners are expected to undertake to complete and show
achievement for the qualification – this is the Total Qualification Time
(TQT). The TQT value indicates the size of a qualification.
Within the TQT, we identify the number of Guided Learning Hours (GLH)
that a centre delivering the qualification needs to provide. Guided
learning means activities that directly or immediately involve tutors and
assessors in teaching, supervising, and invigilating learners, for example
lectures, tutorials, online instruction and supervised study.
As well as guided learning, there may be other required learning that is
directed by tutors or assessors. This includes, for example, private study,
preparation for assessment and undertaking assessment when not
under supervision, such as preparatory reading, revision and
independent research.
TQT and guided learning hours are assigned after consultation with users
of the qualifications.
This qualification has a TQT value of 200 and a GLH of 150.
Student recruitment
IAB follows the JCQ policy concerning recruitment to our qualifications in
that:
● They must be available to anyone who can reach the required
standard
● They must be free from barriers that restrict access and
progression
● Equal opportunities exist for all students.
Prior learning and other requirements
There are no formal entry requirements for this qualification.
Students may be studying in a local language, but the assessment will
be in English. IAB recommends students have B1 level of English on the
Common European Framework of Reference (CEFR). This will support
access to the assessment materials and be able to communicate
responses effectively.

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Progression
LCCI qualifications are designed to allow students to pursue different routes
as outlined below.
Enter a chosen field of work, pursue a promotion, or change their
field of work
The IAB LCCI Level 2 Certificate in Bookkeeping and Accounting supports
progression into employment, for example to a bookkeeping and
accounting role in a large company’s finance department. The
qualification also supports students who run their own businesses and
who need to carry out their own bookkeeping, and those who are
already working in accounting and would like to enhance their skills.
Using appropriate internal processes, centres must ensure they choose
the most appropriate qualification level for their students’ needs.
Progress to further study, such as the next LCCI level or externally with a
professional body or education provider
This qualification allows progression to LCCI Level 3 accounting
qualifications, such as the IAB LCCI Level 3 Certificate in Accounting
(VRQ), as well as qualifications across the LCCI suites. Completing
different LCCI qualifications could potentially lead to gaining an LCCI
Diploma. Please refer to the ‘Exemptions’ section of this specification
for information on recognition from external providers, or the latest
LCCI Information Manual for more information about Diplomas.

Exemptions
We are continuously gaining new and updated exemptions for our LCCI
qualifications from professional bodies and organisations. For the latest
list of agreements, and to check this specific qualification, please visit
the IAB LCCI website: ************

National Occupational Standards

The IAB LCCI Level 2 Certificate in Bookkeeping and Accounting
(VRQ) has links to the following National Occupational Standards
(NOS): Finance and Accounting
Please see our website for further details.

Codes
This qualification is approved by Ofqual and meets the Ofqual General
Conditions for inclusion on the Register of Regulated Qualifications. The
Qualification Number (QN) is ********.
The subject code for the IAB LCCI Level 2 Certificate in Bookkeeping and
Accounting (VRQ) is ASE20093. The subject code is used by centres to
enter students for a qualification.

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 Support, training and resources

Training
IAB offers support and training to teachers on standard of delivery and preparing students to meet the
assessment requirements.

Specifications, Sample Assessment Materials and Teacher Support Materials

The IAB LCCI Level 2 Certificate in Bookkeeping and Accounting (VRQ) Sample Assessment
Materials document (ISBN 9781446947333) can be downloaded from our website.
To find a list of all the support documents available please visit our website.

Appendix
Appendix 1: Glossary of International Accounting Standards
terminology

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Appendix 1: Glossary of International Accounting Standards
terminology

The following is a glossary of the comparison between the International Accounting Standards (IAS)
terminology and the UK GAAP (Generally Accepted Accounting Practice in the UK) terminology. IAS
terminology is used in the content of the LCCI financial and quantitative suite of qualifications, but
not all terms are present in all levels of the qualifications.
Centres should be aware that these terms are also referred to as International Finance Reporting
Standards (IFRS) in certain contexts within the industry, however the definitions and meaning
remain the same.

IAS terminology Previously used UK GAAP terminology

Financial statements Final accounts

Statement of profit or loss Trading and profit and loss account

Revenue Sales
Raw materials/ordinary goods purchased Purchases
Cost of sales Cost of goods sold
Inventory Stock
Work in progress Work in progress
Gross profit Gross profit
Other operating expenses Sundry expenses
Allowance for doubtful debt Provision for doubtful debt
Other operating income Sundry income
Investment revenues/finance income Interest receivable
Finance costs Interest payable
Profit for the year Net profit
Retained earnings Profit/loss balance

Statement of changes in equity (limited Appropriation account

companies)

Statement of financial position Balance sheet

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 Non-current assets Fixed assets

Property Land and buildings

Plant and equipment Plant and equipment
Investment property Investments
Intangible assets Goodwill etc.

Current assets Current assets

Inventory Stock
Trade receivables Debtors
Other receivables Prepayments
Cash and cash equivalents Bank and cash

Current liabilities Current liabilities/creditors amounts due within

12 months
Trade payables Creditors
Other payables Accruals
Bank overdraft and loans Loans repayable within 12 months

Non-current liabilities Long-term liabilities/creditors: amounts falling due

after 12 months
Bank (and other) loans Loans repayable after 12 months

Capital or equity Capital

Share capital Share capital

Statement of cash flows Cash flow statement

Other terms
Inventory count Stock take
Carrying value Net book value

June 2023

For more information on LCCI qualifications

please visit our website: https://www.iab.org.uk/iab-qualifications/
Institute of Accountants and Bookkeepers. Registered in
England No.01119378 Registered Office: 110 Bishopsgate
London EC2N 4AY.

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