Although there continues to be a debate in some New Zealand schools about the value of NCEA Level 1, the benefits of students taking NCEA Accounting at any level are many. From simply improving the financial literacy of the New Zealand population to providing a solid foundation on which to build a successful financial career, NCEA Accounting is a great place to start.
The New Zealand Curriculum suggests that students should take accounting to be able to “make real-life financial decisions in a constantly changing and uncertain world”, as well as be able to understand and communicate financial information. So the curriculum has been created to ensure that students will come through all NCEA accounting levels able to:
- Prepare and maintain financial records
- Manage financial affairs
- Act with integrity
- Contribute to the wider community
What NCEA Accounting Units to Take?
Whether you start at NCEA Level 1 or Level 2, the options you have for accounting achievement standards will cover the essentials of understanding accounting and financial management in New Zealand.
Understanding Level 1 Accounting
At Level 1 you will be covering a range of topics that help you to understand basic accounting concepts, most schools will schedule each of these units throughout the year, with internal assessments for all standards, and end-of-year exams for up to three of the unit standards. While it is not essential to take Level 1 accounting to pass NCEA, if offered, the unit standards each provide an excellent foundation for developing a strong foundation for your financial literacy.
- Demonstrate understanding of accounting concepts for small entities
- Process financial transactions for a small entity
- Prepare financial statements for sole proprietors
- Prepare financial information for a community organisation's annual general meeting
- Interpret accounting information for sole proprietors
- Make a financial decision for an individual or group
- Demonstrate understanding of cash management for a small entity
From 2023 level 1 accounting is being phased out and replaced by level 1 commerce. Much of the information that is currently taught in level 1 accounting will continue to be taught, but will also include areas that incorporate planning, cross-cultural communication, sustainable practices, and skills often associated with marketing or entrepreneurship.
Understanding Level 2 Accounting
Taking NCEA accounting at level 2, whether for the first time or as a continuation from level 1, ensures that students have a working understanding of the accounting principles in New Zealand and Australia, as well as how to use the common accounting technology. This well-rounded curriculum means that students are prepared to undertake further study or move into the workforce.
- Demonstrate understanding of accounting concepts for an entity that operates accounting subsystems
- Demonstrate understanding of accounting processing using accounting software
- Prepare financial information for an entity that operates accounting subsystems
- Interpret accounting information for entities that operate accounting subsystems
- Demonstrate understanding of an accounts receivable subsystem for an entity
- Demonstrate understanding of an inventory subsystem for an entity
- Demonstrate understanding of a contemporary accounting issue for decision-making
After Level 2 Accounting, you can either move into Level 3 Accounting or Level 3 Business Studies.
Understanding Level 3 Accounting
When we look at level 3 NCEA accounting it is naturally increasing in complexity from previous levels, but the progression is logical. There is more emphasis on accounting processes than on financial literacy, and the unit standards help ensure that students will be ready to take on further education or undertake basic bookkeeping or office administration roles in the workforce. Again, most of NCEA level 3 accounting is internally assessed, with limited end-of-year exams.
- Demonstrate understanding of accounting concepts for a New Zealand reporting entity
- Demonstrate understanding of accounting for partnerships
- Demonstrate understanding of company financial statement preparation
- Prepare a report for an external user that interprets the annual report of a New Zealand reporting entity
- Demonstrate understanding of management accounting to inform decision-making
- Demonstrate understanding of a job cost subsystem for an entity
After passing NCEA level 3 accounting you should have enough knowledge to set you up for roles that require a basic understanding of accounting or bookkeeping principles, undertake further study, or allow you to be more secure in how to set up your own business.
Passing NCEA Accounting Exams
One of the best things about the New Zealand NCEA system is that you have access to past year's exams. However, one of the mistakes that most students make is waiting until September before starting to look at revision for end-of-year exams.
Other than the copious amount of research that shows last-minute cramming does little to help the memory, there is simply no need to wait until the last minute. You can download previous year's accounting exams, complete with marked student work and assessors’ comments, as well as suggestions for internal assessments. If you start looking at these resources at the beginning of the year you will have an idea of what areas you should be paying attention to in class. This is particularly useful if you are a person who likes to know what the end goal is rather than someone who likes to focus on only what is directly in front of them at a moment in time.
Another advantage to downloading the various free resources from the NZQA NCEA Accounting website is that you have something to show to your tutor. You can work through past exams and assessments with them to ensure that you are learning the right information. This also provides a clear way for your Superprof tutor to check that you have strong foundational skills and an understanding of the underlying principles.
Revision Areas for NCEA Accounting
With NCEA accounting, one of the most important areas to understand is vocabulary. Memorising “Assets=Liabilities + Owner's Equity + Revenue–Expenses” won’t do you much good if you can’t look at a bunch of receipts from a small business and work out what assets, liabilities, revenue, equity, or expenses are.
While if you keep getting confused about where debits and credits should go, you will continue to struggle as you get into more advanced concepts.
These are both foundational areas that once you’ve “got” them, understanding accounting becomes significantly easier, or at least more logical. If you find that you are heading into term 3 and still get these wrong, it’s time to speak to your teacher, hire a tutor, or spend a lot of time watching YouTube videos until it all starts to make sense. Just like learning to read at primary school, once you get the “code” it all starts to become clear.
For an example, one of the level 1 accounting assessments asks students to complete different financial transaction documents such as journal entries, receipts, invoices, and cash statements based on general information provided such as this:
Charlie’s Cleaners is a cleaning business located at 52 Willow St, Tauranga.
On 8 September 2012, Charlie wrote a cheque to Electrics Ltd for $539.90 (including GST) to purchase a new vacuum cleaner. The cheque should only be able to be banked by Electrics Ltd into their account.
On 9 September 2012, Charlie’s online business bank statement showed a direct credit of a 15% deposit payment from P. Peters for a window-cleaning job. P. Peters has requested a tax invoice for the amount he paid. The total cost of the job is $745.00 (including GST).
On 6 September 2012, Charlie’s Cleaners received an invoice from Bob’s Repairs for repairs to an industrial vacuum cleaner. The invoice shows ¾ hour of labour, a new hose fitting, and a clean. Bob charges $68.00 per hour (excluding GST) for labour, which includes a “free” clean. The new hose fitting cost $42.00 (excluding GST).
When presented with a story like this, can you pick out the keywords and relevant information to create a sense of the business? Accounting is painting a picture with numbers. A balance sheet can show how money is spent and what condition a business is in. We can even take an educated guess at what sort of people own the business by the type of spending they have – do they have high PAYE expenses for their employee size? Is their marketing budget high compared to their income? Understanding accounting is more than just working out how much tax needs to be paid!
Where will accounting take you?
As you can see from the above example, having a decent knowledge of accounting is valuable in almost any field, and being able to understand the financial vocabulary students are in a better position to make financially literate decisions – even if they never look at a Profit and Loss statement again.
However, careers with accountancy and financial management at their core have excellent long-term security, high wages, and diverse applications. Whether you want to become a day trader manipulating the stock market around the world or create financial security for a local charity lifting families out of poverty.
While accountancy roles aren’t on the long-term skill shortage list, the Ministry for Business, Innovation & Employment (MBIE) suggests that jobs with accountancy as their core skill are in demand in New Zealand, and there will be continued growth.
Developing technology has caused a lot of change in many industries, including finance, however, students that have the foundational skills and who can adapt to changing technologies will find themselves in high demand long into the future, all over the world – and that can all start with NCEA accounting in a New Zealand high school.
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