POA Theory, Application & SBQ Notes (O & N)

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Principles of Accounts Notes Theory, Application & SBQ Notes for Sec 3 & 4 Express/G3: 7087 (2025) Normal (Academic)/G2: 7086 (2025) Source: Dunman Sec POA Notes, MCE POA Textbook, Holy Grail Resources Made by: Javier (@javierererie) & Kah Shin (@kah.shin) Refer to the links below for each tab. Table of contents are available in Google Docs. Theory Notes Application Notes SBQ Notes Disclaimer: Information with a Red Heading indicates that the content is only tested for the G3 Level!!!!! This document was created for the 7087/7086 syllabus. Hence some changes made in the new K342/K233 syllabus may not be reflected here. This document generally covers the whole POA syllabus, but you should also use your school notes and your own resources to aid in your learning. This is inclusive of but not limited to practicing topical questions, doing papers, or making your own notes (after improving your understanding of the subject)! Last updated on . Refer to the latest copy here. 9 Sept 2026 For Secondary 3 & 4, G2 (NA) & G3 (EXP) © 2025 Deoxyfication, All rights reserved.

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POA Theory Notes Made by: Javier (@javierererie) & Kah Shin (@kah.shin) Assessment Scheme Chapter 1: Introduction to Accounting Forms of business ownerships Stakeholder Information Chapter 2: Accounting Information System Chapter 3: Elements of Financial Statements & the Accounting Equation Chapter 4: Double-entry Recording Chapter 5: Trial Balance and Financial Statements Trial Balance Financial Statements Statement of Financial Performance Statement of Financial Position Chapter 6: Revenue and other income Received in advance Income receivable Chapter 7: Cost of sales and other expenses Expenses Payable Prepaid Expenses Chapter 8: Cash & Bank Reconciliation Cash Bank Reconciliation Chapter 9: Inventory Chapter 10: Trade Receivables Trade Receivables Allowance for Impairment of Trade Receivables Chapter 11: Non-Current Assets Chapter 12: Trade Payables Chapter 13: Long-term Borrowings Interest Expense Chapter 14: Equities Sole Proprietorship Private Limited Company (G3 Only!!) Chapter 15: Correction of Errors Chapter 16: Financial Statements Analysis (G3 Only!!) Liquidity Profitability Efficiency in Inventory Management Efficiency in Trade Receivables Management Summary of Accounting Theories Information with a Red Heading indicates that the content is only tested for the G3/Express Level!!!!! POA Theory Notes || @javierererie / @kah.shin / @deoxyfication 1

Assessment Scheme EXPRESS/G3: 7087 Syllabus (2025) N(A)/G2 – 7086 Syllabus (2025) Only for Paper 2: ● Q1 – Preparation of Financial Statements (F. Performance & Position) [20m] ● Q2, 3, or 4 – Scenario-based Question (SBQ) [7m for G3 | 5m for G2] ○ Refer to the SBQ Notes section for info and notes. POA Theory Notes || @javierererie / @kah.shin / @deoxyfication 2

Summary of Accounting Theories Source: MCE POA Textbook (page 13) Chapter Name Definition Application 2 Objectivity theory Accounting information must be supported by verifiable and reliable evidence so that financial statements will be free from opinion and biases . Source Documents Historical Cost theory Transactions should be recorded at their original cost. Monetary theory Only transactions that can be measured in monetary terms are recorded. Accounting Information System 3/14 Accounting Entity theory The activities of a business are separate from the actions of the owner. All transactions are recorded from the point of view of the business . Capital, Drawings Share Capital, Dividends 5 Going Concern theory A business is assumed to have an indefinite economic life unless there is credible evidence that it may close down. Financial Statements Accounting period theory The life of a business is divided into regular time intervals . 6 Revenue Recognition theory Revenue is earned when goods have been delivered or services have been provided. Income receivable / received in advance 6/7 Accrual Basis of Accounting Business activities that have occurred, regardless of whether cash is paid or received , should be recorded in the relevant accounting period. Income receivable / received in advance Prepaid expense / Expense payable 7/10/11 Matching theory Expenses incurred must be matched against income earned in the same accounting period to determine the profit for that period. Expenses (in general) 9 Valuation theory on Inventory Inventory should be valued at cost or net realisable value, whichever is lower . Net realisable value, Impairment loss on inventory 10 Valuation Method for Trade Receivables Trade receivables is valued at the expected collectible amount, which is the amount after deduction of allowance for impairment of trade receivables. Allowance for impairment of trade receivables 9/10/11 Prudence theory The accounting treatment chosen should be the one that least overstates assets and profits and least understates liabilities and losses . Impairment loss on inventory / trade receivables Allowance for impairment of trade receivables Depreciation expense 11 Consistency theory Once an accounting method is chosen, this method should be applied to all future accounting periods to enable meaningful comparison . Depreciation method (SLM / RBM) Materiality Theory Relevant information should be reported in the financial statements if it is likely to make a difference to the decision-making process. Revenue vs Capital expenditure POA Theory Notes || @javierererie / @kah.shin / @deoxyfication 3

Chapter 1: Introduction to Accounting Role of Accounting ● Accounting is an information system that provides accounting information for stakeholders to make informed decisions regarding the management of resources and performance of the business. In simple terms, it’s a way of putting financial info in a standardized form for stakeholders to make choices based on relevant data, rather than by their own personal interests, in order to improve the business in the form of managing its assets (resources) and effectiveness (performance). However, who is doing the accounting? Obviously, the accountants! Role of Accountants ● Accountants act as stewards of the business . ● They set up the accounting information system to provide accounting information for stakeholders' decision-making. Stewards are people who are responsible for managing the resources of the business on behalf of the owner (for example, Managers). The accounting information system as mentioned is the same as what the Role of Accounting mentions, made for stakeholders to make their informed decisions. Professional Ethics It is important that these accountants have professional ethics, such as Integrity and Objectivity . One way to remember is through how accountants are influenced (refer to second bullet point)! Integrity ● Accountants are straight