Accounting and Finance (ATAR): should I choose it?

Sources of finance for small business

Business ownership and types of business undertakings

Accounting concepts, conventions and GST principles

Double entry recording, trial balance and simple financial statements

Internal control

Legislation, bankruptcy and responsible small business

Electronic processing and payment systems

Accrual accounting, the Conceptual Framework and balance day adjustments

Depreciation and inventory costing concepts

Recording adjustments, depreciation and accrual-based financial statements

Ratio preparation and interpretation

Professional associations and codes of conduct

Unit 3 — Financial institutions and systems

This area opens Unit 3 with the finance side of the business: the short-term (cash management accounts, the money market, term deposits) and long-term (shares, debentures, secured and unsecured loans, term deposits) finance products a business can raise, and the principles behind managing non-current assets, accounts receivable, inventory, cash and short- and long-term debt and equity. It then draws the line between management accounting and financial accounting — internal versus external users, regulation, statements and reports — and works through cost concepts and classifications: fixed, variable and mixed costs, direct and indirect costs, product and period costs, and past versus future costs relevant to a decision.

Unit 3 — Recording, using and evaluating: costing, CVP, budgeting and capital investment

The largest block of Unit 3. Job order costing calculates direct costs and a predetermined overhead recovery rate at normal capacity to reach a unit cost and a mark-up quotation price. Standard costing then compares actual results against a standard cost card through materials price and usage variances and labour rate and efficiency variances, each labelled favourable or unfavourable using the Specifications booklet formulas. Cost–volume–profit analysis covers single- and multi-product (maximum three) firms: contribution margin, weighted average contribution, break-even in units and dollars, margin of safety and target profit, extended into short-term decisions — make or buy, closing a department or dropping a segment, accepting or rejecting a special order, and sensitivity under a capacity constraint. Budgeting builds the master budget (operating, capital expenditure and financial) via debtors' and creditors' schedules and a cash budget, then a budgeted income statement, with performance reports comparing budgeted to actual results and explaining cash-versus-accrual differences. The area closes on capital investment decisions: the time value of money, annual net cash flows net of tax with straight-line depreciation, net present value and payback (in years and months), and a recommendation.

Unit 3 — Government and the community: audit, insolvency, climate risk and ethics

This area places the accountant inside a wider system of oversight and responsibility. Internal audit and control are covered alongside the accountant's role and business planning — setting goals and objectives, cost leadership versus differentiation, reducing costs and managing risk. Insolvency is treated under the Corporations Act 2001: voluntary administration, liquidation and receivership, and the order of priority of distribution to creditors. Climate-related physical and transition risks and opportunities are introduced together with the Scope 1, 2 and 3 emissions framework, and the area closes on ethical issues — unfair compensation, breaches of confidentiality, misrepresentation of financial data and conflicts of interest.

Unit 4 — Company characteristics and the Conceptual Framework

Unit 4 opens with what a company actually is: the characteristics of public and large proprietary companies — limited liability, members and directors, continuity, separate legal entity status, and transferability of shares versus the separation of ownership and management. The Conceptual Framework for Financial Reporting then supplies the theory underneath every statement prepared later in the unit: the reporting entity concept, the objective of general purpose financial reporting, the fundamental qualitative characteristics (relevance and faithful representation) and enhancing characteristics (comparability, verifiability, timeliness, understandability), and the recognition criteria for assets, liabilities, income and expenses.

Unit 4 — Regulators, accounting standards and sustainability reporting

This area covers who sets and enforces the rules a company reports under: the purpose of accounting standards, and the roles of ASIC, the IASB, the ISSB, the AASB and the ASX (including the ASX's listing rules and disclosure requirements), plus the function of external audit and the role of the external auditor. It also covers the Corporations Act 2001 provisions on directors' powers and duties, a company's written constitution and the replaceable rules, the prospectus and shareholder rights. Newly examinable from 2026: AASB S2 Climate-related Disclosures core content — governance, strategy, risk management, and metrics and targets — together with sustainability reporting and the concepts of greenwashing and bluewashing.

Unit 4 — Company accounts, general purpose financial statements and ratio analysis

The practical core of Unit 4. General journal and ledger entries cover ordinary shares payable in full on application, bonus issues, interim and final dividends (declared or paid) and share issue costs, with a retained earnings ledger tracking profit or loss, dividends and transfers to and from reserves. From there the syllabus builds the Statement of Profit or Loss and Other Comprehensive Income (single statement version only; the 2026 and earlier syllabuses called it the statement of comprehensive income), the Statement of Financial Position and the Statement of Changes in Equity (notes limited to share capital, reserves, property, plant and equipment, and dividends), all after balance day adjustments, with profit before tax deemed equal to taxable income. The Statement of Cash Flows (AASB 107) is prepared by the direct method only, with GST excluded throughout. The area finishes on ratio analysis — current, quick asset, debtor's collection, inventory turnover, profit, rate of return on assets, times interest earned, debt to equity, earnings per share, price/earnings and dividend yield — and the limitations of interpreting annual reports, ratios and cash flow movements (historical cost, comparability, disclosure).