Chapter 3
Depreciation of Non-current Assets
Notes to teachers
1
Sometimes the differentiation between capital expenditure and revenue expenditure is not very clear.
Students should master the definition of capital expenditure first. Any expenditure that

Chapter 8
Financial Statements for Partnerships
Notes to teachers
1
Start with Chapter 3 of Business Environment and Introduction to Management, and briefly explain to
students the characteristics of a partnership.
2
Compare the financial statements of

Chapter 7
Correction of Errors (II): Errors Affecting
Trial Balance Agreement
Notes to teachers
1
Some students may recklessly make an entry in the suspense account when they have no idea which
account to use. Teachers should remind students that an ent

E4-16 (Various Reporting Formats) The following information was taken from the records of
Roland Carlson Inc. for the year 2007. Income tax applicable to income from continuing
operations $187,000; income tax applicable to loss on discontinued operations

Chapter 21
Job Costing
Notes to teachers
1
This chapter largely builds on the concept of indirect costs introduced in the previous chapter.
2
The curriculum only requires the application of job costing in manufacturing operations, even though it
can be

Chapter 20
Cost Classifications, Concepts and
Terminology
Notes to teachers
1
Teachers should follow the sequence of chapters in the textbook. You will find each chapter is built upon
an understanding of the previous chapter.
2
Start with the Learn More

Chapter 7
Financial Statements for
Sole Proprietorships (I)
Notes to teachers
1
Start by showing real-life examples of income statements, which can be found from the Internet.
2
Ask students what can be known about a business entity from its income stat

Chapter 10
Basic Ratio Analysis
Notes to teachers
1
Most students would not have difficulty calculating the various accounting ratios. What they usually find
difficult is interpreting the results of the ratios.
2
You can teach them the following manne

Chapter 4
Books of Original Entry and Ledgers (II)
Notes to teachers
1
Start by explaining technical terms such as cashier, cash discount, drawings, bank overdraft, dishonoured
cheque and petty cash, and showing samples of receipts, cheques and pay-in s

Chapter 22
Absorption and Marginal Costing
Notes to teachers
1
This chapter largely builds on the concepts of fixed costs vs. variable costs, manufacturing overheads vs.
non-manufacturing overheads, and product costs vs. period costs introduced in Chapte

Chapter 24
Cost Accounting for Decision-making
Notes to teachers
1
This chapter deals with the application of costing concepts and techniques to more complicated business
decisions.
2
Teachers are advised to explain the concepts of sunk costs, opportuni

Chapter 23
Cost-Volume-Profit Analysis
Notes to teachers
1
Teachers are advised to give students a brief introduction to the concepts of break-even quantity and sales
revenue (i.e., profit = 0), below which a loss is incurred and above which a profit is e

Chapter 9
Fundamental Accounting Concepts
and Principles
Notes to teachers
1
This is the most difficult topic for students in the Compulsory Part. It is also difficult to teach as many
related accounting topics have not been learnt and thus not many exam

Chapter 6
The Trial Balance
Notes to teachers
1
Students may have forgotten how to identify a balance as a debit balance or a credit balance. So you should
do a revision with students, preferably with the aid of Exhibit 6.1.
2
The following summary can

Chapter 8
Financial Statements for
Sole Proprietorships (II)
Notes to teachers
1
2
To teach the preparation of a balance sheet, you are advised to start by showing real-life examples of
balance sheets, which can be found from the Internet.
3
Ask stude

Chapter 2
Bad Debts and Allowance for
Doubtful Accounts
Notes to teachers
1
Start with Chapter 3 of Frank Woods Introduction to Accounting and briefly explain to students how to
record credit sales in the books.
2
Ask students what should be done in t

Chapter 5
Control Accounts
Notes to teachers
1
Start with Chapters 3 and 4 of Frank Woods Introduction to Accounting and briefly explain to students
the basic principles of recording in the books and ledgers transactions with trade debtors and creditors

Chapter 1
Accruals and Prepayments
Notes to teachers
1
Start with Chapter 4 of Frank Woods Introduction to Accounting and briefly explain to students how to
record expenses and other revenues in the cash book and post entries to the general ledger.
2
Re

Chapter 4
Bank Reconciliation Statements
Notes to teachers
1
Start with Chapter 4 of Frank Woods Introduction to Accounting and briefly explain to students the
basic principles of recording in the cash book.
2
It is necessary to show a (real or simulate

Chapter 6
Correction of Errors (I): Errors Not
Affecting Trial Balance Agreement
Notes to teachers
1
Start with Chapters 5 and 6 of Frank Woods Introduction to Accounting and briefly explain to students
the purpose of preparing a trial balance and the us

Chapter 9
Partnership Goodwill
Notes to teachers
1
Note that the definition of goodwill and its valuation methods mentioned in Sections 9.2 and 9.3 are not
restricted to partnerships. They are also applicable to other forms of business ownership.
2
Teac

Chapter 10
Partnership Revaluation
Notes to teachers
1
If students already understand when and why a partnerships goodwill needs to be valued, it is not
difficult for them to understand when and why a partnerships assets and liabilities need to be revalu

Chapter 12
Issue of Shares and Debentures
Notes to teachers
1
Students have learnt the differences between preference shares and ordinary shares, the procedures for
issuing shares and the differences between debentures and shares from the Compulsory Part

Chapter 11
Partnership Dissolution
Notes to teachers
1
Students should know that legally speaking, a partnership has to be terminated when one of its partners
withdraws, dies or goes bankrupt. In reality, the partnership will usually continue to operate

Chapter 13
Regulatory Framework of Accounting in
Hong Kong and Financial Statements for
Limited Companies
Notes to teachers
1
You will come across many HKALE topics in this chapter, such as the regulatory framework of accounting
in Hong Kong, the reporti

Chapter 14
Financial Analysis (I)
Notes to teachers
1
Students should have acquired some understanding about the uses of accounting ratios in the Compulsory
Part of Introduction to Accounting. However, some teachers may opt to skip that topic when teach