05-17-2010, 01:06 AM
Foundation Examinations Introduction to Financial Accounting
9
MODULE B
PAPER B 4 INTRODUCTION TO FINANCIAL ACCOUNTING (100 marks)
OBJECTIVE
The objective of this course is to enable candidates to understand fundamentals of
accounting theory; apply theory to basic financial accounting and prepare accounting
statements of sole proprietorships and partnerships. To develop knowledge and
understanding of financial statements and the techniques used to prepare financial
statements including necessary underlying records.
INDICATIVE GRID
Note The weightages given above are for guidance purposes only and some deviations in setting of
papers could be expected
CONTENTS
1. a) Introduction to business and accounting theory
⢠Definition and scope of business;
⢠Economic setup of business;
⢠Organization structures;
- Sole proprietorship;
- Partnership (its merits and demerits);
- Limited Companies (their advantages and disadvantages);
⢠Types of finances including
- Long term finance;
- Short term finance;
⢠Commercial Banks;
⢠Stock Exchange
⢠Insurance Companies;
⢠Procurement and production of goods;
⢠Marketing and sales;
⢠Marketing channels;
SYLLABUS CONTENT AREA WEIGHTAGE
1. Introduction to business and accounting theory 10
2. Financial accounting practices 35
3. Receipt and payment accounts, income and expenditure accounts
and preparation of accounts from incomplete records
20
4. Other specialized areas 35
TOTAL 100
Foundation Examinations Introduction to Financial Accounting
10
- Sole Distributors;
- Wholesalers and;
- Retailers.
b) Accounting Theory
⢠Fundamental accounting concepts including
- Accrual basis
- Consistency
- True and fair view
- Materiality
- Prudence
- Completeness
- Going Concern
- Substance over form
⢠Financial statements;
- Components
- Responsibility
- Presentation
- Users of financial statements;
⢠Asset valuation alternatives;
- Historical cost;
- Fair value;
- Net realizable value;
- Replacement cost;
2. Financial accounting practices
Accounting Records
⢠Petty cash book and imprest system;
⢠Cash books (including transactions with banks and their
documentation);
⢠Sales journal and the sales ledger;
⢠Purchase journal and the purchase ledger;
⢠General journal;
⢠General ledger
⢠Computerized Accounting
Introduction to Double Entry
⢠Double entry System, Accounting Equation and Rules of Debit &
Credit
Foundation Examinations Introduction to Financial Accounting
11
⢠Concept of capital and revenue expenditure;
⢠Concept of liability and income
⢠Effect of profit or loss on capital;
⢠Balancing of accounts;
⢠Trial balance;
Adjustments before Final Accounts
⢠Methods and recording of depreciation on Fixed Assets;
⢠Provisions for bad debts/ write off;
⢠Provisions for discounts on debtors;
⢠Prepayments and accruals;
⢠Inventory adjustments
⢠Bank reconciliation and related adjustments;
⢠Control accounts reconciliation and adjustments
⢠Errors in trial balance
⢠Suspense accounts
⢠Other adjustments;
The Final Accounts of Sole Traders & Partnership
⢠Balance sheets;
⢠Manufacturing, Trading and profit and loss accounts (Income
Statement);
⢠Cash Flows Statements
3. Receipt and payment accounts and accounts from incomplete records
⢠Receipt and payment accounts;
⢠Income and expenditure accounts;
⢠Preparation of accounts from incomplete records.
4. Other specialized areas
a) Accounting for inventories (IAS-2)
⢠Cost formulas (LIFO/ FIFO/ weighted average cost);
⢠Cost of inventories (cost of purchase, cost of conversions, other
costs);
⢠Measurement of inventories (lower of cost or Net realizable value);
⢠Presentation of inventories in financial statements.
Note (Cost Accounting techniques will not be tested at this stage)
b) Accounting for property, plant and equipment (IAS-16)
⢠Initial measurement of property, plant & equipment (components
of cost, exchange of assets);
Foundation Examinations Introduction to Financial Accounting
12
⢠Subsequent costs;
⢠Depreciation â Unit of measure, depreciable amount, depreciation
period and depreciation method
⢠Derecognition
c) Branch accounts (excluding foreign branches);
d) Treatment of the following in partnership accounts
⢠Admission;
⢠Retirement / death of partner (excluding life insurance policies,
annuities etc);
⢠Goodwill.
Note (s)
Reference to IAS shall be deemed to have been changed whenever the same is
replaced by a new reporting standard.
9
MODULE B
PAPER B 4 INTRODUCTION TO FINANCIAL ACCOUNTING (100 marks)
OBJECTIVE
The objective of this course is to enable candidates to understand fundamentals of
accounting theory; apply theory to basic financial accounting and prepare accounting
statements of sole proprietorships and partnerships. To develop knowledge and
understanding of financial statements and the techniques used to prepare financial
statements including necessary underlying records.
INDICATIVE GRID
Note The weightages given above are for guidance purposes only and some deviations in setting of
papers could be expected
CONTENTS
1. a) Introduction to business and accounting theory
⢠Definition and scope of business;
⢠Economic setup of business;
⢠Organization structures;
- Sole proprietorship;
- Partnership (its merits and demerits);
- Limited Companies (their advantages and disadvantages);
⢠Types of finances including
- Long term finance;
- Short term finance;
⢠Commercial Banks;
⢠Stock Exchange
⢠Insurance Companies;
⢠Procurement and production of goods;
⢠Marketing and sales;
⢠Marketing channels;
SYLLABUS CONTENT AREA WEIGHTAGE
1. Introduction to business and accounting theory 10
2. Financial accounting practices 35
3. Receipt and payment accounts, income and expenditure accounts
and preparation of accounts from incomplete records
20
4. Other specialized areas 35
TOTAL 100
Foundation Examinations Introduction to Financial Accounting
10
- Sole Distributors;
- Wholesalers and;
- Retailers.
b) Accounting Theory
⢠Fundamental accounting concepts including
- Accrual basis
- Consistency
- True and fair view
- Materiality
- Prudence
- Completeness
- Going Concern
- Substance over form
⢠Financial statements;
- Components
- Responsibility
- Presentation
- Users of financial statements;
⢠Asset valuation alternatives;
- Historical cost;
- Fair value;
- Net realizable value;
- Replacement cost;
2. Financial accounting practices
Accounting Records
⢠Petty cash book and imprest system;
⢠Cash books (including transactions with banks and their
documentation);
⢠Sales journal and the sales ledger;
⢠Purchase journal and the purchase ledger;
⢠General journal;
⢠General ledger
⢠Computerized Accounting
Introduction to Double Entry
⢠Double entry System, Accounting Equation and Rules of Debit &
Credit
Foundation Examinations Introduction to Financial Accounting
11
⢠Concept of capital and revenue expenditure;
⢠Concept of liability and income
⢠Effect of profit or loss on capital;
⢠Balancing of accounts;
⢠Trial balance;
Adjustments before Final Accounts
⢠Methods and recording of depreciation on Fixed Assets;
⢠Provisions for bad debts/ write off;
⢠Provisions for discounts on debtors;
⢠Prepayments and accruals;
⢠Inventory adjustments
⢠Bank reconciliation and related adjustments;
⢠Control accounts reconciliation and adjustments
⢠Errors in trial balance
⢠Suspense accounts
⢠Other adjustments;
The Final Accounts of Sole Traders & Partnership
⢠Balance sheets;
⢠Manufacturing, Trading and profit and loss accounts (Income
Statement);
⢠Cash Flows Statements
3. Receipt and payment accounts and accounts from incomplete records
⢠Receipt and payment accounts;
⢠Income and expenditure accounts;
⢠Preparation of accounts from incomplete records.
4. Other specialized areas
a) Accounting for inventories (IAS-2)
⢠Cost formulas (LIFO/ FIFO/ weighted average cost);
⢠Cost of inventories (cost of purchase, cost of conversions, other
costs);
⢠Measurement of inventories (lower of cost or Net realizable value);
⢠Presentation of inventories in financial statements.
Note (Cost Accounting techniques will not be tested at this stage)
b) Accounting for property, plant and equipment (IAS-16)
⢠Initial measurement of property, plant & equipment (components
of cost, exchange of assets);
Foundation Examinations Introduction to Financial Accounting
12
⢠Subsequent costs;
⢠Depreciation â Unit of measure, depreciable amount, depreciation
period and depreciation method
⢠Derecognition
c) Branch accounts (excluding foreign branches);
d) Treatment of the following in partnership accounts
⢠Admission;
⢠Retirement / death of partner (excluding life insurance policies,
annuities etc);
⢠Goodwill.
Note (s)
Reference to IAS shall be deemed to have been changed whenever the same is
replaced by a new reporting standard.