Study Scheme 2018

(Updated in 2023)

O1-FUNDAMENTALS OF FINANCIAL ACCOUNTING OPERATIONAL LEVEL-1

INTRODUCTION  Prepare ledger accounts, journal entries and a trail

This course basically deals with the Fundamentals of balance;
Financial Accounting. The students are expected to learn  Understand tangible and intangible assets;
an understanding of accounting concepts, principles,  Use different methods of calculating depreciation;
procedures and systems for preparation of financial  Prepare accounts for bad debts and allowance for
statements, accounting treatment of current assets and receivables;
liabilities, tangible and intangible assets. Students should  Records provision and contingencies;
become adept at classifying problems, situations and  Compute inventory by using different valuation
applying the required accounting principles. methods for preparing inventories ‘accounts;
 Prepare accounts for sales taxes and payroll;
OBJECTIVE  Prepare accounts for bank reconciliation statements;
To provide the students with an applied knowledge of  Prepare accounts for sales and purchases, including
basic and most fundamental principles and concepts of personal accounts and control accounts;
accounting, and preparing financial statements  Understand the types/ nature of errors and its
accordingly rectification
 Prepare financial statements from trial balance;
LEARNING OUTCOMES  Prepare manufacturing accounts;
On completion of this course, students will be able to:  Prepare and present the financial statements from
 Understand the need for accounting records; incomplete records
 Apprehend the fundamental accounting principles  Prepare and present the receipts and payments and
and concept; income and expenditure accounts
 Differentiate between financial and management  Prepare a statement of cash flows;
accounting;  Prepare final accounts in accordance with IAS and
 Prepare cash book, bank accounts and petty cash book IFRS;
statements under an imprest system;  Calculate basic financial ratios.
 Perform the system of double-entry bookkeeping;

INDICATIVE GRID
PART SYLLABUS CONTENT AREA WEIGHTAGE
CONCEPTUAL, SYSTEM AND REGULATORY FRAMEWORK
1. Accounting Nature and Objectives
A 2. Introduction to Financial Accounting 10%
3. Accounting Regulatory Framework
4. Accounting Concepts and Conventions
ACCOUNTING SYSTEMS AND ACCOUNTS PREPARATION
5. Source Documents and Books
6. Double Entry and Ledger accounting
7. Trial balance and financial statements
8. Accruals and prepayments
9. Tangible non-current assets
10. Intangible non-current assets
B 50%
11. Bad debts and allowances for receivables
12. Provisions and Contingencies
13. Accounting for Inventories
14. Accounting for Sales Tax and Payroll
15. Bank Reconciliation’s
16. Control accounts
17. Correction of Errors
FINAL ACCOUNTS
18. Sole traders' accounts
19. Incomplete records
C 40%
20. Income and expenditure accounts
21. Statements of cash flows
22. Financial Ratios
TOTAL 100%
Note: The weightage shown against each section indicates, study time required for the topics in that section. This weightage
does not necessarily specify the number of marks to be allocated to that section in the examination.

DETAILED CONTENTS
PART - A  Difference between financial accounting and cost
CONCEPTUAL, SYSTEM AND REGULATORY and management accounting
FRAMEWORK
2. Introduction to Financial Accounting
1. Accounting Nature and Objectives  Explain the meaning and identify the examples of
 Financial Accounting definition & objectives, the following terms
 Cost Accounting definition & Objectives  Capital
 Management Accounting definition & Objectives  Assets

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 Liabilities o Prepare journal and adjusting entries of

 Expenditures (Capital & Revenue) accruals and prepayments
 Revenue o Explain the matching concept with related
 Accounting Equation to accruals and prepayments
 Understand and explain the accounting equation o How the amount of accruals and
prepayments are depicted in financial
3. Accounting Regulatory Framework statements?
 Define Company Law
 Define types of companies as per Company Laws 9. Tangible non-current assets
i.e., private and public limited, listed and non-  Depreciation
listed companies etc. Guarantee limited o Purpose of charging depreciation
company, single Member Company o Methods of calculating depreciation
 IAS, IFRS (Straight line, reducing balance and sum of
 Define IAS/ IFRS and its role year’s digit)
 Explain purpose of implementation company o Compute depreciation where any changes
laws, IAS, IFRS in Financial reporting are made in estimated life and value of
 Accounting bodies assets
 Identify and understand the role of regulatory  Accounting treatment of the following:
bodies i. e, IFRS Foundation (IFRSF), the o Re-valuation of non-current assets
International Accounting Standards Board (Reversal of revaluation is excluded)
(IASB), the IFRS Advisory Council (IFRS AC) and o Non-current asset disposal
the IFRS Interpretations Committee (IFRS IC) o Non-current asset register

4. Accounting Concepts and Conventions 10. Intangible non-current assets

 Accounting Concepts & Principles (Going  Accounting treatment of Intangible Assets
Concern, Accruals, Prudence, Consistency,  Research and Development Cost
Materiality, Substance over form, Business o Define research and development cost
Entity, Money Measurement) o Identify the treatment of research and
 Cost and Values (Historical Cost Convention, development cost
Theory of Capital Maintenance, Current
Purchasing Power Accounting, Current Cost 11. Bad debts and allowances for receivables
Accounting, Fair Value, Value to the business)  Sales and Accounting Concepts
 Concept of debtor’s age analysis
PART - B  Bad and Doubtful Debts
ACCOUNTING SYSTEMS AND ACCOUNTS PREPARATION o Nature and purpose of bad and doubtful
debts
5. Source Documents and Books o General entries and aging analysis
 Identify various Source Documents (Sale &  Bad Debts Recovered
Purchase Order, Credit & Debit Note, GRN) and
explain its purpose 12. Provisions and Contingencies
 Books (Sale day book, Purchase day book, Sales  Categorization of liabilities (current and non-
Return day book, Purchase Return day book, current liabilities)
Cash book, Petty Cash book)  Cash and Credit Purchases
 Concepts and layout  Define, differentiate and classify Provisions,
 Recording of transaction in books and posting Contingent liabilities and Assets
the item in the ledger accounts.
13. Accounting for Inventories
6. Double Entry and Ledger Accounting  What is inventory or stock?
 Principles of double entry bookkeeping  Its types; Raw Materials, Work in progress,
 Journal Finished goods
 Nominal Ledger  Valuation of inventory as per IAS 2
 Posting from day book to nominal ledger and  Lower of cost or NRV
balance off ledger account  Valuation of Cost of sales and closing stock under
 Sales and Purchase accounts, including personal FIFO, LIFO and AVCO (Both periodic and
accounts and Control accounts perpetual)
 Stock and Work -in-progress
7. Trial balance and financial statements  Accounting for Stocks - closing stock
 Trial Balance  Ledger Accounts for stock
o Need and objective of trial balance  Physical Count
o Preparing of trial balance  Impact of inventory on Statement of Profit or
o Need and recording of adjustments Loss and Statement of Financial Positions from
o Preparing of Adjusted trial balance Trial Balance
 Income Statement, Balance Sheet/Statement of
Financial Position 14. Accounting for Sales Tax and Payroll
o Preparation of basic layout off financial  Principles of Sales Tax (input tax, output tax and
statement and illustrate some examples of net tax)
financial statements  Bookkeeping Entries for Sales Tax
 Accounts Coding System-Define chart of accounts  Basic concepts of Gross wages, deductions and
net wages
8. Accruals and prepayments  Accounting entries of Wages from the
 Accruals and Prepayments Employee's Viewpoint

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15. Bank Reconciliation’s  Preparation of Financial Statements

 Concept of Cash book, single column, double
column and triple column cash book 19. Incomplete records
 Understanding of Bank statement and basic  Incomplete Records: Basic Approach
concepts  Cash and Bank Transactions
 Reasons of differences between cash book  Using Ratios and Percentages (Find out missing
balance and bank statement balance figures by using profit percentages)
 Identifying differences in balances by ticking  Preparation of Financial Statements
 Preparation of revised cash book
 Preparation of bank reconciliation statement 20. Income and expenditure accounts
 Concept of which balance to be shown in  Format of Income and Expenditure Accounts
statement of financial position  Preparation of Income and Expenditure Accounts
 Special Funds (Define Special funds i.e., capital
16. Control accounts fund, donation, annual subscription, life
 ledger Accounts and the Division of the ledger membership fees)
Understanding of Control Accounts  Preparation of Financial Statements
 Use of Control Accounts  Interpretation of Accounts
 Purchase and Sale Day Books (Define and
recording of transaction) 21. Statements of cash flows
 Control Accounts Reconciliation  Format of a Statement of Cash Flows
 Preparation of a statement of Cash Flows by
17. Correction of Errors Direct and Indirect Method
 Types of Errors  Uses of Statement of Cash Flows
 Suspense Accounts
 Correcting Entries 22. Financial Ratios
 Impact of correction of errors on financial  Analysis of Accounting Statements and Use of
statements Ratios
 Liquidity, Working Capital and Solvency Ratios
PART - C  Financial Gearing
FINAL ACCOUNTS  Investor Ratios
 Possible Drawbacks of Ratio Analysis
18. Sole traders' accounts  Appraising the Position and Prospects of a
 Chart of Accounts Business

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