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  Management Accounting definition & Objectives
CONCEPTUAL, SYSTEM AND REGULATORY  Difference between financial accounting and cost
FRAMEWORK and management accounting

1. Accounting Nature and Objectives 2. Introduction to Financial Accounting

 Financial Accounting definition & objectives,  Explain the meaning and identify the examples of
 Cost Accounting definition & Objectives the following terms

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 Study Scheme 2018
(Updated in 2023)

 Capital o Prepare journal and adjusting entries of

 Assets accruals and prepayments
 Liabilities o Explain the matching concept with related
 Expenditures (Capital & Revenue) to accruals and prepayments
 Revenue o How the amount of accruals and
 Accounting Equation prepayments are depicted in financial
 Understand and explain the accounting equation statements?

3. Accounting Regulatory Framework 9. Tangible non-current assets

 Define Company Law  Depreciation
 Define types of companies as per Company Laws o Purpose of charging depreciation
i.e., private and public limited, listed and non- o Methods of calculating depreciation
listed companies etc. Guarantee limited (Straight line, reducing balance and sum of
company, single Member Company year’s digit)
 IAS, IFRS o Compute depreciation where any changes
 Define IAS/ IFRS and its role are made in estimated life and value of
 Explain purpose of implementation company assets
laws, IAS, IFRS in Financial reporting  Accounting treatment of the following:
 Accounting bodies o Re-valuation of non-current assets
 Identify and understand the role of regulatory (Reversal of revaluation is excluded)
bodies i. e, IFRS Foundation (IFRSF), the o Non-current asset disposal
International Accounting Standards Board o Non-current asset register
(IASB), the IFRS Advisory Council (IFRS AC) and
the IFRS Interpretations Committee (IFRS IC) 10. Intangible non-current assets
 Accounting treatment of Intangible Assets
4. Accounting Concepts and Conventions  Research and Development Cost
 Accounting Concepts & Principles (Going o Define research and development cost
Concern, Accruals, Prudence, Consistency, o Identify the treatment of research and
Materiality, Substance over form, Business development cost
Entity, Money Measurement)
 Cost and Values (Historical Cost Convention, 11. Bad debts and allowances for receivables
Theory of Capital Maintenance, Current  Sales and Accounting Concepts
Purchasing Power Accounting, Current Cost  Concept of debtor’s age analysis
Accounting, Fair Value, Value to the business)  Bad and Doubtful Debts
o Nature and purpose of bad and doubtful
PART - B debts
ACCOUNTING SYSTEMS AND ACCOUNTS PREPARATION o General entries and aging analysis
 Bad Debts Recovered
5. Source Documents and Books
 Identify various Source Documents (Sale &
12. Provisions and Contingencies
Purchase Order, Credit & Debit Note, GRN) and
 Categorization of liabilities (current and non-
explain its purpose
current liabilities)
 Books (Sale day book, Purchase day book, Sales
 Cash and Credit Purchases
Return day book, Purchase Return day book,
 Define, differentiate and classify Provisions,
Cash book, Petty Cash book)
Contingent liabilities and Assets
 Concepts and layout
 Recording of transaction in books and posting
13. Accounting for Inventories
the item in the ledger accounts.
 What is inventory or stock?
6. Double Entry and Ledger Accounting  Its types; Raw Materials, Work in progress,
 Principles of double entry bookkeeping Finished goods
 Journal  Valuation of inventory as per IAS 2
 Nominal Ledger  Lower of cost or NRV
 Posting from day book to nominal ledger and  Valuation of Cost of sales and closing stock under
balance off ledger account FIFO, LIFO and AVCO (Both periodic and
 Sales and Purchase accounts, including personal perpetual)
accounts and Control accounts  Stock and Work -in-progress
 Accounting for Stocks - closing stock
7. Trial balance and financial statements  Ledger Accounts for stock
 Trial Balance  Physical Count
o Need and objective of trial balance  Impact of inventory on Statement of Profit or
o Preparing of trial balance Loss and Statement of Financial Positions from
o Need and recording of adjustments Trial Balance
o Preparing of Adjusted trial balance
 Income Statement, Balance Sheet/Statement of 14. Accounting for Sales Tax and Payroll
Financial Position  Principles of Sales Tax (input tax, output tax and
o Preparation of basic layout off financial net tax)
statement and illustrate some examples of  Bookkeeping Entries for Sales Tax
financial statements  Basic concepts of Gross wages, deductions and
 Accounts Coding System-Define chart of accounts net wages
8. Accruals and prepayments  Accounting entries of Wages from the
 Accruals and Prepayments Employee's Viewpoint

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 Study Scheme 2018
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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