Part A: Financial Accounting – I
Unit-1: Theoretical Frame Work
Introduction to Accounting
- Accounting- concept, objectives, advantages and limitations, types of accounting information; users of accounting information and their needs. Qualitative Characteristics of Accounting Information. Role of Accounting in Business
- Basic Accounting Terms- Business Transaction, Capital, Drawings. Liabilities (Non Current and Current). Assets (Non Current, Current); Fixed assets (Tangible and Intangible), Expenditure (Capital and Revenue), Expense, Income, Profit, Gain, Loss, Purchase, Sales, Goods, Stock, Debtor, Creditor, Voucher, Discount (Trade discount and Cash Discount)
Theory Base of Accounting
- Fundamental accounting assumptions: GAAP: Concept
- Business Entity, Money Measurement, Going Concern, Accounting Period, Cost Concept, Dual Aspect, Revenue Recognition, Matching, Full Disclosure, Consistency, Conservatism, Materiality and Objectivity
- System of Accounting. Basis of Accounting: cash basis and accrual basis
- Accounting Standards: Applicability in IndAS
- Goods and Services Tax (GST): Characteristics and Objective
Unit-2: Accounting Process
Recording of Business Transactions
- Voucher and Transactions: Source documents and Vouchers, Preparation of Vouchers, Accounting Equation Approach: Meaning and Analysis, Rules of Debit and Credit.
- Recording of Transactions: Books of Original Entry- Journal
Special Purpose books:
- Cash Book: Simple, cash book with bank column and petty cashbook
- Purchases book
- Sales book
- Purchases return book
- Sales return book
Ledger:
- Format, Posting from journal and subsidiary books, Balancing of accounts
Bank Reconciliation Statement:
- Need and preparation
Depreciation, Provisions and Reserves
- Depreciation: Concept, Features, Causes, factors
- Other similar terms: Depletion and Amortisation
- Methods of Depreciation:
i. Straight Line Method (SLM)
ii. Written Down Value Method (WDV)
- Difference between SLM and WDV; Advantages of SLM and WDV
- Accounting treatment of depreciation
i. Charging to asset account
ii. Creating provision for depreciation/accumulated depreciation account
iii. Treatment for disposal of asset
- Provisions and Reserves: Difference
- Types of Reserves:
i. Revenue reserve
ii. Capital reserve
iii. General reserve
iv. Specific reserve
v. Secret Reserve
- Difference between capital and revenue reserve
Accounting for Bills of Exchange
- Bill of exchange and Promissory, Note: Definition, Specimen, Features, Parties
- Difference between Bill of Exchange and Promissory Note
- Terms in Bill of Exchange:
i. Term of Bill
ii. Accommodation bill (concept)
iii. Days of Grace
iv. Date of maturity
v. Discounting of bill
vi. Endorsement of bill
vii. Bill after due date
viii. Negotiation
ix. Bill sent for collection
x. Dishonour of bill
- Accounting Treatment
Trial balance and Rectification of Errors
- Trial balance: objectives and preparation
- Errors: types-errors of omission, commission, principles, and compensating; their effect on Trial Balance
- Detection and rectification of errors; preparation of suspense account
Part B: Financial Accounting – II
Unit 3: Financial Statements of Sole Proprietorship
Financial Statements
Meaning, objectives and importance; Revenue and Capital Receipts; Revenue and Capital Expenditure; Deferred Revenue expenditure. Trading and Profit and Loss Account: Gross Profit, Operating Profit and Net profit. Preparation. Balance Sheet: need, grouping and marshalling of assets and liabilities. Preparation. Adjustments in preparation of financial statements with respect to closing stock, outstanding expenses, prepaid expenses, accrued income, income received in advance, depreciation, bad debts, provision for doubtful debts, provision for discount on debtors, Abnormal loss, Goods taken for personal use/staff welfare, interest on capital and managers commission. Preparation of Trading and Profit and Loss account and Balance Sheet of a sole proprietorship with adjustments.
Incomplete Records
Features, reasons and limitations. Ascertainment of Profit/Loss by Statement of Affairs method.