Thursday, July 04, 2013

Paper 2: Fundamentals of accounting


Section A : Fundamentals of Financial Accounting [60 marks]
1. Accounting Process
(a) Theoretical Framework ( meaning, scope and usefulness of Accounting; Generally Accepted Accounting Principles, Concepts and Conventions)
(b) Capital and Revenue transactions- capital and revenue expenditures, capital and revenue receipts
(c) Measurement, Valuation and Accounting estimates
(d) Double entry system, Books of prime entry, Subsidiary Books
(e) Recording of Cash and Bank transactions
(f) Preparation of Ledger Accounts
(g) Preparation of Trial Balance- interpretation and usefulness
(h) Rectification of Errors
(i) Opening entries, Transfer entries, Adjustment entries, Closing entries

2. Reconciliation Statements
(a) Bank Reconciliation Statement
(b) Receivables / Payables Reconciliation Statement
(c) Stock Reconciliation Statement

3. Accounting for Depreciation
(a) Depreciation Policy
(b) Methods, computation and Accounting treatment

4. Preparation of Final Accounts
(a) Of a Profit making concern ( for sole proprietorship concern and partnership firm only)
(i) Preparation of Trading Account, Profit & Loss Account and Balance Sheet
(ii) Accounting treatment of bad debts, reserve for bad and doubtful debts, provision for discount on debtors and provision for discount on creditors
(b) Of a Not-for- Profit making concern
(i) Preparation of Receipts and Payments Account;
(ii) Preparation of Income and Expenditure Account
(iii) Preparation of Balance Sheet
(c) Under Single Entry System including conversion of single entry into double entry system (basic level)
(i) Concept of Single Entry System and preparation of Statement showing Profit and Loss , Statement of Affairs
(ii) Conversion of Single Entry System into Double Entry System of Accounting

5. Accounting for Special Transactions
(a) Bills of Exchange
(b) Consignment
(c) Joint Venture
(d) Sale of goods on approval or return basis

Section B: Fundamentals of Cost & Management Accounting[40 marks]
6. Fundamentals of Cost Accounting
(a) Cost and Management Accounting – Generally Accepted Cost Accounting Principles
(b) Accounting for Material cost (including Accounting of Inventory – LIFO, FIFO, Weighted Average Cost)
(c) Accounting for Labour costs, Direct Expenses and Overheads

7. Preparation of Cost Statements
(a) Cost Data collection, Cost Sheet formats,
(b) Preparation of Cost Sheets (historical cost sheets and estimated cost sheets)

8. Fundamentals of Management Accounting
(a) Marginal Costing and Break-even analysis – basic knowledge
(b) Application of Marginal Costing for decision-making