SYLLABUS
• Introduction to Financial Accounting and its
terms.
•Accounting equation and Journal.
•Voucher Approach in Accounting.
•Bank reconciliation Statement.
•Financial Management/Statements.
•Partnership Accounts.
•Ledger Accounts.
•Cash Book, Financial Audit.
•Elements of Double entry Book Keeping.
•Rules for journalizing.
•Trial Balance.
•Trading Account.
•Profit Loss Account and Balance Sheet.
•Concept of Social Accounting, Social Audit and
cash based single entry system of accounting.
•Public Financial Management System (PFMS)
• CAPITAL capital means that amount or asset which is
invested in business by businessman or owner of
business. It can be in any kind
• . DRAWINGS It refers to that amount which is
withdrawn by business for his personal use .It can be
in cash as well as in other form also.
• Asset (A) Anything the company owns that has
monetary value. These are listed in order of liquidity,
from cash (the most liquid) to land (least liquid).
Current assets (CA) are those that will be converted to
cash within one year. Typically, this could be cash,
inventory or accounts receivable.
Fixed assets (FA) are long-term and will likely provide
benefits to a company for more than one year, such as a
real estate, land or major machinery.
• Debtors debtors are parties who owe money to a
company, a bank, financial institution, an
enterprise, etc. Whenever a company sells its
goods or services to a buyer on credit, the buyer is
considered to be a debtor
• creditors Creditors are parties like lenders,
government, suppliers, service providers, etc to
whom the debt is owned. In your normal line of
business operation you may be both a debtor and a
creditor.
• Accounts payable (AP) Accounts payable (AP)
definition: The amount of money a company owes
creditors (suppliers, etc.) in return for goods and/or
services they have delivered.
• Accounts Receivable (AR) Accounts Receivable
include all of the revenue (sales) that a company
has provided but has not yet collected payment on.
• Liability (L) All debts that a company has yet to pay
are referred to as Liabilities. Common liabilities
include Accounts Payable, Payroll, and Loans.
•Short term liabilities are those debts that are
payable within a year, such as a CREDITORS.
•Long-term liabilities are typically payable over a
period of time greater than one year. An example of a
long-term liability would be a LONG TERM LOAN
•Contingent liability A contingent liability is a liability
that may or may not occur depending on the
outcome of an uncertain future event.
• Depreciation (Dep) Depreciation is the term that
accounts for the loss of value in an asset over time.
Common assets to be depreciated are automobiles
and equipment. Depreciation is categorized as a
“Non-Cash Expense” since it doesn’t have a direct
impact on a company’s cash position.
• DISCOUNT Discount is an allowance or concession in
price. Discount is given so that the buyer is induced (lured)
to place an order and later to make payment in time.
Cash Discount This discount is offered to encourage the
buyer for quick payment or settlement. It is allowed for
immediate payment of cash or payment within a short
period. It is shown in the books of accounts
Trade Discount Trade Discount is a reduction in the catalogue
price of the goods Its purpose is to encourage the buyer to
make bulk purchases. It is allowed on cash as well as credit
sales. The trade discount is not shown in the books of
account.
• Outstanding expenses Outstanding expenses are those
expenses which have been incurred during the current
accounting period and are due to be paid, however, the
payment is not made. Examples – Outstanding salary,
outstanding rent, outstanding wages, etc.
• Prepaid expenses Prepaid expenses are future expenses
that are paid in advance and hence recognized initially as
an asset
• Accrued income Accrued income is income which has
been earned but not yet received
• Income received in advance It referes to
that amount of income which is received
before it accrue.
• BAD DEBT Bad debt is a Loss that a business
incurs once the repayment of credit
previously extended to a customer is
estimated to be uncollectible. Which
cannot be recovered from debtors.
• INSOLVENCY Insolvency is a state of
financial distress in which a business or
person is unable to pay their bills.
• Purchase Return When purchased goods
are returned to the suppliers, these are
known as purchase return.
• Sales Return When sold goods are returned
from customer due to any reason is known
as sales return.
Example the death of a skilled employee may bring
heavy loss to a business, but this loss is not
measurable in terms of money. So it should be
regarded as event
ACCOUNTING ASSUMPTIONS
Business Entity Assumption According to
this assumption, the business is treated as
a unit or entity apart from its owners,
creditors, managers, and others. For
recording the transactions, it is the
business that is the entity and with which
we are concerned.
Money Measurement Assumption The
money measurement assumption
underlines the fact that in accounting
every worth-recording event, happening or
transaction is recorded in terms of money.
Going Concern Assumption Also known as
”continuity assumption”, the enterprise is
normally viewed as a going concern, i.e.,
continuing in operation for the foreseeable
future.
Accounting Period Assumption According to this
assumption, the economic life of an enterprise is
artificially split into periodic intervals, which are
known as accounting periods, at the end of which an
income statement and financial position statement
are prepared to show the performance and financial
position, the use of this assumption further requires
the allocation of expenses between capital and
revenue.
ACCOUNTING PRINCIPLES
1) Accruals concept: revenue and expenses are
recorded when they occur and not when the cash
is received or paid out;
(2) Consistency concept: once an accounting method
has been chosen, that method should be used unless
there is a sound reason to do otherwise;
(3) Going concern: the business entity for which
accounts are being prepared is in good condition and
will continue to be in business in the foreseeable
future;
4)The full disclosure principle is a concept that
requires a business to report all necessary
information about their financial statements and
other relevant information to any persons who are
accustomed to reading this information.
5) matching principle definition The principle that
requires a company to match expenses with related
revenues in order to report a company's profitability
during a specified time interval. Ideally, the matching
is based on a cause and effect relationship: sales
causes the cost of goods sold expense and the sales
commissions expense.
6) Dual aspect concept, also known as duality
principle in accounting, states that every business
transaction should have double entry in bookkeeping.
Forming the basis of double entry bookkeeping
system, dual aspect concept records every
transaction under two basic classifications of credit
and debit.
ACCOUNTING CYCLE
1 The work of Accounting begins:
(A) Where the work of Book-Keeping begins
(B) Where the work of Book-Keeping ends
(C) Where the books are not written
(D) Where there is no object of keeping the books.
2 Cash invested by owner is called
a) Assets
b) Liabilities
c) Capital
d) Loan
3 Cash or goods taken away by proprietor for
personal use is called
a) Drawing
b) Scale
c) Charity
d) Expense