SE M E ST E R - 1

FUNDAMENTALS OF FINANCIAL ACCOUNTING [BAF-101]

INTRODUCTION  prepare bank and cash accounts, bank reconciliation
This course basically deals with the Fundamentals of Financial statements and petty cash statements,
Accounting. The students are expected to learn an  make year-end adjustments and prepare adjusted trial
understanding of accounting concepts, principles, procedures balance,
and systems for preparation of financial statements, accounting  prepare Income statem ent and statement of financial
treatment of current assets and liabilities, tangible and position from adjusted trial balance,
intangible assets. Students should become adept at classifying  understand the accounting treatment of accruals and
problems, situations and applying the required accounting prepayments,
principles.  Understand the components of financial statement and
the purpose of preparation of each of them .
OBJECTIVE
 know the nature and types of non-current intangible
To provide the students with:
assets
 an applied knowledge of basic and most fundam ental
 comprehend how errors are corrected
principles and concepts of accounting, and preparing
 prepare control accounts,
financial statem ents accordingly.
 compute cost of inventory by using different valuation
OUTCOMES methods,
On com pletion of this course, students should be able to:  Prepare financial Statement from Incom plete record
 apprehend and explain the fundam ental accounting  Develop knowledge of Sole Trader and Company Accounts.
principles and concepts,  Learn ratios to analyse financial statements.
 record transactions in journal,  calculate depreciation by using different m ethods,
 prepare ledger accounts, and trial balance,  prepare bad debts and allowance for doubtful debts
accounts,
INDICATIVE GRID
PART SYLLABUS CONTENT AREA WEIGHTAGE
CONCEPTUAL, SYSTEM AND REGULATORY FRAMEWORK
1. Accounting Nature and Objectives
A 10%
2. Accounting Regulatory Fram ework
3. Accounting Concepts and Conventions
ACCOUNTING SYSTEMS AND ACCOUNTS PREPARATION
4. Double Entry and Ledger Accounting
5. Trial Balance
6. Source Documents and Books
7. Receivables and Allowances for Bad Debts
8. Control Accounts
B 50%
9. Accounting for Inventories
10. Bank Reconciliations
11. Tangible Non-current Assets
12. Intangible Non-current Assets
13. Financial Statem ent
14. Correction of Errors
FINAL ACCOUNTS
15. Incomplete Records
16. Sole Traders’ Accounts
C 40%
17. Com panies Accounts
18. Financial Ratios
19. Not-for-Profit Organizations
TO TA L 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 m arks to be allocated to that section in the examination.
CONTENTS  Stock Exchanges
PART - A 3. Accounting Concepts and Conventions
CONCEPTUAL, SYSTEM AND REGULATORY FRAMEWORK  Accounting Concepts & Principles
(Going Concern, Accruals, Prudence, Consistency,
1. Accounting Nature and Objectives
M ateriality, Substance over form , Business Entity,
 Financial Accounting definition & objectives, Capital, Assets,
M oney Measurem ent)
Liabilities, expenses, ,Revenue, Accounting Equation
 Cost and Values
 Cost Accounting definition & Objectives
(Historical Cost Convention, Theory of Capital
 Management Accounting definition & Objectives
Maintenance, Current Purchasing Power Accounting,
2. Accounting Regulatory Framework Current Cost Accounting, Fair Value, Value to the business)
 Role of the regulatory system
 Company Law PART - B
 IAS ACCOUNTING SYSTEMS AND ACCOUNTS PREPARATION
 IFRS
4. Double Entry and Ledger Accounting
 Accounting bodies
 Principles of double entry book-keeping

Re-align Syllabus 2012 1 ICMA Pakistan

  Journal – (Book of Original Entry)  Nature and purpose of Depreciation and methods of
 Chart of Account Calculating Depreciation
 Nominal Ledger  Disposal of Non-Current Asset
 Posting from journal to ledger  Asset Disposal Account
 Foot and Balance Account
12. Intangible Non-current Assets
5. Trial Balance  Difference between tangible & intangible non-current
 Need and objective of trial balance assets
 Preparing trial balance  Definition & Types of intangible assets
 Difference between cash basis & accrual basis of
13. Financial Statement
accounting
 Objective & Use of Financial Statements
 Need and recording of adjustments
 Qualitative characteristics of Financial Statements
 Adjusted trial balance
 Element of Financial Statements
6. Source Documents and Books  Preparation of Income Statement
 Purpose of the Source Documents  Balance Sheet/Statement of Financial Position
(Requisition, quotation, Sale & Purchase Order, Credit &  Ethical consideration for preparing financial statements
Debit Note, GRN, goods dispatch note, invoice statement,
14. Correction of Errors
remittance advice, receipt)
 Types of Error
 Books
 Suspense Accounts
(Sale day book, Purchase day book, Sales Return day book,
 Correcting Entries
Purchase Return day book, Cash book, Petty Cash book,
 Effect of Errors on Financial Statements
Cash Receipt Journal, Cash Purchase Journal )
 Purpose of m aintaining financial records.
PART - C
7. Receivables and Allowances for Bad Debts FINAL ACCOUNTS
 Nature and purpose of Bad and Doubtful Debts
15. Incomplete Records
 Balance Sheet Approach & Income Statement Approach
 Features of Incomplete Records & Comparison with
 Entries for bad debts expense, allowance for bad debt and
Double-Entry Accounting
Recovered
 Pure & Mixed Incomplete Records-Accounting Treatments
 Aging analysis of receivables
 Preparation of Financial Statements from Incomplete
8. Control Accounts Records
 Understanding of Control Accounts
16. Sole Traders' Accounts
 Use of Control Accounts
 Statement of Profit and Loss
 Reconciliation of Control Accounts
 Balance Sheet
9. Accounting for Inventories
17. Companies Accounts
 Purpose and Need for recording inventory
 Types of Companies
 Accounting systems and methods for Stocks valuation
 Share, Stock and Bonds
 Ledger Accounts for Stock
 Retained Earnings – (Dividends & Reserves)
 Inventory Recognition Criteria
 Statement of Profit and Loss & Comprehensive Income
 Effect of inventory on Trial Balance, Statement of Profit and
 Statement of Retained Earning
Loss account and statement of financial position
 Balance Sheet / Statement of Financial Position
10. Bank Reconciliations
18. Financial Ratios
 Usage and reason for the preparation of bank reconciliation
 Analysis of Financial Statements
 Difference between bank statement and cash book
 Liquidity, working Capital and Solvency Ratios
 Types of transactions for which entries are made
 Proforma Bank Reconciliation by Adjusted Balance Method 19. Not-for-Profit Organizations
 Preparation of Income and Expenditure Account
11. Tangible Non-current Assets
 Preparation of Receipt & Payment Account
 Difference between revenue & capital expenditure with
 Special Funds
examples
 Preparation of Financial Statements
 Computing & Recording of Acquisition of an Asset
TEACHING METHODOLOGY: The faculty is advised to teach the topics in the mode of case studies based on knowledge and application
with practical approach.

RECOMMENDED BOOKS
CORE READINGS
TITL E A UTH O R PUBLISHER
Jan R. William s / Susan F. Haka / M ark S.
Accounting: The Basis for Business Decision McGraw-Hill
Bettner / Joseph V. Carcello
CIMA, UK Study Text --- BPP
Frank wood Business Accountancy 1&2 Frank wood Prentice Hall / Pearson / Financial Tim es
IFRSs/IASs IASB IFRS Foundation
Donald E. Kieso / Jerry J. Weygandt / Terry D.
Accounting Principles John Wiley & Sons
Warfield
ADDITIONAL READINGS
Financial Accounting Fundamentals PBP Professional Business Publications, Lahore.

Re-align Syllabus 2012 2 ICMA Pakistan