F U N DA M EN T A L LE V E L

F U N D A M EN T A L S OF F I N A N C I A L A C C OU N T I N G (F - 1 )

GR I D
PART-A
INTRODUCTION TO ACCOUNTING
PART-B
BOOKING KEEPING AND ADJUSTMENTS PRIOR TO FINANCIAL STATEMENTS
PART-C
PREPARATION OF FINANCIAL STATEMENTS
Total
Syllabus Overview:
F-1 deals with basic concepts, elements, terminology
used in accounting. It provides understanding with
accounting equation, entries, primary books of
accounts and accounting cycle. The knowledge
gained through this syllabus will be used as a strong
foundation for other accounting papers at
Graduation, Professional and Chartered level.
Learning Outcomes:
On completion of this course, students will be able
to:
 Understand the objectives, scope and use of
accounting information
 Clearly distinguish between financial and
management accounting
 Comprehend the basic concepts, principles,
conventions of accounting
 Recognize elements of accounting and their
impact on accounting equation
 Differentiate and understand accrual and cash
basis accounting
 Understand the concept of chart of account and
must be able to prepare it for trading businesses
W E I GH T A G E
15%
60%
25%
100%
 Comprehend the basic source documents of
different business transactions and must be able
to record, balance and rectify transactions in
respective journals
 Maintenan ce of ledger accounts, its balancing
and preparation of trial balance
 Prepare and understand the objective of
adjusting, closing and reversal entries
 Understand the concept of allowance of bad
debts, its estimation and write off for
presentation of accounts receivable in financial
statements
 Know the concept of inven tory, its recognition
and method of valuation
 Compute the cost of inventory by using different
valuation methods
 Understand the practical reasons of bank
account reconciliation and related adjustments.
 Know the nature and types of non-current
intangible assets
 Comprehend different methods of depreciation,
and asset disposal transactions.
 Prepare financial statements of sole
proprietorship (trading concerns)

DETAILED CONTENTS WEIGHTAGE IN %

PART-A
INTRODUCTION TO ACCOUNTING
1. Accounting Nature  Definition, Scope and Objective of Accounting
and Objectives  Uses of Accounting Information
 Concept and Scope of Financial and Management Accounting
 Legal Structure of Business Organization
- Sole Proprietorship, Partnership, Limited Company
 Elements of Accounting
- Assets, Liabilities, Capital/Equity, Expenses and Revenue
 Accounting Equation, effects of business transactions on
accounting elements and equation. 15
2. Accounting  Fundamental Accounting Concepts, Principles and Policies
Concepts and - Going Concern, Accruals Basis of Accounting, Cash basis of
Conventions Accounting, Prudence, Consistency, Materiality, true and fair
view
- Completeness, Timeliness, Business Entity, Money
Measurement, Substance over form, Historical Cost
Convention
PAR T – B
BOOK KEEPING AND ADJUSTMENT PRIOR TO FINANCIAL STATEMENTS
3. Book Keeping and  Introduction to Book Keeping
Double Entry  Double entry book keeping and rules of debit and credit
System 5
 Accrual and Cash basis of Accounting
 Concept and set up Chart of Accounts

1
  Recording Transactions in General Journal
4. General Ledger &  Introduction to General Ledger and its need
Trial Balance  Posting of transactions to ledgers and balancing of the same
 Need and objectives of trial balance
 Concept and setting up T-Accounts
 Preparation of trial balance 5
 Adjusting Entries and adjusted trial balance
 Closing and reversing entries
 Closing and opening Trial Balance
5. Source Documents  Purpose of Source Documents
and Special Journals - Requisition, quotation, Sale & Purchase Order, Credit & Debit
Note, GRN, Goods dispatch note, invoice, remittance advice,
Cash receipt, vouchers
 Special Journals 5
- Sale Journal, Purchase Journal, Cash Receipt Journal, Cash
Payment Journal, Sales Return Journal, Purchase Return
Journal
 Cash book and Petty Cash book
6. Accounting for  Receivables and subsidiary ledger
Receivables and  Concept of Bad debts/ doubtful debts and allowance for bad
Allowance for debts
Doubtful Debts  Recording Bad Debts and its recovery
 Estimation of Allowances for bad & doubtful debts (balance
sheet and income statement approach),
10
 Aging analysis of receivables
7. Control Accounts  Introduction and use of Control Accounts
 Receivable and Payable Control Accounts
 Errors of control accounts (including subsidiary ledger)
 Reconciliation of Control Accounts and subsidiary ledger
8. Accounting for  Nature and classes of Inventories
Inventories  Purpose and need for recording inventory
 Periodic and perpetual inventory system
 Methods for Inventory Valuation
- FIFO and Weighted Average Cost
 Ledger Accounts for Inventory 10
 Inventory Recognition Criteria, Concept of Lower of cost or Net
realisable value, Recording of inventory adjustments
 Impact of closing and opening inventory balances on financial
statements
9. Cash Control and  Reason and purpose of bank reconciliation statements
Bank  Methods to prepare bank reconciliation statements (Adjusted
Reconciliations Balance Method/ Revised Cash Book Method only) 10
 Adjusting or correction entries related to bank reconciliation
10. Tangible Non-  Recognition and measurement of tangible non-current assets;
current Assets  Concept of revenue & capital expenditure
 Recording of acquisition and disposal of an assets
 Nature and purpose of depreciation and methods of calculating 10
depreciation, changes in method of depreciation and revision of
life an asset.
 Disposal of non-Current asset and asset disposal account
11. Intangible Non-  Nature and composition of intangible assets
current Assets  Definition & types of intangible assets (Goodwill, Patent,
copyright, franchise, Trademark, royalty) 5
 Difference between tangible & intangible non-current assets
PAR T – C
PREPARATION OF FINANCIAL STATEMENTS
12. Financial  Elements and components of financial statements
Statements of Sole  Objective & use of financial statements 25
Proprietorship  Qualitative characteristics of financial statements

2
 (Trading concerns)  Preparation of Income Statement/ Profit or Loss Account and
Statement of Comprehensive Income
 Preparation of Balance Sheet/ Statement of Financial Position
TOTAL WEIGHTAGE 100

Recommended Books and Other Resources

CORE READINGS
TITLE AUTHOR PUBLISHER
Financial & Managerial Accounting:
Jan R. Williams / Susan F. Haka McGraw-Hill
The Basis for Business Decisions
Prentice Hall / Pearson /
Business Accounting – Vol-1 Frank wood
Financial Times
CIMA, UK Study Text -- BPP
Donald E. Kieso / Jerry J. Weygandt /
Accounting Principles John Wiley & Sons
Terry D. Warfield