ICMAB

Resources

Foundation Level

001. Principles of Accounting-100

Course objectives : This introductory course will provide the students with basic understanding of the principles and concepts of accounting as well as their applicability and relevance in the national context and with the ability to apply these principles and concepts in the preparation of financial and related information to meet internal and external obligations. On completion of this course the students will be able to:

a.      outline the role and principles of financial accounting and reporting.

b.      record, handle and summarize accounting data.

c.      prepare financial statements for merchandising operations.

d.      discuss the accounting treatment of long lived assets, short-lived assets, liabilities, natural resources and intangible assets.

e.      understand the accounting for partnership and fundamentals of a corporation.

f.      have thorough grounding and the technical skills of accounting necessary to work as an accountant more efficiently and effectively.

 

001.01Accounting in Action

Definition of Accounting; Users of Accounting Data; Brief History of Accounting; Book keeping and Accounting; The Accounting Profession.

Ethics-Fundamental Business Concept; Generally Accepted Accounting Principles; Assumptions; Basic Accounting Equation.

Transaction Analysis; Double Entry Book-keeping; Summary of Transactions; Financial Statements.

 

001.02 The Recording Process

The Account-Debits and Credits; Expansion of Basic Equation.

Steps in the Recording Process-The Journal; The Ledger.

The Trial Balance-Limitations of a Trial Balance; Locating Errors.

 

001.03 Adjusting the Accounts

Timing Issues-Selecting an Accounting time Period; Fiscal and Calendar Years; Recognizing Revenues and Expenses.

The Basics of Adjusting Entries-Types of Adjusting Entries; Adjusting Entries for Prepayments; Adjusting Entries for Accruals; Summary of basic Relationships.

Preparing the Adjusted Trial Balance; Preparing Financial Statements; Accrual vs. Cash Basis of Accounting.

 

001.04 Completion of the Accounting Cycle

Using a Work Sheet-Steps in preparing a Work Sheet; Preparing Financial Statements from a Work Sheet; Preparing Adjusting Entries from a Work Sheet.

Closing the Books-Preparing Closing Entries; Posting Closing Entries; Preparing a Post-Closing Trial Balance.

Summary of the Accounting Cycle-Reversing Entries-An Optional Step; Correcting Entries-An Avoidable Step

Classified Financial Statements-Standard Classifications; Classified Balance Sheet.

 

001.05 Accounting for Merchandising Operations (IAS-18)

Measuring net Income: Sales Revenue; Sales Returns and Allowances; Sales Discounts; Statement Presentation.

Cost of Goods Sold-Recording Purchases of Merchandise; Determining Cost of Goods Purchased; Determining Cost of Goods on Hand; Computing Cost of Goods Sold; Gross Profit; Operating Expenses; Income Statement;

Completing the Accounting Cycle Using a Work Sheet.

Preparing Financial Statements; Adjusting Entries and Closing Entries; Preparing the Post-Closing Trial Balance

Forms of Income Statements-Multiple-Step Income Statement; Single-Step Income Statement.

Perpetual Inventory Systems; Merchandise Transactions under a Perpetual Inventory System.

Adjusting Entry Method for Merchandise Inventory.

 

001.06 Subsidiary Ledgers and Special Journals

Subsidiary Ledgers-Advantages of Subsidiary Ledgers

Special Journals-Sales Journal; Cash Receipts Journal; Purchases Journal; Cash Payments Journal; Effects on General Journal.

 

001.07 Internal Control and Cash

Internal Control-Principles of Internal Control; Limitations of Internal Control.

Cash Controls-Internal Control over Cash Receipts; Internal Control over Cash Disbursements.

Causes of differences between cash account balance and bank statement balance; Preparation of Bank Reconciliation Statement for Correct Balance. Adjusting Entries for reconciliation and errors rectification.

 

001.08 Accounting for Receivables (IAS-1, IAS-18)

Types of Receivables; Accounts Receivables-Recognizing Accounts Receivable; Valuing Accounts Receivable; Disposing of Accounts Receivable.

Note Receivable-Determining the Maturity Date; Computing Interest; Recognizing Notes Receivable; Valuing Notes Receivable; Disposing of Notes Receivable.

Presentation of Receivables in Balance sheet.

 

001.09 Inventories (IAS-2)

Inventory Basics-Classifying Inventory; Determining Inventory Quantities.

Inventory Costing-Inventoriable Costs; Using Actual Physical Flow Costing-Specific Identification; Using Assumed Cost Flow Methods- FIFO, LIFO, and Average Cost; Financial Statement Effects of Cost Flow Methods; Using Inventory Cost Flows Methods Consistency.

Other Methods of Valuing Inventory-Valuing Inventory at the Lower of Cost or Market (LCM); Estimating Inventories.

Inventory Errors-Income Statement Effects; Balance Sheet Effects;

 

001.10 Plant Assets, Natural Resources, and Intangible Assets (IAS-16, 38 & IFRS-6)

Plant Assets; Determining the Cost of Plant Assets-Land; Land Improvements; Buildings; Equipment.

Depreciation-Factors in Computing Depreciation; Depreciation Methods; Depreciation and Income Taxes; Revising Periodic Depreciation.

Natural Resources; Acquisition Cost; Depletion.

Intangible Assets; Accounting for Intangible Assets-Patents; Copyrights; Trademarks and Trade Names; Franchises and Licenses; Goodwill.

 

001.11 Current Liabilities and Payroll Accounting (IAS-19, 37)

Accounting for Current Liabilities-Notes Payable; Sales Taxes Payable; Unearned Revenues; Current Maturities of Long-Term Debt; Financial Statement Presentation.

Contingent Liabilities-Recording a Contingent Liability; Disclosure of Contingent Liabilities.

Payroll Accounting-Internal Control; Determining the Payroll; Recording the Payroll.

Employer Payroll Taxes-Filing and Remitting Payroll Taxes; Additional Fringe Benefits.

 

001.12 Accounting for Partnership

Partnership Form of Organization-Characteristics of Partnerships; Advantages and Disadvantages of Partnerships; The Partnership Agreement as per Partnership Act, 1932.

Basic Partnership Accounting-Forming a Partnership; Dividing Net Income or Net Loss; Treatment of salaries; interest on capital drawings and loans of partners; Preparation of Partnership Financial Statements.

 

001.13 Corporations (Companies Act, 1994)

The Corporate Form of Organization; Common Shares and Preferred Shares; Dividends; Retained Earnings; Corporate Income Statement and Presentation of Stockholder’s Equity on Balance Sheet.

 

001.14 Accounting Principles

The Conceptual Framework of Accounting-Objectives of Financial Reporting; Qualitative Characteristics of Accounting Information; Elements of Financial Statements; Operating Guidelines.

Assumptions-Monetary Unit Assumption; Economic Entity Assumption; Time Period Assumption; Going Concern Assumption.

Principles-Revenue Recognition Principle; Matching Principle (Expense Recognition); Full Disclosure Principle; Cost Principle. Constraints in Accounting-Materiality; Conservation; Summary of Conceptual Framework.

 

Text Books

1.      Accounting Principles (7th Edition) - J.J. Weygandt, D.E. Kieso and Paul D. Kimmel.

2.      Companies Act, 1994.

Reference Books

1.      Accounting Principles – R.H. Hermanson, J.D. Edwards and M.W. Maher (7th edition).

2.      Fundamental Accounting Principles (17th Edition) – K.D. Larson and W. Miller

3.      Accounting: The Basis for Business Decisions (11th Edition) – R.F. Meigs and W.B. Meigs.

4.      Accounting Principles – P.E. Fees and C.S. Warren (19th edition).

5.      Accounting Concepts and Applications (7th Edition) – Skousen, Albrecht, Stice & Stice.

6.      Accounting (4th Edition) – Horngren, Herison and Bamber.

7.      Fundamental of Financial Accounting – Short and Chesley.

8.      Company Law and Partnership Act – Nirmalendu Dhar (2nd edition)

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