FINANCIAL ACCOUNTING INTERMEDIATE

SYLLABUS - 2016

5 INTERMEDIATE : PAPER -

FINANCIAL ACCOUNTING

STUDY NOTES

INTERMEDIATE

The Institute of Cost Accountants of India CMA Bhawan, 12, Sudder Street, Kolkata - 700 016

First Edition : August 2016 Reprint : January 2018 Revised Edition: June 2018 Revised Edition: February 2019 Edition: August 2019

Published by : Directorate of Studies The Institute of Cost Accountants of India (ICAI) CMA Bhawan, 12, Sudder Street, Kolkata - 700 016.

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Syllabus - 2016

Paper 5: Financial Accounting (FAC) Syllabus Structure The syllabus comprises the following topics and study weightage

A Accounting Basics

25%

B Preparation of Financial Statements

40%

C Self Balancing Ledger, Royalties, Hire Purchase & Installment System, Branch & Departmental Accounts

20%

D Accounting in Computerised Environment and Accounting Standards

15%

D

15%

A

25%

C 20%

B 40%

ASSESSMENT STRATEGY There will be written examination paper of three hours

OBJECTIVES

To gain understanding and to provide working knowledge of accounting concepts, detailed procedures and documentation involved in financial accounting system.

Learning Aims

The syllabus aims to test the student's ability to:

Understand the framework of accounting systems and the Generally Accepted Accounting Principles

Prepare necessary financial statements related to different business entities

Construct financial statements for understandability and relevance of stakeholders

Skill set required

Level B: Requiring the skill levels of knowledge, comprehension, application and analysis.

Sec-A : Accounting ? Basics 1. Fundamentals of Accounting 2. Accounting for Special Transactions

Sec-B : Preparation of Financial Statements 3. Preparation of Final Accounts of Profit Oriented organizations, Non-Profit Organizations and from Incomplete Records. 4. Partnership Accounts

Sec-C : Self Balancing Ledgers, Royalties, Hire Purchase & Installment System, Branch & Departmental Accounts 5. Self-Balancing Ledgers 6. Royalties, Hire-Purchase and Installment System 7. Branch and Departmental Accounts

Sec-D : Accounting in Computerised Environment and Accounting Standards 8. Overview of Computerised Accounting 9. Accounting Standards (Specified only)

25% 40% 20% 15%

Section A : Accounting ? Basics [ 25 Marks]

1. Fundamentals of Accounting:

Accounting - Meaning, Scope and Significance of Accounting - Accounting Principles, Concepts and Conventions Capital and Revenue Transactions ? Depreciation - Rectification of Errors.

2. Accounting for Special Transactions Bills of Exchange - Consignment - Joint Venture - Insurance Claims (Loss of Stock and Loss of Profit).

Section B : Preparation of Financial Statements [40 Marks] 3. Preparation of Final Accounts of Profit Oriented organizations, Non-Profit Organizations and from Incomplete Records

(i) Preparation of Financial statements of Profit Oriented organizations: P&L Account, Balance Sheet. (ii) Preparation of Financial Statements of Non-Profit making organizations: Preparation of Receipts & Payments Account,

Income& Expenditure account and Balance Sheet. (iii) Preparation of Financial Statements from incomplete records (Single entry)

4. Partnership Accounts Admission, Retirement, Death, Treatment of Joint Life Policy ,Dissolution of partnership firms including piece meal distribution, Amalgamation of partnership firms, Conversion of partnership firm into a company and sale of partnership firm to a company

Section C: Self Balancing Ledgers, Royalties, Hire Purchase & Installment System, Branch & Departmental Accounts [20 Marks] 5. Self-Balancing Ledgers 6. Royalty Accounts, Hire Purchase and Installment System. 7. Branch and Departmental Accounts.

Section D: Accounting in Computerized Environment and Accounting Standards [15 marks] 8. Computerized Accounting System ? Features, Significance, Grouping of Accounts, Ledger hierarchy, Accounting

Packages and their selection criteria 9. Accounting Standards (AS-1, AS-2, AS-7, AS-9, AS-6 and AS-10 has been replaced by revised AS-10)

Contents

Study Note 1 : Fundamentals of Accounting

1.1

Basics

1

1.2

Generally Accepted Accounting Principles

11

1.3

Accounting Concepts and Conventions

11

1.4

Capital & Revenue Transactions

26

1.5

Accounting for Depreciation

56

1.6

Rectification of Errors

71

Study Note 2 : Accounting for Special Transactions

2.1

Bills of Exchange

93

2.2

Consignment Accounting

112

2.3

Joint Venture Accounts

133

2.4

Insurance Claim (Loss of Stock and Loss of Profit)

151

Study Note 3 : Preparation of Financial Statments of Profit Oriented Organizations

3.1

Introduction

169

3.2

Bad Debts

169

3.3

Preparation of Financial Statements

180

Study Note 4 : Preparation of Financial Statments of Non-Profit Organizations

4.1

Preparation of Financial Statements of Non-Profit Organization

213

Study Note 5 : Preparation of Financial Statements from Incomplete Records

5.1

Preparation of Financial Statements from Incomplete Records

249

Study Note 6 : Partnership

6.1

Admission of Partner

275

6.2

Retirement of Partner

303

6.3

Death of Partner

327

6.4

Dissolution of a Partnership Firm

330

6.5

Insolvency of a Partner

338

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