CAF(Old Scheme 2021) Introduction to Accounting syllabus

Syllabus of Introduction to accounting(old Caf1):

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Syllabus of Introduction to accounting(old Caf1)

Introduction to Business and accounting course content:

Types of business:

  • Types of business entity
  • Advantages and disadvantages of different types of business entity

Introduction to financial accounting:

  • The purpose of financial accounting
  • Accounting systems
  • Chart of accounts
  • Financial statements
  • Regulation of financial reporting

The needs of users:

  • The objective of financial reporting
  • Informational needs of those who use financial statements

Business transactions:

  • Introduction
  • The difference between capital and revenue transactions
  • Capital and revenue expenditure
  • Revenue and capital receipts

Financial Reporting:

The Conceptual Framework for Financial Reporting:

  • Introduction
  • Objective
  • Scope
  • Objective of general purpose financial statements
  • Financial statements
  • The statement of financial position
  • The statement of comprehensive income
  • Relationship between the statement of comprehensive income and the statement of financial position

Accounting concepts:

  • Introduction
  • Accruals basis (matching concept)
  • Consistency
  • Completeness
  • Relevance
  • Faithful representation
  • Materiality
  • Prudence
  • Going concern basis
  • Substance over form

Enhanced Qualitative characteristics of useful financial information:

  • Introduction
  • Enhancing qualitative characteristics
  • Cost constraint on useful information

The Elements of financial statements:

  • Introduction
  • Assets
  • Liabilities
  • Equity
  • Income
  • Expenses
  • Measurement of elements of financial statements
  • Recognition of elements of financial statements

The accounting equation:

The Accounting equation:

  • A simple representation of the statement of financial position
  • The effect of financial transactions on the accounting equation
  • Drawings
  • Links between the statement of comprehensive income and the statement of financial position using the accounting equation.

Double entry bookkeeping:

Introduction to accounting systems:

  • The dual nature of transactions
  • Overview of accounting

Basic rules of double entry bookkeeping:

  • Debit and credit entries, and T accounts
  • The rules of debits and credits
  • Double entry book-keeping and the cash account

Account balances and the trial balance:

  • Closing off an account (and bringing down the balance)
  • Trial balance
  • Preparing accounts from a trial balance

The General Journal:

  • Journal entries to record transactions
  • Illustration using Abbas

General ledger:

  • Introduction
  • Year-end exercise

Books of prime entry:

Introduction to books of prime entry:

  • The role of books of prime entry
  • Posting transactions

Accounting for sales:

  • Documents in the sales cycle
  • Recording sales
  • Recording sales returns
  • Discounts allowed
  • Receivables control account
  • Termnology

Accounting for purchases:

  • Documents in the purchases cycle
  • Recording purchases
  • Recording purchase returns
  • Discounts received
  • Payables control account
  • Contra entries
  • Terminology

Accounting for cash:

  • The cashbook
  • Types of cashbook

Bad and doubtful debts:

Bad Debts:

  • Introduction
  • Accounting for bad debts
  • Bad debts recovered

Doubtful Debts:

  • Basic double entry for doubtful debts
  • Accounting for changes in the allowance account
  • Bad and doubtful debts together
  • Doubtful debts recovered
  • Aged receivables analysis
  • Summary of the rules on bad and doubtful debts

Accruals and prepayments:

Accruals and prepayments introduced:

  • The accruals concept (matching concept)
  • Accruals and prepayments

Accruals:

  • Accrued expenses (accruals)
  • Method 1: the two account approach for accrued expenses
  • Method 2: the one account approach for accrued expenses

Prepayments:

  • Prepayments (prepaid expenses)
  • Method 1: the two accounts method
  • Method 2: the one account method
  • Prepaid expenses: calculating the expense for the statement of comprehensive income

Unearned and accrued income:

  • Introduction
  • Unearned income
  • Accrued income

Bank reconciliations:

Bank Reconciliations:

  • The cash book (bank account in the general ledger) and bank statements
  • Differences and the need for a reconciliation
  • Possible cause of confusion
  • Format of a bank reconciliation statement
  • Bank reconciliations and overdrawn balances

Correction of errors:

Errors:

  • Errors in the double entry accounting system
  • Errors highlighted by the extraction of a trial balance
  • Errors not highlighted by the extraction of a trial balance

Correcting errors:

  • An approach to correcting errors
  • The effect of errors on profit

Suspense Account:

  • Trial balance: differences in total debits and total credits
  • Opening a suspense account
  • Correcting errors where a suspense account is opened
  • Unknown entry

Property, plant and equipment:

Initial measurement:

  • Introduction
  • Recognition
  • Initial measurement
  • Exchange transactions
  • Subsequent expenditure
  • Capital and Revenue items

Depreciation and carrying amount:

  • Explanation of depreciation
  • Accounting for depreciation
  • The purpose of depreciation

Methods of calculating depreciation:

  • Straight-line method
  • Reducing balance method
  • Sum-of-the-digits method
  • Depreciation by the number of units produced

Derecognition:

  • Gain or loss on disposal of a non-current asset
  • Accounting for the disposal of property, plant and equipment

Inventory:

Scope and explanation:

  • Introduction
  • Scope
  • Definitions
  • Explanation of defined terms
  • Explain the situation when the cost of inventories may not be recoverable

End-of-year adjustments:

  • Recording inventory
  • Periodic inventory method (period-end method): accounting procedures
  • Perpetual inventory method: accounting procedures

Other issues:

  • Valuation of inventory
  • Cost formulas

Journal entries:

  • Introduction
  • Inventory Purchases
  • Record Production Costs in Overhead
  • Move Raw Materials to Work in Process
  • Record Inventory Scrap
  • Record Finished Goods
  • Return to supplier
  • Return from customer
  • Sale Transaction
  • Lower of Cost or NRV
  • Summary of journal entries

Disclosure:

  • Disclosure requirements

Preparation of financial statements:

Financial Statements:

  • The process of preparing financial statements
  • The components of financial statements
  • Statement of financial position
  • Statement of profit and loss and other comprehensive income

Preparing financial Statements:

  • Useful guidelines
  • Year-end
  • Preparation of financial statements: Approach 1
  • Preparation of financial statements: Approach 2
  • Service organizations

Partnership accounts:

Features of partnership:

  • Partnerships
  • Partnership accounts
  • Partners’ capital

Sharing the profits between the partners:

  • Profit-sharing ratio
  • Notional salaries for partners
  • Notional interest on long-term capital
  • Guaranteed minimum profit share
  • Changes in the partnership agreement on profit-sharing
  • Profits, drawings and the partners’ current accounts

Concept of goodwill:

  • Introduction
  • Goodwill

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