Financial Accounting - I
Unit 1: Introduction to Accounting Online Notes Page 1 Page 2
Accounting- meaning, objectives, Accounting as source of information, internal
and external users of Accounting information and their needs.
Qualitative characteristics of Accounting information-reliability, relevance, understand-ability and comparability.
Accounting Terms - Asset, Liability, Capital, Expense, Income, Expenditure, Revenue,
Debtors, Creditors, Goods, Cost, Stock, Purchase, Sales, Profit, Loss, Gain,Voucher,
Discount, Transaction, Drawings.
Unit 2: Theory Base of Accounting
Accounting Principles - meaning and nature
Accounting Concepts: Entity, Money Measurement, Going Concern, Accounting
Period,Cost Concept, Dual Aspect, Revenue Recognition (Realisation), Matching,
Accrual,Full Disclosure, Consistency, Conservatism, Materiality
Accounting Standards- Concept
of accounting-from recording of business transactions to preparation of trial balance.
➣ Bases of
Accounting - Cash Basis, Accrual Basis
Unit 3: Recording of Business
and Transactions: Origin of Transactions-Source Documents and Vouchers, preparation
of Accounting vouchers; Accounting Equation Approach - Meaning and Analysis of
transactions using Accounting Equation, Rules of Debit and Credit.
of Transactions: Books of original entry - Journal, Special Purpose Books: i) Cash
Book - Simple, Cashbook with Bank column and Petty Cashbook, ii) Purchases Book,
Sales Book, Purchase Returns Book, Sales Returns Book; Ledger-meaning, utility,
format; posting from Journal and Subsidiary books; Balancing of Accounts.
Reconciliation Statement: Meaning, Need and Preparation, Corrected Cash Book Balance
Unit 4: Trial Balance and Rectification
of Errors Online Notes Page 1
Balance: meaning, objectives and preparation.
Types of Errors: Errors of omission, commission, principles and compensating errors
affecting Trial Balance; errors not affecting Trial Balance.
and Rectificition of Errors (One Sided and Two Sided); use of Suspense Account.
Unit 5: Depreciation, Provisions and
Reserves Online Notes Page 1
Depreciation: Meaning and need for charging depreciation, factors affecting
depreciation, methods of depreciation-Straight Line method, Written Down Value
method (excluding change in method), Method of recording depreciation-charging
to asset account, creating provision for depreciation/accumulated depreciation
account; Treatment of disposal of asset.
Provisions and Reserves: meaning, importance, difference between Provisions and
Reserves, types of Reserves: Revenue Reserve, Capital Reserve, General Reserve,
Specific Reserve and Secret Reserves.
Unit 6: Accounting for Bills of Exchange Transactions Online Notes Page 1 Page 2
➣ Bills of
exchange and Promissory Note: definition, features, parties, specimen and distinction.
Terms: Term of Bill, Days of Grace, Date of Maturity, Bill at Sight, Negotiation,
Endorsement, Discounting of Bill, Dishonour, Retirement and Renewal of a Bill.
Accounting treatment of trade bills.
Accomodation bills : concept and elementary accounting treatment.
Financial Accounting - II
Unit 7: Financial Statements
statements: meaning and users.
Expenditure, Revenue expenditure and Deferred Revenue Expenditure
and Profit and Loss Account: Gross Profit, Operating and net profit.
Sheet: need, grouping and marshalling of Assets and Liabilities. Vertical and Horizontal
Presentation of Financial Statements.
Preparation of Trading and Profit & Loss Account and Balance Sheet of sole
Adjustments in preparation of financial statements with respect to closing
stock, outstanding expenses, prepaid expenses, accrued Income, Income received
In advance, depreciation bad debts, provision for doubtful debts, provision for
discount on debtors, manager's commission.
Unit 8: Accounts from incomplete
records Online Notes Page 1 Page 2 Page 3
records : meaning, uses and limitations. Ascertainment of profit/loss by
statement of affairs method, conversion method.
Unit 9: Computers in Accounting
Introduction to Computer and Accounting Information System (AIS)
Applications of computers in accounting: - Automation of accounting process, designing
accounting reports, MIS reporting, data exchange with other
Comparison of accounting processes in manual and computerized accounting,
highlighting advantages and limitations of automation
of accounting system: readymade and customized and tailor-made accounting system.
Advantages and disadvantages of each option.
Unit 10: Accounting and Database
Accounting and Database Management System
of entity and relationship: entities and relationships in an Accounting System:
designing and creating simple tables, forms, queries and reports in the context
of Accounting System.