CA11 Financial Accounting KASNEB notes

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PART I SECTION 1

PAPER NO.1 FINANCIAL ACCOUNTING

GENERAL OBJECTIVE

This paper is intended to equip the candidate with knowledge, skills and attitudes that will enable him/her to prepare financial statements for different entities.

LEARNING OUTCOMES

A candidate who passes this paper should be able to:

  • Prepare books of original entry and basic ledger accounts under double entry system
  • Prepare basic financial statements of sole traders, partnerships, companies, manufacturing entities and not for profit organisations
  • Comply with the regulatory framework in the accounting field
  • Account for assets and liabilities
  • Analyse financial statements use of ratios and statement of cash

CONTENT

Introduction to accounting

  • The nature and purpose of accounting
  • Objectives of accounting
  • Users of accounting information and their respective needs
  • The accounting equation
  • Regulatory framework of accounting (regulatory bodies such as ICPAK, IFAC, IASB, IPSASB, IAESB)
  • Accounting standards (IASs/IFRSs) (importance and limitations)
  • Professional ethics
  • Accounting concepts/principles
  • Qualities of useful accounting information

Recording transactions

  • Source documents: quotations, purchase orders, statement of account, remittance advice, receipts, petty cash vouchers, sales and purchase invoice, credit notes and debit notes, bank statements
  • Books of original entry: sales journal, purchases journal, returns inwards journal, returns outward journal, cash book, petty cash book and general journal
  • Double entry and the ledger; use of T- accounts and double entry aspects (debit and credit), sales ledger and purchases ledger
  • The trial balance
  • Computerised accounting systems – role of computers, application and accounting softwares in the accounting process, benefits and challenges of operating computerised accounting systems

Accounting for assets and liabilities

Assets

  • Property, plant and equipment – recognition, capital and revenue expenditure, measurement (depreciation and revaluation), disposal and disclosures, property, plant and equipment schedule
  • Intangible assets – recognition, measurement (amortisation, impairment and revaluation), disposals and disclosures
  • Financial assets – examples and risks only
  • Inventory – recognition, measurement and valuation using specific cost method, FIFO and weighted average cost only
  • Trade receivables – bad debts and allowance for doubtful debts and receivables control accounts
  • Accrued income and prepaid expenses
  • Cash at bank – cash book and bank reconciliation statement
  • Cash in hand – cash book and petty cash books

Liabilities

  • Bank overdraft – cash book and bank reconciliation statement
  • Trade payables – control accounts
  • Loans – accounting treatment of repayment of principal and interest
  • Prepaid incomes and accrued expenses

Correction of errors and suspense account

Financial statements of a sole trader

  • Income statement
  • Statement of financial position

Financial statements of a partnership

  • Partnership agreement
  • Introduction to partnership accounts
  • Distinction between current and fixed capital
  • Income statement
  • Statement of financial position
  • Changes in partnership – admission of a new partner, retirement, death and change in profit sharing ratio

Financial statements of a company

  • Types of share capital – ordinary shares and preference shares
  • Issue of shares (exclude issue instalment and forfeiture)
  • Types of reserves – share premium, revaluation reserve, general reserves and retained profits
  • Income tax – accounting treatment and presentation (exclude computation)
  • Financial statements – income statement and statement of financial position
  • Published financial statements (describe a complete set of published financial statements but not preparation)

Financial statements of a manufacturing entity

  • Features of a manufacturing entity
  • Classification and apportioning costs between manufacturing, selling and administration
  • Financial statements – manufacturing account, income statement and statement of financial position

Accounts from incomplete records

  • Features
  • Types of incomplete records(pure single entry, simple single entry, quasi single entry)
  • Ascertainment of profit capital comparison
  • Preparation of statement of affairs and profit determination
  • Techniques of obtaining complete accounting information

Financial statements of a not for profit organisation

  • Distinction between not for profit making organisation and profit making organisation
  • Nature of receipts and payments account
  • Accounting treatment of some special items
  • Income and expenditure account
  • Statement of financial position

Analysing financial statements

  • Statement of cash flows (categories of cash, methods of preparing statement of cash flows and the importance)
  • Financial ratios – definition, categories, analysis and interpretation, application and limitations

Introduction to Public Sector Accounting

  • Features of public sector entities (as compared to private sector)
  • Structure of the public sector (National and county governments, state corporations and other agencies)
  • Regulatory structures and oversight IPSASB, PSASB (establishment, mandate and functions), Director of Accounting Services, National Treasury, Parliamentary Committees, Accounting Officers at national and county levels]
  • Objectives of public sector financial statements
  • Objectives of IPSAS
  • Accounting techniques in public sector (budgeting, cash, accrual, commitment and fund)

(Preparation of financial statements excluded)

Emerging issues and trends

10 thoughts on “CA11 Financial Accounting KASNEB notes”

  1. This gives me much hope, I kindly request you send me the notes of financial accounting & quantitative techniques. Am just starting. спасибо

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