Financial Accounting – I

Course Objectives:

1. It provides the basic concepts in financial accounting.
2. It gives the knowledge to prepare financial statements.
3. It helps to collect various information system.

Course Contents:

Unit I: Introduction ————————————————————– 4 hours

1. 1. Concept of accounting
   2. Forms of business organization
   3. Nature of business activity
   4. Users of accounting information and their needs
   5. Fields of accounting
   6. Financial statements
   7. The tools for communication
   8. Generally accepted accounting principles
   9. Qualitative characteristic of accounting information
   10. Objectives of financial statements
   11. The accounting profession.

Unit II: Recording, Handling and Summarizing the Accounting Information —————————————————————————————– 9 hours

1. 1. Role of source documents
   2. Recording of transaction and events
   3. The accounting equation
   4. The double entry system
   5. Analysis of transaction
   6. Rules of debits and credits for assets, expenses, liabilities, capital and income
   7. Cash accrual and hybrid system of accounting
   8. Journal (general and special including cash and bank books)
   9. Role of vouchers
   10. T-accounts
   11. Trial balance
   12. Concepts of the annual report and financial statements

Unit III: Income Statement —————————————————– 4 hours

1. 1. Concepts of income statement
   2. Major components of income statements: revenues, cost of sales, gross margin, administrative expenses, selling and distribution expenses, gains and losses, net income and retained earnings;
   3. Formats of income statements
   4. Retained earning statements
   5. Preparation of income statement (Vertical multi-step format)

Unit IV: Balance Sheet ———————————————————- 4 hours

1. 1. Concepts of balance sheet
   2. Major components of balance sheet: assets, liabilities and stockholder’s equity
   3. Preparation of balances sheet (vertical, classified format)

Unit V: Work Sheet ————————————————————– 8 hours

1. 1. Accrual and adjusting entries
   2. T-accounts opening and closing entries
   3. Preparation of income statement
   4. Balance sheet with adjustments using a work sheet.

Unit VI: Statement of Cash Flows ——————————————– 8 hours

1. 1. Cash flows and accrual accounting
   2. Purpose of the statement of cash flows
   3. Operating, investing and financing activities
   4. Formats of statement of cash flows
   5. Preparation of cash flow statement (vertical format)

Unit VII: Annual Repot ——————————————————— 2 hours

1. 1. Meaning and components of an annual report

Unit VIII: Accounting Information System and the Use of Computers in Accounting ———————————————————————— 9 hours

1. 1. The accounting information system in modern business organizations
   2. Role of computers in accounting
   3. Recording transactions
   4. Extracting ledger
   5. Trial balance
   6. Presenting the financial statements received from the accounting package
   7. Using computerized accounting software
   8. Retrieving various reports from the system

Text Book:

1. 1. Porter, Gary A. Norton, Curtis L., Financial Accounting: The Impact on Decision Makers, The Dryden Press, USA.

Reference Books:

1. 1. R. Narayanswamy, Financial Accounting: A Managerial Perspective, Prentice Hall of India.
   2. Accounting Package
   3. Sharma, Narendra, Acharya, C: Financial Accounting, Budha Academic Centre
   4. Koirala, Goet, Bhandari,Sharma,Adhikari, Neupane, Upreti : Financial Accountancy I, Asmita Publication