Accounting

ICWA : Foundation
Paper 2 : Accounting
[One paper: Three Hours – 100 marks]

Objective . . .

•	To understand fundamental accounting principles
•	To understand basic concept of cost accounting

1.	Basics of Bookkeeping and accounting	10%
	• Definitions and its usefulness • Financial Accounting principles, concept and convention – measurement of business income • Position statement • Accounting Standards – national and international ( basic knowledge)
2.	Systems of Bookkeeping	10%
	• Double entry system, books of prime entry, subsidiary books • Recording of cash and Bank transactions • Preparation of ledger accounts • Preparation of trial balance — interpretation and usefulness
3.	Bank Reconciliation statements	5%
	• Need for reconciliation between cashbook and bank pass book and problems relating to the preparation of bank reconciliation statements.
4.	Accounting System	25%
	• Concept of capital, revenue, deferred revenue expenditures, opening entries, closing entries, adjustment entries and rectification entries. • Accounting treatment for bad debts, reserve for bad debts and other adjusting entries. • Depreciation- significance, accounting and various methods of calculation of depreciation. • Concept of single entry system, conversion of single entry system into double entry system of accounting. • Preparation of receipts and payments accounts, income and expenditure accounts. • Significance of reserves and provisions. • Bill of Exchange, consignment and joint venture
5.	Elements of Cost Accounting	15%
	• Basics of cost and management accounting: • Evolution of cost accounting and management accounting, cost concepts and cost object, • Cost classification, cost organization and its relationship with other departments. • Elements of cost and cost determination. • Material cost-purchase procedure, store keeping and stock control, pricing issue of material and accounting thereof, perpetual inventory and physical stock taking, identification of slow, non-moving and fast moving items, ABC analysis, JIT system, level of inventories and economic order quantity, analysis, investigation and corrective steps for treatment of stock discrepancies – control through other means. • Labour costs – remuneration methods, monetary and non-monetary incentive schemes, payroll procedures, labour analysis and idle time, measurement of labour efficiency and productivity, analysis of non productive time and its cost, labour turnover and remedial measures, treatment of idle time and overtime. • Direct expenses – nature, collection, classification and treatment of direct expenses. • Overheads – nature, collection and classification. • Production overheads – collection, apportionment, absorption, use of predetermined recovery rates, treatment of under and over absorption, fixed, variable and semi variable overhead, report for control of overhead cost. • Administration, selling and distribution overheads – analysis, accounting and control, treatment of miscellaneous items in cost accounting.
6.	Cost Sheets	15%
	• Cost data collection • Cost Sheet formats • Preparation of cost sheets.
7.	Behaviour of Costs	20%
	• Fixed & Variable costs • Direct & Indirect costs • Cost Behaviour for decision making • Marginal Costing and Break Even Analysis