CIFA Financial Accounting KASNEB Notes

Download Financial Accounting KASNEB Notes




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.


A candidate who passes this paper should be able to:
· Prepare books of original entry and basic ledger accounts under double entry
· 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 by use of ratios and statement of cash flows.


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,
  • 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

Download Financial Accounting KASNEB Notes

Accounting for assets and liabilities


  • 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


  • 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

Download Financial Accounting KASNEB Notes

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 by 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
  • 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
  • Ascertainment of profit by 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
  • 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

Download Financial Accounting KASNEB Notes

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