Chopi KASNEB ATD Introduction to Financial Accounting Notes

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ATD LEVEL I

COURSE OUTLINE

GENERAL OBJECTIVE

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

LEARNING OUTCOMES

A candidate who passes this paper should be able to:

Apply accounting concepts in preparation of financial statements
Apply the double entry aspects of accounting
Account for assets and liabilities
Prepare financial statements of a sole trader, partnership and company.

CONTENT

Introduction to accounting

Nature and purpose of accounting

Objectives of accounting
Users of accounting information and their information needs
Qualities of useful accounting information
Accounting concepts/principles
Accounting standards and their importance
The accounting equation

Double entry bookkeeping and books of original entry including manual and computerised systems

Source documents
Books of original entry
The double entry system and the ledger
The trial balance and basic financial statements
Computerised accounting systems – Role of computers, application and accounting softwares in the accounting process, benefits and challenges of operating computerised accounting systems

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Accounting for assets and liabilities

Accrued expenses and prepaid expenses
Accounting for revenue including accrued income and prepaid income
Accounting for account receivables, bad debts and allowance for doubtful debts
Property plant and equipment including capital revenue and expenditure, depreciation, acquisition and disposal
Inventory – recognition, measurement and valuation using specific cost method (FIFO and weighted average cost only)
Accounting for cash and cash equivalents, bank reconciliation
Accounting for accounts payable including control account

Correction of accounting errors and the suspense account

Financial statements of a sole trader

Income statement
Statement of financial position

Partnership accounts

Contents of a partnership agreement
Distinction between current and capital accounts
Appropriation statement and partners current and capital accounts
Statement of financial position and income statement (excluding changes in partnerships)

Company accounts

Types of share capital – ordinary shares and preference shares

Types of reserves – share premium, revaluation reserve, general reserves and retained profits
Issue of shares (exclude issue by installment and forfeiture)
Rights issues and bonus
Income tax -Accounting treatment and presentation (exclude computation)
Income statement
Statement of financial position