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FOUNDATION : PAPER - 2

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FUNDAMENTALS OF
ACCOUNTING FOUNDATION

STUDY NOTES




The Institute of Cost Accountants of India
CMA Bhawan, 12, Sudder Street, Kolkata - 700 016

,First Edition : August 2016
Reprint : April 2017
Reprint : January 2018




Published by :
Directorate of Studies
The Institute of Cost Accountants of India (ICAI)
CMA Bhawan, 12, Sudder Street, Kolkata - 700 016
www.icmai.in




Printed at :
Mega Calibre Enterprises Pvt. Ltd.
06/315 Action Area 3,
New Town, Rajarhat,
Kolkata 700 160.




Copyright of these Study Notes is reserved by the Institute of Cost
Accountants of India and prior permission from the Institute is necessary
for reproduction of the whole or any part thereof.

, Syllabus - 2016
PAPER 2: FUNDAMENTALS OF ACCOUNTING (FOA)
Syllabus Structure

A Fundamentals of Financial Accounting 80%
B Fundamentals of Cost Accounting 20%


B
20%


A
80%




ASSESSMENT STRATEGY

There will be written examination paper of three hours

OBJECTIVES

To gain comprehensive understanding of all aspects relating to financial statements, principles,
procedures of accounting and their application to different practical situations

Learning Aims

The syllabus aims to test the student’s ability to:
 Understand and explain the conceptual framework of Accounting

 Prepare Accounting for various entities under different situations
 Acquire basic concepts of Coat & Management Accounting relevant for managerial decision

making


Skill set required

Level A: Requiring the skill levels of knowledge, comprehension,

Section A : Fundamentals of Financial Accounting

1. Accounting Fundamentals 35%

2. Accounting for Special Transactions 20%

3. Preparation of Final Accounts 25%

Section B: Fundamentals of Cost Accounting

4. Fundamentals of Cost Accounting 20%

, SECTION A : Fundamentals of Financial Accounting [80 MARKS]

1. Accounting Basics
2. Accounting for Special Transactions
3. Preparation of Final Accounts

SECTION B: Fundamentals of Cost & Management Accounting [20 MARKS]
4. Fundamentals of Cost Accounting
Section A : Fundamentals of Financial Accounting [80 marks]

1. Accounting Process
(a) Accounting Principles, Concepts and Conventions
(b) Capital and Revenue transactions - capital and revenue expenditures, capital and revenue receipts
(c) Double entry system, Books of prime entry, Subsidiary Books, Cash Book
(d) Journal, Ledger, Trial Balance
(e) Depreciation - Methods (Straight Line and Diminishing Balance methods only)
(f) Rectication of Errors
(g) Opening entries, Transfer entries, Adjustment entries, Closing entries
(h) Bank Reconciliation Statements
2. Accounting for Special Transactions
(a) Bills of Exchange (excluding accommodation bill, insolvency)
(b) Consignment (cost price, invoice price, commission & valuation of stock)
(c) Joint Venture
3. Preparation of Final Accounts
(a) Of a Prot making concern (for sole proprietorship concern only)
(i) Accounting treatment of bad debts, reserve for bad and doubtful debts, provision for discount on
debtors and provision for discount on creditors.
(ii) Preparation of Trading Account, Prot & Loss Account and Balance Sheet.
(b) Of a Not-for- Prot making concern
(i) Preparation of Receipts and Payments Account
(ii) Preparation of Income and Expenditure Account

SECTION B: Fundamentals of Cost Accounting [20 MARKS]

4. Fundamentals of Cost Accounting

(a) Meaning, Denition, Signicance of Cost Accounting, its relationship with Financial Accounting &
Management Accounting.
(b) Classication of Costs
(c) Format of Cost Sheet