DA1 – Financial Accounting
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DA1 Financial Accounting
Learning outcomesOn successful completion of DA1, students should be able to:
- Describe the context and purpose of financial accounting
- Apply double-entry bookkeeping techniques to record financial transactions and to maintain accounting records
- Identify and correct omissions and errors in accounting records
- Make appropriate end of year adjustments to financial records
- Prepare financial statements for sole traders, partnerships and limited companies and non-profit making organisations
- Describe features of public sector accounting
- Describe the main accounting modules in a computerized accounting system
|Context and purpose of financial accounting||5%|
|Financial transactions and accounting records||15%|
|Omissions and errors||15%|
|Public Sector Accounting||15%|
|Computerised Accounting system||10%|
1. Context and purpose of financial accountingA. Purpose of financial accounting (I)
- Define financial accounting
- Explain the nature and purpose of financial accounting
- Explain types of business entities, including sole traders, partnerships, limited companies and not for profit making organisations
- Explain the various users of financial accounting information and their information needs
- Explain the purposes of the conceptual framework for financial reporting
- Explain the content of the conceptual framework for financial reporting.
- Explain the main accounting concepts and the objectives of financial statements
- Explain the main elements of financial statements including; assets, liabilities, incomes,expenses and equity
- Explain the following bases of valuing financial statement items:
- Historic cost
- Net realizable valuE
- Present value of future cash flows
- Fair value
- Explain advantages and disadvantages of historic cost accounting.
- Describe the qualitative characteristics of financial statements
- Explain the underlying assumption in the preparation of financial statements.
- Explain the purpose and scope of the regulatory framework
- Explain the procedure of setting standards
- Explain advantages and disadvantages of International Accounting Standards
2. Financial transactions and accounting recordsA. Business transactions and documentation (M)
- Explain the main source documents used in accounting system including quotations, sales and purchase orders, goods received and dispatch notes, invoice, statement, credit and debit notes, remittance advice, receipts
- Describe the main features of each of the main source documents
- Explain the main books of prime entry and their use.
- Record transactions in the books of prime entry
- Apply double entry principles to keeping accounting record
- Explain the ledger and its main component parts (i.e. nominal, receivables and payables ledgers)
- Describe a ledger account
- Explain main classification of ledger accounts including (i.e. personal and impersonal accounts), and their function
- State the accounting equation, including the effects of transactions on it
- State the double entry rules for incomes, expenses, assets and liabilities
- Prepare and balance ledger accounts for cash, credit and other transactions
- Explain the key principles of the operation of VAT
- Calculate and record the accounting entries involving VAT
- State the purpose of the trial balance
- Prepare a trial balance from ledger accounts
3. Omissions and errorsA. Correction of errors (M)
- Explain how errors can arise in accounting records
- Explain types of errors that would not be highlighted by the extraction of a trial balance including original entry, complete omission, complete transposition, complete reversal, compensating, commission and principle errors
- Explain the purpose of suspense accounts
- Explain types of errors that would be highlighted by the extraction of a trial balance including partial omission, partial transposition, casting involving one account and one sided entry
- Record entries in a suspense account and make journal entries to clear the suspense account balance
- Explain the purpose of bank reconciliations
- Identify the main the reasons for the differences between the cash book and the bank statement balances
- Prepare an adjusted cash book
- Prepare a bank reconciliation statement
- Derive bank statement and cash book balances from given information
- Explain the purpose of control accounts
- Account for discounts allowed and received
- Account for contras between trade receivables and payables
- Identify errors which should be highlighted by performing a control account reconciliation and perform a correction of the same
- Prepare control account reconciliations for accounts receivables and payables
- Reconcile supplier statements
4. Year-end adjustmentsA. Receivables, irrecoverable debts and allowances (M)
- Explain the benefits and costs of offering credit facilities to customers
- Explain the purpose of an aged receivable analysis
- Define ‘credit limit’ and state the purpose of credit limits
- Prepare book keeping entries to write off an irrecoverable debt and record recoverable debts
- Illustrate the impact of the recoverable debts on the profit and loss account and statement of financial position
- Prepare the book keeping entries to create and adjust for receivables including increases and decreases in allowance for receivables in profit or loss and how closing balances should appear in the statement of financial position
- Explain the need for adjustments for inventory in preparing financial statements
- Record opening and closing inventory using double entry book keeping
- Identify and explain alternative methods of valuing inventory (i.e. FIFO, and AVCO)
- Calculate the value of inventory and its impact on profit using FIFO and AVCO
- Apply the requirements of IAS 2 in valuing inventories, specifying the costs to be included in the cost of inventory
- State the accounting convention underlying accounts and prepayments
- Explain the different methods of inventory counts (continuous and period end) including their merits and demerits
- Explain how the matching concept applies to accruals and prepayments
- Identify and calculate the adjustments needed for accruals and prepayments in preparing financial statement
- Illustrate the process of adjusting for accruals and prepayment in preparing the financial statements including journal and ledger entries
- Identify and state the impact on profit and net assets of accruals and prepayments
- Explain the difference between capital and revenue expenditure
- Define non-current assets
- Distinguish between non-current and current assets
- Classify expenditure as capital and revenue expenditure
- Calculate and record profit or loss on disposal of non-current assets in the profit and loss account, including part exchange transactions.
- Prepare ledger accounts to record the acquisition, disposal and depreciation of non-current assets.
- Record the revaluation of non-current assets in ledger accounts, the statement of comprehensive income and the statement of financial position.
- Calculate the profit or loss on disposal of a revalued asset.
- Illustrate how non-current asset balances and movements are disclosed in financial statements
- Explain the purpose of non-current register including its content
- Calculate depreciation of non-current assets using straight line and reducing balance methods.
- Identify circumstances where different methods of depreciation would be appropriate.
- Calculate depreciation on a revalued non-current asset including the transfer of excess depreciation between the revaluation reserve and retained earnings.
- Recalculate depreciation if changes are made to either residual value or useful life or capitalized cost (carrying amount).
- Record depreciation in the profit or loss and statement of financial position.
5. Financial statementsA. Format of Financial statements
- Identify the main types of financial statements
- Illustrate the formats of the statement of profit or loss and statement of financial position
- Explain a sole trader
- Prepare statement of profit or loss from given information
- Prepare the statement of financial position from given information
- Define a partnership for accounting purposes
- Identify typical content of partnership agreement
- Describe capital and current accounts and division of profits
- Calculate and record partners’ shares of profits and losses
- Calculate and record partners’ drawings
- Calculate and record partners’ salaries
- Calculate and record partners’ interest on capital
- Calculate and record partners’ interest on drawings
- Prepare current accounts
- Prepare capital accounts
- Prepare statement of profit and loss and appropriation account for the partnership
- Prepare statement of financial position of partnership
- Define goodwill in relation to partnerships
- Identify factors leading to the creation of goodwill in relation to partnership accounts
- Define limited liability
- Describe the key features of company accounts
- Explain the main features of:
- Ordinary shares
- Preference shares (redeemable and irredeemable)
- Loan notes
- Record movements in the share capital, share premium and other reserve accounts
- Define a bonus (capitalization or scrip) issue including its advantages and disadvantages
- Define a rights issue including its advantages and disadvantages
- Record and show the effect of bonus and rights issues in the statement of financial position
- Explain dividends including the difference between interim and final dividends.
- Record dividends in ledger accounts and financial statements
- Calculate and record finance costs in ledger accounts and financial statements
- Identify component parts of the statement of changes in equity (SOCIE) including its preparation
- Describe different types of reserves and their uses (i.e. revaluation reserve, share premium, retained earnings)
- Distinguish between statutory and non-statutory reserves
- State the alternative descriptions for retained earnings
- Prepare statement of profit or loss and other comprehensive income for internal use
- Prepare statement of financial position for internal use
- Identify items requiring separate disclosure on the face of the financial statements and those not requiring separate disclosure.
- State the purpose of manufacturing accounts
- Prepare a manufacturing account
- Prepare the statement of profit or loss for a manufacturing business organization
- Prepare a statement of financial position for a manufacturing business
- Describe the key features of not for profit organisations
- Prepare the financial statements for clubs and societies
- Apply the principles of incomplete records
- State the purpose of departmental accounts
- Prepare the statement of profit or loss of departmental organisation
- Define incomplete records and how they can arise
- Apply the accounting equation and other techniques to calculate missing figures including: use of control and other ledger accounts; use of cash and bank summaries; use of profit percentages.
6. Public Sector AccountingA. Public sector and private sector accounting
- Explain the objectives of Public Sector Accounting
- Distinguish between Public Sector Accounting and Commercial Accounting
- Explain the Accounting Bases (Cash accounting and Accruals accounting)
- Explain the Legislation governing Public Sector Accounting
- Explain the Institutional Framework for Public Sector Accounting
- Explain sources of Revenue for Public Sector
- Explain the Types (or Uses) of Expenditure
- Account for Revenue and Expenditure
- Outline the objectives of Financial Reporting for Public Sector entities
- Explain the IPSASB Conceptual Framework underpinning the Financial Reporting for
- Public Sector entities
- Explain the role and significance of International Public Sector Accounting Standards (IPSAS)
- Prepare Financial Statements in Public Sector organizations in line with IPSAS using the Cash Basis Reports, and Accrual Based Reports (As per Accrual Based Standards)
7. Computerized accounting systemA. Accounting packages (I)
- Describe the main features of accounting packages
- List the advantages and disadvantages of computerised accounting packages
- Explain coding and its benefits to computerised accounting systems
- Describe the main accounting modules in a computerised accounting system including invoicing, inventory management, receivables ledger, Payables ledger, nominal ledger, payroll, cash book, job costing, non-current asset register, report generator
- Describe the main features of integrated software.
- Explain advantages and disadvantages of an integrated software
- Explain the main inputs to the computerized receivables and payables ledger
- Explain the main outputs from the computerized receivables and payables ledger
- Describe the nature of processing within computerised receivables and payables ledger
- Explain inputs to the computerised nominal ledger
- Explain outputs from the computerised nominal ledger
Format of the exam
|Section A:||10 compulsory multiple choice questions, 2 marks each||20|
|Section B:||Any 4 out of 5 questions, 20 marks each||80|
- ZiCA D1 Financial Accounting Study Manual
- Wood, F. and Robinson, S. (2009) Bookkeeping and Accounts. 7th edition. London, FT Prentice Hall.
- Wood, F. and Sangster A. (2011) Business Accounting 1. 12th edition. London, FT Prentice Hall.
This course does not have any sections.
how possible is it for a part time student to take four subjects DA 1, DA 2, DA 4 and DA 7?
I need your quick advise.