CA (Chartered Accountancy) Foundation: Accounting Syllabus

Foundation: Accounting syllabus — full chapter and topic list

Expand any chapter to see its topics and sub-topics. This is the whole examinable outline for Foundation: Accounting in CA (Chartered Accountancy), not a summary of it.

1. 1

   Theoretical Framework of Accounting

   4 topics

   • Meaning and Scope of Accounting
     • Definition, functions and objectives of accounting
     • Book-keeping versus accounting
     • Users of accounting information
   • Accounting Concepts, Principles and Conventions
     • Going concern, accrual and consistency
     • Prudence, materiality and substance over form
   • Accounting Standards and Capital vs Revenue
     • Objectives and benefits of Accounting Standards
     • Capital and revenue expenditure and receipts
   • Measurement, Valuation and Accounting Estimates
2. 2

   Accounting Process

   5 topics

   • Journal, Ledger and Subsidiary Books
     • Double entry system and rules of debit and credit
     • Purchase, sales, returns and cash books
   • Trial Balance and Rectification of Errors
     • Types of errors and suspense account
   • Bank Reconciliation Statement
   • Depreciation and Amortisation
     • Straight line and written down value methods
     • Change in method and AS 10 basics
   • Bills of Exchange and Promissory Notes
3. 3

   Final Accounts and Special Transactions

   5 topics

   • Final Accounts of Sole Proprietors
     • Trading and profit and loss account
     • Balance sheet and adjusting entries
   • Final Accounts of Not-for-Profit Organisations
     • Receipts and payments account
     • Income and expenditure account
   • Accounts from Incomplete Records
   • Inventory Valuation
   • Consignment and Joint Ventures
4. 4

   Partnership and Company Accounts

   4 topics

   • Fundamentals of Partnership Accounts
     • Profit sharing, interest on capital and drawings
   • Admission, Retirement and Death of a Partner
     • Goodwill treatment and revaluation
   • Dissolution of Partnership Firms
   • Introduction to Company Accounts
     • Issue, forfeiture and re-issue of shares
     • Issue of debentures and redemption of preference shares

Foundation: Accounting flashcards for CA (Chartered Accountancy)

20 of 51 cards from the Foundation: Accounting deck — real questions with worked answers.

1. Define accounting as per the AICPA / commonly accepted definition.

   Accounting is the art of recording, classifying and summarising in a significant manner and in terms of money, transactions and events which are, in part at least, of a financial character, and interpreting the results thereof.

2. What are the four main functions of accounting?

   (1) Recording (journalising), (2) Classifying (ledger posting), (3) Summarising (trial balance, financial statements), and (4) Analysing and interpreting/communicating the results to users.

3. State the primary objectives of accounting.

   To maintain systematic records of transactions, ascertain profit or loss (via P&L account), ascertain the financial position (via Balance Sheet), and provide information to various users for decision-making.

4. Distinguish book-keeping from accounting.

   Book-keeping is the recording and classifying part (journal, ledger) and is clerical/routine. Accounting is broader: it includes book-keeping plus summarising, analysing, interpreting and communicating results. Book-keeping is the base; accounting begins where book-keeping ends.

5. Who are the internal and external users of accounting information?

   Internal users: owners/management and employees. External users: investors, lenders/creditors, banks, government and tax authorities, customers, researchers and the public.

6. What is the difference between a financial accounting and management accounting orientation in terms of users?

   Financial accounting serves mainly external users (investors, creditors, government) through general-purpose statements; management accounting serves internal users (management) for planning, control and decision-making.

7. What is the distinction between Accounting Concepts and Accounting Conventions?

   Concepts are basic assumptions/postulates on which accounting is based (e.g., going concern, accrual, entity). Conventions are customs/traditions guiding the preparation of statements (e.g., conservatism, materiality, consistency, full disclosure).

8. State the Business Entity (Separate Entity) concept.

   The business is treated as a unit separate and distinct from its owners. Owner's capital is a liability of the business to the owner, and only business transactions are recorded in the business's books.

9. State the Money Measurement concept and its main limitation.

   Only transactions measurable in money terms are recorded. Limitation: qualitative factors (management quality, employee morale, market reputation) are ignored, and it assumes a stable monetary unit, ignoring changes in price levels.

10. Explain the Going Concern concept.

    It assumes the business will continue to operate for the foreseeable future and has no intention or necessity to liquidate or curtail operations. This justifies recording assets at cost less depreciation rather than at break-up/realisable value.

11. Explain the Accrual concept.

    Revenues and costs are recognised as they are earned or incurred (not when cash is received or paid) and recorded in the financial statements of the periods to which they relate, regardless of cash flow.

12. Explain the Consistency concept.

    Accounting policies and methods should be applied consistently from one period to the next so that financial statements are comparable. A change is allowed only with proper disclosure and justification.

13. State the Matching concept.

    Expenses incurred in an accounting period should be matched against the revenues earned in the same period to determine the correct profit or loss for that period.

14. Explain the convention of Prudence (Conservatism).

    Anticipate no profit but provide for all possible losses. Income is not recognised until reasonably certain, while all known liabilities and losses are provided for even if the amount is uncertain (e.g., provision for doubtful debts, valuing stock at lower of cost or NRV).

15. Explain the convention of Materiality.

    Only items material enough to influence the decisions of users need be disclosed separately; insignificant items may be grouped or treated in a convenient way. Materiality depends on the size and nature of the item.

16. Explain Substance over Form.

    Transactions should be accounted for in accordance with their actual economic substance and financial reality, not merely their legal form (e.g., a hire-purchase asset is shown by the buyer though legal title passes only on final payment).

17. State the Full Disclosure convention.

    Financial statements and accompanying notes should disclose all material information so that users get a true and fair view; nothing significant should be concealed.

18. State the Cost (Historical Cost) concept.

    Assets are recorded at the price actually paid to acquire them (historical cost), and this cost is the basis for subsequent accounting (e.g., systematic depreciation), rather than market value.

19. State the Realisation (Revenue Recognition) concept.

    Revenue is recognised when it is realised or realisable and earned, generally at the point of sale/transfer of goods or rendering of services, not when the order is received or cash is collected.

20. What is the Dual Aspect (Duality) concept and the accounting equation derived from it?

    Every transaction has two aspects—a debit and an equal credit. This gives the accounting equation $$\text{Assets} = \text{Liabilities} + \text{Capital}$$

See more Foundation: Accounting flashcards →

Planning Foundation: Accounting for CA (Chartered Accountancy)

Foundation: Accounting (CA (Chartered Accountancy)) FAQ