JAIBP Accounting for Financial Services Syllabus

Accounting for Financial Services syllabus — full chapter and topic list

Expand any chapter to see its topics and sub-topics. This is the whole examinable outline for Accounting for Financial Services in JAIBP, not a summary of it.

1. 1

   Fundamentals of Accounting

   3 topics

   • Accounting Concepts and Conventions
   • The Accounting Equation and Double Entry
   • Trial Balance
2. 2

   Financial Statements

   3 topics

   • Statement of Financial Position
   • Statement of Profit or Loss
   • Statement of Cash Flows
3. 3

   Adjustments and Final Accounts

   3 topics

   • Accruals and Prepayments
   • Depreciation and Provisions
   • Bad Debts and Allowances
4. 4

   Bank Accounting

   3 topics

   • Accounting for Banking Transactions
   • Bank Reconciliation Statement
   • Financial Statements of Banks
5. 5

   Accounting Standards

   3 topics

   • Introduction to IFRS and IAS
   • Application of IFRS in Banking
   • IFRS 9 Financial Instruments
6. 6

   Financial Statement Analysis

   3 topics

   • Ratio Analysis
   • Trend and Comparative Analysis
   • Interpretation of Financial Performance

Accounting for Financial Services flashcards for JAIBP

21 of 57 cards from the Accounting for Financial Services deck — real questions with worked answers.

1. What is the going concern concept in accounting?

   The assumption that a business will continue to operate for the foreseeable future and has no intention or need to liquidate or significantly curtail its operations, so assets are not valued at break-up (forced sale) values.

2. State the accruals (matching) concept.

   Revenues and expenses are recognised in the period in which they are earned or incurred, regardless of when cash is received or paid, and expenses are matched against the revenues they help generate.

3. What does the prudence (conservatism) concept require?

   Exercising caution under uncertainty: do not overstate assets/income or understate liabilities/expenses. Recognise losses as soon as they are foreseen but recognise profits only when realised or reasonably certain.

4. What is the business entity (separate entity) concept?

   The business is treated as a separate accounting entity distinct from its owners, so only the business's transactions are recorded and the owner's personal transactions are excluded.

5. What is the consistency concept and why does it matter?

   Once an accounting policy or method is adopted it should be applied consistently from period to period, so that financial statements are comparable over time. Changes are only made when justified and disclosed.

6. What is the money measurement concept?

   Only transactions and events that can be expressed in monetary terms are recorded in the accounts; non-monetary factors such as staff morale or management quality are excluded.

7. What is the materiality convention?

   Information is material if its omission or misstatement could influence the economic decisions of users. Immaterial items may be treated in the most convenient way (e.g. expensed) without strict accounting rules.

8. State the accounting equation.

   Assets = Liabilities + Capital (Owners' Equity). Equivalently, Capital = Assets - Liabilities.

9. What is the expanded accounting equation including profit elements?

   Assets = Liabilities + Capital + Income - Expenses - Drawings (since profit = Income - Expenses increases capital, and drawings reduce it).

10. State the golden rule of double-entry bookkeeping.

    Every transaction has two equal and opposite effects: for each debit there must be a corresponding credit of equal amount, keeping the accounting equation in balance.

11. In double entry, what do debits and credits represent for the main account types?

    Debit increases assets and expenses and decreases liabilities, capital and income. Credit increases liabilities, capital and income and decreases assets and expenses.

12. What is a trial balance and its main purpose?

    A list of all ledger account balances (debits and credits) at a point in time. Its main purpose is to check the arithmetical accuracy of the double entry by confirming total debits equal total credits.

13. Name three types of errors that a trial balance will NOT reveal.

    Errors of omission, errors of commission, errors of principle, errors of original entry, compensating errors, and complete reversal of entries (any three) — because debits and credits still agree.

14. What is a suspense account used for in relation to the trial balance?

    A temporary account opened to make the trial balance balance when there is a difference, holding it until the error(s) causing the difference are found and corrected.

15. What is the Statement of Financial Position (balance sheet)?

    A statement showing an entity's assets, liabilities and equity at a specific date, reflecting the accounting equation Assets = Equity + Liabilities at that point in time.

16. Distinguish current assets from non-current assets.

    Current assets are expected to be realised, sold or consumed within the normal operating cycle or within 12 months (e.g. inventory, receivables, cash). Non-current assets are held for long-term use (e.g. property, plant, equipment, intangibles).

17. Distinguish current liabilities from non-current liabilities.

    Current liabilities are due to be settled within 12 months (e.g. payables, bank overdraft, accruals). Non-current liabilities are due after more than 12 months (e.g. long-term loans, bonds).

18. What does the Statement of Profit or Loss show?

    An entity's financial performance over a period: income earned less expenses incurred, arriving at gross profit, operating profit and net profit (or loss) for the period.

19. How is gross profit calculated?

    Gross profit = Sales (revenue) - Cost of goods sold, where Cost of goods sold = Opening inventory + Purchases - Closing inventory.

20. How is net profit derived from gross profit?

    Net profit = Gross profit + Other income - Operating expenses - Finance costs - Tax (i.e. gross profit adjusted for all remaining incomes and expenses).

21. What are the three sections of the Statement of Cash Flows?

    Operating activities, investing activities, and financing activities.

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