KASNEB NOTES – INTRODUCTION TO FINANCIAL ACCOUNTING (ATD) STUDY NOTES PDF

INTRODUCTION TO FINANCIAL ACCOUNTING

 

ATD LEVEL 1

 

 

  

 

STUDY NOTES

 

  

SYLLABUS

 

PAPER NO 1: INTRODUCTION TO FINANCIAL ACCOUNTING

GENERAL OBJECTIVE

This paper is intended to equip the candidate with knowledge, skills and attitudes that will enable him/her to prepare financial statements for different entities

LEARNING OUTCOMES

A candidate who passes this paper should be able to:

  • Prepare books of original entry and basic ledger accounts under double entry system
  • Prepare basic financial statements of sole traders. Partnerships and companies
  • Account for assets and liabilities

 

CONTENT

  1. Introduction to Accounting
    • The nature and purpose of accounting
    • Objectives of accounting
    • Users of accounting information and their respective needs
    • The accounting equation
    • Accounting standards (IAS/IFRS), (Importance and limitations)
    • Accounting concepts/principles
    • Qualities of useful accounting information

2          Recording transactions

  • Source documents (quotations_ purchases order, statement of account. remittance advice, receipts, petty cash vouchers_ sales arid purchase invoices, credit notes and debit notes, bank statements)
  • Books of original entry: sales journal, purchases journal, returns inward, returns outward journal, cashbook, petty cashbook and general journal
  • Double entry and the ledger; general ledger, sales ledger, purchases ledger
  • The trial balance
  • Computerised accounting systems- Role of computers, application and accounting softwares in the accounting process, benefits and challenges of operating computerised accounting systems

 

3.    Accounting for assets and liabilities

  • Property, plant and equipment — recognition, capital and revenue expenditure, measurement (depreciation and revaluation), disposal and disclosures — property, plant and equipment schedule
  • Inventory – recognition, measurement and valuation using specific. cost method (FIFO and weighted average cost)
  • Trade receivables – bad debts and allowance for doubtful debts and receivables control accounts
  • Accrued income and prepaid expenses
  • Cash at bank — cashbook and bank reconciliation statement
  • Cash in hand – cash book and petty cashbook
  • Trade payables – payables control accounts

4.    Correction of accounting errors and suspense account

5.    Financial statements of a sole trader

  • Income statement
  • Statement of financial position

6.    Partnership accounts

  • Contents of a partnership agreement
  • Distinction between current and fixed capital
  • Income statement
  • Statement of financial position
  • Changes in partnership – Admission of a new partner, retirement and change in profit sharing ratio

7.    Company accounts

  • Types of share capital – ordinary shares and preference shares
  • Issue of shares (exclude issue instalment and forfeiture)
  • Types of reserves share premium, revaluation reserve, general reserves and retained profits
  • Income tax -Accounting treatment and presentation (exclude computation)
  • Financial statements – Income statement and statement of financial position
  • Published financial statements (describe a complete set of published financial statements but not preparation)

 

8.        Emerging issues and trends

 

 

CONTENT                                                                                                    PAGE

Topic 1: Introduction to Accounting…………………………………….. 6

Topic 2:Recording transactions……………………………………………. 36

Topic 3: Accounting for assets and liabilities………………………….. 91

Topic 4: Correction of accounting errors and suspense account… 148

Topic 5: Financial statements of a sole trader…………………………..161

Topic 6: Partnership accounts………………………………………………199

Topic 7: Company accounts ………………………………………………….. 228

 

  

Revised on: January 2019

 

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