Financial accounting is a crucial field that involves recording, summarizing, and reporting an organization’s financial transactions over a specific period. Its primary purpose is to provide stakeholders with accurate and standardized financial information for decision-making. Key features of financial accounting include systematic documentation of financial activities, the creation of key financial statements, adhering to standardized frameworks like GAAP or IFRS, focusing on past financial performance and transactions, and external reporting for investors and regulators. Financial accounting ensures transparency and accountability in financial reporting, crucial for market functioning and informed decision-making by stakeholders. Its historical focus provides a historical record for analysis and is used by external parties to assess an organization’s financial health.
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Objective of Studying Financial Accounting
The objective of the Financial Accounting course is to provide students with a comprehensive understanding of the fundamental principles and practices of financial accounting. The course aims to:
- Develop knowledge of accounting concepts, principles, and frameworks.
- Teach the preparation and interpretation of financial statements, including balance sheets, income statements, and cash flow statements.
- Equip students with the skills to record, classify, and summarize financial transactions accurately.
- Enable students to analyze and interpret financial data for decision-making purposes.
- Introduce the regulatory environment and ethical considerations in financial accounting.
- Prepare students for further studies in accounting and finance, as well as for professional roles in the field.
By the end of the course, students will have the foundational skills necessary to apply financial accounting practices in real-world business scenarios.
Financial Accounting Course Description
This course discusses the accounting system and disclosure of major components of financial statements. Basically, it deals with recording, valuating and presenting inventory; recording, reporting and analyzing current liabilities; long term liabilities; property, plant and equipment; shareholders’ equities; and analysis of financial statements.
Financial Accounting Course Outcomes
By the end of this course, students will be able to
- analyze financial statements using different tools.
- record, account, valuate and present the inventories and the cost of goods sold.
- record, report and analyze account receivables and bills receivables.
- record, report and analyze current and non-current assets and liabilities.
- record, report and analyze property, plant and equipment.
- record, report and analyze owners’ equity and dividends.
Syllabus of Financial Accounting
Unit 1
Introduction to Financial Accounting; Accounting Convention; Accounting Principal; Purpose, Scope of Accounting; Importance of Accounting; Limitations of Accounting; Users of Accounting information; Generally Accepted Accounting Principles (GAAP); Accounting Standards (AS); Accounting Equation; Understanding the Assets, Liabilities, Revenues and Expenses; Capital Expenditure and Revenue Expenditure; Deferred Revenue Expenditure; Capital Receipts and Revenue Receipts; Nature of Accounts and Rules of Debit and Credit
Unit 2
Double entry System and its Advantage; Basic Accounting procedure; Journal; Journalizing; Journal entries processes for Accounting; Goods and Service Tax (GST); Ledger Meaning, Utility; Ledger Posting Entries, Opening and Closing entries; Trial Balance
Unit 3
Accounting for Depreciation; Significance and Methods of Depreciation; Inventory Valuation Methods and Choice of Methods; Different Types of Reserves; Accounting for Partnership Firm, Introduction; Dissolution of Partnership Firm and Its Accounts; Provision for Bad Debts, Accrued, Prepaid, Outstanding and Unearned income and expenditure
Unit 4
Recording and Classification of Transactions; Preparation of Financial Statements; Preparing Trading Account without and with adjustments; Preparing Trial Balance without and with adjustments; Preparing Profit and Loss Account with and without adjustments; Cash Flow Statement for a Sole Proprietor; Understanding of Financial Statements of a Joint Stock Company as per the Companies Act 2013; Preparation of Cash Flow Statements
Unit 5
Introduction to International Financial Reporting Standards (IFRS), Need and Significance; Ethical Issues in Accounting; Meaning and Need for Convergence of India Accounting Standards with IFRS; Benefits of achieving Convergence with IFRSs for the economy, Investors, Industry, and Accounting Professionals; Concept and Procedure of issuing Indian Accounting Standards (Ind AS); Ind AS7 Statement of Cash Flows; Ind AS16 Property, Plant and equipment; Ind AS18 Revenue Recognition
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