Financial Accounting -2

Part B: Financial Accounting – II (40 Marks)

Unit 3: Financial Statements of Sole Proprietorship

  • Financial Statements: objective and importance.
  • Trading and profit and loss account: gross profit, operating profit and net profit.
  • Balance Sheet: need, grouping, marshalling of assets and liabilities.
  • Adjustments in preparation of financial statements : with respect to closing stock, outstanding expenses, prepaid expenses, accrued income, income received in advance, depreciation, bad debts, provision for doubtful debts, provision for discount on debtors, manager’s commission, abnormal loss, goods taken for personal use and goods distributed as free samples.
  • Preparation of Trading and Profit and Loss Account and Balance Sheet of sole proprietorship.
  • Incomplete records: use and limitations.
  • Ascertainment of profit/loss by statement of affairs method.

Unit 4: Financial Statements of Not-for-Profit Organizations

  • Not-for-profit organizations: concept.
  • Receipts and Payment account: features.
  • Income and Expenditure account: features. Preparation of Income and Expenditure account and Balance Sheet from the given Receipts and Payments account with additional information.

Scope:

  1. Adjustments in a question should not exceed 3 or 4 in number and restricted to subscriptions, consumption of consumables, and sale of assets/ old material.
  2. Entrance/ admission fees and general donations are to be treated as revenue receipts.
  3. Trading Account of incidental activities is not to be prepared.

Unit 5: Computers in Accounting

  • Introduction to Computer and Accounting Information System {AIS}: Introduction to computers (Elements, Capabilities, Limitations of Computer system),
  • Introduction to operating software, utility software and application software. Introduction to Accounting Information System (AIS), as a part of MIS
  • Automation of Accounting Process. Meaning
  • Stages in automation
    • (a) Accounting process in a computerised environment; comparison between manual accounting process and Computerised accounting process.
    • (b) Sourcing of accounting Software; kinds of software: readymade software; customised software and tailor-made software; Generic Considerations before sourcing accounting software
    • (c) Creation of Account groups and hierarchy
    • (d) Generation of reports -Trial balance, Profit and Loss account and Balance Sheet.

Scope:

  • The scope of the unit is to understand accounting as an information system for the generation of accounting information and preparation of accounting reports.
  • It is presumed that the working knowledge of any appropriate accounting software will be given to the students to help them learn basic accounting operations on computers
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Class X1 – FA2 – Chapter 9 : Financial Statements -1
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Class X1 – FA2 – Chapter 10 : Financial Statements -2
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Class X1 – FA2 – Chapter 11 : Accounts from Incomplete Records
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Class X1 – FA2 – Chapter 12 : Applications of computers in Accounting
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Class X1 – FA2 – Chapter 13 : Computerised Accounting System
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Class X1 – FA2 – Chapter 14 : Structuring Database for Accounting
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Class X1 – FA2 – Chapter 15 : Accounting system using Database Management System
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Lectures: 7