PRINCIPLES OF ACCOUNTING

Course Code Marks: 100 Credits: 4 Class Hours: 60
Course Title: PRINCIPLES OF ACCOUNTING
1. Accounting – The Language of Business: Definition and Scope of Accounting, Its role
and Functions, History of Accounting, Purpose and Nature of Accounting Information-
Users of Accounting Information. Branches of Accounting-Nature of Business and
Accounting.
2. Conceptual Framework for Financial Accounting: FASB Conceptual Frame for
Financial Accounting-First Level: Basic Objectives (SFAC-1); Second Level: Qualitative
Characteristics of Accounting Information (SFAC-2); Third Level: Operational Guidelines.
3. The Accounting Process: Double-Entry Accounting System vis-à-vis Incomplete System.
Accounting Equation – Effects of Transactions on the Accounting Equation. The Account-
Classification of Accounts-Selection of Account titles-Chart of Accounts-Coding-Rules of
Debit and Credit-Balancing and Normal Balance-Recording (Bookkeeping) Aspect of
Accounting Cycle: Documentary Evidence and Identification, Analysis, and Recording of
Transactions and Other Events-Journalization-Posting to the Ledger-Preparation of Trial
Balance-Limitations of Trial Balance, Errors and their Rectification.
4. The Adjustment Process and Completing the Accounting Process: Key aspects of the
Accrual basis of accounting, Cash accounting and Break-up basis of accounting-
Adjustments-Adjusted Trial Balance-Preparation of Work Sheet-Closing Entries-Post-
Closing Trial Balance-Reversing Entries.
5. Merchandising Operations and Accounting System: Merchandising Operations and
Classifying Inventory-Purchases, Sales, Other Use or Loss and Returns of Merchandise
Inventory-Periodic and Perpetual Inventory Systems and Journal Entries-Specific
Identification Method and Inventory Cost Flow Assumption (FIFO, LIFO and Average
Cost).
6. Accounting Systems and Special Ledgers: Manual and Computerized Accounting
Systems and their effectiveness-The Voucher System-General Ledgers and Subsidiary
Ledgers: General Ledger Control Accounts and Subsidiary Ledger Individual Accounts.
Special Journals: Advantages of Special Journals-Cash Receipts Journal-Sales Journals-
Purchase Journal-Cash Payments Journal and General Journal.
7. Control of Cash: Controlling cash, Internal control. The bank chequing account, Petty
Cash, Bank Reconciliation Statement.
8. Accounting for Receivable and Current Liabilities: Receivable-Types of Receivables
valuing and disposing Uncollectible accounts-Allowance for doubtful accounts, Accounting
for temporary investments-Marketable Securities-Accounting for current liabilities.
9. Financial Statements as a Reporting Device: Idea on a Complete Set of Financial
Statement. Purpose and interrelationship of the Financial Statement. Importance,
Limitations & Preparation of Financial Statements. Supplementary Statements/Schedules.
Preparation of Statements according to Nature of Business. Statements for Nonprofit
Organizations. Preparation of Financial Statements according to Legal Form of Business:
Sole-proprietorship Organizations. Partnership Firms & Company (Introductory Idea).
10. Financial Statement Analysis: Horizontal analysis and vertical analysis of comparative
financial statements; Preparation and use of common-size financial statements; Ratio
analysis-Basic Ratios of Liquidity, Activity, Profitability, and Solvency.
Book Recommended:
Weygandt, Jerry J., Paul D. Kimmel, Paul D. and Kieso Donald E, Accounting Principles, 9th
edition, John Wiley & Sons, Inc.
Reference Books:
1. Needles and Anderson, Principles of Accounting.
2. American Accounting Association, A Statement of Basic Accounting Theory (ASOBAT).