Financial Accounting

Financial accounting: concept, features, objectives and scope; Book-keeping, accounting and accountancy; Nature of accounting; Qualitative features of accounting information; Users anduses of accounting information: internal users and external users; Elements and components of financial statement; Limitations of financial accounting.

GAAP and its features; Basic accounting concepts: the business entity concept, the monetaryconcept, the going concern concept, the cost concept, the dual aspect concept, the accountingperiod concept, the realization concept, the accrual concept and the matching concept; Basicaccounting conventions: consistency, conservatism, materiality and full disclosure;Differences between accrual versus cash basis of accounting; Differences between accounting and accountancy; Accounting standards: meaning, nature, need, significance and classification of accountingstandards; Concept of Nepal Accounting Standards (NASs), International Accounting Standards(IASs), Nepal Financial Reporting Standards (NFRSs), International Financial reporting Standards (IFRSs); Disclosures required as per NFRS

Accounting events of business: concept and types; Accounting equation for analyzing thetransactions; Debit and credit and their rules; Recording process of accounting events: journal,ledger, and trial balance. Opening and closing entries: concept and types of closing entries;Adjusting entries: concept and types of adjusting entries; Prepaid and outstanding items;Adjusted trial balance.

Concept of cash and bank; Types of bank account; Cheques: concept and types, parties to acheque, honor and dishonor of cheque; Bank Statement: concept and importance; Preparation of bank reconciliation statement

Concept, features and types of property, plant and equipment; Acquisition cost of property, plantand equipment; Depreciation of property, plant and equipment: Straight-line method,diminishing balance method, and unit of activity method; Choice of depreciation method;Disposal of property, plant and equipment; Impact of depreciation on profit measurement;Intangible assets: concept and types; Capital versus Revenue: concept and types.

Financial statements: concept, objectives and limitations;Basic Nepal Accounting Standards (NASs): NAS 1: Presentation of financial statements, NAS 2: Inventories, NAS 7: Statement of cash flow, NAS 8: Accounting policies, changes in accountingestimates and errors, NAS 10: Events after reporting period, NAS 16: Property, plant andequipmentPreparation of financial statement under NFRS:Statement of Profit or Loss (Income Statement): concept, types and components of profit or lossstatementStatement of financial position (Balances Sheet): concept, purpose, components and preparationof classified statement of financial position or balance sheet;Statement of other comprehensive income: concept, components and preparation of othercomprehensive income statement;Statement of changes in equity: concept, components and preparation of statement of changes inequity.Cash Flow Statement: Meaning, objectives and limitations of cash flow statement; Contents ofcash flow statement; Preparation and interpretation of cash flow statement using balance-sheets of single and two periods under direct and indirect method.

Value added: concept and its application; Value added statement: concept, advantages andpreparation of value added statement showing value added generated and applied.

Meaning, objectives, need and importance of financial statement analysis; Types of financialstatement analysis: Horizontal, vertical and trend analysis, comparative and common sizestatement analysis and their application.Ratio analysis: Concept, uses, importance and limitations of ratio analysis; Types, computationsand interpretations of: liquidity (current ratio and quick ratio), capital structure (debt-equity ratio, debt to total capital ratio, interest coverage ratio and debt coverage ratio), efficiency (stockturnover ratio, receivable turnover ratio including collection period, payable turnover ratioincluding payable period, total assets turnover ratio, capital employed turnover ratio),profitability (gross profit ratio, net profit ratio, operating ratio, return on equity, return on total assets and return on common shareholders equity) and earning evaluation ratios (EPS, DPS andprice-earnings ratio) for evaluating the financial performance of the business.