Course Syllabus of Financial Accounting I
Course Title: Financial Accounting I
Course code: ACC 121
Credit hours: 3
The aim of this course is to provide students with an understanding of the basic concepts, principles, procedures and techniques underlying the accounting process and make them able to prepare financial statements of an organization.
The course will cover the nature, scope and function of accounting; basic fundamental concepts and generally accepted accounting principles and practices; the accounting cycle; journalizing adjusting entries, preparation of financial statements; accounting for cash and cash equivalent and accounting for current liabilities. The course will also include computer-based project work / case studies.
By the end of this course, students should be able to:
• understand accounting concepts, GAAP and accounting standards, and their role;
• introduce the legal and practical aspects of financial reporting with its components and characteristics;
• identify the difference between accrual and cash basis accounting, and carry out adjusting entries;
• prepare financial statements i.e. income statement, balance sheet and cash flow statement;
• explain cash and cash equivalents and prepare bank reconciliation statement;
• appreciate the role of accounting software applications play in gathering, recording, reporting and interpreting financial accounting information; and
• use computers to record and process business transactions.
Unit I: The Conceptual Foundation of Accounting 7 hours
Accounting as a language of business, forms of business organizations, types of activities performed by business organization; Users of accounting information: internal and external; Qualitative characteristics of accounting information; The accounting profession, role and activities of an accountant; The accounting framework – basic accounting assumptions, concepts, GAAP, definitions and terminology, Accounting information system in modern business organizations; Use of computers in accounting process.
Unit II: Basics of Corporate Reporting 5 hours
Legal requirements of accounting, provisions of Company Act relating to accounting, introduction to accounting standards (IFRS and NAS), annual report, major components, basic components of financial statements, basic financial statements: Income Statement, Balance Sheet, Statement of Changes in Equity, Cash Flow Statement, Accounting Policies and Notes.
Unit III: Processing and Recording Business Transactions 6 hours
The Basis for Recording Transactions: Sources of accounting information, External and internal events; Accounting transaction, the accounting equation and analysis of transactions, the role of source documents.
The Double Entry System: Debits and credits and its rules; The journals; T account; General ledger; Normal account balances; Objectives and preparation of trail balance; Use of excel in processing business transaction.
Unit IV: Accrual Accounting and Adjustments 12 hours
Adjusting Entries: The revenue recognition principle, matching principle; Cash verses accrual basis of accounting, The need for adjusting entries; Types of adjusting entries; Journalizing adjusting entries; Effects of failing to prepare adjusting entries, Preparation of adjusted trial balance.
Worksheet and Accounting Cycle: Preparation of ten and twelve column work-sheet; Preparing financial statements from the work sheet The closing process; Post-closing trail balance; Completion of accounting cycle.
Unit V: Preparation of Financial Statements 12 hours
Income Statement: Concepts and major components; revenues, cost of goods sold, gross profit, net income and retained earnings; statement of retained earnings, preparation of income statement with vertical multi-step format.
Balance Sheet: Concepts and major components; assets, liabilities and stockholders’ equity; preparation of balance sheet under vertical- classified format; use of computers in preparation of income statement and balance sheet.
Cash Flow Statements: Cash flows and accrual accounting; purpose of the statement of cash flows; financing, investing and operating activities; formats of statement of cash flows; preparation of cash flow statement using direct method, Reconciling cash flow under operating activity using indirect method, use of computers in preparation of cash flow statement.
Unit VI: Accounting for Cash and Cash Equivalents 6 hours
Components of cash and cash equivalents; preparation of the bank reconciliation statement and the need for adjustments to accounting records; petty cash, balance sheet presentation of cash and cash equivalent, Internal control system; Cash control: receipt and disbursement; Ratios relating to cash management.
Porter, G. A., & Norton, C. L. Financial Accounting: The Impact on Decision Makers. USA: The Dryden Press.
Hermanson, H. R., & Edwards, D. J. Financial Accounting: A Business Perspective. USA: Von Hoffmann Press.
Kimmel, P. D., Weygandt, J. J., & Kieso, D. E. Financial Accounting. New Delhi: Wiley India Pvt. Ltd.
Narayanswamy, R. Financial Accounting: A Managerial Perspective. New Delhi: Prentice Hall of India.
Koirala, M. P., Acharya, C., Sharma, L. P. B., Sharma, N., & Gautam, C. M. Financial Accounting. Kathmandu: Buddha Academic Enterprises.
Nepal Accounting Standards (NASs)
International Accounting Standards (IASs) / International Financial Reporting Standards (IFRSs)