Financial Accounting – KASNEB Syllabus

PAPER NO. 5 FINANCIAL ACCOUNTING

GENERAL OBJECTIVES

This paper is intended to equip the candidate with knowledge, skills and attitudes that will enable him/her to prepare financial statements for different entities.

LEARNING OUTCOMES

A candidate who passes this paper should be able to:

  • Prepare books of original entry and basic ledger accounts under double entry system
  • Prepare basic financial statements of sole traders, partnerships, companies and manufacturing entities and not for profit organisations
  • Comply with the regulatory framework in the accounting field
  • Account for assets and liabilities
  • Analyse financial statements by use of ratios and statement of cash

CONTENT

Introduction to accounting

  • The accounting framework
  • Sources of regulations at national and global levels; the law (Companies Act), professional bodies, global regulatory bodies
  • Accounting standards (IASs/IFRSs) (their importance and limitations)
  • Professional ethics

Accounting for assets and liabilities

  • Assets

    • Property, plant and equipment – recognition, capital and revenue expenditure, measurement (depreciation and revaluation), disposal and disclosures – property, plant and equipment schedule
    • Intangible assets – recognition, measurement (amortisation, impairment and revaluation), disposals and disclosures
    • Financial assets – examples and risks only

   Liabilities

  • Loans – Accounting treatment of repayment of principal and interest

Financial statements of a sole trader

  • Income statement
  • Statement of financial position

Financial statements of a partnership

  • Income statement
  • Statement of financial position
  • Changes in partnership – admission of a new partner, retirement and change in profit sharing ratio

Financial statements of a company

  • Financial statements – income statement and statement of financial position
  • Published financial statements (describe a complete set of published financial statements but not preparation)

Financial statements of a manufacturing entity

  • Features of a manufacturing entity
  • Classification and apportioning costs between manufacturing and selling and administration
  • Financial statements – manufacturing account, income statement and statement of financial position

Accounts from incomplete records

  • Features
  • Types of incomplete records (pure single entry, simple single entry, quasi single entry)
  • Ascertainment of profit by capital comparison
  • Preparation of statement of affairs and profit determination
  • Techniques of obtaining complete accounting information

Financial statements of a not-for-profit making organisation

  • Features
  • Types of funds and their accounting treatment
  • Income and expenditure account
  • Statement of financial position

Analysing financial statements

  • Statement of cash flows (categories of cash, methods of preparing statement of cash flows and the importance)
  • Financial ratios – definition, categories, analysis and interpretation, application and limitations

Introduction to Public Sector Accounting

  • Features of public sector entities (as compared to private sector)
  • Structure of the public sector (National and county governments, state corporations and other agencies)
  • Regulatory structures and oversight [IPSASB, PSASB (establishment, mandate and functions), Director of Accounting Services, National Treasury, Parliamentary Committees, Accounting Officers at national and county levels]
  • Objectives of public sector financial statements
  • Objectives of IPSAS
  • Accounting techniques in public sector (budgeting, cash, accrual, commitment and fund)

(Preparation of financial statements excluded)

Emerging issues and trends



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