Principles of Accounting – KASNEB Syllabus



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


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


Introduction to accounting

  • The nature and purpose of accounting
  • Users of accounting information and their respective needs
  • Accounting Standards and their purposes
  • Regulatory framework (ICPAK, IASB, IAESB, IPSASB)
  • Professional ethics
  • Principles; concepts and conventions underlying the preparation of accounting statements

Accounting procedures and techniques

  • Double entry book-keeping
  • The cash book; two and three column including cash journal
  • The ledger and their role in recording and summarising, classifying accounting data
  • Books of original entry
  • Petty cash book
  • Balancing accounts and preparing the trial balance
  • Introduction to simple statements of financial performance
  • Statements of financial position

Computerised accounting

  • Different accounting packages
  • Rationale for computerised accounting system
  • Components of a computerised accounting system
  • Selecting a good computerised accounting system
  • Challenges of a computerised accounting system
  • Current trends in computerised accounting software

Preparation of financial statements and year-end adjustments

  • Depreciation of non-current assets including their disposal (by part exchange; ordinary sale; accident)
  • Methods and reasons of providing for depreciation
  • Preparation of movement of property, plant equipment (as per International Financial Reporting Standards)
  • Trade receivables, bad debts write-offs and provision for bad and doubtful debts
  • Accruals, prepayments, reserves and provisions
  • Necessary adjustments in statements of financial performance to record increase and decrease in provision for bad and doubtful debts

Confirming and correcting mechanism

  • Bank reconciliation statements
  • Control accounts

Errors and correction of errors

  • Errors affecting and not affecting the agreement of the trial balance
  • Use of the suspense accounts
  • The effect of errors on statement of financial performance and statement of financial position

Sole traders accounts

  • Income statements
  • Statements of financial position

Partnership accounts

  • Basic contents of a partnership agreement
  • Provisions of the Partnership Act
  • Partnership statement of financial performance and appropriation account
  • Partners current account and statement of financial position
  • Financial statements to reflect elementary changes in partnership such as admission, retirement and dissolution

Introduction to simple company accounts

  • Share capital and reserve
  • Issue of shares at par; premium; discount
  • Over and under subscriptions
  • Allotment and calls on shares, forfeiture of shares
  • Preparation of    statements    of    financial    performance    and                       appropriation account and the statement of financial position
  • Published accounts:     Components of a complete set of published financial statements only

Manufacturing accounts

  • Elements of cost and cost behaviour
  • Preparation of manufacturing accounts, statement of financial performance and statement of financial position

–             Accounting treatment of manufacturing profit or loss and unrealised profit on closing stock

Financial statements of a not-for-profit organisation

  • What non-profit making organisations are
  • Receipts and payments accounts

–              Income and expenditure accounts and statement of financial position

Incomplete records and single entry book keeping

  • Why incomplete records
  • Preparation of statement of affairs

–             Preparation of financial statements

Analysis of financial statements Introduction to accounting ratios

  • Profitability ratios
  • Revenue ratios
  • Liquidity ratios

Preparation of cash flow statements (International Accounting Standard 7)

Public sector accounting

  • Features of public sector entities (as compared to private sector)
  • Structure of the public sector and examples of entities in public sector
  • Objectives of public sector financial statements
  • Users of public sector financial statements and officers (treasury, accounting officers, public accounts committee, auditor general)
  • IPSAS on inventory, property, plant and equipment and intangible assets (the ledger accounts of central and county governments are not examinable)
  • Accounting techniques in public sector (budgeting, cash, accrual, commitment and fund)

Emerging issues and trends

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