Financial Accounting

BCH: DSC- 1.3

Objective: The course aims to help learners to acquire conceptual knowledge of financial
accounting, to impart skills for recording various kinds of business transactions and to prepare
financial statements.

Learning Outcomes: After completion of the course, learners will be able to:
1. apply the generally accepted accounting principles while recording transactions and
preparing financial statements.
2. demonstrate the accounting process under a computerised accounting system.
3. measure business income applying relevant accounting standards.
4. evaluate the impact of depreciation and inventories on Business Income.
5. prepare the Financial Statements of sole proprietor firms and Not-For-Profit Organisations.
6. prepare the accounts for Inland Branches, Departments and Leases.

Course Contents:
Unit wise C&K* A&A**
Unit weightage of
marks (in %)

Unit 1: Conceptual Framework and 15 √ √

Accounting Process

Unit 2: Business Income, Accounting for 20 √ √

Property, Plant and Equipment, and
Valuation of Inventory

Unit 3: Financial Statements of Sole 20 √ √

Proprietorship and Not-for-Profit
Organisations

Unit 4: Accounting for Inland Branches, 25 √ √

Departments and Leases

Unit 5: computerised Accounting Systems 20 √ √

*C&K- Comprehension & Knowledge
**A&A – Analysis & Application
Unit 1: Theoretical Framework and Accounting Process:

(A) Conceptual Framework

(i) Accounting as an information system, the users of financial accounting information and
their needs. An overview of Artificial Intelligence and Data Analytics in Accounting.
(ii) Qualitative characteristics of accounting information. Functions, advantages and
limitations of accounting. Branches of accounting. Basis of accounting: cash basis and
accrual basis. Capital and revenue expenditures and receipts. Events occurring after the
balance sheet date, Extraordinary Items, Prior Period Items, Accounting Estimate.
Accounting Policies, Fair Value, Meaning, Recognition and Disclosure Requirements of
Provision, Contingent Liability and Contingent Asset.

(iii) Financial Accounting Principles: Meaning and need; Generally Accepted Accounting
Principles(GAPP): Entity, Money Measurement, Going Concern, Cost, Revenue
Recognition, Realization, Fundamental Accounting Assumptions, Accruals, Periodicity,
Full Disclosure, Consistency, Materiality, and Prudence (Conservatism). Fundamental
Accounting Assumptions as per AS 1.

(iv) Accounting Standards: Concept, benefits, and Process of formulation of Accounting

Standards including Ind AS (IFRS converged standards) and IFRSs; convergence vs
adoption; Application of accounting standards (AS and Ind AS) on various entities in
India. International Financial Accounting Standards (IFRS) –meaning, need, and scope.

(B) Accounting Process

From the recording of a business transaction to the preparation of trial balance including
adjustment, transfer and closing entries. Application of Generally Accepted Accounting
Principles in recording financial transactions and preparing financial statements and accounting
treatment of GST.

Unit 2: Business Income, Accounting for Property, Plant and Equipment, and Valuation of
Inventory:

(a) Business income: Concept of Revenue and Business Income, Measurement of business
income; relevance of accounting period, continuity doctrine and matching concept in the
measurement of business income; Objectives of measurement of Business income.

(b) Revenue recognition with reference to AS 9.

(c) Accounting for Property, Plant, and Equipment with reference to AS 10. Impact of
Depreciation on measurement of business income. Accounting for Intangible Assets with
reference to AS 26.
(d) Valuation of Inventory with reference to AS 2. Impact of inventory valuation on
measurement of business income by using FIFO, LIFO, and Weighted Average Method.

Unit 3: Financial Statements of Sole Proprietorship and Not-for-Profit Organisations:

Preparation of Financial Statements of Sole Proprietorship and Not-for-Profit Organisations.

Unit 4: Accounting for Inland Branches, Departments and Leases:

(a) Accounting for Inland Branches: Concept of Dependent branches; Branch Accounting as
per- Debtors System, Stock and Debtors’ System.
(b) Accounting for Departments (excluding Mark-up Account).
(c) Accounting for Leases with reference to AS 19.

Unit 5: Computerised Accounting Systems:

Computerised Accounting Systems: computerised Accounts by using any popular accounting
software Creating a Company; Configure and Features settings; Creating Accounting Ledgers
and Groups; Creating Stock Items and Groups; Vouchers Entry including GST; Generating
Reports - Cash Book, Ledger Accounts, Trial Balance, Profit and Loss Account, Balance Sheet,
Cash Flow Statement. Selecting and shutting a Company; Backup, and Restore data of a
Company.

Notes:
1. The relevant Accounting Standards (both AS and Ind-AS) for all of the above topics should
be covered.
2. Any revision of the relevant Indian Accounting Standard/Accounting Standard would
become applicable after it is included in the guidelines issued by the Department of
Commerce.

Practical Exercises:

The learners are required to

1. download ‘Framework for the Preparation and Presentation of Financial Statements from the
websites of the Institute of Chartered Accountants of India (ICAI) to analyse the qualitative
characteristics of accounting information provided therein.
2. collect and examine the balance sheets of business Organisations to study how these are
prepared.
3. examine the accounting policies and revenue recognition policies by collecting necessary
data from small business firms.
4. prepare Trading and Profit & Loss Account and Balance Sheet collecting necessary data
from small business firms.
5. prepare financial statements manually and using appropriate software.
6. prepare accounts of Inland Branches.
7. collect data from your college and prepare a Receipt and Payment Account, Income and
Expenditure Account and Balance Sheet.

Suggested Readings:

● Anthony, R. N., Hawkins, D., & Merchant, K. A. (2019). Accounting: Text and Cases
McGraw-Hill Education India.
● Batra, J. K., (2018). Accounting and Finance for Non-finance Managers, Sage Textbook
● Bhattacharyya. A. K. (2021). Essentials of Financial Accounting, 6th ed. PHI learning;
Narayanaswamy, R. (2020). Financial Accounting: A Managerial Perspective, 7th ed. PHI
learning
● Dam, B. B., & Gautam, H. C. (2011). Financial Accounting. Gayatri Publications, Guwahati.
● Goldwin, N., Alderman, W., & Sanyal, D. (2016). Financial Accounting. Cengage
Learning, Boston.
● Goyal, B. K., & Tiwari, H. N. (2021). Financial Accounting. Taxmann Publication, New
Delhi.
● Horngren, C. T., & Philbrick, D. (2014). Introduction to Financial Accounting, Pearson
Education, London.
● Kumar, A. (2018). Financial Accounting. Singhal Publication.
● Lal, J., Srivastava, S., & Abrol. S. (2017). Financial Accounting Text & Problems. Himalaya
Publishing House, Mumbai.
● Lt Bhupinder. (2020). Financial Accounting – Concepts and Applications. Cengage.
● Maheshwari, S. N., Maheshwari, S. K., & Maheshwari, S. K. (2018). Financial Accounting.
Vikas Publishing House Pvt. Ltd., New Delhi.
● Monga, J. R., & Bahadur, R. (2022) Financial Accounting: Concepts and Applications.
Scholar Tech Press, New Delhi.
● Mukherjee. (2018). Financial Accounting. Oxford University Press
● Sah, R. K. (2019). Concept Building Approach to Financial Accounting. Cengage Learning
India Pvt. Ltd.
● Sehgal, A., & Sehgal D. (2015). Fundamentals of Financial Accounting. Taxmann.
● Sehgal, D. (2016). Financial Accounting. Vikas Publishing House Pvt. Ltd., New Delhi.
● Shah, P. (2019). Financial Accounting for Management.Oxford University Press
● Shukla, M. C., Grewal, T. S., & Gupta, S. C. (2017). Advanced Accounts. Vol.-I. Sultan
Chand Publishing, New Delhi.
● Tulsian, P. C. (2016). Financial Accounting. S Chand Ltd., New Delhi.
Additional Resources:
● Accounting Standards at the Website of the Institute of Chartered Accountants of India.
● Indian Accounting Standards at the Website of the Ministry of Corporate Affairs.

Note: Suggested readings will be updated by the Department of Commerce and uploaded
on Department’s website.

Assessment Method:

1. There shall be 2 credit hours for lectures + one credit hour (Two Practical Periods per week
per batch) for practical lab + one credit hour for tutorials (per group).
2. Examination scheme for computerised accounting system: Practical for 20 marks. The
practical exam will be for one hour.
3. Theory exam shall carry 80 marks (Including an Internal Assessment of 25 Marks). The
theory exam will be for 2.5 hours.