INDEX

01. Accounting • Jrounal Entry 20

1. The Basic Accounting 2–30 • Sales Return and Purchase Return 20–21

• Introduction 2 • Discount Allowed and Discount Receive

21–22
• Objective of Accounting 3
• Compound Entry 22
• Procedural Aspects of Accounting 3–6
• Book Keeping Efficency 22
• Sub-Branches of Accounting 7–8
• Outstanding Expenses/Prepaid Expenses/
• Applications Uses of Accounting Information
8 Accured Income/Advance Income 22–23

• Role of Accountancy in socity 8–9 • Ledger 24

• Accounting Conventions and Standards 9–10 • Ledger Posting 24

• Accounting Principles 10–11 • Opening Entry 25

• Accounting Equation 11 • Balancing of Account 25

• Accounting Standards : Meaning and Concept • Cash Book 26–27

12 • Subsidiary Books 27–28

• Compliance of Accounting Standards • Sales Book 28

(As per companies Act, 2013) 12–13 • Purchase Book 28

• Accounting Policies and their Disclosures • Sales Return Book or Return Inward book
13–14 28

• International Financial Reporting Standards • Purchase Return book or Return Outward Book
(IFRS) 14–15 29

• Difference between AS and IAS (IFRS) • Questions 29–30

15–17 2. Trial Balance 31–43
• Journal 17 • Introduction 31–32
• Double Entry System 17–18 • Types of Trial Balance 32–39
• Personal Account 18–19 • Computerized Accounting System 39–40
• Real Account 19 • Questions 40–43
• Normal Account 19 3. Financial Statements 44–70
• Rule of Debit and Credit 19–20 • Introduction 44–45

(i)
• Capital Expenditure and Revenue Expenditure, • Important Issues Relations to Issue of Bonus
Capital Receipts and Revenue Reciepts45–46 Share 87–88
• Trading Account 46
• Procedure & Practice 88–90
• Cost of Goods Sold and Gross profits 46–47
5. Ratio Analysis 91–100
• Need of Trading Account 47
• Important Items of Training Account 48–50 • Introduction 91

• Profit and Loss Account 50–52 • Importance of Ratio Analysis 91–93

• Financial Statements 52–54 • Long-term Solvency and Leverage Ratios

93–94
• Marshalling of Assets and Liabilities 55
• Current Ratio 94–100
• Classification of Assets and Liabilities 55–57
• Preparation of Balance Sheet 57–58 6. Cash Flow Statement 101–106

• Finance Statement:II 58–60 • Introduction 101

• Not for Profit Organisation 60–61 • Important Definitions 101–103

• Relevant Items of Income and Expenditure • Cash and Cash Equivalents 102–103

61–62 • Investing Activities 103

• Preparation of Income and Expenditure • Financing Activities 103–105

Account 62–63 • Some Special Items Under AS 3 105–106
• Financial Statement (for NPOs) 63–65 7. Partnership Accounts 107–137
• Preparation of Income and Expenditure • Introduction 107–108
Account 65–68 • Contents of a Partnership 108–109
• Questions 69–70 • Capital Accounts 109–135
4. Accounting for Share Capital 71–90 • Questions 135–137
• Meaning of a Company 71 8. Nature and Scope of Cost Accounting
• Characteristics of Company 71 138–148
• Meaning and Categories of Share Capital • Introduction 138–140
71–77 • Classification of Cost 140–143
• Issue of Share at a Premium 77–79 • Introduction to Cost Sheet 143–147
• Issue of Share at a Discount 79–82 • Questions 147–148
• Forfeiture of Share 82–85 9. Insurance Claim for Loss of Stock and
• Right Shares 85–86 Loss of Profit 149–151
• Bonus Shares 86–87 • Introduction 149–151

(ii)
 02. Auditing • Special Audit 22
• Compensation Audit 22–24
1. Auditing : An Introduction 2–29
• Objective Questions 24–29
• Introduction 2
2. Company Audit 30–45
• Objective of Auditing 2
• Appointment of Auditor (Section 139) 30–32
• Inherent Limitation of Auditing 2–4
• Tenure : Term & Rotation of Auditor 32-34
• Qualities of an Auditor 4–5
• Rotation of Auditors Section 139(2) 34–38
• Types of Audit 5–6
• Resignation by Auditor 35
• Scope of Audit 6–7
• Removal of Auditor by the Tribunal 35–36
• Auditor’s Engagement 7–8
• Qualifications of an Auditor [Section 141(1)
• Audit Programme 8–9
& (2)] 36
• Audit Documentation 9–10
• Disqualification of Auditors [Section 141(3)]
• Aqvantages and Disarvantages of Audit
36–37
Documention 10
• Power / Right and Duties of Auditor [Section-
• Auditor’s Judgement while Obtaining Audit
143] 37–40
Evidance 11
• Audit Committee [Section-177] 40–42
• Methods of Obtainig Audit Evidance 11–12
• Questions 42–45
• Audit Note-book 12
• Vouching 12–13 3. Audit 46–50

• Verification 13 • An Introduction to Bank Audit 46–50

• Auditing and Assurance Standards board 4. Government Audit 51–53

(AASB) 13–14 • Introduction of Government Audit 51–53
• Audit Sampling 14–17 • Duties of CAG 53
• Aditor’s Liabilitiesed 17 • Audit Report 53
• Civil Liability 18 5. Audit of Non-Governmental Organization
• Liabilites Under Companies Act 18–19 54–56
• Criminal Liability Under Indian Penal Code • Components of Auditor Report During NGO
19–20 Audit 54–56
• Internal Auding 20 6. Audit of Educational Institutions
• Objective of Internal Audit 20–21 57–59
• Advantages of Internal Audit 21–22 • Educational Institutions 57

(iii)
• Preliminary Audit of Educationaln Institutions • General Insurance 3–4
57–58 • Insurance and Risk 4–5
• Internal Control System 58–59 2. Important Terminology Relater to
7. Audit of Insurance Company 60–62 Insurance 6–9
• Indian Insurance Company 60 • Insurance Terminologies 6–9
• Insurance Audit and Role of Insurance Auditor 3. Insurance Contract 10–15
60–61 • Insurance Interest 11–12
• Audit Testing 61–62 • Important Doctrines & Principles in Insurance
8. Audit of Trust 63–65 12–13
• Trust 63 • Warranties 13–15
• Responsibilities of an Accountant in a • Return of Premium 15
Charitable Trust 63 4. Types of Insurance 16–19
• Audit Report 63–64 • Types of General Insurance 16–17
• Audit Procedure 64–65
• Home Insurance 17
9. Forensic Audit & Accounting 66–69 • Life Insurance 17–18
• Forensic Accounting and Audit 66
• Money Back Policy 18–19
• Forensic Accounting and Auditing Framework
5. Regulatory Framwork for Insurance
66–67
Sector in India 20–27
• Techniques of Forensic Audit 67–68
• Role and Significance of IRDAI 21–22
• Area of Forensic Audit 68–69
• Life Insurance Council & General Insurance
10. Audit of Charitable Institutions
Council 22–23
70–71
• Power and Functions LIC and GIC 23
03. Insurance
• Insurance Ombudsmen Rule, 2017 23–27
1. An Instroduction to Insurance 2 • Insurance as a Social Security tool 27
• Insurance - Meaning and Defination 2 6. Government Led Insurance Schemes
• Evolution of Insurance 2–3 and Policies 28–29
• Life Insurance 3 • Pension 29

(iv)
1. The Basic Accounting
2. Trial Balance
3. Financial Statements
4. Accounting for Share Capital
5. Ratio Analysis
6. Cash flow Statement
7. Partnership Accounts
8. Nature and Scope of Cost Accounting
9. Insurance Claim for Loss of Stock and Loss of Profit
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• A bookkeeper can handle basic accounting

Introduction needs, but a Certified Public Accountant
Accounting is the process of recording financial (CPA) should be utilized for larger or more
transactions pertaining to a business. The advanced accounting tasks.
accounting process includes summarizing, • Two important types of accounting for
analyzing, and reporting these transactions businesses are managerial accounting and
to oversight agencies, regulators, and tax cost accounting. Managerial accounting
collection entities. The financial statements helps management teams make business
used in accounting are a concise summary of decisions, while cost accounting helps
financial transactions over an accounting period, business owners decide how much a product
summarizing a company’s operations, financial should cost.
position, and cash flows. • Professional accountants follow a set of
standards known as the Generally Accepted
Key Concepts in Accounting Accounting Principles (GAAP) when
preparing financial statements.
• Regardless of the size of a business, accounting
is a necessary function for decision making, • Accounting is an important function of
cost planning, and measurement of economic strategic planning, external compliance,
performance. fundraising, and operations management.

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profits. The accounting chart of profit and

Important Definitions of Accounting
loss determines whether there is a profit or
• American Accounting Association : loss made in the business. The income and
Accounting is the process of identifying, expenditure decide profit and loss.
measuring, and communicating economic
information to permit informed judgments and • Utility of Resources : Resources are a
decisions by users of the information. very crucial part of any organization and
• R.J. Chambers : Accounting is a social for a firm to function smoothly, they play
science concerned with the measurement of a significant role. The records hold the
economic activity. responsibility to report to the firm about the
• Warren Buffett : Accounting is the language different activities along with its timing.
of business. Hence, it becomes easy for the management
to take note of the details before putting in
• Robert Anthony : Accounting is the process
of recording, classifying, and summarizing the money.
economic events to provide information • Estimation of Financial Position : A
that is useful in making decisions. business person is not only interested
• AICPA (American Institute of Certified in knowing the Profit and Losses of his
Public Accountants) : Accounting is the art business but he also wants to know how
of recording, classifying, and summarizing in much he owes to his creditors and how
a significant manner and in terms of money, much he has to pay to his debtors. For this
transactions and events which are, in part at
purpose, he prepares a statement in which
least, of a financial character, and interpreting
all such details are recorded. This statement
the results thereof.
is known as Balance sheet. With the help
• Sidney Davidson : Accounting is the
of Balance sheet Financial position of the
process of collecting, recording, and reporting
business can be Understood.
financial information to enable informed
decision-making. • Helps in Decision Making : With the help of
• Charles T. Horngren : Accounting is all the records that have been maintained by
the process of identifying, measuring, and following Accounting Procedures, Decisions
communicating economic information. can be made with all those information which
eventually helps in the smooth functioning of
Objectives of Accounting the organisation.
• Maintaining Records : As we mentioned,
accounting is the spoken language of Procedural Aspects of Accounting
transactions. The human brain cannot store
endless information. And so accounting takes On the basis of the above definitions, procedure
the charge of keeping the records of all the of accounting can be basically divided into two
transactions made within a firm. parts:

• Profit and Loss : Business is directly 1. Generating financial information and

proportional to profits. It is all about earning 2. Using the financial information

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Generating Financial Information

• Recording transactions : The first step in the • Entering journal entries : The second step in
accounting procedure is to identify and record the accounting method is the establishment of
all business transactions. Organisations have journal entries for every transaction in a paper
many transactions throughout the fiscal year or electronic journal. Many organisations use
and it is crucial to record individual transactions point of sale technology to combine steps
accurately. Organisations use automated point one and two. They also keep a record of the
expenses of the organisation. Bookkeepers
of sale algorithms and software to record sales.
record transactions chronologically, with the
Apart from sales, transactions may include
oldest transaction at the top and the newest
debt payments, employee payroll, purchases at the end. Single-entry bookkeeping is
and reimbursements. equivalent to maintaining a chequebook.
Transactions do not include creating Double-entry bookkeeping requires you
purchase orders and signing contracts. to record two entries for every transaction
Bookkeepers record exact amounts during under two accounts that have equal credits and
this step of the accounting cycle. Transactions debits. This is further classified into two types,
are the first requirement for the upcoming accrual accounting, which involves matching
accounting procedure. revenues with expenses, and cash accounting,
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for which you require documenting ledger and identify the adjustments to make.
transactions when the organisation receives The bookkeeper makes adjustments and
cash for the transaction. explains the adjustments made in the ledger
• Posting entries to the general ledger : by using the worksheet.
Once you have listed every transaction • Balancing entries : Bookkeepers adjust
in a journal, the third step is to record all ledger and journal entries based on
the transactions in the general ledger. A accruals and deferrals in the sixth step of
business’s general ledger keeps a record the accounting procedure. Some financial
of all financial activities, organising transactions may take several days to process
every account by category. This allows most times. So this step helps accountants
accountants and bookkeepers to gauge the identify sales or expenditures that were not
business’s economic position through one recorded in the journals. The bookkeeper
centralised document. The general ledger also adjusts the trial balance by reviewing
aids authorities to monitor the influence of past journal entries. It is a bookkeeper’s
job to recognise unusual account activity
expenses and income of every individual
and unaccounted balances and fix existing
account on the business’s finances. It is
errors. This step also involves a calculation
a bookkeeper’s responsibility to post the
of depreciation of assets, prepayments, loans,
journal entries in the general ledger to provide
among other accruals and deferrals that affect
uniformity and efficiency.
the accuracy of the ledger.
• Creating an unadjusted trial balance : • Preparing financial statements : The
Accounting professionals of a company seventh step involves bookkeepers
enter the data from the general ledger to to create a financial statement report
a trial balance at the end of an accounting which summarises all transactions in an
period. Accountants create a trial balance to accounting period. During this step of
identify and correct any errors that might have the accounting cycle, accountants classify
occurred during the initial stages of accounting financial statements into categories like
proceedings. This trial balance is unadjusted income statements, statements of retained
because of the difference between the total earnings, balance sheets and cash flow
debit and credit of a company’s account. A statements in the respective order.
trial balance is successful when the debit is
equal to the credit section of the ledger. It is important that an accountant prepares
these financial documents in this order
The accountant requires identifying because they use gross income from the
inconsistencies in the ledger and rectifying income statement to prepare a statement of
them to maintain parity to ensure both sections retained earnings. Accountants use the final
of the ledger are equal. balance of the statement of retained earnings
• Using worksheets : Creating and analysing a to prepare the balance sheet. Professionals
worksheet is the fifth step of the accounting prepare the cash flow statement at the end, as
cycle. Accountants draft worksheets to ensure it utilises data from the first three statements.
a balance between debits and credits and • Closing : The last step of the accounting
make adjustments if there are any differences. process includes the closing of temporary
In addition, bookkeepers use worksheets accounts and producing a closing statement
as a visual aid to recognise typing errors, which delivers the analysis of the business’s
inconsistencies and entry mistakes in the financial performance during the accounting

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