UNIT DESCRIPTION
This paper is intended to introduce the candidate to the overall purpose of accounting,
applicable regulations, the accounting treatment and presentation of basic transactions and
preparation and analysis of financial statements.

LEARNING OUTCOMES
A candidate who passes this paper should be able to:
• Prepare books of original entry and basic ledger accounts under the double entry system
• Prepare basic financial statements of sole traders, partnerships, companies,
manufacturing entities and not-for-profit organizations
• Comply with the regulatory framework in the accounting field
• Analyse financial statements by use of ratios and statement of cash flows
• Demonstrate basic understanding of public sector accounting framework

CONTENT
1. Introduction to Accounting
1.1 Nature and Purpose of Accounting
1.2 The objective of Financial Accounting
1.3 The Elements of Financial Statements
1.4 The Accounting Equation
1.5 The Users of Accounting Information

2. The Accounting Process and Systems
2.1 The Source documents such as receipts and invoices
2.2 The Books of Prime entry/Original Entry from the journals, cashbooks, Petty cash
books and registers
2.3 The Ledger and the concept of double entry
2.4 The Trial Balance
2.5 The Financial Statements

3. Regulation and other principles guiding the accounting profession
3.1 The legal sources of regulation
3.2 The professional sources of regulation (local and international bodies) and ethical
requirements
3.3 Accounting Standards
3.4 Common accounting principles/concepts
3.5 Qualities of useful financial information

4. Accounting for Assets and Liabilities
4.1 Property, Plant, and Equipment (depreciation, acquisition, disposal, exchange,
excluding revaluations)
4.2 Intangible Assets
4.3 Financial Assets and Financial Liabilities (Definition, Examples and Classification
only)
4.4 Inventory
4.5 Cash in hand and cash at bank (bank reconciliation statements)
4.6 Trade Receivables (Measurement and credit Losses)
4.7 Trade payables
4.8 Accrued Incomes/Expenses and Prepaid Incomes/Expenses

5. Financial Statements of a sole trader
5.1 Statement of Profit or Loss
5.2 Statement of Financial Position

6. Financial Statements of a partnership
6.1 The partnership deed/agreement
6.2 The statement of Profit or Loss and appropriation
6.3 Partners’ capital and current accounts
6.4 The statement of financial position
6.5 Accounting treatment and presentation when there is a change in profit/loss
sharing ratio, admission/retirement of a partner, dissolution of a partnership

7. Financial Statements of a company
7.1 Important concepts of a company (Ordinary and Preference share capital, issuing
new shares by way of full market price, bonus shares and rights issue, Reserves,
retained profits and corporation tax)
7.2 Statement of Profit or Loss
7.3 Other comprehensive incomes
7.4 Statement of Financial Position
7.5 Statement of Cash flows

8. Financial Statements of a manufacturing entity
8.1 Manufacturing Statement of production
8.2 Statement of Profit or Loss
8.3 Statement of Financial Position

9. Statements of a not–for–profit entity
9.1 Objectives of Not–for–profit organizations
9.2 Statement of Income and Expenditure
9.3 Statement of Financial Position

10. Correction of errors and preparing financial statements with incomplete records
10.1 Types and causes of errors
10.2 Correcting errors in source documents, the books of prime entry, the ledger, the
trial balance and financial statements
10.3 Reasons for incomplete information
10.4 Preparation of financial statements from incomplete information

11. Analyzing Financial Statements
11.1 The objective of analyzing financial statements
11.2 Analysing financial statements using financial ratios (Liquidity, Profitability,
Solvency, Efficiency, Investor/Value, and Cash Flow categories)

12. Accounting in the Public Sector
12.1 Features of public sector entities (as compared to private sector)
12.2 Structure of the public sector (National and county governments, State
Corporations, Departments, and Agencies)
12.3 Regulation and oversight (International Public Sector Accounting Standards
Board, Director of Accounting Services, National Treasury, Parliamentary
Committees, Accounting Officers at national and county levels)
12.4 Objectives of public sector financial statements and Standards (IPSAS)
12.5 Accounting techniques in public sector such as budgeting, cash, accrual,
commitment and fund accounting)