How to pass the Financial Accounting exam on your first attempt
Financial Accounting is a fundamental subject at the CPA Foundation level that introduces you to the recording, summarizing, and reporting of a business’s financial transactions. Mastery of this subject lays the groundwork for all advanced accounting papers.
What does the CPA Foundation Financial Accounting paper cover?
- The paper focuses on basic accounting principles and concepts.
- You learn how to prepare and interpret financial statements.
- It introduces the double-entry bookkeeping system.
- You will understand the accounting cycle, including journalizing, ledger posting, trial balance preparation, and preparation of adjustment entries.
- The paper also touches on accounting for assets, liabilities, equity, revenues, and expenses.
- Finally, you’ll learn the preparation of key financial statements: The Statement of Financial Position, Income Statement, and Statement of Cash Flows.
CPA Foundation Financial Accounting Syllabus / Key Topics
| Topic | Key areas to focus on |
|---|---|
| 1. Introduction to Accounting | o Nature and Purpose of Accounting. o The objective of Financial Accounting. o The Elements of Financial Statements. o The Accounting Equation. o The Users of Accounting Information. |
| 2.Accounting Process and Systems | o The Source documents, such as receipts and invoices. o The Books of Prime entry/Original Entry from the journals, cashbooks, Petty cashbooks, and registers. o The Ledger and the concept of double entry. o The Trial Balance and the Financial Statements. |
| 3. Regulation and other principles guiding the accounting profession | o The legal sources of regulation. o The professional sources of regulation (local and international bodies) and ethical requirements. o Accounting Standards. o Common accounting principles/concepts. o Qualities of useful financial information. |
| 4. Accounting for Assets and Liabilities | o Property, Plant and Equipment (depreciation, acquisition, disposal, exchange, excluding revaluations). o Intangible Assets. o Financial Assets and Financial Liabilities (Definition, Examples, and Classification only). o Inventory. o Cash in hand and cash at bank (bank reconciliation statements). o Trade Receivables (Measurement and Credit Losses). o Trade payables. o Accrued Incomes/Expenses and Prepaid Incomes/Expenses. |
| 5. Financial Statements of a sole trader | o Statement of Profit or Loss. o Statement of Financial Position. |
| 6. Financial Statements of a partnership. | o The partnership deed/agreement. o The statement of Profit or Loss and appropriation. o Partners’ capital and current accounts. o The statement of financial position. o 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 | o 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). o Statement of Profit or Loss. o Other comprehensive incomes. o Statement of Financial Position. o Statement of Cash Flows. |
| 8. Financial Statements of a manufacturing entity | o Manufacturing Statement of production. o Statement of Profit or Loss. o Statement of Financial Position. |
| 9. Statements of a not-for-profit entity | o Objectives of Not-for-profit organizations. o Statement of Income and Expenditure. o Statement of Financial Position. |
| 10. Correction of errors and preparing financial statements with incomplete records | o 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). o Statement of Profit or Loss. o Other comprehensive incomes. o Statement of Financial Position. o Statement of Cash Flows. |
| 11. Analyzing Financial Statements | o The objective of analyzing financial statements o Analyzing financial statements using financial ratios (Liquidity, Profitability, Solvency, Efficiency, Investor/Value, and Cash Flow categories). |
| 12. Accounting in the Public Sector | o Property, Plant and Equipment (depreciation, acquisition, disposal, exchange, excluding revaluations). o Intangible Assets. o Financial Assets and Financial Liabilities (Definition, Examples, and Classification only). o Inventory. o Cash in hand and cash at bank (bank reconciliation statements). o Trade Receivables (Measurement and Credit Losses). o Trade payables. o Accrued Incomes/Expenses and Prepaid Incomes/Expenses. |
Exam format and expectations
- The exam usually includes a combination of theoretical questions (definitions, explanations) and practical problems (journal entries, ledger accounts, financial statements).
- You will be expected to prepare complete financial statements from the given trial balances or adjusted trial balances.
- Bank reconciliation and error correction questions are commonly tested.
- Time management is crucial since the paper involves detailed calculations and statement preparation.
- Clear presentation of work and proper use of accounting terminology are essential.
Tips on how to pass the Financial Accounting exam on your first attempt
- Master the basics of double-entry bookkeeping: Practice journal entries and ledger postings repeatedly until confident.
- Understand and memorize key accounting principles and concepts: They are frequently tested in theory questions.
- Practice preparing trial balances and identifying errors: Ensure you can spot and correct different types of errors.
- Work on preparing financial statements from adjusted trial balances: This is a major part of the exam.
- Practice bank reconciliation problems: They test your understanding of cash management and error identification.
- Use past CPA Foundation exam papers and marking schemes: Familiarity with question style and examiner expectations will boost confidence.
- Develop good exam technique: Read all questions carefully, allocate time based on marks, and show workings neatly for partial credit.
- Use revision guides/kits and other recommended revision platforms and summary notes: These help in quick revision of formulas and definitions.
- Group study and discussion: These can help clarify difficult topics and improve understanding.
- Stay consistent and revise regularly: Don’t cram; steady preparation leads to better retention and exam performance.
Useful resources
- KASNEB official syllabus and past papers (available on the KASNEB website)
- CPA Foundation study texts by reputable authors/publishers.
- CPA Foundation revision guides/kits, revision notes.
- Online video tutorials, revision platforms, and accounting forums for interactive learning.
- Accounting practice software or Excel templates to simulate bookkeeping.
6-Week Study Plan| Financial Accounting Sample
Additional Tips
- Weekly Review: Dedicate Saturdays to reviewing and practicing questions from previous topics.
- Past Papers: Start practicing past CPA Foundation papers/revision kits by Week 4 onward.
- Flashcards: Make flashcards for accounting terms, concepts, and key ratios.
- Group Discussion: Join or form a study group once per week for challenging topics.
- Final Revision: Use Week 6’s Saturday for a timed mock exam covering all sections.
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