Financial Accounting — PREVIEW Course: CPA — Certified Public Accountant | Level: Foundation Level 1 This is a free preview covering the introduction and Section 1–2 only. Table of contents (full paper) 1. Introduction to accounting and the regulatory framework — *included in this preview* 2. The accounting equation and double entry — *included in this preview* 3. Books of original entry — full version only 4. Ledger accounts and the trial balance — full version only 5. Value Added Tax (VAT) in the accounting records — full version only 6. Non-current assets and depreciation — full version only 7. Inventory (stock) valuation — full version only 8. Accruals and prepayments — full version only 9. Irrecoverable debts and allowances for doubtful debts — full version only 10. Bank reconciliation statements — full version only 11. Control accounts, errors, and suspense accounts — full version only 12. Financial statements of a sole trader — full version only 13. Financial statements of not-for-profit organisations — full version only 14. Introduction to company accounts — full version only 15. Full worked revision question — full version only 16. Self-assessment question bank, 10 original questions with model answers — full version only 17. Exam technique and revision checklist — full version only 1. Introduction to accounting and the regulatory framework 1.1 What accounting is Accounting is the process of identifying, recording, classifying, summarising, and communicating financial information about an economic entity to people who use that information to make decisions. Three stages happen in sequence: | Stage | What happens | Output | |---|---|---| | Recording (bookkeeping) | Transactions are captured as they occur | Books of original entry, ledgers | | Classifying & summarising | Similar items are grouped and totalled | Trial balance | | Communicating | Summarised data is presented for decisions | Financial statements, reports | 1.2 Users of accounting information and their needs | User | Typical question they want answered | |---|---| | Owners/shareholders | Is my investment growing? Should I keep, add, or withdraw capital? | | Management | Are we hitting targets? Where should resources go next period? | | Lenders/banks | Can this entity service debt? Is security adequate? | | Government (KRA) | What tax is due? Is the entity complying with tax law? | 2. The accounting equation and double entry 2.1 The accounting equation ASSETS = LIABILITIES + CAPITAL (EQUITY) 2.2 Double entry rules | Account type | Increase | Decrease | |---|---|---| | Asset | Debit | Credit | | Expense | Debit | Credit | | Liability | Credit | Debit | | Capital/Equity | Credit | Debit | | Income | Credit | Debit | Mnemonic — DEAD CLIC: *Debit: Expenses, Assets, Drawings. Credit: Liabilities, Income, Capital.* Unlock the full paper The complete version includes 17 sections, a fully worked revision question (statement of profit or loss and statement of financial position), and a 10-question original self-assessment kit with model answers — covering VAT, depreciation, inventory valuation, accruals, bad debts, bank reconciliations, control accounts, and full financial statements. Purchase the full paper to continue. CPA Foundation Level 1 — Financial Accounting (Preview) — Page 1 of 2 CPA Foundation Level 1 — Financial Accounting (Preview) — Page 2 of 2