Syllabus of Fundamentals of Accounting

Fundamentals of Accounting is the first paper of CAP-I. It covers 100 marks out of which 50 are asked as the multiple choice questions (MCQ) and remaining 50 marks from subjective questions. The syllabus you need to cover in CAP-I under “Fundamentals of Accounting” is as follow:

Level of Knowledge : Basic

Objectives :

  1.  To enable the candidates to understand the fundamentals of the financial accounting system and apply theory to basic financial accounting issues and process financial transactions.
  2. To enable the candidates to prepare accounting statements of small business enterprises and not-for-profit entities.

Course Contents

  1. Introduction
  • Business and its common types – organized/incorporated bodies, partnerships, sole proprietorship, company, cooperatives, Trusts, Clubs, Not-for-profit organizations; Forms of their capital and capital structure. Types of Accounting – Financial Accounting, Cost Accounting and Management Accounting.
  • Accounting as a profession – Meaning of accounting as a language of business and measurement discipline, interrelationship between accounting and other professions-economics and statistics. Role of accounting profession in business and society.
  • Basic accounting concepts related to revenue, expenses, assets and liabilities recognition and generally accepted accounting practices; Framework of Nepal Accounting Standard.
  • Financial Statements – Balance Sheet, Income Statement, Cash Flow Statement, Statement of Changes in Equity and Accounting Policies and Explanatory Notes to Accounts. Users of financial statements and significance of accounting.


  1. Accounting Systems and Processes
  2. Introduction to double entry book keeping systems, rules of debit and credit, meaning of assets, liabilities, income, expenses, equity, capital and revenue expenditure, analytical perspective of accounting equation. Basis of accounting-Cash, Accrual (mercantile) and hybrid.
  3. Form and content of accounting records – manual and computerized
  4. Books of original entry and ledgers, journal, sales and purchase ledgers, cash and bank book, subsidiary ledger, main/general ledger, extracting of trial balance, and consumable and non-consumable inventory including fixed assets ledgers. Bank reconciliation statements. Use of control and subsidiary accounts.
  5. Adjustment before preparation of final financial statements – accrual and prepayments adjustment, depreciation, provisions for uncollectible receivables and advances, locating errors in trial balance and preparation of adjusted trial balance.
  6. Accounting treatment of fixed assets and depreciation


Reasons and methods of depreciation calculation (straight line, written down value, double declining, machine hour, sum of the year’s digits). Physical verification of fixed assets and record updating.

7.Accounting treatment of inventory


Definition and types of inventory, determination of cost of inventory, methods of inventory costing (FIFO, LIFO and average methods), inventory recording systems (periodic and perpetual).

8. Accounting for Special Transactions (simple problems for each of them) Consignments, joint ventures, bills of exchange and royalty.

9.Financial statements preparation

Income Statement and Balance Sheet of small business enterprises (sole proprietorship, partnership and private company). Receipts and payments statement, income and expenditure statement and balance sheet of not-for-profit organizations.

10.Partnership Accounts

Concept and treatment of goodwill and profit sharing, admission, retirement and death of a partner.

Text Book:

  1. Fundamental of Accounting-Study Material, ICAN

Reference Books:

  1. Advanced Accounts, M.C. Shukla, T.S. Grewal & S.C. Gupta, S. Chand & Co. Ltd., New Delhi
  2. Advanced Accountancy, S.P. Jain & K.L. Narang, Kalyani Publishers
  3. Fundamental of Accounting, P.C. Tulsian, Mc Graw Hill Education Pvt. Ltd.
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