Paper 5 :
About Financial Accounting
Financial accounting is the branch of accounting that keeps track of a company’s financial transactions resulting from business operations. These are presented in the form of financial reports or statements such as Profit & Loss Account, Trail Balance or Balance Sheets. These reports are used to inform outside stakeholders such as investors, creditors and tax authorities to understand the company’s business performance.
If you want to become a cost management accountant, you need to achieve expertise in the domain of financial accounting. It builds on the concepts learned from CMA Foundation (Fundamentals of Accounting). At foundation level, you were introduced to Fundamentals of Accounting. Here, you get a working knowledge of the accounting concepts involved in Financial Accounting. You also learn how to present and construct financial statements that are understandable to the relevant stakeholders. Special emphasis is given to accounting in the computerised environment
The topics covered in Financial Accounting at the CMA Intermediate level is,
- You are introduced to the fundamentals of accounting including accounting for special transactions
- You will learn how to prepare final accounts for both profit and non-profit organisations, and from incomplete records
- You will learn about concepts such as self-balancing ledgers, royalties, hire-purchase and instalment system, and branch & departmental accounts
- Finally, you will get an overview of computerised accounting as well as specified accounting standards
The best approach to study Financial Accounting is,
- Start as soon as possible: Start your study early and quickly. The syllabus is of a practical nature. So, you cannot mug things up a couple of weeks before the exam and hope to pass
- Work things out practically: This is quite a practical field and so the best way to understand the content is to work out and solve practical problems. Try solving the problems before seeing the solution. The motto is to practice, practice and practice!
- Solve past exam papers: Solve past exam papers to get an idea of what kind of questions will appear in the exam
- Keep up with updates: Accounting standards keep changing from time to time. So, you need to keep up with the latest changes. It is a good idea for you to keep visiting the ICMAI website for any notifications and amendments