Important Topics in CA Foundation Accounting Paper

Accounting Principles & Concepts

The foundation of every other topic in accounting.

You must understand:

• Core accounting terms.

• Accounting rules include prudence, realisation (concept), condominium (cost), and match(asset, debt).

• Accounting standards at an introductory level.

Journal Entries and Ledger Posting

Backbone of Accounting. You must master:

• Rules of debit and credit.

• Types of accounts.

• Special transactions (bad debts, outstanding expenses, prepaid expenses, depreciation, discounts).

• Ledger posting helps you see how every transaction flows through accounts.

Balance Trial and Error Correction

Once you know journal entries and ledger accounts, the next step is trial balance. Questions usually include:

• Preparing a trial balance.

• Locating one-sided and two-sided errors.

• Suspense account preparation.

• Rectifying errors through journal entries.

Depreciation Accounting

One of the easiest and most frequently asked topics. You should focus on:

• Straight-line method.

• Written-down value method.

• Change in method.

• Purchase and sale of fixed assets.

• Partial-year depreciation.

• Machinery account preparation.

Bank Reconciliation Statement (BRS)

Make you understand the difference between the bank balance as per the cash book and the bank statement. Important concepts include:

• Reasons for differences.

• BRS preparation.

• Add fewer rules.

• Situational adjustments.

Bills of Exchange

Many students struggle initially, but with 2-3 revisions, this chapter becomes extremely easy. Important sections include:

• Drawer, drawee, and payee.

• Endorsement

• Dishonour

• Renewal of bill

• Accommodation bills

• Interest and noting charges

• Journal entries in all three parties’ books

Final Accounts with Adjustments

One of the most important and guaranteed question areas. It includes:

• Trading account

• Profit & loss account

• Balance sheet.

Inventory Valuation

An essential concept for businesses and CA students. Focus on:

• FIFO

• Weighted average method

• Cost vs. NRV rules

• Basic stock calculations

Consignment Accounts

Consignment accounting deals with sending goods to an agent. Important areas:

• Consignment vs. sales

• Abnormal and normal loss

• Stock valuation

• Commission types

• Journal entries

• Consignment account and consignee’s account

Partnership Accounts

One of the highest-scoring and most frequently asked chapters in exams. Must-cover topics:

• Profit-sharing ratio

• Past adjustments

• Interest on capital and drawings

• Admission of a partner

• Retirement and death

• Goodwill valuation methods

• Revaluation account

• Capital and current account preparation

Cash Flow Statement (Basic Level)

The CA Foundation covers the introductory level of cash flow statements. Topics include:

• Cash from operating activities

• Cash from investing activities

• Cash from financing activities