MCA-134
Finance and Accounting
Reading and producing the numbers — the accounting equation and the books, financial statements, inventory and ratio analysis, and the Indian financial system.
- Semester
- Semester 2
- Credits
- 4
- Scheme
- 3 lectures + 1 tutorial a week
- Contact hours
- 40 across four units
- Category
- Open Elective - I
What the paper is
Finance and Accounting is the open elective for people who will one day have to read a balance sheet rather than prepare one. It is built sequentially: the accounting equation, then journals and ledgers, then the statements those produce, then the analysis of those statements.
That sequence is also the exam. Units I and II are procedural — you will be given transactions and asked for journal entries, a ledger, a trial balance, an income statement and a balance sheet — and the marks are in getting the mechanics right rather than in explaining them.
Unit IV changes register entirely and covers the Indian financial system: participants, money and capital market instruments, and risk management in banks. It is descriptive and self-contained, and it is often the difference between a pass and a good grade for students who found the bookkeeping hard.
What to concentrate on
- Practise the full cycle end to end at least three times: transactions to journal to ledger to trial balance to final accounts, with depreciation and receivables adjustments included. It is the backbone of the paper and it only becomes reliable through repetition.
- Know FIFO, LIFO and weighted average well enough to value closing inventory three ways on the same data and say why the answers differ.
- Ratio analysis is the highest-yield topic in Unit III: know the profitability, liquidity, solvency, activity and market ratios, and — more importantly — be able to interpret a computed value rather than just produce it.
Syllabus, unit by unit
Summarised from the approved scheme. Hours are the contact hours the scheme allots, which is a fair guide to where the marks sit.
Unit I · Accounting principles and the journal
10 hours- Nature and purpose of accounting; accounting measurement assumptions
- Generally accepted accounting principles
- The accounting equation and an overview of financial statements
- The accounting process, double-entry bookkeeping and recording transactions in the journal
Unit II · Preparing financial statements
10 hours- Preparation of the ledger and the trial balance
- The importance of the suspense account
- Preparation of the income statement, with adjustments for depreciation and receivables
- Preparation of the balance sheet
Unit III · Inventory and financial statement analysis
10 hours- Measurement of inventory by cost or net realisable value
- Methods of inventory valuation: FIFO, LIFO and weighted average cost
- Common size statement analysis and trend analysis
- Ratio analysis and interpretation: profitability, solvency, liquidity, activity and market capitalisation ratios
Unit IV · The financial system, markets and instruments
10 hours- Introduction to the Indian financial system
- Participants in the financial system and their roles
- Working of the financial market: money market and capital market instruments
- Risk management in the financial sector, particularly banks
How it is examined
- Question 1 is compulsory, covers the whole syllabus, and is made of objective or short-answer questions. It carries 12 marks.
- The rest of the paper is four units matching the four above. Each unit sets two questions and you attempt one, so there are four more answers at 12 marks each.
- Examiners are asked to map every question to a course outcome using Bloom's taxonomy, which is why questions are phrased as “apply”, “analyse” or “evaluate” rather than only “explain”.
The pass mark is 40 out of 100 in every paper.
Learning objectives
- Preparation of the primary books of account
- Preparation of final statements
- Inventory cost flow methods and valuation of closing inventory
- Analysis of financial statements and reporting
- Understanding the scope of computer applications in the Indian financial sector
Assumed beforehand
- Basic mathematical skills
Books it is taught from
- TB1V. Rajeskaran and R. Lalitha, “Financial Accounting”, Pearson Education, 2018
- TB2S. N. Maheshwari, S. K. Maheshwari and S. Maheshwari, “Financial Accounting”, Pearson Education, 6th revised edition, 2018
- TB3M. Y. Khan, “Indian Financial System”, Tata McGraw Publishing, 11th edition, 2019
Notes for MCA-134
Lecture notes, question papers and assignments filed against MCA-134 are in the library. Everything there has been checked by a moderator before it appears, and an account is free — new ones are approved by hand, which is what keeps the shelf clean.