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CA Foundation
CA Intermediate
CA Foundation

1 Principles & Practice of Accounting
2 Business Laws & Business Correspondence & Reporting
3 Business Mathematics, Logical Reasoning & Statistics
4 Business Economics & Business & Commercials Knowledge
1 Principles & Practice of Accounting

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PAPER – 1 : PRINCIPLES AND PRACTICE OF ACCOUNTING

(One paper – Three hours – 100 Marks)

Objective:

To develop an understanding of the basic concepts and principles of Accounting and apply the same in preparing financial statements and simple problem solving.

Contents:

  1. Theoretical Framework

    1. (i)  Meaning and Scope of accounting

    2. (ii)  Accounting Concepts, Principles and Conventions

    3. (iii)  Accounting terminology - Glossary

    4. (iv)  Capital and revenue expenditure, Capital and revenue receipts, Contingent assets and contingent liabilities

    5. (v)  Accounting Policies

    6. (vi)  Accounting as a Measurement Discipline – Valuation Principles, Accounting Estimates.

    7. (vii)  Accounting Standards – Concepts and Objectives.

    8. (viii)  Indian Accounting Standards – Concepts and Objectives.

  2. Accounting Process

    1. (i)  Books of Accounts

    2. (ii)  Preparation of Trial Balance

    3. (iii)  Rectification of Errors.

  3. Bank Reconciliation Statement

    Introduction, reasons, preparation of bank reconciliation statement.

  4. Inventories

    Cost of inventory, Net realizable value, Basis and technique of inventory valuation and record keeping.

 
  1. Concept and Accounting of Depreciation

    Concepts, Methods of computation and accounting treatment of depreciation, Change in depreciation methods.

  2. Accounting for Special Transactions

    1. (i)  Bills of exchange and promissory notes

      Meaning of Bills of Exchange and Promissory Notes and their Accounting Treatment; Accommodation bills.

    2. (ii)  Sale of goods on approval or return basis

      Meaning of goods sent on approval or return basis and accounting treatment.

    (iii) Consignments

    Meaning and Features of consignment business, Difference between sale and consignment, Accounting treatments for consignment transactions and events in the books of consignor and consignee.

    1. (iv)  Average due Date

      Meaning, Calculation of average due date in various situations.

    2. (v)  Account Current

      Meaning of Account Current, Methods of preparing Account Current.

  3. Final Accounts of Sole Proprietors

    Elements of financial statements, Closing Adjustment Entries, Trading Account, Profit and Loss Account and Balance Sheet of Manufacturing and Non-manufacturing entities.

  4. Partnership Accounts

    1. (i)  Final Accounts of Partnership Firms

    2. (ii)  Admission, Retirement and Death of a Partner including Treatment of Goodwill

    3. (iii)  Introduction to LLPs and Distinction of LLPs from Partnership.

  5. Financial Statements of Not-for-Profit Organizations

    Significance of Receipt and Payment Account, Income and Expenditure Account and Balance Sheet, Difference between Profit and Loss Account and Income and Expenditure Account. Preparation of Receipt and Payment Account, Income and Expenditure Account and Balance Sheet.

  6. Introduction to Company Accounts

 
  1. (i)  Definition of shares and debentures

  2. (ii)  Issue of shares and debentures, forfeiture of shares, re-issue of forfeited shares

  3. (iii)  Statement of Profit and Loss and Balance Sheet as per Schedule III to the Companies Act, 2013.

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2 Business Laws & Business Correspondence & Reporting

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PAPER – 2 : BUSINESS LAWS AND BUSINESS CORRESPONDENCE AND REPORTING

Objective:

(One paper – Three hours – 100 Marks)

SECTION A : BUSINESS LAWS (60 MARKS)

To develop an understanding of significant provisions of select business laws and acquire the ability to address basic application-oriented issues.

Contents

  1. The Indian Contract Act, 1872: An overview of Sections 1 to 75 covering the general nature of contract, consideration, other essential elements of a valid contract, performance of contract, breach of contract, Contingent and Quasi Contract.

  2. The Sale of Goods Act, 1930: Formation of the contract of sale, Conditions and Warranties, Transfer of ownership and delivery of goods, Unpaid seller and his rights.

  3. The Indian Partnership Act, 1932: General Nature of Partnership, Rights and duties of partners, Reconstitution of firms, Registration and dissolution of a firm.

  4. The Limited Liability Partnership Act, 2008: Introduction- covering nature and scope, Essential features, characteristics of LLP, Incorporation and differences with other forms of organizations.

  5. The Companies Act, 2013 : Essential features of company, corporate veil theory, Classes of companies, types of share capital, Incorporation of company, Memorandum of Association, Articles of Association, Doctrine of Indoor Management

Note: If new legislations are enacted in place of the existing legislations, the syllabus would include the corresponding provisions of such new legislations with effect from dates notified by the Institute.

SECTION B : BUSINESS CORRESPONDENCE AND REPORTING (MARKS 40)Objective:

To acquire and develop good communication skills requisite for business correspondence and reporting.

1. Communication

  1. (i)  Types

  2. (ii)  Directions

  3. (iii)  Network

  4. (iv)  Process

  5. (v)  Problems

  6. (vi)  Barriers

  7. (vii)  Types of Communication

Part – I: Communication

  1. a)  Interpersonal Skills

  2. b)  Listening Skills

  3. c)  Emotional Intelligence

  1. (viii)  Sample Questions with Answers

  2. (ix)  Exercises.

    Part – II : Sentence Types and Word Power

2. Sentence Types (Direct-Indirect, Active -Passive Speech)

  1. (i)  Sentence: Definition

  2. (ii)  Classification of sentence based on connotation

    1. a)  Assertive sentences

    2. b)  Interrogative sentences

    3. c)  Imperative sentences

    4. d)  Exclamatory sentences

    5. e)  Optative sentences

  3. (iii)  Sentence Structure

    1. a)  Subject and Predicate

    2. b)  Verb (Auxiliary, Finite)

    3. c)  Object (Direct, Indirect)

 
  1. d)  Complement

  2. e)  Adjunct or Adverbial

  3. f)  Clause Structure

  4. g)  Types of Clauses

    • -  Independent clauses

    • -  Dependent clauses

    • -  Relative or noun clauses

  1. (iv)  Types of sentences

    1. a)  Simple sentence

    2. b)  Compound sentence

    3. c)  Complex sentence

    4. d)  Compound-complex sentence

  2. (v)  Direct-Indirect Speech

    1. a)  Introduction

    2. b)  Procedure for converting Direct speech into Indirect speech

      • -  Rules for converting Direct speech into Indirect speech

      • -  Change in pronouns

      • -  Change in tenses

      • -  Change in modals

      • -  Changes for Imperative sentences

      • -  Changes for Exclamatory sentences

      • -  Changes for Interrogative sentences

      • -  Punctuation in Direct speech

    3. c)  Rules for converting Indirect speech into Direct speech

  3. (vi)  Active Passive Voice: Introduction

    1. a)  Usage : Active vs. passive voice

    2. b)  Reasons for using Passive voice

 

c) Changing Passive voice to Active voice

  1. d)  Changing Active voice to Passive voice

  2. e)  Suggestions for using Active and Passive voice

  1. (vii)  Verbs Voice Active or passive

  2. (viii)  Exercises

  1. Vocabulary Root Words, Synonyms, Antonyms, Prefixes, Suffixes), Phrasal verbs, Collocations and Idioms.

    1. (i)  Introduction

    2. (ii)  Significance of improving vocabulary

    3. (iii)  How to improve vocabulary

    4. (iv)  Root words

    5. (v)  Synonyms and Antonyms

    6. (vi)  Words formed by using Prefixes

    7. (vii)  Words formed by using Suffixes

    8. (viii)  Phrasal verbs

    9. (ix)  Collocations

    10. (x)  Idioms

    11. (xi)  Exercises

      Part – III : Comprehension Passages and Note Making

  2. Comprehension Passages

    1. (i)  Introduction to Comprehension Passages

    2. (ii)  Points to ponder

    3. (iii)  Sample Passages with answers

    4. (iv)  Exercises

  3. Note Making

    1. (i)  Introduction to Note Making

    2. (ii)  Significance of Note Making

    3. (iii)  Detailed Format Heading(Title)

 
  1. a)  Sub-heading

  2. b)  Indentation

  3. c)  Points

  4. d)  Use of abbreviations

  5. e)  Summary

  6. f)  Content

  7. g)  Expression

  1. (iv)  Steps to Comprehend and summarize text

  2. (v)  Helpful Hints

  3. (vi)  Sample Passages with Notes

  4. (vii)  Exercises

    Part – IV : Developing Writing Skills

  1. Introduction to Basic Writing

    1. (i)  Introduction

    2. (ii)  Process of writing

    3. (iii)  Styles of Writing

    4. (iv)  Significance of writing skills for students

    5. (v)  Writing Conventions

    6. (vi)  Characteristics of good writing

    7. (vii)  Do’s and Don’ts of good writing

  2. Précis Writing

    1. (i)  What is Précis writing?

    2. (ii)  Features of good Précis writing

    3. (iii)  How to write a Précis

    4. (iv)  Do’s and Don’ts of Précis writing

    5. (v)  Examples (Passages with Précis)

    6. (vi)  Exercises

 
  1. Article Writing

    1. (i)  What is an Article?

    2. (ii)  Essential elements of Article Writing

    3. (iii)  Detailed Format

      1. a)  Title

      2. b)  By- Writer’s Name

      3. c)  Body

        • -  Introduction

        • -  Main Idea-Support

        • -  Conclusion

      4. d)  Sample Articles

      5. e)  Exercises

  2. Report Writing

    1. (i)  What is a Report?

    2. (ii)  Essential elements of Report Writing

    3. (iii)  Kinds of Reports

a) b) c)

Reporting for a Meeting/Assembly Reporting for a Newspaper Reporting for a Magazine

(iv) Detailed Format for (iii) above

  1. a)  Title

  2. b)  By- Writer’s Name

  3. c)  Place, Date

  4. d)  Body

    • -  What

    • -  When

    • -  Where

    • -  Who

    • -  How

  5. e)  Tips and Conventions of Report Writing

 
  1. f)  Sample Reports

  2. g)  Exercises

10. Writing Formal Letters

(i)

(ii)

Types of Letters

  1. a)  Circulars

  2. b)  Complaints

  3. c)  Memos

  4. d)  Promotional Content

  5. e)  Sales

  6. f)  Recovery/Remittances

Detailed format for (i) above

  1. a)  Date

  2. b)  Salutation

  3. c)  Subject

  4. d)  Body of the letter

    • -  First paragraph

    • -  Second paragraph

  5. e)  Complimentary Closure

(iii)
(iv)
(v) Exercises

Points to Remember Sample Letters

11. Writing Formal Mails

  1. (i)  How to Write a Formal Mail?

  2. (ii)  Writing Effective Mails

  3. (iii)  Essential elements of Mails

    1. a)  Subject line

    2. b)  Formal Greetings

    3. c)  Target Audience(Reader)

    4. d)  Clarity and Conciseness

 
  1. e)  Formal Closing

  2. f)  Proof read

  3. g)  Feedback

  1. (iv)  Tips and Conventions of Mails

  2. (v)  Sample Mails

  3. (vi)  Exercises

12. Resume Writing

  1. (i)  Essential Elements of Resume

    1. a)  Name and contact details

    2. b)  Objective Summary

    3. c)  Academic Qualifications and Achievements

    4. d)  Co-curricular Achievements

    5. e)  Training Programs attended/completed

    6. f)  Strengths

    7. g)  Interests/Hobbies

    8. h)  Declaration

    9. i)  Signature

  2. (ii)  Resume Writing Tips and Conventions

  3. (iii)  Sample Resumes

  4. (iv)  Exercises

13. Meetings

  1. (i)  Notice

  2. (ii)  Agenda

  3. (iii)  Drafting minutes

  4. (iv)  Action Taken Report

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3 Business Mathematics, Logical Reasoning & Statistics

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PAPER –3: BUSINESS MATHEMATICS, LOGICAL REASONING AND STATISTICS

(One paper – Two hours – 100 Marks)

Objective:

  1. (a)  To develop an understanding of the basic mathematical and statistical tools and their application in Business, Finance and Economics.

  2. (b)  To develop logical reasoning skills and apply the same in simple problem solving.

Contents:

  1. Ratio and Proportion, Indices and Logarithms

    Ratio and Proportion (Business Applications related to Ration and Proportion) Laws of Indices, Exponents and Logarithms and Anti Logarithms.

  2. Equations and Matrices

    1. (i)  Equations: Simultaneous linear equations up to three variables, Quadratic and Cubic equations in one variable.

    2. (ii)  Matrices: Algebra of Matrices, Inverse of a Matrix and determinants, solving system ofequations by Cramer’s Rule (involving not more than three variables).

  3. Linear Inequalities with Objective Functions and Optimization w.r.t. objective function.

  4. Time value of Money

    1. (i)  Simple Interest

    2. (ii)  Compound interest

    3. (iii)  Depreciation

    4. (iv)  Effective Rate of Interest

    5. (v)  Present Value

    6. (vi)  Net Present Value

    7. (vii)  Future Value

    8. (viii)  Perpetuity

    9. (ix)  Annuities

 

Part – A. Business Mathematics (40 Marks)

  1. (x)  Sinking Funds

  2. (xi)  Valuation of Bonds

  3. (xii)  Calculating of EMI

  4. (xiii)  Calculations of Returns:

    1. a)  Nominal Rate of Return

    2. b)  Effective Rate of Return

    3. c)  Compound Annual growth rate (CAGR)

  1. Permutations and Combinations

    Basic concepts of Permutations and Combinations: Introduction, the Factorial, Permutations, results, Circular Permutations, Permutations with restrictions, Combinations with standard results.

  2. Sequence and Series

    Introduction Sequences, Series, Arithmetic and Geometric progression, Relationship between AM and GM and Sum of n terms of special series

  3. Sets, Relations and Functions

  4. Basic applications of Differential and Integral calculus (Excluding the trigonometric

    applications), Applications of Marginal Cost and Marginal Revenue etc.,

    Part – B: Logical Reasoning (20 Marks)

  5. Number series, Coding and Decoding and odd man out.

  6. Direction Tests

  7. Seating Arrangements

  8. Blood Relations

  9. Syllogism

 

Part – C: Statistics (40 Marks)

  1. Statistical description of Data

    Statistical Representation of Data, Diagrammatic representation of data, Frequency distribution, Graphical representation of Frequency Distribution – Histogram, Frequency Polygon, Ogive, Pie-chart.

  2. Measures of Central tendency and Dispersion

    Measures of Central Tendency and Dispersion: Mean Median, Mode, Mean Deviation, Quartiles and Quartile Deviation, Standard Deviation, Co-efficient of Variation, Coefficient of Quartile Deviation.

  3. Probability

    Probability: Independent and dependent events; mutually exclusive events. Total and Compound Probability and Mathematical Expectation.

  4. Theoretical Distributions

    Theoretical Distributions: Binomial Distribution, Poisson distribution – Basic application and Normal Distribution – Basic applications.

  5. Correlation and Regression

    Correlation and Regression: Scatter diagram, Karl Pearson’s Coefficient of CorrelationRank Correlation, Probable Error and Probable limits. Regression lines, Regression equations, Regression coefficients.

  6. Index Numbers and Time Series

    1. (i)  Index Numbers: Uses of Index Numbers, Problems involved in construction of Index

      Numbers, Methods of construction of Index Numbers.

    2. (ii)  Time Series Analysis – Components of Time Series and Calculation of Trend by Moving Average Method.

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4 Business Economics & Business & Commercials Knowledge

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PAPER – 4 : BUSINESS ECONOMICS AND BUSINESS AND COMMERCIAL KNOWLEDGE

(One paper – Two hours – 100 Marks)

PART I : BUSINESS ECONOMICS (60 Marks)

To develop an understanding of the concepts and theories in Business Economics and apply such concepts and theories in simple problem solving.

  1. Introduction to Business Economics

    1. (i)  Meaning and scope of Business Economics

    2. (ii)  Basic Problems of an Economy and Role of Price Mechanism.

  2. Theory of Demand and Supply

    1. (i)  Meaning and determinants of demand, Law of demand and Elasticity of demand ─ Price,income and cross elasticity

    2. (ii)  Theory of consumer’s behaviour – Marshallian approach and Indifference curve approach

    3. (iii)  Meaning and determinants of supply, Law of supply and Elasticity of supply.

    4. (iv)  Demand Forecasting

  3. Theory of Production and Cost

    1. (i)  Meaning and Factors of production

    2. (ii)  Laws of Production – The Law of Variable proportions and Laws of Returns to Scale,Producer’s equilibrium

    3. (iii)  Concepts of Costs ─ Short-run and long-run costs, Average and marginal costs, Total, fixed and variable costs.

  4. Price Determination in Different Markets

    1. (i)  Various forms of markets – Perfect Competition, Monopoly, Monopolistic Competition and Oligopoly

    2. (ii)  Price determination in these markets.

  5. Business Cycles

    1. (i)  Meaning

    2. (ii)  Phases

    3. (iii)  Features.

    4. (iv)  Causes behind these Cycles.

 

PART – II : BUSINESS AND COMMERCIAL KNOWLEDGE (40 MARKS)Objective:

To develop an understanding of common business and commercial concepts and to keep abreast with developments in the business and commercial world.

Contents:

  1. Business and Commercial Knowledge – An Introduction

    Nature of Business, Profession and Employment. Objectives of Business. Economic and Non-Economic Activities, Forms of Business Organizations.

  2. Business Environment

    Micro and Macro Environment, Elements of Micro Environment – Consumers/Customers, Competitors, Organization, Market, suppliers, Intermediaries, Elements of Macro Environment – Demographic, Economic, Political-legal, Socio-cultural, Technological, Global Environment.

  3. Business Organizations

    Overview of selected Indian and Global Companies.

  4. Government Policies for Business Growth

    Policies creating conducive business environment such as Liberalization, Privatization, Foreign Direct Investment.

  5. Organizations Facilitating Business

    1. (i)  Indian Regulatory Bodies – RBI, SEBI, CCI, IRDA

    2. (ii)  Indian Development Banks – NABARD

  6. Common Business Terminologies

    1. (i)  Finance Terminologies.

    2. (ii)  Marketing Terminologies.

    3. (iii)  Stock & Commodity Markets Terminologies.

    4. (iv)  Banking Terminologies.

    5. (v)  Other Business Terminologies.

Note: Students are expected to read at least one financial newspaper and one business magazine on a regular basis. They may also watch a business channel to remain updated about the developments related to commercial world.

CA Intermediate

1 Accounts
2 Corporate & Other Laws
3 Cost & Management Accounting
4 Taxation
5 Advance Accounts
6 Auditing & Assurance
7 Enterprise Information System & Strategic Management
8 Financial Management & Economics for Finance
1 Accounts

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PAPER 1 – ACCOUNTING
(One paper – Three hours – 100 Marks)

Objectives:

To acquire the ability to apply specific accounting standards and legislations to different transactions and events and in preparation and presentation of financial statements of various business entities.

Contents:

  1. Process of formulation of Accounting Standards including Ind ASs (IFRS converged standards) and IFRSs; convergence vs adoption; objective and concepts of carve
  2. Framework for Preparation and Presentation of FinancialStatements (as per AccountingStandards).
  3. Applications of AccountingStandards:

AS1 :     Disclosureof Accounting Policies AS2  :        Valuation ofInventories

AS3  :     Cash FlowStatements

AS4  :     Contingencies and Events occurring after the Balance SheetDate

AS 5  :     NetProfitorLossforthePeriod,PriorPeriodItemsandChangesinAccounting Policies

AS10:     Property, Plant andEquipment

AS11:     The Effects of Changes in Foreign Exchange Rates AS12:   Accounting for GovernmentGrants

AS13:     Accounting for Investments AS16:      BorrowingCosts

AS17:      SegmentReporting

AS22:     Accounting for Taxes onIncome

4.      CompanyAccounts
  • Redemptionof preferenceshares;
  • Redemptionofdebentures;
  • Accountingfor bonus issue and right
  • Accountingfor tax: Concept of deferred tax asset and deferred tax liability in line with AS 22 “Accounting forTaxes”.
  • ManagerialRemuneration
  • Preparationof financial statements – Statement of Profit and Loss, Balance Sheet and Cash FlowStatement,
  • Profit (Loss) prior toincorporation;
5.      Accounting for SpecialTransactions:
  • Investment
  • Insuranceclaims for loss of stock and loss ofprofit
  • Hire- purchase and Instalment SaleTransactions
6.      Special Type ofAccounting
  • DepartmentalAccounting
  • Accountingfor Branches including foreignbranches
  • Accountsfrom IncompleteRecords
7.      Dissolutionof partnership firms including piecemeal distribution of assets; Amalgamation of partnership firms; Conversion of partnership firm into acompany and Sale to a company; Issues related to accounting in Limited LiabilityPartnership.

Note :  If either anew Accounting Standards (AS), Announcements and Limited Revisions to   AS are issued or the earlier one are withdrawn or new AS, Announcements and Limited Revisionsto AS are issued in place of existingAS, Announcements and Limited Revisions to  AS, the syllabus will accordingly include / exclude such new developments in the place ofthe existingoneswitheffectfromthedatetobenotifiedbytheInstitute.

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2 Corporate & Other Laws

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PAPER – 2: CORPORATE AND OTHER LAWS

(One paper – Three hours - 100 Marks)

PART I – COMPANY LAW (60 MARKS)

To develop an understanding of the provisions of company law and acquire the ability to address application-oriented issues.

Contents:
The Companies Act, 2013 – Sections 1 to 148

  1. Preliminary

  2. Incorporation of Company and Matters Incidental thereto

  3. Prospectus and Allotment of Securities

  4. Share Capital and Debentures

  5. Acceptance of Deposits by companies

  6. Registration of Charges

  7. Management and Administration

  8. Declaration and payment of Dividend

  9. Accounts of Companies

  10. Audit and Auditors

Note: The provisions of the Companies Act, 1956 which are still in force would form part of the syllabus till the time their corresponding or new provisions of the Companies Act, 2013 are enforced.

PART II- OTHER LAWS (40 MARKS)

Objectives:

  1. (a)  To develop an understanding of the provisions of select legislations and acquire the ability

    to address application-oriented issues.

  2. (b)  To develop an understanding of the rules for interpretation of statutes

1. The Indian Contract Act, 1872 (Specific contracts covered from section 123 onwards): Contract of Indemnity and Guarantee, Bailment, Pledge, Agency

2. The Negotiable Instruments Act, 1881: Meaning of Negotiable Instruments, Characteristics, Classification of Instruments, Different provisions relating to Negotiation, Negotiability, Assignability, Right and Obligation of parties, presentment of Instruments, Rules of Compensation

  1. The General Clauses Act, 1897: Important Definitions, Extent and Applicability, General Rules of Construction, Powers and Functionaries, Provisions as to Orders, Rules, etc. made under Enactments, Miscellaneous

  2. Interpretation of statutes: Rules of Interpretation of statutes, Aids to interpretation, Rules of Interpretation/construction of Deeds and Documents

Note: If new legislations are enacted in place of the existing legislations, the syllabus would include the corresponding provisions of such new legislations with effect from a date notified by the Institute. Similarly, if any existing legislation ceases to have effect, the syllabus will accordingly exclude such legislation with effect from the date to be notified by the Institute.

The specific inclusions/exclusions in the various topics covered in the syllabus will be effected every year by way of Study Guidelines, if required.

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3 Cost & Management Accounting

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PAPER – 3: COST AND MANAGEMENT ACCOUNTING

(One Paper- Three hours- 100 Marks)

  1. (a)  To develop an understanding of the basic concepts and applications to establish the cost associated with the production of products and provision of services and apply the same to determine prices.

  2. (b)  To develop an understanding of cost accounting statements.

  3. (c)  To acquire the ability to apply cost information for cost ascertainment, planning, control and decision making.

Contents:
1. Overview of Cost and Management Accounting

  1. (i)  Introduction to Cost and Management Accounting

    1. a)  Objectives and Scope of Cost and Management Accounting,

    2. b)  The users of Cost and Management accounting information- Functions of management accounting.

    3. c)  Role of cost accounting department in an organisation and its relation with other departments.

    4. d)  Installation of Costing System

    5. e)  Relationship of Cost Accounting, Financial Accounting, Management Accounting and Financial Management.

    6. f)  Cost terms and Concepts

    7. g)  Cost Reduction and Cost Control

    1. i)  Elements of Costs

    2. j)  Cost behavior pattern, Separating the components of fixed, variable, semi- variable and step costs.

    3. k)  Methods of Costing, Techniques of Costing.

    4. l)  Cost Accounting with use of Information Technology.

  2. (ii)  Elements of Cost and preparation of Cost Sheets

a) Functional classification and ascertainment of cost

b) Preparation of Cost Sheets for Manufacturing sector and for Service sector

2. Ascertainment of Cost and Cost Accounting System

  1. (i)  Material Cost

    1. a)  Procurement procedures- Store procedures and documentation in respect of receipts and issue of stock, Stock verification,

    2. b)  Valuation of material receipts,

    3. c)  Inventory control-

      • -  Techniques of fixing level of stocks- minimum, maximum, re-order point, safety stock, determination of optimum stock level,

      • -  Determination of Optimum Order quantity- Economic Order Quantity (EOQ),

      • -  Techniques of Inventory control- ABC Analysis, Fast, Slow moving and Non moving (FSN), High, Medium, Low (HML), Vital, Essential, Desirable (VED), Just-in-Time (JIT)- Stock taking and perpetual inventory system, use of control ratios,

    4. d)  Inventory Accounting

    5. e)  Consumption- Identification with products of cost centres, Basis for consumption entries in financial accounting, monitoring consumption.

  2. (ii)  Employee Cost

a) Attendance and Payroll procedures-

- Elements of wages- Basic pay, Dearness Allowance, Overtime, Bonus, Holiday and leave wages, Allowances and perquisites.

  1. b)  Employee Cost Control

  2. c)  Employee Turnover- Methods of calculating employee turnover, causes of employee turnover, effects of employee turnover.

  3. d)  Utilisation of Human Resource, Direct and indirect employee Cost, charging of employee cost, Identifying employee hours with work orders or batches or capital jobs.

  4. e)  Remuneration systems and incentive schemes-

- Time Rate System, Piece Rate System, Differential piece rate system, Calculation of wages, Effective Wages.

(iii) Direct Expenses

  1. a)  Direct expenses

  2. b)  Nature of Direct or Chargeable expenses.

  3. c)  Sub-contracting- Control on material movements, Identification with the main product or service.

(iv) Overheads

  1. a)  Functional analysis- Factory, Administration, Selling, Distribution, Research and Development.

  2. b)  Behavioral analysis- Fixed, Variable and Semi- Variable.

  3. c)  Allocation and Apportionment of overheads using Absorption Costing Method.

  4. d)  Factory Overheads- Primary and secondary distribution,

  5. e)  Administration Overheads- Method of allocation to cost centres or products,

  6. f)  Selling & Distribution Overheads- Analysis and absorption of the expenses in products/ customers, impact of marketing strategies, cost effectiveness of various methods of sales promotion.

  7. g)  Treatment of Research and development cost in cost accounting.

  1. (v)  Concepts of Activity Based Costing (ABC)

  2. (vi)  Recording and Accounting of Costs

    1. a)  Non-integrated Cost Accounting system- Ledger under non-integral system

    2. b)  Integrated (Cost and Financial) Accounting system- Ledgers under integral system.

    3. c)  Difference between the Non- integrated and Integrated Accounting system.

    4. d)  Reconciliation of profit as per Cost and Financial Accounts (under Non- Integrated Accounting System).

3. Methods of Costing

(i) Single Output/ Unit Costing

(ii) Job Costing: Job cost cards and databases, collecting direct costs of each job, attributing overheads to jobs, Application of job costing.

(iii) Batch Costing: Determination of optimum batch quantity, Ascertainment of cost for a batch, Preparation of batch cost sheet, Treatment of spoiled and defective work.

  1. (iv)  Contract Costing

    1. a)  Ascertainment of cost of a contract, Progress payment, Retention money, Escalation clause, Cost plus contract, Value of work certified, Cost of Work not certified.

    2. b)  Determination Value of work certified, Cost of work not certified, Notional or Estimated profit from a contact.

  2. (v)  Process/ Operation Costing

    1. a)  Process cost recording, Process loss, Abnormal gains and losses, Equivalent units of production, Inter-process profit, Valuation of work in process.

    2. b)  Joint Products- Apportionment of joint costs, Methods of apportioning joint cost over joint products,

    3. c)  By-Products- Methods of apportioning joint costs over by-products, treatment of By-product cost.

  3. (vi)  Costing of Service Sectors

a) Determination of Costs and Prices of services of following sectors/ Industries:

- Transport, Toll roads, Hospitals, Canteen/ Restaurants, Hotels/ Lodges, Educational Institutions, Financial Institutions/ Banks, Insurance, IT sector and other services.

4. Cost Control and Analysis (i) Standard Costing

  1. a)  Setting up of Standards, Types of Standards, Standard Costing as method of performance measurement.

  2. b)  Calculation and Reconciliation of Cost Variances-

- Material Cost Variance, employee Cost Variance, Variable Overheads Variance and Fixed Overhead Variance.

(ii) Marginal Costing

  1. a)  Basic concepts of marginal costing, Contribution margin, Break-even analysis, Break –even and profit volume charts, Contribution to sales ratio, Margin of Safety, Angle of Incidence, Cost-Volume-Profit Analysis (CVP), Multi- product break- even analysis, Consideration of Limiting factor (key factor),

  2. b)  Determination of Cost of a product/ service under marginal costing method, determination of cost of finished goods, work-in-progress,

 

c) Comparison of Marginal costing with absorption costing method- Reconciliation of profit under the both methods,

d) Short term decision making using the above concepts (basic / fundamental level).

(iii) Budget and Budgetary Control

  1. a)  Meaning of Budget, Essentials of Budget, Budget Manual, Budget setting process, Preparation of Budget and monitoring procedures.

  2. b)  The use of budget in planning and control

  3. c)  Flexible budget, Preparation of Functional budget for operating and non- operating functions, Cash budget, Master budget,

  4. d)  Introduction to Principal/ Key budget factor, Zero Based Budgeting (ZBB), Performance budget, Control ratios and Budget variances.

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4 Taxation

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PAPER – 4 : TAXATION

(One paper ─ Three hours – 100 Marks)

To develop an understanding of the provisions of income-tax law and goods and services tax law and to acquire the ability to apply such knowledge to make computations and address application oriented issues.

SECTION A: INCOME TAX LAW (60 MARKS)

Contents:

  1. Basic Concepts

    1. (i)  Income-tax law: An introduction

    2. (ii)  Important definitions in the Income-tax Act, 1961

    3. (iii)  Concept of previous year and assessment year

    4. (iv)  Basis of Charge and Rates of Tax

  2. Residential status and scope of total income

    1. (i)  Residential status

    2. (ii)  Scope of total income

  3. Incomes which do not form part of total income (other than charitable trusts and institutions, political parties and electoral trusts)

    1. (i)  Incomes not included in total income

    2. (ii)  Tax holiday for newly established units in Special Economic Zones

  4. Heads of income and the provisions governing computation of income under different heads

    1. (i)  Salaries

    2. (ii)  Income from house property

    3. (iii)  Profits and gains of business or profession

    4. (iv)  Capital gains

    5. (v)  Income from other sources

 
  1. Income of other persons included in assessee's total income

    1. (i)  Clubbing of income: An introduction

    2. (ii)  Transfer of income without transfer of assets

    3. (iii)  Income arising from revocable transfer of assets

    4. (iv)  Clubbing of income of income arising to spouse, minor child and son’s wife in certain cases

    5. (v)  Conversion of self-acquired property into property of HUF

  2. Aggregation of income; Set-off, or carry forward and set-off of losses

    1. (i)  Aggregation of income

    2. (ii)  Concept of set-off and carry forward and set-off of losses

    3. (iii)  Provisions governing set-off and carry forward and set-off of losses under different heads of income

    4. (iv)  Order of set-off of losses

  3. Deductions from gross total income

    1. (i)  General provisions

    2. (ii)  Deductions in respect of certain payments

    3. (iii)  Specific deductions in respect of certain income

    4. (iv)  Deductions in respect of other income

    5. (v)  Other deductions

  4. Computation of total income and tax liability of individuals

    1. (i)  Income to be considered while computing total income of individuals

    2. (ii)  Procedure for computation of total income and tax liability of individuals

  5. Advance tax, tax deduction at source and introduction to tax collection at source

    1. (i)  Introduction

    2. (ii)  Direct Payment

    3. (iii)  Provisions concerning deduction of tax at source

    4. (iv)  Advance payment of tax

    5. (v)  Interest for defaults in payment of advance tax and deferment of advance tax

 

(vi) Tax collection at source – Basic concept

(vii) Tax deduction and collection account number

10. Provisions for filing return of income and self-assessment

  1. (i)  Return of Income

  2. (ii)  Compulsory filing of return of income

  3. (iii)  Fee and Interest for default in furnishing return of income

  4. (iv)  Return of loss

  5. (v)  Provisions relating to belated return, revised return etc.

  6. (vi)  Permanent account number

  7. (vii)  Persons authorized to verify return of income

  8. (viii)  Self-assessment

    SECTION B – INDIRECT TAXES (40 MARKS)

Contents:

  1. Concept of indirect taxes

    1. (i)  Concept and features of indirect taxes

    2. (ii)  Principal indirect taxes

  2. Goods and Services Tax (GST) Laws

    1. (i)  GST Laws: An introduction including Constitutional aspects

    2. (ii)  Levy and collection of CGST and IGST

      1. a)  Application of CGST/IGST law

      2. b)  Concept of supply including composite and mixed supplies

      3. c)  Charge of tax

      4. d)  Exemption from tax

      5. e)  Composition levy

(iv) Basic concepts of time and value of supply

  1. (vi)  Input tax credit

  2. (vii)  Computation of GST liability

  3. (viii)  Registration

 

(ix) Tax invoice; Credit and Debit Notes; Electronic way bill (x) Returns
(xi) Payment of tax including reverse charge

Note – If any new legislation(s) is enacted in place of an existing legislation(s), the syllabus will accordingly include the corresponding provisions of such new legislation(s) in place of the existing legislation(s) with effect from the date to be notified by the Institute. Similarly, if any existing legislation ceases to have effect, the syllabus will accordingly exclude such legislation with effect from the date to be notified by the Institute. Students shall not be examined with reference to any particular State GST Law.

Consequential/corresponding amendments made in the provisions of the Income-tax law and Goods and Services Tax laws covered in the syllabus of this paper which arise out of the amendments made in the provisions not covered in the syllabus will not form part of the syllabus. Further, the specific inclusions/exclusions in the various topics covered in the syllabus will be effected every year by way of Study Guidelines. The specific inclusions/exclusions may also arise due to additions/deletions every year by the annual Finance Act.

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5 Advance Accounts

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GROUP II- PAPER 5: ADVANCED ACCOUNTING

(One paper – Three hours – 100 Marks)

  1. To acquire the ability to apply specific Accounting Standards, Guidance Notes and legislations to different transactions and events and in preparation and presentation of financial statements of business entities;

  2. To understand and apply financial reporting and regulatory requirements of Banking, Financial services and Insurance sector.

Contents:
1. Accounting Standards:

2. Application of Guidance Notes issued by the ICAI on specified accounting aspects. Company Accounts

  1. Special Aspects of Company Accounts

    1. (i)  Accounting for employee stock option plan

    2. (ii)  Buy back of securities

    3. (iii)  Equity shares with differential rights

    4. (iv)  Underwriting of shares and debentures.

  2. Reorganization of Companies

(i) Accounting for Amalgamation (excluding inter-company holding) and reconstruction

(ii) Accounting involved in liquidation of companies.

  1. Financial Reporting of Banking, Financial Services and Insurance (BFSI)

    1. (i)  Insurance companies,

    2. (ii)  Banking companies and

    3. (iii)  Non-Banking Financial Companies

    4. (iv)  Mutual funds

    and regulatory requirements thereof.

  2. Valuation of goodwill

  3. Consolidated Financial Statements

    Concept of consolidation and simple problems on Consolidated Financial Statements with single subsidiary (excluding problems involving acquisition of Interest in Subsidiary at Different Dates; Different Reporting Dates; Disposal of a Subsidiary and Foreign Subsidiaries)

Notes :

  1. If either a new Accounting Standards (ASs), Announcements and Limited Revisions to ASs are issued or the earlier one are withdrawn or new ASs, Announcements and Limited Revisions to AS are issued in place of existing ASs, Announcements and Limited Revisions to AS, the syllabus will accordingly include / exclude such new developments in the place of the existing ones with effect from the date to be notified.

  2. The specific inclusions/exclusions, in any topic covered in the syllabus, will be effected every year by way of Study Guidelines. The list of applicable Guidance Notes in Accounting will also form part of the Study Guidelines.

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6 Auditing & Assurance

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PAPER 6: AUDITING AND ASSURANCE (100 MARKS)

(One paper – Three hours – 100 Marks)

To develop an understanding of the concepts in auditing and of the generally accepted auditing procedures, techniques and skills and acquire the ability to apply the same in audit and attestation engagements.

  1. Nature, Objective and Scope of Audit
    Auditing Concepts: Nature, objective and scope of Audit; Relationship of auditing with other

    disciplines;

    Standard Setting Process: Overview, Standard-setting process, Role of International Auditing and Assurance Standards Board (IAASB) & Auditing and Assurance Standards Board (AASB); Standards on Auditing, Guidance Note(s) issued by the ICAI;

    Engagement Standards: Qualities of Auditor, Elements of System of Quality Control (SQC 1 Quality Control for Firms that Perform Audits and Reviews of Historical Financial Information, and Other Assurance and Related Services Engagements); Ethical requirements relating to an audit of financial statements; Inherent Limitations of an audit (SA 200 Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with Standards on Auditing); Preconditions for an audit; Audit Engagement; Agreement on Audit Engagement Terms; Terms of Engagement in Recurring Audits (SA 210 Agreeing the Terms of Audit Engagements); Leadership Responsibilities for Quality on Audits; Concept of Auditor’s Independence; Threats to Independence; Acceptance and Continuance of Client Relationships and Audit Engagements (SA 220 Quality Control for an Audit of Financial Statements).

  2. Audit Strategy, Audit Planning and Audit Programme

    Audit Strategy; Audit planning (SA 300); Audit programme; Development of Audit Plan and Programme, Control of quality of audit work - Delegation and supervision of audit work; Materiality and Audit Plan; Revision of Materiality; Documenting the Materiality; Performance Materiality (SA 320 Materiality in Planning and Performing an Audit).

  3. Audit Documentation and Audit Evidence

    Concept of Audit Documentation; Nature & Purpose of Audit Documentation; Form, Content & Extent of Audit Documentation; Completion Memorandum; Ownership and custody of Audit Documentation (SA 230 Audit Documentation); Audit procedures for obtaining audit evidence; Sources of evidence; Relevance and Reliability of audit evidence; Sufficient appropriate audit evidence, Evaluation of Audit Evidence (SA 500 Audit Evidence); Written

 

Representations as Audit Evidence; Objective of Auditor regarding Written Representation; Management from whom Written Representations may be requested; Written Representations about Management’s Responsibilities (SA 580 Written Representations); Obtaining evidence of existence of inventory; Audit procedure to identify litigation & claims (SA 501 Audit Evidence - Specific Considerations for Selected Items); External confirmation procedures; Management's refusal to allow the auditor to send a confirmation request; Negative Confirmations (SA 505 External Confirmations); Audit evidence about opening balances; Accounting policies relating to opening balances; Reporting with regard to opening balances (SA 510 Initial Audit Engagements-Opening Balances); Meaning of Related Party; Nature of Related Party Relationships & Transactions; Understanding the Entity's Related Party Relationships & Transactions (SA 550 Related Parties); Meaning of Subsequent Events; Auditor's obligations in different situations of subsequent events (SA 560 Subsequent Events); Responsibilities of the Auditor with regard to Going Concern Assumption; Objectives of the Auditor regarding Going Concern; Events or Conditions that may cast doubt about Going Concern Assumption; Audit Procedures when events or conditions are identified (SA 570 Going Concern).

  1. Risk Assessment and Internal Control: Audit Risk, Identifying and Assessing the Risk of Material Misstatement, Risk Assessment procedures; Understanding the entity and its environment; Internal control ,Documenting the Risks; Evaluation of internal control system; Testing of Internal control; Internal Control and IT Environment (SA 315 Identifying and Assessing the Risks of Material Misstatement Through Understanding the Entity and Its Environment); Materiality and audit risk (SA 320 Materiality in Planning and Performing an Audit); Internal audit, Basics of Standards on Internal Audit (SIAs) issued by the ICAI; Basics of Internal Financial Control and reporting requirements; Distinction between Internal Financial Control and Internal Control over Financial Reporting.

  2. Fraud and Responsibilities of the Auditor in this Regard: Responsibility for the Prevention and Detection of Fraud; Fraud Risk Factors; Risks of Material Misstatement Due to Fraud; Communication of Fraud (SA 240 The Auditor’s responsibilities Relating to Fraud in an Audit of Financial Statements); Provisions of the Companies Act 2013 relating to fraud and rules thereunder including reporting requirements under CARO.

  3. Audit in an Automated Environment: Key features, Impact of IT related Risks, Impact on Controls, Internal Financial Controls as per Regulatory requirements, Types of Controls, Audit approach, Understanding and documenting Automated environment, Testing methods, data analytics for audit, assessing and reporting audit findings.

  4. Audit Sampling: Meaning of Audit Sampling; Designing an audit sample; Types of sampling; Sample Size and selection of items for testing; Sample selection method (SA 530 Audit Sampling).

 
  1. Analytical Procedure: Meaning, nature, purpose and timing of analytical procedures; Substantive analytical procedures, Designing and performing analytical procedures prior to Audit; investigating the results of analytical procedures (SA 520 Analytical Procedures).

  2. Audit of Items of Financial Statements: Audit of sale of Products and Services; Audit of Interest Income, Rental Income, Dividend Income, Net gain/loss on sale of Investments etc.

    Audit of Purchases, Employee benefits expenses, Depreciation, Interest expense, Expenditure on Power & Fuel, Rent, Repair to building, Repair to Machinery, Insurance, Taxes, Travelling Expenses, Miscellaneous Expenses etc.

    Audit of Share Capital, Reserve & Surplus, Long Term Borrowings, Trade Payables, Provisions, Short Term Borrowings & Other Current Liabilities. Audit of Land, Buildings, Plant & Equipment, Furniture & Fixtures, Vehicles, Office Equipments, Goodwill, Brand/Trademarks, Computer Software etc. Audit of Loan & Advances, Trade Receivable, Inventories, Cash & Cash Equivalent, Other Current Assets. Audit of Contingent Liabilities.

    (The list of items is illustrative only)

  3. The Company Audit: Eligibility, Qualifications and Disqualifications of Auditors; Appointment of auditors; Removal of auditors; Remuneration of Auditors; Powers and duties of auditors; Branch audit; Joint audit; Reporting requirements under the Companies Act, 2013 including CARO; Other Important Provisions under the Companies Act, 2013 relating to Audit and Auditors and Rules made thereunder.

11. Audit Report: Forming an opinion on the Financial Statements; Auditor's Report- basic elements (SA 700 Forming an Opinion and Reporting on Financial Statements); Types of Modified Opinion; Circumstances When a Modification to the Auditor’s Opinion is Required (SA 705 Modification to the Opinion in the Independent Auditor’s Report); Qualification, Disclaimer, Adverse opinion (SA 706 Emphasis of Matter Paragraphs and Other Matter Paragraphs in the Independent, Auditor’s Report); Nature of Comparative Information; Corresponding Figure; Comparative Financial Statements (SA 710 Comparative Information – Corresponding Figures and Comparative Financial Statements).

  1. Audit of Banks: Understanding of accounting system in Banks, Audit Approach, Audit of Revenue items, Special Consideration in Bank Audit with emphasis on Advances and NPAs.

  2. Audit of Different Types of Entities: Appointment of Auditor, Audit Procedure. Audit Report in respect of different Category of Entities mentioned below: government; Local bodies and not-for-profit organizations; Partnership Firms, Audit of different type of undertakings, i.e., Educational institutions, Hotels, Clubs, Hospitals Basics of Limited Liability Partnerships (LLPs) audit and Co-operative Societies Audit.

 

Note:

The specific inclusions/exclusions, in any topic covered in the syllabus, will be effected every year by way of Study Guidelines.

(ii)

(iii) If new legislations/ Standards on Auditing/Guidance Notes/Statements are enacted in place of the existing legislations, the syllabus would include the corresponding provisions of such new legislations with effect from a date notified by the Institute. The changes in this regard would also form part of Study Guidelines.

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7 Enterprise Information System & Strategic Management

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PAPER – 7 : ENTERPRISE INFORMATION SYSTEMS AND STRATEGIC MANAGEMENT.

(One paper – Three hours – 100 Marks)

SECTION A : ENTERPRISE INFORMATION SYSTEMS (50 MARKS)Objective: To develop an understanding of technology enabled Information Systems and their

impact on enterprise-wide processes, risks and controls.Contents:

  1. AUTOMATED BUSINESS PROCESSES

    1. (i)  Introduction to Enterprise Business Processes, Benefits, Risks and Controls;

    2. (ii)  Diagrammatic representation of business processes using Flowcharts;

    3. (iii)  Risks and controls for specific business processes: Procure to pay (P2P), Order to cash, Inventory Cycle, Hire to Retire, Supply Chain Management, Fixed Assets etc.

    4. (iv)  Applicable regulatory and compliance requirements including computer related offences, privacy, cyber-crime, Sensitive Personal Data Information of Information Technology Act, 2000

  2. FINANCIAL AND ACCOUNTING SYSTEMS

    1. (i)  Integrated (ERP) and non-integrated systems with related risks and controls;

    2. (ii)  Business process modules and their integration with Financial and Accounting systems.

    3. (iii)  Reporting Systems and MIS, Data Analytics and Business Intelligence

    4. (iv)  Business Reporting and fundamentals of XBRL (eXtensible Business Reporting Language).

    5. (v)  Applicable regulatory and compliance requirements

  3. INFORMATION SYSTEMS AND ITS COMPONENTS

    1. (i)  Components of Automated Information Systems: Application Systems, Database, Network and Operating System with related risks and controls.

    2. (ii)  Mapping of Organization structure with segregation of duties in Information Systems.

 
  1. E-COMMERCE, M-COMMERCE AND EMERGING TECHNOLOGIES

    1. (i)  Components and Architecture of E-Commerce and M-Commerce with related risks and controls

    2. (ii)  Business process flow with its related risks and controls

    3. (iii)  Applicable regulatory and compliance requirements

    4. (iv)  Emerging technologies with its related risks and controls

  2. CORE BANKING SYSTEMS

    1. (i)  Components and Architecture of CBS and related risks and controls

    2. (ii)  Core modules of banking and Business process flow and its related risks and controls

    3. (iii)  Reporting Systems and MIS, Data Analytics and Business Intelligence

    4. (iv)  Applicable regulatory and compliance requirements

      SECTION B : STRATEGIC MANAGEMENT (50 MARKS)

Objective: To develop an understanding of strategic management concepts and techniques

and acquire the ability to apply the same in business situations.

Contents

  1. Introduction to Strategic Management

    1. (i)  Business Policy

    2. (ii)  Meaning and Nature of Strategic management

    3. (iii)  Business Strategy

    4. (iv)  Strategic Levels in Organizations

    5. (v)  Strategic Management in Government and Not-for-profit organization

  2. Dynamics of Competitive Strategy

    1. (i)  Competitive Landscape

    2. (ii)  Strategic Analysis

    3. (iii)  Industry and Competitive Analysis

    4. (iv)  Core Competence

    5. (v)  Competitive Advantage

 

(vi) Internal and External Analysis (vii) SWOT Analysis
(viii) Globalization

  1. Strategic Management Process

    1. (i)  Strategic Planning

    2. (ii)  Strategic Intent - Vision, Mission and Objectives

    3. (iii)  Strategy Formulation

  2. Corporate Level Strategies

    1. (i)  Concepts and Nature of Corporate Strategy

    2. (ii)  Strategic Alternatives at Corporate Level

      1. a)  Growth

      2. b)  Stability

      3. c)  Expansion

      4. d)  Business Combinations – Mergers and Acquisitions

      5. e)  Strategic Alliances

      6. f)  Turnaround

      7. g)  Retrenchment and Retreat

  3. Business Level Strategies

    1. (i)  Competitive Strategies at Business Level

    2. (ii)  Michael Porter’s Generic Strategies

    3. (iii)  Best-Cost Provider Strategy

  4. Functional Level Strategies

    1. (i)  Marketing Strategy

    2. (ii)  Financial Strategy

    3. (iii)  Operations Strategy

    4. (iv)  Human Resource Strategy

    5. (v)  Research and Development

 
  1. Organisation and Strategic Leadership

    1. (i)  Organisation Structure

    2. (ii)  Strategic Business Unit

    3. (iii)  Strategic Leadership

    4. (iv)  Strategy Supportive Culture

    5. (v)  Entrepreneurship and Intrapreneurship

  2. Strategy Implementation and Control

    1. (i)  Strategy Implementation

    2. (ii)  Strategic Change

    3. (iii)  Strategic Control

    4. (iv)  Strategy Audit

    5. (v)  Business Process Reengineering

    6. (vi)  Benchmarking

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8 Financial Management & Economics for Finance

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PAPER – 8 : FINANCIAL MANAGEMENT AND ECONOMICS FOR FINANCE

(One paper – Three hours – 100 Marks)

SECTION A: FINANCIAL MANAGEMENT (60 MARKS)
Objective: To develop an understanding of various aspects of Financial Management and

acquire the ability to apply such knowledge in decision-making.

1. Financial Management and Financial Analysis

  1. (i)  Introduction to Financial Management Function

    1. a)  Objective and scope of financial management

    2. b)  Role and purpose

    3. c)  Financial management environment

    4. d)  Functions of finance executives in an organization

    5. e)  Financial distress and insolvency.

  2. (ii)  Financial Analysis through Ratios

    1. a)  Users of the financial analysis

    2. b)  Sources of financial data for analysis

    3. c)  Calculation and Interpretation of ratios:

2. Financing Decisions
(i) Sources of Finance

a) Different Sources of Finance, Characteristics of different types of long term debt and equity finance, Method of raising long term finance

Analysing liquidity Analysing leverage Analysing solvency

Analysing efficiency/ activity

Analysing profitability d) Limitations of ratio analysis

  1. b)  Different Sources of short term Finance

  2. c)  Internal fund as a source of finance

  3. d)  International sources of finance

  4. e)  Other sources of finance- Sale and lease back, Convertible debt, Venture capital, Grants etc.

  1. (ii)  Lease Financing

    1. a)  Concept and Classification

    2. b)  Significance and Limitations of Lease Financing

    3. c)  Financial Evaluation of Leasing Decision

  2. (iii)  Cost of Capital

    1. a)  Significance of cost of capital

    2. b)  Factors of cost of capital

    3. c)  Measurement of costs of individual components of capital

    4. d)  Weighted average cost of capital (WACC)

    5. e)  Marginal cost of capital

    6. f)  Effective Interest rate

  3. (iv)  Capital Structure Decisions

    1. a)  Significance of capital structure

    2. b)  Determinants of capital structure

    3. c)  Capital structure planning and designing

    4. d)  Designing of optimum capital structure

    5. e)  Theories of Capital Structure and value of the firm- relevancy and Irrelevancy of capital structure.

    6. f)  EBIT- EPS Analysis, Breakeven- EBIT Analysis.

    7. g)  Under/ Over Capitalisation.

(v) Leverages

  1. a)  Types of Leverages- Operating, Financial and Combined

  2. b)  Analysis of leverages

 

3. Capital Investment and Dividend Decisions

  1. (i)  Capital Investment Decisions

    1. a)  Objective of capital investment decisions

    2. b)  Methods of Investment appraisal:

      • -  Payback period, Discounted payback period

      • -  Accounting Rate of Return (ARR),

      • -  Net Present Value (NPV) - The meaning of NPV, Strengths and limitations of NPV method, The impact of taxation on the NPV analysis, The impact of Inflation on the NPV analysis, The working capital adjustment in an NPV analysis, Capital rationing, Equivalent Annual Costs, Adjusted present value

      • -  Internal Rate of return (IRR)- Limitations of the IRR method, Multiple IRRs,

      • -  Modified internal Rate of Return (MIRR)- Definition and explanation of

        MIRR, The process for calculating MIRR, Strengths of the MIRR approach.

      • -  Profitability Index

  2. (ii)  Adjustment of Risk and Uncertainty in Capital Budgeting Decision

    1. a)  Probability Analysis

    2. b)  Certainty Equivalent Method

    3. c)  Risk Adjusted Discount Rate

    4. d)  Monte Carlo Simulation

    5. e)  Decision Tree Analysis

    6. f)  Scenario Analysis

    7. g)  Sensitivity Analysis

  3. (iii)  Dividend Decisions

    1. a)  Basics of Dividends

    2. b)  Forms of dividend

    3. c)  Determinants of dividend

    4. d)  Relevancy and Irrelevancy of Dividend Policies- Traditional Approach, Walter’s model, Gordon’s model, Modigliani and Miller (MM) Hypothesis.

 

4. Management of Working Capital
(i) Management of Working Capital

  1. a)  The management of working capital- Liquidity and Profitability

  2. b)  The Working capital financing decisions- Primary and Secondary Sources of Liquidity

  3. c)  The working Capital Cycle (operating Cycle), Effectiveness of Working Capital based on its operating and cash conversion cycles

  4. d)  Assessment of working capital requirement

  5. e)  Management of Accounts Receivables (Debtors)

  6. f)  Factoring and Forfaiting

  7. g)  Management of Accounts Payables (Creditors)

  8. h)  Management of Inventory

  9. i)  Management of Cash, Treasury management

  10. j)  Banking norms of working capital finance

SECTION B : ECONOMICS FOR FINANCE (MARKS: 40)Objective:

To develop an understanding of the concepts and theories of Economics in the context of Finance and acquire the ability to address application oriented issues.

  1. Determination of National Income

    1. (i)  Macro Economic Aggregates and Measurement of National Income

    2. (ii)  The Keynesian Theory of Determination of National Income

  2. The Money Market

    1. (i)  The Concept of Money Demand: Important Theories of Demand for Money

    2. (ii)  The Concept of Money Supply

    3. (iii)  Monetary Policy

  3. Public Finance

(i) Fiscal functions: An Overview.

  1. (ii)  Market Failure

  2. (iii)  Government Interventions to Correct Market Failure

  3. (iv)  Fiscal Policy

4. International Trade

  1. (i)  Theories of International Trade

  2. (ii)  Trade Policy – The Instruments of Trade Policy

  3. (iii)  Trade Negotiations

  4. (iv)  Exchange Rates and its economic effects

  5. (v)  International Capital Movements: Foreign Direct Investment

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