CA CPT Notes at One Place

My sister is doing CA Course. Now she is preparing for CPT Exam. She wants notes for Fast Track preparation. So can anybody provide important notes for Fast preparation of CPT Exam?

[shikha]

As you want important notes for Fast Track preparation for CPT Exam, so I am providing important notes:

CPT Exam Fast Track Preparation Notes

FUNDAMENTALS OF ACCOUNTING
1. Meaning and scope of accounting:
a. As per AS-1 fundamental accounting assumptions are Going concern, Consistency and accrual.
b. No disclosure is required if Fundamental accounting assumptions are followed.
c. Qualitative characteristics of financial statements are Understanding, Relevance, Reliability and Comparability.
d. Functions of accounting are- Measurement, forecasting, Decision making, Control, Comparison and evaluation,Government regulation and taxation.
e. Accounting starts where book keeping ends.
f. Sub fields of accounting are- Financial, Management, Cost, Social responsibility, Human Resource Accounting.
g. Users of accounting are- Investors, employees, lenders, Suppliers, Customers, Government, Owners and Public.

2. Accounting Concepts, Principles and Conventions:
a. The assets are classified as Current and Fixed Assets as per Going concern concept.
b. Capital and Drawings accounts are created in the books of accounts as per Business entity concept.
c. The Assets and incomes are not overstated and Liabilities and Losses are not understated as perConservatism/Prudence concept.
d. Profits for the current year is shown as liabilities in balance sheet as per Entity concept.
e. In case of corporate entities, profits for the current year is shown under current liabilities is as per entity concept.
f. Accounting for small items like calculators, books etc., are as expense and not an asset is as per Materiality concept.
g. Materiality principle is an exception to Full disclosure concept.
h. Closing stock is shown on credit side of Trading a/c is as per Matching concept.
i. Depreciation, Amortization of assets is considered in financial statements as per matching concept.
j. Prudence principle is an exception to Consistency principle.
k. Valuation of Inventories at lower of cost or NRV, Making provision for Doubtful debts and Discount on debtors areapplication of Prudence principle.
l. Advance received from customer is not shown as sales is as per Accrual Concept.
m. Depreciation on small items is taken as 100% in the year of purchase is as per Materiality Concept.
n. The Practice of preparing Notes to accounts (Footnotes) is the outcome of Full Disclosure concept.
o. Major considerations governing the selection and application of accounting policies are- Prudence, Substance over formand Materiality.
p. Selection of inappropriate accounting policy may lead to understatement or overstatement of performance andfinancial position.
q. Duality concept applies where change in method results in change in profit.
r. Omission of paisa or showing rounding figures in financial statements is as per Materiality concept.
s. The Cost of an asset as on 31st March,2014 is Rs.1,00,000 and its Market price is Rs.1,50,000.If the accountant shows the Value of an asset at Rs.1,50,000 --- it is violation of Cost concept.
If the question is given that, The accountant considers Profit of Rs.50,000 ---- it is the violation of Realisationconcept.

Accounting Standards:
a. Accounting standards are issued by ICAI and formulated by ASB.
b. ASB was established by ICAI on 21st April, 1977.
c. 32 AS are issued by the ICAI and 31 AS are in force, AS 8 was replaced by AS 26.
d. A change in accounting policy is recommended by only if that change is required by Law or AS or to ensure moreappropriate presentation of financial statements.
e. IASB means International accounting standards board.

Valuation principles and Accounting estimates:
a. Money as a measurement scale and has no universal denomination.
b. Measurement of discipline deals with- Identification of objects and events, Selection of scale and Evaluation ofdimension of measurement of scale.
c. Valuation principles are- Historical cost, Current cost, Realizable value and Present value.
d. Change in accounting estimation means the difference between certain parameters estimated earlier and
a. Re-estimated during the current period or
b. Actual results achieve during the current period.
e. Change in accounting estimate does not give retrospective effect.
f. Unless otherwise stated, the change will be considered as change in accounting estimate.

Journal:
a. Assets = Capital + Liabilities This equation is formed by Dual aspect concept and represents Balance sheet.
b. Only financial transactions are recorded in the books of accounts is as per Money measurement concept.
c. If the machinery is purchased on the last day of Accounting year end--- Transaction as well as Event
d. Profits, closing stock and all the balance sheet items ------- Events
e. As per accounting equation approach, Accounts are classified as - Assets, Liabilities, Capital, Expense and Income.
f. Increase in Assets or expenses are debited and Decrease in assets or expense are credited.
g. Increase in Capital or income or liability is Credited and Vice versa.
h. As per traditional approach, Accounts are divided as ----- Personal A/c, Nominal A/c and Real A/c.
i. Real A/c--- Debit what comes in and credit what goes out.
j. Nominal A/c---- Debit expenses or losses and credit income or gains.
k. Personal A/c --- Debit the receiver and Credit the giver.
l. Journal is called as Book of first entry or Book of original entry or Primary book.
m. Journal contains 5 columns and all columns of journal are not filled at the time of journalising.
n. Normally personal and real accounts are balanced and nominal accounts are not balanced and are closed bytransferring to trading and profit and loss A/c.

CPT Exam Fast Track Preparation Notes