PAPER 2 – ACCOUNTING & FINANCE FOR BANKERS
It consist of 4 module
MODULE A –
BUSINESS MATHEMATICS AND FINANCE
Calculation of
Interest and Annuities
Calculation of Simple Interest
& Compound Interest; Calculation of Equated Monthly Installments, Fixed and
Floating Interest Rates; Calculation of Annuities; Interest Calculation using
Products / Balances, Amortization of a Debt; Sinking Funds.
Calculation of
YTM
Debt- Definition, Meaning &
Salient Features; Loans; Introduction to Bonds,Terms associated with Bonds; Cost
of Debt Capital; Bond value with semi-annual Interest; Current Yield on Bond;Calculation of Yield-to- Maturity of Bond,Theorems for Bond Value; Duration
of Bond; Properties of Duration; Bond Price Volatility.
Capital
Budgeting
Present Value and Discounting;
Discounted Technique for Investment Appraisal,Internal Rate of Return (IRR);
Method of Investment Appraisal; NPV and IRR compared; Investment
Opportunities with Capital Rationing; Investment Decision
making under condition of
uncertainty; Expected NPV Rule; Risk Adjusted Discount Rate Approach for NPV
Determination; Sensitivity Analysis for NPV Determination; Decision Tree Analysis for NPV
Estimation; Payback Methods; ARR.
Depreciation and
its Accounting
Depreciation, its types and
methods; Comparing Depreciation Methods
Foreign Exchange
Arithmetic
Fundamentals of Foreign Exchange;
Forex Markets; Direct and Indirect Quote,Some Basic Exchange Rate
Arithmetic – Cross Rate, Chain Rule, Value date, etc.Forward Exchange Rates – Forward
Points; Arbitrage; Calculating Forward Points; Premium / discount; etc.
MODULE B –
PRINCIPLES OF BOOKKEEPING & ACCOUNTANCY
Definition,
Scope and Accounting Standards
Nature and Purpose of Accounting;
Historical Perspectives; Origins of Accounting Principles; Accounting Standards
in India and its Definition and Scope; Generally Accepted Accounting Principles of
USA (US GAAP); Transfer Pricing,Overviewof IFRS,Difference between GAAP
& IFRS.
Basic
Accountancy Procedures
Concepts of Accountancy; Going
Concern Entity; Double Entry System; Principle of Conservatism; Revenue
Recognition and Realisation; Accrual and Cash Basis.
Maintenance of
Cash / Subsidiary Books and Ledger
Record Keeping Basics; Account
Categories; Debit and Credit Concepts; Accounting and Columnar
Accounting Mechanics; Journals; Ledgers; subsidiary books; etc.
Bank Reconciliation Statement
Need for Bank Reconciliation; Causes of Differences; Preparation of Bank Reconciliation Statement; How to
prepare a Bank Reconciliation Statement when Extracts of Cash Book and
Pass Book are given; Adjusting the Cash Book Balance; Advantages of Bank
Reconciliation Statement.
Trial Balance,
Rectification of Errors and Adjusting & Closing Entries
Meaning of a Trial Balance;
Features and Purpose of a Trial Balance,Types of Trial Balance and
Preparation of a Trial Balance; Disagreement of a Trial Balance; Classification
of Errors; Location of Errors; Rectification of Errors; Suspense Account and Rectification; Rectification of Errors when Books are closed; Adjusting and Closing
Entries.
Capital and Revenue
Expenditure
Expenditure; Distinction between
Capital and Revenue Expenditure; Deferred Revenue Expenditure; Receipts;
General Illustrations.
Bills of
Exchange
Types of Instruments of Credit;
Term and Due Date of a Bill; Certain Important Terms; Accounting Entries to be
Passed; Accommodation Bill etc.
MODULE C – FINAL
ACCOUNTS
Balance Sheet
Equation
Balance Sheet Equation;
Computation of Balance Sheet Equation.
Preparation of
Final Accounts
Preparation of Trading A/C;
Profit and Loss A/C; Profit & Loss Appropriation Account; Balance Sheets.
Ratio Analysis
Meaning of Accounting Ratios;
Classification of Ratios; Uses of Accounting Ratios; Limitations of Accounting
Ratios; Calculation and interpretation of various Ratios; Different Users
and their Use of Ratios.
Final Accounts
of Banking Companies
Definition and Functions of a
Bank; Requirements of Banking Companies as to Accounts and Audit;
Significant Features of Accounting Systems of Banks; Principal Books of
Accounts; Preparation and Presentation of Financial Statements of Banks; CMA Format;
Accounting Treatment of Specific Items; Preparation of Profit and Loss
Account; Comments on Profit and Loss Account; Important Items of
Balance Sheet; Disclosure Requirements of
Banks; Additional Disclosures
prescribed by RBI; Disclosures required under BASEL norms.
Company Accounts
I & II
Definition and Types of
Companies; Distinction between Partnership and Limited Liability Company;
Classes of Share Capital; Issue of Shares; General Illustrations Non-voting Shares;
Form of Balance Sheet; Legal Requirements for Assets; Legal Requirements
for Liabilities; Legal Requirements for Profit
& Loss A/c; Preparation of
Final Accounts.
Accounting in a
Computerized Environment
Meaning, Features of and Terms
used in Computerized Accounting;
Difference between Computerized
and Manual Accounting; Advantages and Disadvantages of Computerized
Accounting; Functions performed by Computerized Accounting Softwares
available in the Market; Computerization – Scope and Experiences in Banking;
The Core Banking Components; Information Security; Internet and World Wide
Web – Influences on Banking.
MODULE D –
BANKING OPERATIONS
Banking
Operations & Accounting Functions
Preparation of Vouchers, cash
receipt and payment entries, clearing inward and outward entries, transfer
debit and credit entries, what is KYC and what are the different documents to
satisfy KYC, verify KYC and authenticity of documents, operational aspects in
regard to opening of all types of accounts, scrutiny of loan applications / documents,
allowing drawals and accounting entries involved at various
stages, operational aspects of CBS environment etc., Back office operations in
banks, handling of unreconciled entries in banks.
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