CMA Foundation Fundamentals of Financial and Cost Accounting Classes

CMA Foundation Paper 2 — Fundamentals of Financial and Cost Accounting

Paper 2 is the most critical paper in CMA Foundation — it introduces both financial accounting and cost accounting in one paper, establishing the dual competency that defines the CMA professional. A CMA who cannot understand financial statements cannot interpret them for management decisions; one who cannot understand cost flows cannot advise on pricing, cost reduction, or profitability. This paper builds both.

Financial Accounting

• Accounting fundamentals — Double entry system, accounting concepts and conventions (going concern, accrual, consistency, prudence), journal, ledger, trial balance
• Subsidiary books — Cash book (single, double, triple column), purchase and sales day books, returns books
• Bank Reconciliation Statement — Identifying timing differences, preparing BRS
• Depreciation — SLM and WDV methods, change of method treatment, scrapping and disposal entries
• Provisions and Reserves — Distinction, treatment in financial statements
• Partnership Accounts — Fixed and fluctuating capital, interest on capital, goodwill treatment on admission, retirement, dissolution (Garner v Murray rule)
• Company Accounts — Issue of shares (at par, premium, discount), forfeiture and reissue, issue of debentures, redemption of preference shares, preparation of financial statements under Schedule III

Introduction to Cost Accounting

• Meaning and objectives of cost accounting — Cost vs financial accounting, advantages of cost accounting
• Classification of costs — By nature (material, labour, overhead), by function, by behaviour (fixed, variable, semi-variable)
• Cost sheet — Format, calculation of prime cost, works cost, cost of production, cost of goods sold, cost of sales
• Elements of cost — Direct material, direct labour, direct expenses, factory overhead, administration overhead, selling and distribution overhead
• Methods of costing overview — Job costing, process costing, contract costing, batch costing (conceptual introduction)