CA Foundation Papers : All You Must Know About

Registering for the CA Foundation Course is the first step in your journey to becoming a Chartered Accountant.

Paper at Foundation Level

Paper 1  Accounting

Paper 2  Business Laws

Paper 3  Quantitative Aptitude

• Business Mathematics

• Logical reasoning

• Statistics

Paper 4   Business Economics

Paper 1: Accounting (100 Marks)

OBJECTIVE

To develop an understanding of the basic fundamental concepts and principles of CA foundation papers accounting and to apply them in the preparation of financial statements and basic problem-solving.

Contents

1. Theoretical Frameworks in CA  Foundation Papers:

• Meaning and Scope of Accounting
• Accounting Concepts, Principles, and Conventions
• Expenditures and receipts can be classified as capital or revenue, alongside considerations for contingent assets and contingent liabilities
• Accounting Policies.
• Accounting as a measurement discipline involves principles of valuation and the use of accounting estimates.
• Accounting Standards- concepts and objectives

2. Accounting Process

• Recording Accounting Transactions: CA Foundation Papers This involves the principles of double-entry bookkeeping, which includes the use of original entry books such as journals, subsidiary books, and cash books. It also covers ledger formatting, the process of posting from journals and subsidiary books, and the balancing of accounts.
• Preparation of Trial Balance
• Rectification of errors

3. Bank Reconciliation Statement

Introduction, purpose, and process of preparing a bank reconciliation statement

4. Inventories

• Understanding inventory valuation: its principles, methods, cost calculation, net realizable value, and recording systems.

5. Depreciation and Amortisation

Tangible and Intangible Assets: CA foundation papers: This section explores the definitions and differences between tangible and intangible assets. It includes concepts related to each type, methods for calculating their value, and the accounting treatment for depreciation and amortization. Additionally, it discusses how changes in depreciation methods can be handled.

6. Bills of Exchange and Promissory notes

Definition of bills of exchange and promissory notes, along with their accounting treatment, including accommodation bills.

7. Preparation of Final accounts of Sole Proprietors:

Components of financial statements, CA Foundation papers, including closing adjustment entries, trading accounts, profit and loss accounts, and balance sheets for both manufacturing and non-manufacturing entities.

8. Financial Statements of Not-for-Profit Organizations:

Importance and preparation of receipt and payment accounts, income and expenditure accounts, and balance sheets CA foundation papers, along with the distinction between profit and loss accounts and income and expenditure accounts.

9. Accounts:

 from incomplete records (excluding the preparation of accounts using ratios).

10. Partnership and LLP Accounts

• Final accounts of partnership firms and LLPs. In CA Foundation Papers.”
• Admission, retirement, and death of a partner, along with the handling of goodwill.  
• Dissolution of partnership firms and limited liability partnerships (LLPs), including the distribution of assets on a piecemeal basis.

11. Company Accounts:

• Definition of shares and debentures
• Issuance of shares and debentures, forfeiture of shares, and the reissuance of forfeited shares.
• Redemption of preference shares and debentures (not including the purchase and redemption of one’s own debentures and the sinking fund method).
• Accounting for bonus issue and right issue.

Paper 2 :   Business Laws (100 MARKS)

Objective

•  To develop a foundational understanding of contract and sales law, CA Foundation Papers, as well as various business structures and their challenges, to navigate the business environment and effectively address basic application-oriented challenges.

Contents

 1. Indian Regulatory Framework

• Key regulatory bodies, including the Ministry of Finance, Ministry of Corporate Affairs, SEBI, RBI, IBBI, and the Ministry of Law and Justice.

2. The Indian Contract Act, 1872

• An overview of contract fundamentals, covering essential elements of a valid contract like consideration, contract performance, breach, contingent and quasi-contracts, indemnity and guarantee agreements, bailment and pledge contracts, and agency contracts.

3. The Sale of Goods Act, 1930

•   Formation of a contract of sale, including conditions and warranties; transfer of ownership and delivery of goods; and the rights of an unpaid seller.

4. The Indian Partnership Act, 1932

• Overview of partnerships, including the rights and duties of partners, reconstitution of firms, registration, and dissolution of a firm.

5. The Limited Liability Partnership Act, 2008

•  Introduction encompassing the nature and scope of LLPs, key features, characteristics, the incorporation process, and comparisons with other types of organizations.

6. The Companies Act, 2013

•  Key features of a company, in CA Foundation Papers the corporate veil theory, classifications of companies, types of share capital, the incorporation process, Memorandum of Association, Articles of Association, and the doctrine of indoor management.

7. The Negotiable Instruments Act, 1881

• Definition of negotiable instruments, their characteristics, classification, various provisions related to negotiation, presentment of instruments, and rules of compensation.

Note:

• Should new legislations replace existing ones, in CA Foundation papers, the syllabus will incorporate the relevant provisions of these new laws as of the dates announced by the Institute. 

 Any specific additions or exclusions to the various topics in the syllabus will be made annually through Study Guidelines, as needed.

Paper 3 : QUANTITATIVE APTITUDE (100 Marks)

Objective

A. To build a foundational understanding of essential mathematical and statistical tools and apply them in business, finance, and economics.

 B. To develop logical reasoning skills.

Contents

• The Quantitative Aptitude syllabus is categorized into three main areas:
• Business Mathematics 
•  Logical Reasoning
• Statistics

PART A: BUSINESS MATHEMATICS (40 MARKS)

• Ratio and Proportion, Indices, and Logarithms: In CA Foundation Papers: covering topics such as ratio and proportion, time and work problems, laws of indices, exponents, logarithms, and antilogarithms.
• Equations: including simultaneous linear equations with up to three variables, as well as quadratic and cubic equations in a single variable. Applications in Business related problems.
• Linear Inequalities: Linear Inequalities: Linear Inequalities in one and two variables and the solution space

4 Mathematics of Finance:

• Simple Interest
•  Compound interest
•  Nominal and Effective Rate of Interest
•  Present Value
•  Net Present Value
•  Future Value
•  Perpetuity
•  Annuities 
• Sinking Funds
•  Calculating of EMI
•  Return Calculations: Nominal and Effective Rates of Return
•  Compound Annual growth rate (CAGR)

5. Permutations and Combinations:

• Fundamental concepts of permutations and combinations: CA Foundation Papers: An introduction, the factorial, permutations, key results, circular permutations, permutations with restrictions, and combinations with standard outcomes.

6. Sequence and Series:

• An introduction to sequences and series CA Foundation papers:  encompassing arithmetic and geometric progressions, the connection between arithmetic mean (AM) and geometric mean (GM), the sum of n terms in special series, and their applications in the business context.

7. Sets, Relations, and Functions. Basics of Limits and Continuity functions.

8. Fundamental applications of differential and integral calculus in business and economics, (excluding trigonometric applications.)

PART B: LOGICAL REASONING (20 MARKS)

9. Number series coding and Decoding and odd man out
10. Direction Tests
11. Seating Arrangements
12. Blood Relations

PART C: STATISTICS (40 MARKS)

Unit 1: Statistical Representation of Data:

• This unit in CA Foundation Papers covers the diagrammatic representation of data, frequency distribution, and graphical representations of frequency distributions, including histograms, frequency polygons, ogives, and pie charts.

13. Unit 2: Sampling:

• This section in CA Foundation Papers  focuses on the fundamental principles of sampling theory, comparing sample surveys with complete enumeration, and introduces important terms related to sampling. It also discusses various types of sampling and the differences between sampling and non-sampling errors.

 14. Measures of Central Tendency and Dispersion:

• This section explores the essential measures of central tendency, including mean, median, and mode, along with measures of dispersion such as mean deviation, quartiles, quartile deviation, standard deviation, coefficient of variation, and coefficient of quartile deviation.

15. Probability:

This section explores independent and dependent events, mutually exclusive events, total and compound probability, and Bayes’ theorem

16. Theoretical Distributions:

• This section examines in CA foundation papers random variables, including discrete and continuous random variables, and the expectation of a discrete random variable. It covers theoretical distributions such as the binomial distribution, Poisson distribution—with basic applications—and normal distribution, also highlighting its fundamental applications.

17. Correlation and Regression:

• including scatter diagrams, Karl Pearson’s coefficient of correlation, rank correlation, regression lines, regression equations, and regression coefficients.

18. Index Numbers:

• their applications, challenges in constructing index numbers, and methods for creating them.
• BSE SENSEX and NSE.

PAPER 4: BUSINESS ECONOMICS (100 Marks)

Objective

To develop an understanding of economic concepts and theories while developing the skills to address application-oriented challenges.

Contents

1.  Introduction to Business Economics
2. Meaning and scope of Business Economics. 
3. Fundamental Economic Problems and the Function of the Price Mechanism.

2. Theory of Demand and Supply

• Understanding Demand and Its Determinants, the Law of Demand, and Elasticity of Demand—covering price elasticity, income elasticity, and cross elasticity
• Theory of Consumer’s Behaviour –Indifference Curve approach
• Understanding the Meaning and Key Factors of Supply, the Law and Elasticity of Supply, along with Market Equilibrium and Social Efficiency.

3. Theory of Production and Cost

•  Meaning and Components of Production, along with Short-Run and Long-Run Perspectives.
• Production Laws – The Law of Variable Proportions and the Laws of Returns to Scale.
• Producer’s Equilibrium
• Cost Concepts – Exploring Short-Run and Long-Run Costs, along with Average, Marginal, Total, Fixed, and Variable Costs

4. Price Determination in Different Markets

• Market Structures: Perfect Competition, Monopoly and Monopolistic Competition. Using Game Theory to study Oligopoly
• Price Determination in these Markets
• Price- Output Determination under different Market Forms.

5. Determination of National Income

a. of National Income.

b.Determining National Income: Keynes’ Basic Two-Sector Model, and the Expanded Three- and Four-Sector Models.

6. Business Cycles

• Meaning 
• Phases 
• Features 
• Causes behind these Cycles 

7. Public Finance

a. Overview of Fiscal Functions: Central and State Finances.

b. Market Failure and Government Intervention for Correction.

c. Process of budget making: Sources of Revenue, Expenditure Management, and Management of Public Debt.

d. Fiscal Policy

 8. Money Market

a. Concept of Money Demand.

b. Important theories of Demand for Money.

c. Understanding Money Supply, Cryptocurrency, and Emerging Financial Terminology.

d. Monetary Policy.

9. International Trade

 a. Theories of International Trade, including Krugman’s Intra-Industry Trade Theories.

 b. Trade Policy – The Instruments of Trade Policy.

 c. Trade Negotiations

d. Exchange Rates and its economic effects

e. International Capital Movements: Foreign Direct Investment.

10. The Indian Economy:

• From Ancient Times with Chanakya and the Nanda Dynasty, through the OECD Analysis (1950-1991), to Key Developments from 1991 Onwards.