Certificate in Business Accounting

The CIMA Certificate in Business Accounting is an entry requirement to the CIMA Professional Qualification and a recognised qualification in its own right.

It will give you a solid grounding in the basics of management accounting and business skills.

The new revised CIMA Certificate in Business Accounting qualification syllabus now replaces the old Foundation Level. Students are examined by computer based assessment (CBA) which can be taken at the college at a time that is mutually convenient.

All assessments for the 2006 syllabus will be 2 hours. The pass mark for each subject is 50% and you will receive your results and a Certificate of Achievement immediately after the assessment. If you are unsuccessful, you will receive some feedback on your performance in the assessment.

Entry Qualifications:

CIMA now operate a Flexible Entry policy meaning which means there are no minimum entry requirements but students should have a good standard of maths and be competent in the English language before starting the course. All Students need to register as members of the Institute at the following address:
Chartered Institute of Management Accountants (CIMA)
26 Chapter Street
London SW1P 4NP
Tel:+44 (0)20 7663 5441

To qualify as a Chartered Management Accountant you must:
• Complete the CIMA Certificate in Business Accounting or another exempting qualification
• Complete the nine exams from the CIMA Professional Qualification
• Gain three years relevant practical experience and send your ‘Career Profile’ to us for approval
• Pass the Test of Professional Competence in Management Accounting (TOPCIMA)

Duration of course
The Certificate in Business Accounting covers one semester. Computer Based exams can be taken at anytime thereafter though students must complete all 5 subjects before taking any Managerial Level examinations.

Syllabus

C01 Fundamentals of Management Accounting

A Cost Determination – 25%
Learning outcomes
On completion of their studies students should be able to:
(i) explain why organisations need to know how much products, processes and services cost and why they need costing systems;(ii) explain the idea of a ‘cost object’; (iii) explain the concept of a direct cost and an indirect cost; (iv) explain why the concept of “cost” needs to be qualified as direct, full, marginal etc, in order to be meaningful; v) distinguish between the historical cost of an asset and the economic value of an asset to an organisation; (vi) apply first-in-first-out (FIFO), last-in-first-out (LIFO) and average cost (AVCO) methods of accounting for stock, calculating stock values and related gross profit; (vii) explain why FIFO is essentially a historical cost method, while LIFO approximates economic cost; viii) prepare cost statements for allocation and apportionment of overheads, including between reciprocal service departments; (ix) calculate direct, variable and full costs of products, services and activities using overhead absorption rates to trace indirect costs to cost units;(x) explain the use of cost information in pricing decisions, including marginal cost pricing and the calculation of “full cost” based prices to generate a specified return on sales or investment.

B Cost Behaviour and Break-even Analysis – 10%

Learning outcomes
On completion of their studies students should be able to:
(i) explain how costs behave as product, service or activity levels increase or decrease; ii) distinguish between fixed, variable and semi-variable costs; (iii) explain step costs and the importance of time-scales in their treatment as either variable or fixed; iv) compute the fixed and variable elements of a semi-variable cost using the high-low method and “line of best fit” method; (v) explain the concept of contribution and its use in cost-volume-profit (CVP) analysis; (vi) calculate and interpret the breakeven point, profit target, margin of safety and profit/volume ratio for a single product or service; (vii) prepare break-even charts and profit/volume graphs for a single product or service; (viii) calculate the profit maximising sales mix for a multi-product company that has limited demand for each product and one other constraint or limiting factor.

C Standard Costing – 15%

Learning outcomes
On completion of their studies students should be able to:
(i) explain the difference between ascertaining costs after the event and planning by establishing standard costs in advance; (ii) explain why planned standard costs, prices and volumes are useful in setting a benchmark for comparison and so allowing managers’ attention to be directed to areas of the business that are performing below or above expectation; iii) calculate standard costs for the material, labour and variable overhead elements of cost of a product or service; (iv) calculate variances for materials, labour, variable overhead, sales prices and sales volumes;(v) prepare a statement that reconciles budgeted contribution with actual contribution; (vi) interpret statements of variances for variable costs, sales prices and sales volumes including possible inter-relations between cost variances, sales price and volume variances, and cost and sales variances; (vii) discuss the possible use of standard labour costs in designing incentive schemes for factory and office workers.

D Costing and Accounting Systems – 30%

Learning outcomes
On completion of their studies students should be able to:
(i) explain the principles of manufacturing accounts and the integration of the cost accounts with the financial accounting system;(ii) prepare a set of integrated accounts, given opening balances and appropriate transactional information, and show standard cost variances;(iii) compare and contrast job, batch, contract and process costing; (iv) prepare ledger accounts for job, batch and process costing systems; (v) prepare ledger accounts for contract costs; (vi) explain the difference between subjective and objective classifications of expenditure and the importance of tracing costs both to products/services and to responsibility centres; vii) construct coding systems that facilitate both subjective and objective classification of costs; (viii) prepare financial statements that inform management; (ix) explain why gross revenue, value-added, contribution, gross margin, marketing expense, general and administration expense, etc. might be highlighted in management reporting; (x) compare and contrast management reports in a range of organisations including commercial enterprises, charities and public sector undertakings.

E Financial Planning and Control - 20%

Learning outcomes
On completion of their studies students should be able to:
(i) explain why organisations set out financial plans in the form of budgets, typically for a financial year; (ii) prepare functional budgets for material usage and purchase, labour and overheads, including budgets for capital expenditure and depreciation;(iii) prepare a master budget: income statement, balance sheet and cash flow statement, based on the functional budgets;
(iv) interpret budget statements and advise managers on financing projected cash shortfalls and/or investing projected cash surpluses;
(v) prepare a flexed budget based on the actual levels of sales and production and calculate appropriate variances;
(vi) compare and contrast fixed and flexed budgets;
(vii) explain the use of budgets in designing reward strategies for managers.

CO2 Fundamentals of Financial Accounting

A Conceptual and Regulatory Framework – 20%

Learning outcomes
On completion of their studies students should be able to:
(i) identify the various user groups which need accounting information and the qualitative characteristics of financial statements; (ii) explain the function of and differences between financial and management accounting systems;  (iii) identify the underlying assumptions, policies and changes in accounting estimates;  (iv) explain and distinguish capital and revenue, cash and profit, income and expenditure, assets and liabilities; (v) identify the difference between tangible and intangible assets;  (vi) explain the historical cost convention; (vii) identify the basic methods of valuing assets on current cost,  fair value and value in use bases, and their impact on profit measures and balance sheet values; (viii) explain the influence of legislation (e.g. Companies Acts, EC directives) and accounting standards on the production of published accounting information for organisations.

B Accounting Systems – 20%

Learning outcomes
On completion of their studies students should be able to:
(i) explain the purpose of accounting records and their role in the accounting system; (ii) prepare cash and bank accounts, and bank reconciliation statements; (iii) prepare petty cash statements under an imprest system; (iv) prepare accounts for sales and purchases, including personal accounts and control accounts; (v) explain the necessity for financial accounting codes and construct a simple coding system; (vi) prepare nominal ledger accounts, journal entries and a trial balance;  (vii) prepare accounts for indirect taxes; (viii) prepare accounts for payroll.

C Control of Accounting Systems – 15%

Learning outcomes
On completion of their studies students should be able to:
(i) identify the requirements for external audit and the basic processes undertaken; (ii) explain the purpose and basic procedures of internal audit; iii) explain the meaning of fair presentation; iv) explain the need for financial controls; (v) explain the purpose of audit checks and audit trails; (vi) explain the nature of errors, and be able to make accounting entries for them; vii) explain the nature of fraud and basic methods of fraud prevention.

D Preparation of Accounts for Single Entities – 45%

Learning outcomes
On completion of their studies students should be able to:
(i) prepare accounts using accruals and prepayments; (ii) explain the difference between bad debts and allowances for receivables; (iii) prepare accounts for bad debts and allowances for receivables; (iv) calculate depreciation; (v) prepare accounts using each method of depreciation and for impairment values;  (vi) prepare a non-current asset register; vii) prepare accounts for inventories; (viii) prepare income statements, statement of changes in equity and balance sheets from trial balance; (ix) prepare manufacturing accounts; (x) prepare income and expenditure accounts; (xi) prepare accounts from incomplete records; (xii) interpret basic ratios; (xiii) prepare cash-flow statements.

CO3 Fundamentals of Business Mathematics

A Basic Mathematics - 15%

Learning outcomes
On completion of their studies students should be able to:
(i) demonstrate the order of operations in formulae, including brackets, powers and roots; (ii) calculate percentages and proportions; (iii) calculate answers to an appropriate number of decimal places or significant figures; (iv) solve simple equations, including two variable simultaneous equations and quadratic equations; (v) prepare graphs of linear and quadratic equations.

B Probability - 15%

Learning outcomes
On completion of their studies students should be able to:
(i) calculate a simple probability; (ii) demonstrate the addition and multiplication rules of probability; (iii) calculate a simple conditional probability; (iv) calculate an expected value; (v) demonstrate the use of expected value tables in decision making; (vi) explain the limitations of expected values; (vii) explain the concepts of risk and uncertainty.

C Summarising and Analysing Data - 15%

Learning outcomes
On completion of their studies students should be able to:
(i) explain the difference between data and information; (ii) identify the characteristics of good information; (iii) tabulate data and prepare histograms; (iv) calculate for both ungrouped and grouped data: arithmetic mean, median, mode, range, variance, standard deviation and coefficient of variation; (v) explain the concept of a frequency distribution; (vi) prepare graphs/diagrams of normal distribution, explain its properties and use tables of normal distribution; (vii) apply the Pareto distribution and the ‘80:20 rule’. viii) explain how and why indices are used; ix) calculate indices using either base or current weights; (x) apply indices to deflate a series.

D Inter-relationships between Variables - 15%

Learning outcomes
On completion of their studies students should be able to:
(i) prepare a scatter diagram; (ii) calculate the correlation coefficient and the coefficient of determination between two variables; iii) calculate the regression equation between two variables; (iv) apply the regression equation to predict the dependent variable, given a value of the independent variable.

E Forecasting - 15%

Learning outcomes
On completion of their studies students should be able to:
(i) prepare a time series graph; (ii) identify trends and patterns using an appropriate moving average; iii) identify the components of a time series model; (iv) prepare a trend equation using either graphical means or regression analysis; (v) calculate seasonal factors for both additive and multiplicative models and explain when each is appropriate; (vi) calculate predicted values given a time series model; (vii)identify the limitations of forecasting models.

F Financial Mathematics - 15%

Learning outcomes
On completion of their studies students should be able to:
(i) calculate future values of an investment using both simple and compound interest; (ii) calculate an annual percentage rate of interest given a monthly or quarterly rate; (iii) calculate the present value of a future cash sum using formula and CIMA Tables; iv) calculate the present value of an annuity and a perpetuity using formula and CIMA Tables; v) calculate loan/mortgage repayments and the value of the loan/mortgage outstanding; vi) calculate the future value of regular savings and/or the regular investment needed to generate a required future sum using the formula for the sum of a geometric progression; (vii) calculate the net present value (NPV) and internal rate of return (IRR) of a project and explain whether and why it should be accepted;

G Spreadsheets - 10%

Learning outcomes
On completion of their studies students should be able to:
(i) explain the features and functions of spreadsheet software; (ii) explain the use and limitations of spreadsheet software in business; (iii) apply spreadsheet software to the normal work of a Chartered Management Accountant.

C04 Fundamentals of Business Economics

A. The Goals and Decisions of Organisations – 20%

Learning outcomes
On completion of their studies students should be able to:
(i) distinguish the goals of profit seeking organisations, not-for-profit organisations and governmental organisations; (ii) compute the point of profit maximisation for a single product firm in the short run; iii) distinguish the likely behaviour of a firm’s unit costs in the short run and long run; (iv) illustrate the effects of long run cost behaviour on prices, the size of the organisation and the number of competitors in the industry; (v) explain shareholder wealth, the variables affecting shareholder wealth, and its application in management decision making; (vi) identify stakeholders and their likely impact on the goals of not-for-profit organisations and the decisions of the management of not-for-profit organisations; (vii) distinguish between the potential objectives of management and those of shareholders, and the effects of this principal-agent problem on decisions concerning price, output and growth of the firm. (viii) describe the main mechanisms to improve corporate governance in profit seeking organisations.

B. The Market System and the Competitive Process – 30%

Learning outcomes
On completion of their studies students should be able to:
(i) identify the equilibrium price in a product or factor markets likely to result from specified changes in conditions of demand or supply; (ii) calculate the price elasticity of demand and the price elasticity of supply; (iii) identify the effects of price elasticity of demand on a firm’s revenues following a change in prices; (iv) explain market concentration and the factors giving rise to differing levels of concentration between markets; (v) explain market failures, their effects on prices, efficiency of market operation and economic welfare, and the likely responses of government to these; (vi) distinguish the nature of competition in different market structures; (vii) identify the impacts of the different forms of competition on prices and profitability.

C. The Financial System – 20%

Learning outcomes
On completion of their studies students should be able to:
(i) identify the factors leading to liquidity surpluses and deficits in the short, medium and long run in households, firms and governments; (ii) explain the role of various financial assets, markets and institutions in assisting organisations to manage their liquidity position and to provide an economic return to holders of liquidity; (iii) explain the role of insurance markets in the facilitation of the economic transfer and bearing of risk for households, firms and governments; (iv) explain the role of the foreign exchange market and the factors influencing it, in setting exchange rates and in helping organisations finance international trade and investment; v) explain the role of national and international governmental organisations in regulating and influencing the financial system, and the likely impact of their policy instruments on businesses.

D. The Macroeconomic Context of Business – 30%

Learning outcomes
On completion of their studies students should be able to:
(i) explain macroeconomic phenomena, including growth, inflation, unemployment, demand management and supply-side policies; (ii) explain the main measures and indicators of a country’s economic performance and the problems of using these to assess the wealth and commercial potential of a country; (iii) explain the stages of the trade cycle, its causes and consequences, and discuss the business impacts of potential policy responses of government to each stage; iv) explain the main principles of public finance (i.e. deficit financing, forms of taxation) and macroeconomic policy; (v) explain the concept of the balance of payments and its implications for business and for government policy; (vi) identify the main elements of national policy with respect to trade, including protectionism, trade agreements and trading blocks; vii) identify the conditions and policies necessary for economic growth in traditional, industrial and post-industrial societies, and the potential consequences of such growth; viii) explain the concept and consequences of globalisation for businesses and national economies; (ix) identify the major institutions promoting global trade and development, and their respective roles.

CO5 Fundamentals of Ethics, Corporate Governance and Business Law

 A. Ethics and Business – 15%

Learning outcomes
On completion of their studies students should be able to:
(i) apply the values and attitudes that provide professional accountants with a commitment to act in the public interest and with social responsibility; (ii) explain the need for a framework of laws, regulations and standards in business and their application; (iii) explain the nature of ethics and its application to business and the accountancy profession; (iv) identify the difference between detailed rules-based and framework approaches to ethics; (v) explain the need for continual personal improvement and life long learning; (vi) explain the need to develop the virtues of reliability, responsibility, timeliness, courtesy and respect; (vii) explain the ethical principles of integrity, objectivity, professional competence, due care and confidentiality; (viii) identify concepts of independence, scepticism, accountability and social responsibility; (ix) explain the reasons why CIMA and IFAC each have a ‘Code of Ethics for Professional Accountants’.

B. Ethical Conflict – 10%

Learning outcomes
On completion of their studies students should be able to:
(i) explain the relationship between ethics, governance, the law and social responsibility;(ii) describe the consequences of unethical behaviour to the individual, the profession and society;(iii) identify situations where ethical dilemmas and conflicts of interest occur;(iv) explain how ethical dilemmas and conflicts of interest can be resolved.

C. Corporate Governance – 10%

Learning outcomes
On completion of their studies students should be able to:
(i) define corporate governance; (ii) explain the interaction of corporate governance with business ethics and company law; (iii) describe the history of corporate governance internationally; (iv) explain the effects of corporate governance on directors’ behaviour and their duties of skill and care; (v) explain different board structures, the role of the board and corporate governance issues; (vi) describe the types of policies and procedures that best practice companies introduce; vii) explain the regulatory governance framework for companies.

D. Comparison of English Law with Alternative Legal Systems - 10%

Learning outcomes
On completion of their studies students should be able to:
(i) explain the manner in which behaviour within society is regulated by the civil and the criminal law; (ii) identify and explain the sources of English law; iii) illustrate the operation of the doctrine of precedent by reference to the essential elements of the tort of negligence and its application to professional advisers; (iv) compare and contast the elements of alternative legal systems, Sharia Law and the role of international legal regulations.

E. The Law of Contract - 20%

Learning outcomes
On completion of their studies students should be able to:
(i) identify the essential elements of a valid simple contract and situations where the law requires the contract to be in a particular form; (ii) explain how the law determines whether negotiating parties have reached agreement and the role of consideration in making that agreement enforceable; (iii) explain when the parties will be regarded as intending the agreement to be legally binding and how an agreement may be avoided because of misrepresentations; (iv) explain how the contents and the terms of a contract are established and the possible repercussions of non-performance; (v) explain how the law controls the use of unfair terms in respect of both consumer and non-consumer business agreements; (vi) explain what the law regards as performance of the contract, and valid and invalid reasons for non-performance; vii) explain the type of breach necessary to cause contractual breakdown and the remedies which are available for serious and minor breaches of contract.

F. The Law of Employment - 10%

Learning outcomes
On completion of their studies students should be able to:
(i) explain the difference between employees and independent contractors and how the contents of a contract of employment are established; (ii) explain the distinction between unfair and wrongful dismissal; iii) demonstrate an awareness of how employers and employees are affected by health and safety legislation, including the consequences of a failure to comply.

G. Company Administration and Finance - 25%

Learning outcomes
On completion of their studies students should be able to:
(i) explain the essential characteristics of the different forms of business organisations and the implications of corporate personality; (ii) explain the differences between public and private companies and establishing a company by registration or purchasing “off the shelf”; (iii) explain the purpose and legal status of the memorandum and articles of association; iv) explain the ability of a company to contract; v) explain the main advantages and disadvantages of carrying on business through the medium of a company limited by shares. (vi) explain the use and procedure of board meetings and general meetings of shareholders; (vii) explain the voting rights of directors and shareholders and identify the various types of shareholder resolutions; viii) explain the nature of different types of share, the procedure for the issue of shares, and acceptable forms of payment; (ix) explain the maintenance of capital principle and the procedure to increase and reduce share capital, including the repercussions of issuing shares for an improper purpose; x) explain the ability of a company to take secured and unsecured loans, the different types of security and the registration procedure. (xi) explain the procedure for the appointment, retirement, disqualification and removal of directors and their powers and duties during office; (xii) explain the rules dealing with the possible imposition of personal liability upon the directors of insolvent companies; (xiii) identify and contrast the rights of shareholders with the board of a company; (xiv) explain the qualifications, powers and duties of the company secretary.