CA Foundation syllabus

Module A

PAPER A 1 : Functional English (100 marks)

The objective of this syllabus is to help students communicate effectively in English language through proper usage of vocabulary & knowledge of English grammar.

1. Vocabulary
a. Frequently confused words
b. Frequently misused words
c. Phrases, synonyms, antonyms, idioms
d. General vocabulary
2. Practical Use of Grammar
a. Grammar
i. Nouns
ii. Pronouns
iii. Verbs
iv. Adjectives
v. Adverbs
vi. Prepositions
vii. Conjunctions
viii. Articles
ix. Interjections
x. Tenses
b. Sentences
i. Types of sentences
ii. Parts of sentences
iii. Rules for structuring sentences
iv. Phrases Ð Types and functions
v. Clauses Ð Types and functions
vi. Direct and Indirect Speech
vii. Active & Passive Voice
c. Punctuation
Periods, Question Marks, Exclamation
marks, Semicolons, Colons, Commas,
Apostrophes, Quotation Marks
d. Writing Mechanics
Capitals, Abbreviations
3. Composition and Comprehension
a. Story writing from outlines
b. Letter writing (informal and formal)
c. Précis writing
d. Essay writing
e. Comprehension

PAPER A 2: Quantitative Methods (100 marks)

The role of an accountant has changed over the years; it has become imperative for him to have
knowledge of various Mathematical and Statistical Techniques, which are being used in Financial
Analysis and Decision Making. The latest research carried out in the above areas is mostly based on
such techniques. The syllabus includes topics which the students will use not only in their later studies
but throughout their career.
The objective of the course is to train the students in the use of Quantitative Techniques in business
and finance. The students are required to gain thorough theoretical knowledge of the subject and
understanding of the application of such knowledge.

1. Basic Mathematics
Rates, ratios, percentages; discounts, markup, markdown; indices, exponential and logarithmic
functions.Use of brackets, simplification rules, co-ordinate system, concept of equation, gradient,
equation of straight line, application of straight line in business and economics; simultaneous equations;
quadratic equations; factorization of equations including factorization by completion of squares,
arithmetic progression and geometric progression.
2. Financial Mathematics
Simple interest, present and future values; discounting notes; bank discount; compound interest and
annuities; sinking funds, present value; perpetuities; effective rate of interest.
(Note: The students should be able to use both formulas as well as mathematical table)
3. Calculus
Techniques of differentiation; sum, difference, product and quotient rules of differentiation. Marginal
function, calculation of revenue, cost & profit of marginal unit. Use of second order derivatives; maxima,
minima and point of inflexion.
4. Matrix and Determinants
Addition, subtraction, multiplication, inverse of matrices. Solution of equations using matrix; inequalities,
graphical presentation of inequalities; graphical method for linear programming; problems in graphical
solutions such as no feasible solution, alternative optimum solution, unbounded solutions and redundant
5. Statistical Methods
Collection, presentation, tabulation, graphical presentation through graphs, charts and diagrams, stem
and leaf display, box and whisker plot. Measures of central tendencies. Measures of dispersions. Index
numbers, weighted index numbers, concept of purchasing power and deflation of income.
6. Methods of Least Square and Regression
Scatter diagram, linear relationship, simple linear regression lines by method of least square. Simple
linear correlation, Coefficient of correlation, determination and interpretation. Rank correlation
7. Probability and Probability Distribution
Counting techniques, probability, addition law for mutually exclusive and not mutually exclusive events.
Multiplicative laws for dependent and independent events. Binomial, Poisson, hypergeometric and
normal distribution.
(Note: The students should be able to use both formulas as well as mathematical tables)
8. Sampling and Decision Making
Simple random sampling, sampling distribution of mean, standard error of mean. Sampling with and
without replacement. Testing of hypothesis for population mean, difference between population means,
population proportion, difference between two population proportions, single population variance and
test of association through z, t and Chi-square. Confidence interval for estimating population mean.
Population and variance. Difference between means, proportion and difference between proportion and
population variance. Problems of determination of sample size for the study of population mean and

Module B

PAPER B 4: Introduction to economics (100 marks)

The object of the course is to enable candidates to equip themselves with the main economic concepts
and their use, relevance in economic analysis and as an introduction to the economic environment of
trade, industry and banking as well as to methods of analysis relevant to the study of financial decisions.


1. Economic Concepts
a. Basic concepts;
b. Natural resources, labour, capital and enterprise;
c. Allocation of scarce resources Ð production, distribution and consumption;
d. Production possibility frontier and the opportunity cost;
e. Key characteristics of market economy, planned economy and mix economy;
f. Microeconomics and Macroeconomics.
2. Microeconomics
a) Concept of Market
i. Market forces of demand and supply;
ii. Demand and supply;
iii. Equilibrium of demand and supply;
iv. Elasticity of demand and supply;
v. Utility analysis and indifference curve;
vi. Consumer, producers and efficiency of
b) Theory of the Firm
i. Production function and isoquants;
ii. Cost, revenue and profits;
iii. Maximization of profits;
iv. Cost and revenue curves;
v. Distinction between long run and short
run assumptions;
vi. Equilibrium of firm under perfect
competition, monopoly, oligopoly and
monopolistic conditions.
Note: The weightages given above are for guidance purposes only and some deviations in setting
of papers could be expected.
The Institute of Chartered Accountants of Pakistan 12
Foundation Examination Introduction to Economics & Finance
c) Factors of Production
i. Laws of returns;
ii. Pricing of factors of production
iii. Marginal productivity theory.
3. Macroeconomics
a. National Income
i. Circular flow of income;
ii. Measurement of national income including knowledge of basic concepts like GDP, GNP, NNP;
iii. Marginal propensity to consume and save;
iv. Consumption, saving and investment functions;
v. Multiplier and accelerator;
vi. Equilibrium of national income;
b. Government and the Economy
i. Fiscal Budget
ii. Unemployment;
iii. Inflation;
iv. Growth, price stability and employment;
v. Recession
c. Fiscal Policy
i. Direct and indirect taxation;
ii. Principles, methods and forms of taxation.
d. Money & Monetary Policy
i. Types of money;
ii. Value of money;
iii. Nature and functions of money;
iv. Definitions of banking, banking system and its institutions;
v. Financial intermediaries;
vi. Role of State Bank;
vii. The supply of money and interest rate policy.
e. Capital
Role of the money and capital markets.
f. International Trade
i. Trade and balance of payments;
ii. Foreign exchange rates (floating and fixed exchange rates) their nature, function and
iii. Trade and its determinants;
iv. Markets and demand for imports and exports;
v. Open Economy (Basic concept)
vi. Introduction to World Trade Organization

PAPER B 4: Introduction to Financial Accounting (100 marks)

The objective of this course is to enable candidates to understand fundamentals of accounting theory;
apply theory to basic financial accounting and prepare accounting statements of sole proprietorships
and partnerships. To develop knowledge and understanding of financial statements and the techniques
used to prepare financial statements including necessary underlying records.

1. a) Introduction to business and accounting theory
i. Definition and scope of business;
ii. Economic setup of business;
iii. Organization structures;
w Sole proprietorship;
w Partnership (its merits and demerits);
w Limited Companies (their advantages
and disadvantages);
iv. Types of finances including
w Long term finance;
w Short term finance;
Introduction to Financial Accounting
Note: The weightages given above are for guidance purposes only and some deviations in setting
of papers could be expected.
Foundation Examination Introduction to Financial Accounting
b) Accounting Theory
v. Commercial Banks;
vi. Stock Exchange
vii. Insurance Companies;
viii. Procurement and production of goods;
ix. Marketing and sales;
x. Marketing channels;
w Sole Distributors;
w Wholesalers and;
w Retailers.
i Fundamental accounting concepts including:
w Accrual basis
w Consistency
w True and fair view
w Materiality
w Prudence
w Completeness
w Going Concern
w Substance over form
ii Financial statements;
w Components
w Responsibility
w Presentation
w Users of financial statements;
iii Asset valuation alternatives;
w Historical cost;
w Fair value;
w Net realizable value;
w Replacement cost;
2. Financial accounting practices
a) Accounting Records
i. Petty cash book and imprest system;
ii. Cash books (including transactions
with banks and their documentation);
iii. Sales journal and the sales ledger;
iv. Purchase journal and the purchase
v. General journal;
vi. General ledger
vii. Computerized Accounting
b) Introduction to Double Entry
i. Double entry System, Accounting
Equation and Rules of Debit & Credit
ii. Concept of capital and revenue
iii. Concept of liability and income
iv. Effect of profit or loss on capital;
v. Balancing of accounts;
vi. Trial balance;
c) Adjustments before Final Accounts
i. Methods and recording of
depreciation on Fixed Assets;
ii. Provisions for bad debts/ write off;
iii. Provisions for discounts on debtors;
iv. Prepayments and accruals;
v. Inventory adjustments
vi. Bank reconciliation and related
vii. Control accounts reconciliation and
viii. Errors in trial balance
ix. Suspense accounts
x. Other adjustments;
d) The Final Accounts of Sole Traders &
i. Statement of financial position
ii. Statement of comprehansive income
iii. Cash flows statements
The Institute of Chartered Accountants of Pakistan 16
Foundation Examination Introduction to Financial Accounting
3. Receipt and payment accounts and accounts from incomplete records
4. Other specialized areas
a) Accounting for inventories (IAS-2)
i Cost formulas (LIFO/ FIFO/ weighted average cost);
ii Cost of inventories (cost of purchase, cost of conversions, other costs);
iii Measurement of inventories (lower of cost or Net realizable value);
iv Presentation of inventories in financial statements.
b) Accounting for property, plant and equipment (IAS-16)
i Initial measurement of property, plant & equipment (components of cost, exchange of
ii Subsequent costs;
iii Depreciation Ð Unit of measure, depreciable amount, depreciation period and
depreciation method
iv Derecognition
c) Branch accounts (excluding foreign branches);
d) Treatment of the following in partnership accounts:
i Admission;
ii Retirement / death of partner (excluding life insurance policies, annuities etc);
iii Goodwill.
a) Receipt and payment accounts;
b) Income and expenditure accounts;
c) Preparation of accounts from incomplete records.
(Note: Cost Accounting techniques will not be tested at this stage)

PAPER B 5: Mercantile Law

The syllabus aims to enable the students to develop a professional approach towards matters
connected with Mercantile Law in the performance of their duties as Chartered Accountants.

1. Introduction to Legal System
Sources of law; process of legislation; and
the legal system in Pakistan
2. Contract Act 1872
All sections
3. Partnership Act 1932
All Sections
4. Negotiable Instruments Act 1881
All Sections
5. Sale of Goods Act 1930
All Sections
6. Trust Act 1920
Duties and Liabilities of Trustees; Rights,
powers and liabilities of the beneficiary;
Revocation of Trust
7. Carriage of Goods by Sea Act 1925
All Sections
(100 marks)