Trade Finance BD · Original revision handnote · Edition 2026.1
BA — Basic Accounting
JAIBB · Compulsory · 14 October 2026
Turn business transactions into reliable statements, then interpret liquidity, profitability and cash flow.
Use this revision pack with the full syllabus and official papers. Important topics are revision priorities, not a promise of future questions.
Contents
- A · Accounting foundations
- B · Recording and adjusting transactions
- C · Ratios and financial analysis
- D · Statements and cash-flow interpretation
- Worked example
- Applied case and model response
- Terminology
- Official syllabus and papers
Revision priorities
Adjusting entries and financial statements — Syllabus priority. Editorial judgement based on syllabus importance.
Ratio interpretation and operating cash flow — Syllabus priority. Editorial judgement based on syllabus importance.
Syllabus-mapped handnotes
Module A
Accounting foundations
Syllabus scope: Users; business forms; principles; standards; assets, liabilities and equity; ethics and limitations
Accounting communicates financial information for decisions. Assets are resources controlled by the entity, liabilities are present obligations, and equity is the residual interest. The accounting equation is Assets = Liabilities + Equity. Accrual accounting recognises relevant income and expense in the appropriate period rather than only when cash moves. Separate the entity from its owners; distinguish a going-concern assumption from certainty of survival. Reliable reporting requires appropriate recognition, measurement, disclosure and consistent policies. Estimates and judgement create limitations, so a correct-looking number may still need supporting evidence and sensitivity analysis.
Apply it in bankingAn owner injecting cash increases equity rather than revenue. A bank loan increases cash and liabilities rather than profit.
Practice question: Explain the accounting equation and why profit is different from cash received.
Answer framework: use the explanation above, add the banking example, then address assumptions and controls. Expand to match the question’s marks and command words.
Module B
Recording and adjusting transactions
Syllabus scope: Double entry; debit/credit; journal; ledger; trial balance; errors; fixed assets; depreciation; accrual adjustments
Every transaction affects at least two accounts with equal total debits and credits. Debits generally increase assets and expenses; credits generally increase liabilities, equity and revenue. Record the journal from source evidence, post to the ledger and prepare a trial balance. A balanced trial balance does not detect every error: complete omission, an incorrect but balanced amount and compensating errors may remain. Adjust for accrued and prepaid items, depreciation and other period-end matters before preparing statements. Depreciation allocates depreciable cost over useful life; it is not a current cash outflow or a precise market valuation.
Apply it in bankingRent paid for twelve months creates a prepaid asset for the unused period. Recognise only the consumed portion as expense at the reporting date.
Practice question: Explain the accounting cycle and show why a balanced trial balance may still contain errors.
Answer framework: use the explanation above, add the banking example, then address assumptions and controls. Expand to match the question’s marks and command words.
Module C
Ratios and financial analysis
Syllabus scope: Liquidity; profitability; efficiency; leverage; comparisons and interpretation
Ratios connect statement figures to a question: liquidity, operating efficiency, profitability or financial risk. Current ratio is current assets/current liabilities; quick ratio removes less liquid categories according to the stated definition. Gross margin relates gross profit to revenue. ROA and ROE should state whether average or closing asset/equity balances are used. Receivable, inventory and payable days explain the cash conversion cycle. Compare periods and similar firms, accounting policies and seasonality. A high current ratio may indicate idle cash or obsolete inventory; high ROE may result from risky leverage rather than improved operations.
Apply it in bankingA borrower’s sales rise while receivable days double. Explain why earnings growth may hide collection risk and a greater working-capital need.
Practice question: Interpret a borrower’s liquidity and profitability ratios and identify the information still needed.
Answer framework: use the explanation above, add the banking example, then address assumptions and controls. Expand to match the question’s marks and command words.
Module D
Statements and cash-flow interpretation
Syllabus scope: Statement of financial position; profit/loss; equity; direct/indirect cash flows; interrelationships
The statement of financial position reports balances at a date; income and cash-flow statements report activity over a period. Profit changes equity, subject to distributions and other movements. Operating cash flows arise from principal revenue-generating activities; investing flows include relevant long-term asset transactions; financing flows change funding from owners and lenders under the applicable classification rules. The indirect operating method adjusts profit for non-cash items and working-capital changes. An increase in operating receivables reduces operating cash relative to sales; an increase in operating payables usually increases it relative to expenses. State classifications where standards permit or require particular treatment.
Apply it in bankingProfitable credit sales increase receivables without immediately increasing cash. Reconcile the operating cash shortfall before judging debt-service capacity.
Practice question: Explain the main financial statements and reconcile profit to operating cash flow.
Answer framework: use the explanation above, add the banking example, then address assumptions and controls. Expand to match the question’s marks and command words.
Worked example
Adjustments, depreciation and cash flow
A machine costs BDT 500,000, residual value BDT 50,000 and useful life five years. Annual profit before depreciation is BDT 200,000. Receivables increase by BDT 30,000 and payables increase by BDT 10,000. Ignore tax and other items. Find straight-line depreciation, profit after depreciation and operating cash flow.
- Annual depreciation = (500,000 − 50,000)/5 = BDT 90,000.
- Profit after depreciation = 200,000 − 90,000 = BDT 110,000.
- Indirect operating cash flow = 110,000 + 90,000 − 30,000 + 10,000 = BDT 180,000.
- Depreciation reduces profit; adding it back avoids treating the same non-cash expense as a current cash payment.
Common mistake: Subtract the increase in receivables, but add the increase in operating payables.
Case clinic
Window-dressed liquidity
A borrower reports a current ratio of 2.5 and seeks a working-capital limit. Inventory is ageing and large receivables are overdue. Is the ratio sufficient evidence of repayment capacity?
Model response
No. Decompose current assets by quality and collection timing. Review inventory ageing, saleability, receivable ageing, disputed amounts and customer concentration.
Recalculate liquidity using realistic recoverable balances; compare the cash conversion cycle with the loan tenor. Review cash-flow statements, bank account turnover and subsequent collections.
Set a facility linked to the operating cycle with verifiable drawing power, reporting covenants and follow-up. Ratios support judgement; they cannot replace analysis of the primary repayment cash flow.
Practice marking guide · 20 marks- Explain ratio limitations (4)
- Assess asset quality (6)
- Analyze cash cycle (6)
- Recommend monitored financing (4)
Terminology and comparisons
| Accrual / cash basis | Recognition by period of economic activity versus recognition when cash moves. |
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| Capital / revenue expenditure | Expenditure meeting asset recognition criteria versus expense recognised in the period. |
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| Provision / reserve | An accounting obligation/allowance under the relevant rule versus an equity allocation; establish context. |
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| Trial balance / balance sheet | Ledger-balance checking schedule versus a statement of financial position. |
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Official references
Official papers are linked for comparison; their full text and official model answers are not reproduced. This pack’s explanations, examples and cases are original. Numerical examples are practice assumptions. Current law, instructions and subsequent amendments must be checked for regulatory answers.