How to Prepare JAIIB Accounting & Financial Management for Bankers | JAIIB AFM MAY 2024
In this post on JAIIB, we will discuss all about the JAIIB’s practical paper i.e. AFM (Accounting & Financial Management for Bankers) for the upcoming MAY 2024 Exam. If you also find it difficult to practice the JAIIB AFM paper, then you must also read the following suggestions, tips & considerations which are given by the Expert faculty of Learning Sessions who have years of experience in teaching for the JAIIB exams preparation!
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How to Prepare JAIIB Accounting & Finance for Banking?
‘How to prepare for JAIIB Accounting and Finance for Banking 2024?’ this is the most common question asked by a banking person who is going to appear in the exam of JAIIB. But the real question is why?
Why do we think that Accounting and Finance for Banking is a difficult subject in the JAIIB exam? Is it because some of us are from non-commerce backgrounds?
So, now that the JAIIB Exam Dates for MAY 2024 will be declared and we will have a prescribed schedule of the dates to get ourselves registered for JAIIB MAY 2023 & the exam dates for MAY 2024. Therefore, we must too fix a schedule for studying (JAIIB AFM Study Material) so that we could clear the JAIIB 2024 exam in one attempt without facing any slack on our own part.
So, in this series of articles by learning sessions, we will make efforts so that you could study in a much better way and more convenient way so that we could achieve our goal.
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Let’s start
So there are four papers in the exam for IIBF JAIIB certification 2024.
- The 1st exam is Indian Economy & Indian Financial System with the help of IE&IFS Study Material MAY 2024
- 2nd one is Principles & Practices of Banking with the help of PPB Study Material MAY 2024
- 3rd one is Accounting & Financial Management for Bankers with the help of AFM Study Material MAY 2024
- 4th one is Retail Banking & Wealth Management with the help of RBWM Study Material MAY 2024
So first of all we will prepare for accounting and Finance for the bank because we think it is difficult but actually, that is not the truth. We have to prepare for all four papers in 45 days or one and a half months you can say. And we will study for one hour a day not more than that.
Important Topic:- AFM SYLLABUS PRIORITY AFM
JAIIB AFM EXAM STRATEGY FOR JAIIB EXAMS 2024
Day 1 for Accounting & Finance for Banking Paper 2024
Paper 1 – Accounting & Financial Management for Bankers
Book-keeping – Book Keeping is the art of recording, classifying and summarizing financial
transactions in a systematic manner in a particular financial year.
Accountancy – Accountancy is a wider term. It includes analysis and interpretation besides bookkeeping. Book-keeping is limited to recording, classifying and summarizing the financial transactions
Steps
- Recording in a book called Journal Entry
2. Classifying in a book called Ledger Posting
3. Summarizing on a format called Trial Balance
4. Preparation of Final Statements called Profit and Loss Account and Balance Sheet.
5. Analysis and Interpretation of the results thereof through Ratio Analysis, Cash Flow Analysis etc.
Read Also:- JAIIB AFM Notes – Accounting & Finance for Banking Short Notes Part 1
Branches of Accounting
- Stewardship Accounting: In the earlier days, rich people used to appoint, ”Stewards” to manage their property. The accounting practices used by them to present their financial matters is called Stewardship Accounting.
- Financial Accounting: Recording Financial transactions in a systematic manner in the books of accounts, summarizing in the form of Trial Balance and presenting the results thereof is called Financial accounting. Previously Single Entry concept was prevalent in which only one aspect of the transaction was recorded. Later on, the Double Entry concept was introduced in which two aspects of each transaction are recorded.
- Cost Accountancy: This is the process of ascertaining the cost of each unit, each department and each process. Steps are taken to curtail cost, make the product market worthy and increase profits.
- Management Accountancy: It contains tools and techniques to analyze the financial results and interpret them in a meaningful manner so that planning can be made and budgets can be prepared. Ratio Analysis, Cash Flow, Fund Flow, Capital Budgeting etc. come under the preview of Management accounting.
READ MORE: WILL I GET CREDIT FOR MY PREVIOUS JAIIB EXAM IN 2024
BASIC ACCOUNTING PROCEDURE from the AFM Syllabus 2024
Double Entry System
Double-entry bookkeeping means that each debit in an account will have a matching credit to another account. For proper recording of the transaction, the knowledge of the rules of ‘Debit’ and ‘Credit’ is essential. When to debit and when to credit depends upon the nature of the transaction.
In order to keep a full record of transactions, the business must keep:
i) The account of each person or firm with whom it deals;
ii) The account of each property in the business; and
iii) The account of each head of expense or income.
READ MORE: HOW TO CLEAR JAIIB IN 2024 EASILY ON THE FIRST ATTEMPT
What are the Three Types of Accounts?
Real, Personal and Nominal Accounts
There are mainly three types of accounts in accounting: Real, Personal and Nominal accounts, personal accounts are classified into three subcategories: Artificial, Natural, and Representative.
If you fail to identify an account correctly as either a real, personal or nominal account, in most cases, you will get end up recording incorrect journal entries.
1. Real Accounts
All assets of a firm, which are tangible or intangible, fall under the category of “Real Accounts“.
Tangible real accounts are related to things that can be touched and felt physically. A few examples of tangible real accounts are building, machinery, stock, land, etc.
Intangible real accounts are related to things that can’t be touched and felt physically. A few examples of such real accounts are goodwill, patents, trademarks, etc.
The golden rule for real accounts
| Debit what comes in |
| Credit what goes out |
Example
The transaction below shows the interaction of two different real accounts: one is furniture and the other is cash, both of them are assets of the company and hence classified as real accounts.
- Purchased furniture for 10,000 in cash
| Accounts Involved | Debit/Credit | Rule Applied |
| Furniture A/C | Debit | Real A/C – Dr. what comes in |
| To Cash A/C | Credit | Real A/C – Cr. What goes out |
*Amount will be 10,000 in both debit and credit.
JAIIB SYLLABUS PRIORITY FOR MAY 2024
| PPB Syllabus Priority MAY 2024 |
| AFM Syllabus Priority MAY 2024 |
2. Personal Accounts
These accounts are related to individuals, firms, companies, etc. A few examples of personal accounts include debtors, creditors, banks, outstanding/prepaid accounts, accounts of credit customers, accounts of goods suppliers, capital, drawings, etc.
Natural personal accounts: This type of personal account is the simplest to understand out of all and includes all of God’s creations who have the ability to deal, with who, in most cases, are people. E.g. Kumar’s A/C, Adam’s A/C, etc.
Artificial personal accounts: Personal accounts which are created artificially by law, such as corporate bodies and institutions, are called Artificial personal accounts. E.g. Pvt Ltd companies, LLCs, LLPs, clubs, schools, etc.
Representative personal accounts: Accounts that represent a certain person or a group directly or indirectly. E.g. Let’s say that wages are paid in advance to an employee – a wage prepaid account will be opened in the books of accounts. This wages prepaid account is a representative personal account indirectly linked to the person.
There are four types of Representative Personal Accounts:
· Pre-paid Expenses
· Outstanding Expenses
· Accrued Income and
· Income Received in Advance
The golden rule for personal accounts
| Debit the receiver |
| Credit the giver |
READ MORE: CLEAR MAY JAIIB EXAM 2024 IN A SINGLE ATTEMPT IN 15 DAYS
Example
The transaction below demonstrates the interaction between two different personal accounts, one of which is a private limited company and the other one is a bank.
- Paid Unreal Pvt Ltd. 24,000 by check
| Accounts Involved | Debit/Credit | Rule Applied |
| Unreal Pvt Ltd. A/C | Debit | Artificial Personal – Dr. the receiver |
| To Bank A/C | Credit | Artificial Personal – Cr. the giver |
*Amount will be 24,000 in both debit and credit.
3. Nominal Accounts
Accounts that are related to expenses, losses, incomes or gains are called Nominal accounts. The dictionary meaning of the word “nominal” is “existing in name only” and the meaning remains absolutely true in the accounting sense too, because nominal accounts do not really exist in physical form, but behind every nominal account, money is involved. E.g. Purchase A/C, Salary A/C, Sales A/C, Commission received A/C, etc.
The final result of all nominal accounts is either profit or loss which is then transferred to the capital account.
The golden rule for nominal accounts
| Debit all expenses & losses |
| Credit all incomes & gains |
READ MORE: JAIIB MAY EXAM NEW UPDATED SYLLABUS & LATEST STUDY MATERIAL 2024
Example
The following example shows a transaction where a nominal account deals with a real a/c.
- Purchased good for 15,000 in cash
| Accounts Involved | Debit/Credit | Rule Applied |
| Purchase A/C | Debit | Nominal A/C – Dr. all expenses |
| To Cash A/C | Credit | Real A/C – Cr. What goes out |
The amount will be 15,000 in both debit and credit.
LATEST JAIIB STUDY MATERIAL APPLICABLE FOR JAIIB MAY 2024
Access the JAIIB courses as per the latest prescribed JAIIB Syllabus for MAY 2024 exam through the following apps/browsers:
- Download Android App: LS PRO or IIBF LEARNING CENTER
- Download iOS App: My Institute (Code: gegkt)
- Visit the website for Exam Materials: iibf.info
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