CA (Chartered Accountancy) Intermediate: Cost and Management Accounting and Taxation Syllabus

Intermediate: Cost and Management Accounting and Taxation syllabus — full chapter and topic list

Expand any chapter to see its topics and sub-topics. This is the whole examinable outline for Intermediate: Cost and Management Accounting and Taxation in CA (Chartered Accountancy), not a summary of it.

1. 1

   Cost Ascertainment and Elements of Cost

   4 topics

   • Introduction to Cost and Management Accounting
     • Cost concepts, classification and cost sheet
   • Material Cost
     • Inventory control techniques and pricing of issues
   • Employee (Labour) Cost
     • Labour turnover and incentive schemes
   • Overheads - Absorption Costing Method
     • Allocation, apportionment and absorption
2. 2

   Cost Accounting Methods and Techniques

   5 topics

   • Cost Accounting Systems and Reconciliation
   • Job, Batch, Contract and Process Costing
     • Normal and abnormal loss; equivalent units
   • Service Costing and Joint Products
   • Standard Costing and Variance Analysis
     • Material, labour, overhead and sales variances
   • Marginal Costing and Budgetary Control
     • Cost-volume-profit analysis and break-even
3. 3

   Income Tax Law

   5 topics

   • Basic Concepts and Residential Status
     • Scope of total income and incidence of tax
   • Heads of Income
     • Salaries and income from house property
     • Profits and gains of business or profession
     • Capital gains and income from other sources
   • Clubbing, Set-off and Deductions
     • Deductions under Chapter VI-A
   • Computation of Total Income and Tax Liability
   • TDS, Advance Tax and Return Filing
4. 4

   Goods and Services Tax (GST)

   4 topics

   • GST Framework, Concepts and Charge
     • Supply, levy and collection
   • Time, Place and Value of Supply
   • Input Tax Credit
   • Registration, Tax Invoice and Returns
     • Payment of tax and e-way bill

Intermediate: Cost and Management Accounting and Taxation flashcards for CA (Chartered Accountancy)

25 of 69 cards from the Intermediate: Cost and Management Accounting and Taxation deck — real questions with worked answers.

1. What is Cost Accounting?

   Cost Accounting is the process of ascertaining and recording costs. It applies cost concepts, techniques and principles to ascertain the cost of products/services, control costs, and aid managerial decision-making.

2. Distinguish between Cost Accounting and Management Accounting in terms of objective.

   Cost Accounting focuses on ascertainment and control of cost. Management Accounting uses cost and financial data to assist management in planning, decision-making and control. Management Accounting is broader and forward-looking.

3. Define 'Cost', 'Costing', 'Cost Accountancy'.

   Cost is the amount of expenditure (actual or notional) incurred on a given thing. Costing is the technique and process of ascertaining costs. Cost Accountancy is the application of costing and cost accounting principles, methods and techniques to the science, art and practice of cost control and ascertainment of profitability.

4. What is a Cost Centre? Name its two main types.

   A Cost Centre is a location, person or item of equipment for which costs are ascertained and used for cost control. Two main types: (1) Personal cost centre (a person/group) and (2) Impersonal cost centre (a location or item of equipment).

5. Differentiate between Cost Unit and Cost Centre.

   A Cost Centre is a location/person/equipment for which costs are accumulated. A Cost Unit is a unit of product or service in terms of which costs are expressed (e.g., per tonne, per litre, per passenger-km).

6. How are costs classified by behaviour (variability)?

   By behaviour costs are classified as: (1) Fixed cost (remains constant in total within a range), (2) Variable cost (varies in total proportionately with output), and (3) Semi-variable/semi-fixed cost (has both fixed and variable elements).

7. What is the difference between a Product Cost and a Period Cost?

   Product (inventoriable) costs are costs assigned to products and held in inventory until sold (e.g., direct materials, direct labour, factory overhead). Period costs are charged against revenue in the period incurred (e.g., selling and administrative expenses).

8. State the components/build-up of a Cost Sheet (the cost elements in order).

   Prime Cost = Direct Material + Direct Labour + Direct Expenses. Works/Factory Cost = Prime Cost + Factory Overhead. Cost of Production = Works Cost + Administration Overhead. Cost of Sales = Cost of Production + Selling & Distribution Overhead. Sales = Cost of Sales + Profit.

9. Write the formula for Prime Cost.

   $$\text{Prime Cost} = \text{Direct Materials} + \text{Direct Labour} + \text{Direct Expenses}$$

10. How is Cost of Goods Sold (COGS) computed in a cost sheet?

    $$\text{COGS} = \text{Cost of Production} + \text{Opening Finished Goods} - \text{Closing Finished Goods}$$

11. What is Material Cost and how is it categorised?

    Material Cost is the cost of commodities/substances supplied to an undertaking. It is categorised as Direct Material (traceable to and forming part of the product) and Indirect Material (cannot be conveniently allocated, e.g., lubricants, consumables).

12. Write the Economic Order Quantity (EOQ) formula and define its terms.

    $$EOQ = \sqrt{\frac{2AO}{C}}$$ where $A$ = annual demand/consumption, $O$ = ordering cost per order, and $C$ = carrying (holding) cost per unit per annum.

13. At EOQ, what is the relationship between total ordering cost and total carrying cost?

    At the Economic Order Quantity, total annual ordering cost equals total annual carrying cost; the total inventory-associated cost (ordering + carrying) is minimised.

14. Give the formula for Re-order Level (ROL).

    $$\text{ROL} = \text{Maximum Usage} \times \text{Maximum Lead Time}$$ Alternatively, $\text{ROL} = \text{Safety Stock} + (\text{Average Usage} \times \text{Average Lead Time})$.

15. Give the formulas for Maximum Stock Level and Minimum Stock Level.

    $$\text{Maximum Level} = \text{ROL} + \text{ROQ} - (\text{Min. Usage} \times \text{Min. Lead Time})$$ $$\text{Minimum Level} = \text{ROL} - (\text{Avg. Usage} \times \text{Avg. Lead Time})$$

16. Give the formula for Average Stock Level.

    $$\text{Average Stock Level} = \text{Minimum Level} + \frac{1}{2}\,\text{Re-order Quantity}$$ or $\dfrac{\text{Maximum Level} + \text{Minimum Level}}{2}$.

17. What is the ABC method of inventory control?

    ABC analysis is selective inventory control based on value: 'A' items are high value/few in number (tight control), 'B' items are moderate value/moderate quantity, 'C' items are low value/large quantity (loose control). Control effort is proportional to value.

18. Compare FIFO and LIFO methods of pricing material issues.

    FIFO (First-In-First-Out) issues materials at the earliest purchase price; closing stock reflects recent prices. LIFO (Last-In-First-Out) issues at the most recent price; closing stock reflects older prices. In rising prices, FIFO gives lower charge and higher profit; LIFO gives higher charge and lower profit.

19. How is the issue price computed under the Weighted Average method?

    $$\text{Weighted Avg. Price} = \frac{\text{Total Cost of Materials in Stock}}{\text{Total Quantity in Stock}}$$ recomputed after each receipt; issues are priced at this average.

20. What is Inventory Turnover Ratio and what does a high ratio indicate?

    $$\text{Inventory Turnover Ratio} = \frac{\text{Cost of Materials Consumed}}{\text{Average Inventory}}$$ A high ratio indicates fast-moving stock and efficient inventory use; a low ratio signals slow-moving or obsolete stock.

21. Define Employee (Labour) Cost and distinguish direct from indirect labour.

    Employee cost is the benefit paid/payable to employees for their services. Direct labour cost is traceable to a specific product/job (e.g., machine operator's wages). Indirect labour cannot be conveniently identified with a product (e.g., supervisor, maintenance staff) and is treated as overhead.

22. What is Labour Turnover? State the formulas under the Separation and Replacement methods.

    Labour turnover is the rate of change in the workforce. $$\text{Separation Method} = \frac{\text{No. of Separations}}{\text{Avg. No. of Workers}} \times 100$$ $$\text{Replacement Method} = \frac{\text{No. of Replacements}}{\text{Avg. No. of Workers}} \times 100$$

23. Write the Flux method formula for labour turnover.

    $$\text{Flux Method} = \frac{\text{No. of Separations} + \text{No. of Replacements (or Accessions)}}{\text{Average No. of Workers}} \times 100$$

24. Explain the Halsey premium bonus plan and its bonus formula.

    Under the Halsey plan, a worker gets guaranteed time wages plus a bonus of 50% of the time saved. $$\text{Bonus} = 50\% \times (\text{Time Saved}) \times \text{Rate per hour}$$ $$\text{Earnings} = (\text{Time Taken} \times \text{Rate}) + \tfrac{1}{2}(\text{Time Saved}) \times \text{Rate}$$

25. Explain the Rowan premium bonus plan and its earnings formula.

    Under the Rowan plan, bonus is the proportion of time saved to time allowed, applied to time wages. $$\text{Earnings} = (\text{Time Taken} \times \text{Rate}) + \frac{\text{Time Saved}}{\text{Time Allowed}} \times \text{Time Taken} \times \text{Rate}$$

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