CA Intermediate PAPER 1 : ADVANCED ACCOUNTING Syllabus

PAPER 1 : ADVANCED ACCOUNTING syllabus — full chapter and topic list

Expand any chapter to see its topics and sub-topics. This is the whole examinable outline for PAPER 1 : ADVANCED ACCOUNTING in CA Intermediate, not a summary of it.

1. 1

   Process of formulation of Accounting Standards

   3 topics

   • Indian Accounting Standards (IFRS converged standards) and IFRSs
   • Convergence vs Adoption
   • Objective and Concepts of carve outs
2. 2

   Framework for Preparation and Presentation of Financial Statements

   1 topic

   • Framework as per Accounting Standards
3. 3

   Applicability of Accounting Standards to various entities

   overview

   Examined as a single unit within PAPER 1 : ADVANCED ACCOUNTING — no further topic split in the official outline.

4. 4

   Application of Accounting Standards

   27 topics

   • AS 1 Disclosure of Accounting Policies
   • AS 2 Valuation of Inventories
   • AS 3 Cash Flow Statements
   • AS 4 Contingencies and Events Occurring After the Balance Sheet Date
   • AS 5 Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies
   • AS 7 Construction Contracts
   • AS 9 Revenue Recognition
   • AS 10 Property, Plant and Equipment
   • AS 11 The Effects of Changes in Foreign Exchange Rates
   • AS 12 Accounting for Government Grants
   • AS 13 Accounting for Investments
   • AS 14 Accounting for Amalgamations (excluding inter-company holdings)
   • AS 15 Employee Benefits
   • AS 16 Borrowing Costs Leases
   • AS 17 Segment Reporting
   • AS 18 Related Party Disclosures
   • AS 19 Leases
   • AS 20 Earnings Per Share
   • AS 21 Consolidated Financial Statements of single subsidiaries (excluding problems involving acquisition of Interest in Subsidiary at Different Dates, Cross holding, Disposal of a Subsidiary and Foreign Subsidiaries)
   • AS 22 Accounting for Taxes on Income
   • AS 23 Accounting for Investment in Associates in Consolidated Financial Statements
   • AS 24 Discontinuing Operations
   • AS 25 Interim Financial Reporting
   • AS 26 Intangible Assets
   • AS 27 Financial Reporting of Interests in Joint Ventures
   • AS 28 Impairment of Assets
   • AS 29 Provisions, Contingent Liabilities and Contingent Assets
5. 5

   Company Accounts

   4 topics

   • Schedule III to the Companies Act, 2013 (Division I)
   • Preparation of financial statements – Statement of Profit and Loss, Balance Sheet and Cash Flow Statement
   • Buy back of securities
   • Accounting for reconstruction of companies
6. 6

   Accounting for Branches including foreign branches

   overview

   Examined as a single unit within PAPER 1 : ADVANCED ACCOUNTING — no further topic split in the official outline.

PAPER 1 : ADVANCED ACCOUNTING flashcards for CA Intermediate

20 of 51 cards from the PAPER 1 : ADVANCED ACCOUNTING deck — real questions with worked answers.

1. What is the difference between 'Convergence' and 'Adoption' of IFRS?

   Adoption means implementing IFRS as issued by the IASB without any change. Convergence means developing national standards (Ind AS) that are in line with IFRS but allow certain modifications (carve-outs/carve-ins) to suit the country's legal, economic and regulatory environment.

2. What are 'carve-outs' in the context of Ind AS?

   Carve-outs are departures made in Ind AS from the corresponding IFRS to suit Indian conditions. Their objective is to address Indian economic/legal realities without distorting accounting principles. (Carve-ins are additional requirements added that are not in IFRS.)

3. Under the Framework for Preparation and Presentation of Financial Statements, what are the four qualitative characteristics of financial statements?

   Understandability, Relevance, Reliability, and Comparability.

4. What are the three fundamental accounting assumptions under AS 1 (Disclosure of Accounting Policies)?

   Going Concern, Consistency, and Accrual. If they are followed, no specific disclosure is required; if any is not followed, the fact must be disclosed.

5. What are the three major considerations governing the selection and application of accounting policies under AS 1?

   Prudence, Substance over Form, and Materiality.

6. Under AS 2, how is inventory valued?

   At the lower of cost and net realisable value (NRV).

7. Under AS 2, what is included in the 'cost of inventories'?

   Cost of purchase (purchase price + duties/taxes not recoverable + freight inwards − trade discounts/rebates), costs of conversion (direct labour + fixed and variable production overheads), and other costs incurred in bringing the inventories to their present location and condition.

8. Under AS 2, which cost formulas are permitted for inventory, and which is prohibited?

   FIFO and Weighted Average Cost are permitted. LIFO is not permitted. Specific identification is used for items that are not ordinarily interchangeable.

9. How is net realisable value (NRV) defined under AS 2?

   NRV is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.

10. Under AS 3, what are the three activities into which cash flows are classified?

    Operating activities, Investing activities, and Financing activities.

11. Under AS 3, what are the two methods of reporting cash flows from operating activities?

    The Direct method (gross cash receipts and payments) and the Indirect method (net profit/loss adjusted for non-cash items and changes in working capital).

12. Under AS 3, how are 'cash and cash equivalents' defined?

    Cash comprises cash on hand and demand deposits. Cash equivalents are short-term, highly liquid investments readily convertible to known amounts of cash and subject to insignificant risk of changes in value (generally maturity of 3 months or less from acquisition).

13. Under AS 4, what is the difference between an 'adjusting' and a 'non-adjusting' event occurring after the balance sheet date?

    Adjusting events provide additional evidence of conditions existing at the balance sheet date and require adjustment of the financial statements. Non-adjusting events relate to conditions arising after the balance sheet date and are only disclosed (not adjusted).

14. Under AS 4 (revised), how are proposed dividends treated?

    Proposed dividends declared after the balance sheet date but before approval of financial statements are NOT recognised as a liability; they are disclosed in the notes to accounts.

15. Under AS 5, how are 'prior period items' defined?

    Prior period items are income or expenses which arise in the current period as a result of errors or omissions in the preparation of financial statements of one or more prior periods. They are disclosed separately so their impact on current profit/loss can be perceived.

16. Under AS 5, what is the difference between a 'change in accounting policy' and a 'change in accounting estimate'?

    A change in accounting policy is a change in the principle/basis of accounting and is permitted only if required by statute, an accounting standard, or for better presentation. A change in accounting estimate results from new information and is accounted for prospectively in the period of change (and future periods).

17. Under AS 5, how are 'extraordinary items' treated?

    Extraordinary items are income/expenses arising from events clearly distinct from ordinary activities and not expected to recur. They are disclosed separately in the statement of profit and loss in a manner that their impact on current profit/loss can be perceived.

18. Under AS 7, which method of revenue recognition is used for construction contracts?

    The Percentage of Completion Method (POCM). Contract revenue and costs are recognised by reference to the stage of completion of the contract activity at the reporting date.

19. Under AS 7, how is an expected loss on a construction contract treated?

    When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately, irrespective of the stage of completion.

20. Under AS 9, when is revenue from the sale of goods recognised?

    When the seller has transferred to the buyer the property in the goods (significant risks and rewards of ownership), no significant uncertainty exists regarding the amount of consideration, and it is reasonable to expect ultimate collection.

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