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100+ Free CA Inter Advanced Accounting Practice Questions

ICAI CA Intermediate Paper 1: Advanced Accounting practice questions are available now; exam metadata is being verified.

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Under AS 7, Construction Contracts, contract revenue and contract costs are recognised by reference to the stage of completion when the outcome of the contract can be estimated reliably. This method is known as the:

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2026 Statistics

Key Facts: CA Inter Advanced Accounting Exam

100

Marks (3-hour paper)

ICAI Intermediate New Scheme

70/30

Descriptive / MCQ Split

ICAI Intermediate New Scheme

No

Negative Marking on MCQs

ICAI Examination Rules

40% / 50%

Paper / Aggregate Pass Marks

ICAI

AS 1-29

Accounting Standards Covered

ICAI Study Material

Group I

CA Intermediate Stage

ICAI New Scheme 2023

ICAI CA Intermediate Paper 1, Advanced Accounting, is a 100-mark, 3-hour Group I paper under the New Scheme 2023, with roughly 70% descriptive questions and a 30% compulsory MCQ section that carries no negative marking. The syllabus covers the framework and process of formulating Accounting Standards, application of AS 1 to AS 29, special transactions (ESOP, buy-back, equity shares with differential rights), company accounts (managerial remuneration, profit prior to incorporation, amalgamation under AS 14, internal reconstruction, branch and departmental accounts), accounting for branches including foreign branches under AS 11, and consolidated financial statements of a single subsidiary under AS 21. A candidate must score at least 40% in the paper and 50% aggregate in the group to pass.

Sample CA Inter Advanced Accounting Practice Questions

Try these sample questions to test your CA Inter Advanced Accounting exam readiness. Each question includes a detailed explanation. Start the interactive quiz above for the full 100+ question experience with AI tutoring.

1Under the ICAI standard-setting process, who is the apex body that issues Accounting Standards (AS) for non-corporate entities, and what is the role of the Accounting Standards Board (ASB)?
A.The ICAI Council issues AS for non-corporate entities after the ASB formulates them
B.The ASB issues standards directly without ICAI Council approval
C.SEBI issues AS for all entities including non-corporate
D.The Ministry of Corporate Affairs issues AS for non-corporate entities
Explanation: The ASB formulates Accounting Standards and the Council of ICAI issues them for non-corporate entities. For companies, the AS are notified by the Central Government (MCA) under the Companies (Accounting Standards) Rules. The ASB only drafts and recommends; it does not issue on its own authority.
2Which of the following is NOT one of the fundamental accounting assumptions identified in AS 1, Disclosure of Accounting Policies?
A.Going Concern
B.Materiality
C.Consistency
D.Accrual
Explanation: AS 1 recognises three fundamental accounting assumptions: Going Concern, Consistency, and Accrual. Materiality is a major consideration governing the selection of accounting policies, not a fundamental assumption. If a fundamental assumption is not followed, the fact must be disclosed.
3According to the Framework for Preparation and Presentation of Financial Statements, which qualitative characteristic requires that information should be free from material error and bias and faithfully represent transactions?
A.Relevance
B.Comparability
C.Reliability
D.Understandability
Explanation: Reliability is the qualitative characteristic under which information must be free from material error and bias and faithfully represent what it purports to represent. The Framework lists four principal qualitative characteristics: understandability, relevance, reliability, and comparability.
4Under the Framework, an asset is recognised in the balance sheet when it is probable that future economic benefits will flow to the entity and the asset has a cost or value that can be measured reliably. Which element does this recognition criterion relate to?
A.Income
B.Expense
C.Equity
D.Asset
Explanation: The Framework defines recognition criteria for each element. An asset is recognised when it is probable that future economic benefits will flow to the entity and its cost/value can be measured reliably. Equity is a residual and is not separately recognised through such criteria.
5The Framework describes two main bases of capital maintenance. Under the financial capital maintenance concept, profit is earned only if:
A.The net assets in money terms at the end exceed those at the beginning, after excluding owner contributions and distributions
B.The physical productive capacity of the entity at the end exceeds that at the beginning
C.Total revenue exceeds total cash expenses for the period
D.Closing inventory is valued at net realisable value
Explanation: Under financial capital maintenance, profit is earned only if the financial (money) amount of net assets at the end of the period exceeds that at the beginning, after excluding distributions to and contributions from owners. Physical capital maintenance, by contrast, focuses on operating/physical productive capacity.
6In the ICAI procedure for formulating an Accounting Standard, what document is issued for public comments before the final standard is issued?
A.A Guidance Note
B.An Exposure Draft
C.A Technical Release
D.An Announcement
Explanation: After the ASB prepares a draft, an Exposure Draft is circulated to ICAI members and other interested parties for public comment. Comments are considered before the ASB finalises and the Council issues the standard. Guidance Notes are recommendatory and separate from the AS-setting flow.
7Under AS 2, Valuation of Inventories, inventories should be valued at:
A.Cost only
B.Net realisable value only
C.Lower of cost and net realisable value
D.Higher of cost and net realisable value
Explanation: AS 2 requires inventories to be valued at the lower of cost and net realisable value (NRV). Cost includes purchase cost, conversion cost, and other costs to bring inventory to its present location and condition. NRV is the estimated selling price less estimated costs of completion and costs to make the sale.
8A company purchased inventory costing Rs. 1,00,000. Its estimated selling price is Rs. 1,20,000, estimated cost of completion is Rs. 15,000 and estimated selling costs are Rs. 10,000. Under AS 2, at what value should this inventory be carried?
A.Rs. 1,00,000
B.Rs. 1,20,000
C.Rs. 1,05,000
D.Rs. 95,000
Explanation: NRV = Selling price 1,20,000 - completion cost 15,000 - selling cost 10,000 = Rs. 95,000. Since NRV (95,000) is lower than cost (1,00,000), AS 2 requires valuation at the lower amount, Rs. 95,000, recognising the Rs. 5,000 write-down as an expense.
9Under AS 3, Cash Flow Statements, the purchase of property, plant and equipment for cash is classified as a cash flow from which activity?
A.Investing activities
B.Operating activities
C.Financing activities
D.Extraordinary activities
Explanation: AS 3 classifies the acquisition and disposal of long-term assets such as property, plant and equipment under investing activities. Operating activities relate to principal revenue-producing activities, while financing activities involve changes in the size and composition of owners' capital and borrowings.
10Under AS 4, Contingencies and Events Occurring After the Balance Sheet Date, the proposed dividend declared by the Board after the balance sheet date but before approval of the financial statements should be:
A.Recognised as a liability in the current year's financial statements
B.Not recognised as a liability but disclosed in the notes
C.Recognised directly in retained earnings without disclosure
D.Treated as a prior period item
Explanation: Following the amendment aligning AS 4 with the Companies Act, proposed dividends declared after the balance sheet date are not recognised as a liability at the reporting date; instead they are disclosed in the notes to accounts. They are recognised only when approved by shareholders.

About the CA Inter Advanced Accounting Practice Questions

Verified exam format metadata for ICAI CA Intermediate Paper 1: Advanced Accounting is pending. The practice questions above remain available while official exam length, timing, passing score, fee, and administrator details are reviewed.