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100+ Free CA Inter Advanced Accounting Practice Questions

Prepare for the ICAI CA Intermediate Paper 1: Advanced Accounting exam with instant access — no signup required.

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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 Exam

CA Intermediate Paper 1 Advanced Accounting under the ICAI New Scheme 2023 tests the application of Accounting Standards, special transactions such as ESOP and buy-back, company accounts including amalgamation and internal reconstruction, branch and departmental accounts, foreign branches, and consolidated financial statements of a single subsidiary.

Assessment

Question count not published by the exam provider

Time Limit

3 hours (100 marks)

Passing Score

40% in the paper and 50% aggregate across the group (ICAI)

Exam Fee

Approximately INR 1,500 for a single group examination, plus one-time ICAI registration fees (The Institute of Chartered Accountants of India (ICAI))

CA Inter Advanced Accounting Exam Content Outline

5-10%

Introduction to Accounting Standards and Framework

Process of formulation of Accounting Standards, the conceptual framework for preparation and presentation of financial statements, qualitative characteristics, recognition criteria, and capital maintenance concepts.

30-40%

Application of Accounting Standards (AS)

Application of AS 1 to AS 29 including disclosure of policies, inventories, cash flows, contingencies, PPE, foreign exchange, grants, investments, leases, employee benefits, segment reporting, EPS, deferred tax, intangibles, impairment, and provisions.

10-15%

Special Transactions

Accounting and legal provisions for employee stock option plans (ESOP), buy-back of securities, and equity shares with differential rights under the Companies Act, 2013.

20-25%

Company Accounts

Managerial remuneration under Sections 197 and 198, profit or loss prior to incorporation, amalgamation under AS 14, internal reconstruction and capital reduction, and branch and departmental accounts.

8-12%

Accounting for Branches including Foreign Branches

Dependent and independent branches, debtors and stock-and-debtors systems, invoicing above cost and stock reserve, wholesale branches, and translation of integral and non-integral foreign operations under AS 11.

10-15%

Consolidated Financial Statements of a Single Subsidiary

Control and consolidation under AS 21, goodwill or capital reserve on consolidation, minority interest, pre- and post-acquisition profits, intra-group elimination, and equity method and proportionate consolidation under AS 23 and AS 27.

How to Pass the CA Inter Advanced Accounting Exam

What You Need to Know

  • Passing score: 40% in the paper and 50% aggregate across the group (ICAI)
  • Assessment: Question count not published by the exam provider
  • Time limit: 3 hours (100 marks)
  • Exam fee: Approximately INR 1,500 for a single group examination, plus one-time ICAI registration fees

Keys to Passing

  • Work through all 100 available questions
  • Review every answer and explanation
  • Track weak areas and revisit them
  • Use our AI tutor for tough concepts

CA Inter Advanced Accounting Study Tips from Top Performers

1Prioritise the Accounting Standards, which form the largest share of the paper and underpin company accounts and consolidation problems.
2Practice amalgamation, internal reconstruction, and consolidation problems repeatedly, as they are high-weight and computation-heavy.
3Learn the Companies Act provisions for buy-back, ESOP, and managerial remuneration precisely, including statutory limits and reserve transfers.
4Attempt the compulsory MCQ section in full because it carries no negative marking.
5Work through full-length 3-hour mock papers to build the speed needed for the descriptive section.
6Maintain a formula and journal-entry sheet for stock reserve, purchase consideration, and capital reduction entries.

Frequently Asked Questions

What is the format of CA Intermediate Paper 1 Advanced Accounting?

Under the ICAI New Scheme 2023, Paper 1 is a 100-mark, 3-hour paper. About 70% of the marks are from descriptive questions and 30% from a compulsory multiple-choice section. The MCQ section carries no negative marking.

What is the passing requirement for CA Intermediate Advanced Accounting?

ICAI requires a candidate to score at least 40% marks in the paper and 50% aggregate across all papers of the group to pass. Group I includes Advanced Accounting along with the other registered papers.

Which Accounting Standards are covered in CA Inter Advanced Accounting?

The paper covers the application of the applicable Indian Accounting Standards from AS 1 to AS 29, including inventories, cash flow statements, PPE, foreign exchange, leases, employee benefits, EPS, deferred tax, intangibles, impairment, provisions, and consolidation standards AS 21, AS 23, and AS 27.

Is there negative marking in the MCQ section?

No. ICAI has specified that the objective (MCQ) portion of CA Intermediate papers, including Advanced Accounting, carries no negative marking. Candidates should therefore attempt every MCQ.

What special transactions are tested in Paper 1?

Special transactions include accounting for employee stock option plans (ESOP), buy-back of securities, and equity shares with differential rights, along with their legal provisions under the Companies Act, 2013.

How much does the CA Intermediate examination cost?

The ICAI examination fee for a single group of CA Intermediate is approximately INR 1,500, in addition to one-time registration and study fees charged at enrolment. Candidates should check the ICAI portal for current amounts.

Does CA Inter Advanced Accounting cover consolidated financial statements?

Yes. The syllabus covers consolidated financial statements of a single subsidiary under AS 21, including goodwill or capital reserve on consolidation, minority interest, pre- and post-acquisition profits, and elimination of intra-group transactions.

Is this practice bank descriptive or multiple-choice?

This free practice bank provides 100 multiple-choice questions as knowledge preparation. The actual ICAI paper is mainly descriptive with a 30% compulsory MCQ section, but MCQ practice strengthens conceptual recall for both formats.