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VOL: 3, No.: 3 , March , 2018 ISSUE

CMA STUDENTS’

INTERMEDIATE

TOLL FREE 18003450092 / 1800110910

Behind every successful business decision, there is always a CMA

The ChairmanMessage from

CMA Manas Kumar ThakurCMA Manas Kumar ThakurCMA Manas Kumar Thakur

STUDENTS’ E-bulletin MARCH 2018, ISSUEIntermediateVOL: 3, No.: 3

Behind every successful business decision, there is always a CMA i

CCCOOONNNTTTEEENNNTTTSSSTTTCCCOOONNN EEENNNTTTSSSKnowledge Update -

Message from the Chairman -



Group : I Paper 5: Financial Accounting (FAC) -

Group: I Paper 6: Laws & Ethics (LNE) -

Group: I Paper 7: Direct Taxation (DTX) -

Group: I Paper 8: - Cost Accounting (CAC)-

Group: II Paper: 9, Part - i: Operations Management & Strategic Management

Operations Management (OMSM)-

Group: II Paper: 9, Part - ii: Operations Management & Strategic Management -

Strategic Management (OMSM)

Group: II Paper: 10: Cost & Management Accounting and Financial Management (CMFM) Group: II Paper 11: Indirect

Group: II Paper 12: Company

Submissions

Examination Time Table

Message from the Directorate

Snapshots

Leadership Matrix

Taxation (ITX)

Accounts & Audit (CAA)

of Studies

i

1

2

8

12

16

20

23

28

32

38

41

44

46

47

48

Practical Advice45

In this section of e-bulletin we shall have a series of discussion on each of these chapters to provide a meaningful assistance to the students in preparing themselves for the examination at the short end and equip them with sufficient knowledge to deal with real life complications at the long end.

KNOWLEDGEKNOWLEDGEKNOWLEDGEUpdateUpdateUpdate


Behind every successful business decision, there is always a CMA 1

Your Preparation Quick Takes

GROUP: 1, PAPER: 5

FINANCIALACCOUNTING ACCOUNTING (FAC)(FAC)ACCOUNTING (FAC)

CMA (Dr.) Nibir GoswamiAssociate Professor in CommerceVidyasagar Mahavidyalaya, W.B.He can be reached at:[email protected]



2



Learning Objective:

· Students will demonstrate their knowledge of the fundamental and technical concepts of

accounting.

· Students will reveal critical-thinking and problem-solving skills.

· Students will exhibit the ability to recognize when change is appropriate, to adapt to

change as it occurs, and to take the lead in creating change.

· Students will display a sense of responsibility and a capacity for the subject after learning

PART – 3 (i): PREPARATION OF FINAL ACCOUNTS

NTRODUCTION:

I In earlier issues we have already discussed the contents in part 3 (a) (ii) & (iii) i.e. preparation of

financial statements of Non profit making concerns and preparation of financial statements from incomplete

records. Now in this issue we will discuss the method of preparation of Trading account, Profit and loss account and

Balance Sheet of sole proprietorship concerns only.

Final accounts are prepared in three parts:

1. Trading Account

2. Profit and Loss account

3. Balance Sheet

The objectives of preparing the first two accounts are to know the operating result. From trading account we come to know

the Gross profit by comparing the direct income and direct expenses. From profit and loss account we ascertain the net

profit by comparing the indirect operating income and indirect operating expenses. Balance sheet is not an account. It is a

statement showing the financial position of the business classifying its assets and liabilities. The trading account and profit

and loss account comprises of all nominal accounts and the balance sheet includes all real and personal accounts.

METHOD OF PREPARING FINAL ACCCOUNTS:�A. TRADING ACCOUNT

B. PROFIT AND LOSS ACCOUNT

C. BALANCE SHEET

TRADING ACCOUNT:

Here to ascertain the gross operating result cost of goods sold is compared with sales. The simple formula to calculate gross

profit is (sales – cost of goods sold). Cost of goods sold is = (Opening stock + Purchase + Direct expenses – Closing stock).

This can be represented in the following format :

Trading account

*Valued at cost or market price whichever is lower.

PROFIT AND LOSS ACCOUNT:

Here gross profit is adjusted with the indirect expenses and indirect incomes to find out net profit / loss.

To opening stock By sales

To purchase Less returns

Less returns By closing stock*

To wages/direct expenses By abnormal loss

Add/less: due / advance (stock destroyed by fire)

To p/l a/c : By p/l a/c :

(GP transferred) (gross loss transferred)

Total Total

3



The following format will help you to understand P/L account.

Profit and loss account

BALANCE SHEET

All assets are recorded in the right hand side and liabilities on the left hand side of a balance sheet. As per the basic

accounting equation the total of sides must tally.

Method of preparing:

Normally final accounts are prepared from the ledger balances. Trial balance may also be given to prepare final account. All

items in the trial balance should be posted once to any of the above three part depending on its nature. There may be some

additional information for which adjustment entry is required to be passed. Effect of these adjustments must be posted

twice in any of the three parts depending on the nature of the transaction.

For example if there is an outstanding rent as an additional information, it should be added to Rent a/c in p/l a/c and

should be recorded as a liability in the balance sheet. However, if outstanding rent is already there in the trial balance it will

be posted once to the balance sheet as liability.

Let us illustrate the whole process with an example.

The trial balance of a business is given below:

To Salaries By Gross profit c/d

To Rent By Discount received

To printing & Stationery By Interest Received

Add/less: due / advance By capital account

To Discount allowed (net loss transferred)

To Bad debts By Provision for bad debt (old prov.)

To Depreciation

To Provision for bad debt(new prov.)

To Abnormal loss (net of claim)

To Other indirect expenses

To Capital account By p/l a/c :

(NP transferred) (gross loss transferred)

Total Total

ITEM DR CR ITEM DR CR

Returns 25900 10900 Purchase 340000

Disc. received 5200 Reserve 75000

Sales 612700 Wages 65800

Commission 11500 Discount allowed 6500

Bills receivable 60000 Sundry debtors 85800

Carriage inward 14900 Freight 12400

Plant &machinery 85600 Bills payable 44800

Investments 22400 Furniture 48600

Sundry creditors 40000 Carriage outward 15200

Salaries 15500 Opening stock 35900

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Prepare Trading Account and Profit and Loss Account for the year ended 31.12.2017 and a balance sheet as on that date

after taking into account the following adjustments:

1. The market price of the closing stock is Rs. 100000 which includes a profit margin of Rs. 15000.

2. Outstanding liabilities for salaries Rs.4500 and for wages Rs. 9800

3. Depreciate Furniture by 15 % and Plant and Machinery by 20 %

4. Sundry Debtors include Rs. 1800 as bad which is to be written off.

5. Create a provision for bad debt @ 5 % on sundry debtors.

6. Goods distributed as free sample Rs. 500.

7. Goods lost by fire Rs. 20800 and insurance claim admitted for Rs. 16000.

8. Goods drawn for personal use Rs. 2100.

9. Commission received Rs. 1500 is yet to be earned.

Solution:

First scan the items in the Trial Balance to identify their positions in this way

Freehold premises 105000 Cash at bank 24700

Drawings 5300

Capital 150000 Cash in hand 1600

6% Bank Loan 20000 Prov. For D/D 1000

971100 971100

ITEM POSITION TREATMENT ITEM POSITION TREATMENT

Returns Trading Adjusted

against sales

and purchase

Purchase Trading Expense

Disc. received p/l Income Reserve B/S Liability

Sales Trading Income Wages Trading Expenses

Commission p/l Income Discount allowed p/l Expenses

Bills receivable B/S Asset Sundry debtors B/S Asset

Carriage inward Trading Expense Freight Trading Expenses

Plant &machinery B/S Asset Bills payable B/S Liability

Investments B/S Asset Furniture B/S Asset

Sundry creditors B/S Liability Carriage outward p/l Expenses

Salaries p/l Expense Opening stock Trading

Freehold premises B/S Asset Cash at bank B/S Asset

Capital B/S Liability Cash in hand B/S Asset

Drawings B/S Deducted

from capital

6% Bank loan B/S Liability Prov for D/D P/L Adjusted

against new

prov.

5



You have almost done the sum. Now consider the adjustment entries one by one which will be posted twice.

Closing stock will be posted to trading account as well as in the balance sheet as an asset

Outstanding expenses will be added with respective item and will be posted to the liability side of the balance sheet.

Depreciation will be posted to the P/L a/c and will be deducted from the respective asset in the balance sheet.

Bad debt will be debited to P/L a/c and will be deducted from the sundry debtors in the balance sheet. Provision will be

debited in the P/L a/c and again will be deducted from the sundry debtors.

Goods distributed as free sample is to be treated as advertisement expenses and to be debuted to P/L A/C. Since it an

outflow of stock it is to be either credited in the trading account or may be deducted from purchase.

Goods lost by fire will also be credited to trading account as an outflow of stock and will be debited to P/L Account as loss

(after adjusting the insurance claim.). So the insurance claim admitted will be posted to the asset side of the balance sheet

as the amount is expected to be received shortly.

Commission that is received but not yet earned is a liability and to be posted to the Balance sheet accordingly. At the same

time this is to be deducted from the commission earned in the P/L account since it is not yet earned in this year.

Goods drawn for personal use is again an item of outflow of stock and may be credited to trading Account or may be

deducted from Purchase. This is to be deducted from the Capital account as well as erosion of capital.

6% interest on Bank loan is also to be provided. Here you can assume the loan is taken at the mid of the year and in that case

the interest to be debited to P/L Account will be 6/100x20000x6/12 = 600/-. As a liability this is again to be posted to the

Balance sheet accordingly.

Now keep on posting as scanned above. This is shown below:

Trading account for the year ended 31.12.2017

*Rs.100000-15000 = Rs.85000.(TAKEN AT COST)

Profit and loss account for the year ended 31.12.2017

To Opening stock 35900 By Sales 612700

To Purchase 340000 Less returns (25900)

Less returns (10900) By Closing stock* 85000

Less free sample (500)

Less drawings (2100)

To Wages/direct expenses 65800 By Abnormal loss 20800

Add/less: due / advance +9800 (Goods lost by fire)

To Carriage inward 14900

To Freight 12400

To P/L a/c : 227300

(GP transferred)

Total 692600 Total 692600

To Salaries 15500 By Gross profit c/d 227300

Add: due +4500 By Discount received 5200

By Commission 11500

Less not yet earned (1500)

To Abnormal loss (20800-16000) 4800

To Discount allowed 6500

6



Balance sheet as on 31.12.2017

To Bad debts 1800

To Depreciation: On Plant 7290

On Furniture 17120

To Provision for bad debt(new prov.) 4200

Less Old provision (1000)

To Interest on bank loan 600

To carriage outward 15200

To Advertisement (free sample) 500

To Capital account 165490

(NP transferred)

Total 242500 Total 242500

Liabilities Rs Assets Rs

Capital 150000 Freehold premises 105000

Add NP +165490 Plant and machinery 85600

Less Drawings (5300+2100) (7400)

Reserves 75000 Less depreciation (17120)

Sundry creditors 40000 furniture 48600

Bills payable 44800 Less depreciation (7290)

Outstanding salaries 4500 investments 22400

Outstanding wages 9800 Closing stock 85000

Accrued interest 600 Sundry debtors 85800

Unearned Commission 1500 Less bad debt (1800)

6% Bank loan 20000 Less prov for bad debt (4200)

Bills receivable 60000

Cash at bank 24700

Cash in hand 1600

Insc. Claim admitted 16000

504290 504290

7


GROUP: 1, PAPER: 6

LAWS& ETHICS & ETHICS (LNE)(LNE)& ETHICS (LNE)



CA Partha Ray He can be reached at:[email protected]

Syllabus StructureA Commercial Laws 30%B Industrial Laws 25%C Corporate Law 35%D Ethics 10%

A 30%

C 35%D 10%

B 25%

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Learning Objectives:

Prior to start discussing on the Paper, we need to understand few basic points about the paper. Unlike other papers, this particular may turn to be very interesting and scoring as well, provided you pay attention to the points discussed below:

Read the Act carefully and try to know the meaning of the contents in it,

All the Acts are having practical implications in the real life world and it will help you to solve

the problems in your real life situations once you join in the industry and / or practicing field,

Answers should be specific and to the point,

Please don't try to elaborate your answers adding irrelevant terms and items ; it may penalise

you With the Tips given here, please follow the Suggested Answers and Mock Test Papers of

the Institute to have a fair idea about writing the paper in the examination.

LAW & ETHICS

In continuation to the points covered in the earlier issues of the E-Bulletin, we continue to discuss certain points on The Indian Contract Act,1872 , with a totally

new approach.

With Mission CMA in mind, the students are advised to study this paper with a practical approach, as if the points concern them and they are given to deal with it as a professional. As a CMA in the making whether you decide to get employed or be self-employed and employ people, you will have to deal with Offers and Acceptances legally and establish Legal relationship for lawful consideration and perform your professional duties. Keeping that in mind, you have to study this subject seriously.

The first TIP is that you must start thinking like A Teacher. You must read the Bear Act and the Sections and start asking questions to yourself and find your own answers.

Let us understand the meaning of Bailment and the different kinds of bailment. Please read Sec.148 of the Contract Act.

1. Bailment is actually the delivery of goods by one person to another.

2. It has to be for some purpose ; and 3. when that purpose is accomplished, the goods are

to be returned or disposed off according to the directions of the person delivering the goods. ( Please read Sec.148 of the Contract Act,1872).

So, we have two parties – a person who delivers the goods –called the and the other person to whom the Bailorgoods are delivered – called the In this case, the Bailee.transaction is called Bailment.

It must be remembered that, Bailment deals with only movement of goods and money transaction is not bailment Bailment may be of two . Moreover, types –

a) in which neither the bailor nor the bailee is entitled to any remuneration- this is called Gratuitous Bailment ; and

b) where either the bailor or the bailee is entitled to a remuneration – this is called Bailments

for reward. So, we know that the other person to whom the goods are delivered – called the That raises the question – Bailee.What are the duties of the Bailee ? The answer is :

1. The bailee is bound to take good degree of care of the goods .Please read Sec.151

2. The bailee must not make unauthorized use of the goods received by him, if he does so, he sall be responsible to make good all the damages to the goods or pay compensation to the Bailor. For example – M gives his motor car to N for personal use only. N starts hiring out that motor car and the car meets with an accident. N is liable to compensate M for the damages to the motor car. Please read Sec.154 .

3. In case, the Bailee mixes his own goods with that of the Bailor,a) both the with the consent of the Bailor,

b a i l o r a n d t h e b a i l e e s h a l l h a v e proportionate share of interest in the goods thus produced. However,

b) if the Bailee mixes his own goods with that of the Bailor, of the without the consentBailor, in such case, if the goods can be separated or divided, the property in the goods remains with the respective parties. Here, the Bailee is bound to bear the cost of separating or dividing the goods ,including any incidental damaged to those goods.

c) Where the Bailee mixes his own goods with that of the Bailor, of without the consentthe Bailor and it is impossible to separate the goods bailed and deliver them back, the bailor is entitled to be compensated by the bailee for the loss of the goods. Please read Sec.157 .

4. It is the duty of the bailee to return or deliver the good s bac k ac c or d in g to the directions of the bailor as soon as the time for return or delivery of the goods bailed has expired or the purpose for which the goods were bailed is accomplished. Please read Sec.160. If the goods are not returned or delivered back to the bailor, the bailee is responsible to compensate the bailor for any loss, destruction or deterioration of the goods from the time those were to be returned or delivered. Please

9



read Sec.161.5. Even if there is no contract , it is the duty of the

bailee to deliver to the bailor, any increase or profit derived from the goods bailed. For example, X left his pet dog with P for safe custody and care while X was on official tour for 1 month. The dog, delivered some kittens after a few days. P is bound to deliver the mother dog as well as all the kittens to X.

Law of Agency

Let us know what is an Agency ?U n d e r t h e L a w o f A g e n c y , o n e p a r t y appoints/entrusts/authorizes a second party to do something legally and/or deal with a Third Party on behalf of the First Party to build a fiduciary contractual relationship between the Principal and the Third Party/parties. The First Party is called the Principal, andthe Second Party is called the Agent.

It must be remembered that, the Agent is bound to work with the scope and authority given by the Principal . If the Agent does anything beyond the scope given by the Principal, the Principal will be bound to the Third Party. However, the Principal can sue the Agent for stepping beyond his authority, since it is a case of Breach of Contract. Please refer Sec.182 of the Contract Act.

Let us take an example – X Insurance Co. appoints Mr.Z to collect premium in cash from the policy holders. Here X Insurance Co. is the Principal and Mr.Z is the Agent. When the policy holder pays the money to Mr.Z, he (the policy holder) is discharged of his duty to pay the premium to the Insurance Company. Now let us raise a question – What is the Test of Agency ?

One must remember that, whenever the Agent can bind the Principal for act done on his (the Principal's )behalf , the agency exists. It is for this reason that a spouse is not necessarily the agent of the other, unless specific authority is given to him/her, but an Authorized Representative – say a lawyer, holding Power of Attorney is an Agent. So, the next question coming to mind is – What are the Duties of an Agent ? Please think logically and frame your answer –. The obvious duties have to be :

1. To conduct business as per the directions of the principal. (If the principal does not specify anything , the agent must act as per expected normal / prevailing customs and practices in the trade.

2. To exercise normal skills in executing his duties in the normal course of business

3. T o k e e p p r o p e r a c c o u n t s o f h i s dealings/transactions on behalf of the principal and submit the same periodically or on demand as may be laid in the agreement.

4. To act as a prudent person and communicate and seek instructions and guidance from the principal , if possible.

5. To refrain from doing something on his own without the consent of the Principal. In such case, the principal can repudiate such dealings. For example, A appoints B to sell his car at the best possible price. B himself buys the car in another person's name – say C . A can repudiate the transaction if he feels that the price was unreasonably low or that the dealing was disadvantageous for A.

6. To do business only on behalf of the principal and never deal in the business for his own benefit without the knowledge of the Principal. If the agent does anything on his own and derives any personal benefit, the principal is entitled to claim all the benefits derived by that agent from such discreet transactions.

7. To pay to the principal all sums collected on behalf of the principal minus the official expenses and his remunerations as per laid terms of contract.

8. In the event of a contingency –such as death of the principal , or the principal becoming medically of unsound mind, the agent is bound to take reasonable steps to run the affairs of the business and protect and preserve the business interests of his principal. ( Please read the relevant Sections 209 to 218 of the Contract Act.

We must therefore, ask the question – What are the Duties of the Principal to the Agent ?

1. The principal must make good any losses (indemnify) , which the agent may incur as a result of any lawful transaction/s done by the agent while discharging his duties under the contract. Refer Sec.222

2. If the agent does anything in good faith, while acting on behalf of the principal ,resulting in losses to the agent, the principal is liable to indemnify the agent . Refer Sec.223. However, if the agent does anything illegal or criminal in nature, the principal is not not liable to indemnify either the agent or any third party who may suffer injury or loss therefrom.

3. In case of losses to the agent caused due to negligence or want of skill of the principal, the principal must compensate the agent for any injury or losses.

So, we now know that in an Agency Contract, the Principal appoints another person as an Agent to transact business or deal on his behalf in order to establish a lasting relationship. However, there are something more which we must also know. Let us understand those with examples :-

1. Suppose Mr.X introduced his servant B to buy items from the local grocery shop on regular basis. If B buys quantities more than the requirement or buys items for personal use (not with the consent of his employer) , the employer is responsible to pay the shop for every item

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purchased by the servant as the Agent of the employer. This is called Agency by Estoppel.

2. In another example, suppose, X Stores in Kolkata, sets up a branch in Howrah with Mr.C as the Manager and periodically sends Cash to run the Branch . Due to unforeseen reasons, cash remittances could not be sent to Howrah Branch for a few weeks. In order to meet day to day business expenses, Mr.C pledges the Office Motor Van for 1 month and collects some money. In this case, Mr.C is considered as the agent of X Stores by necessity. This is Agency of Necessity.

3. In another case, Y and Z are good friends. Z goes to Delhi on private tour. On reaching Delhi, Z finds a supplier who agrees to sell goods of same specification at a lesser price than the normal supplier. Z buys from that supplier without authority from A. A accepts the goods bought by Z and sends payment to the new supplier. In such a case, there is an implied ratification of the deal by Z. Agency by Ratification. This is However, in this case there are some rules that are followed – The ratification must be of the entire 1.deal, not partial, The dealings must be lawful . . 2. 3Z must have done the transaction exclusively for Y , Y must fully understand the deal before 4.ratifying, Y must have the full authority to ratify 5., The ratification must not be in order to cause 6.harm to the business of the normal supplier.

There is another interesting point coming to mind. In many practical situations, an Agent has to take assistance from another person while discharging the duties of his principal. Such persons appointed by the Agent, becomes the Agent of the Agent. Such persons are called Sub-

agents. Let us know more about Sub-agents

a. is appointed by the agent and The Sub-agent works under the control of the original agent and carries on work which the Original Agent in discharging on behalf of the principal.

b. The Principal is represented by the Sub-agent. c. The Principal is responsible for the acts of the

sub-agent. d. The Agent is responsible to the principal for the

acts of the sub-agent.e. The Sub-agent is responsible for his acts to the

Agent.f. The Sub-agent is not responsible to the

principal except in case of fraud or wrongful acts.

g. A Agent who wrongfully appoints a Sub-Agent is responsible for all acts of the Sub-agent – both to the principal and the third parties, if any. The principal in such cases is neither represented by the sub-agent nor is responsible for the acts of the Sub-agent.

A small clarification is pertinent in this case. Let us be conceptually clear that there is a marked difference between a Sub-agent and a Co-agent. We already know that a Sub-agent is an agent appointed by the Agent. A Co-owner, however, is a person appointed by the Agent according to the express and implied authority of the Principal , to act on behalf of the principal in transacting business in the normal course. A Co-agent is an agent of the principal and is responsible to the principal. There is a direct contract between the Co-agent and the principal.

11


GROUP: 1, PAPER: 7

DIRECTTAXATION TAXATION (DTX)(DTX)TAXATION (DTX)



A Income Tax Act Basics 10%B Heads of Income and Computation of Total Income and Tax Liability 70%C Administrative Procedures and ICDS 20%

CA Vikash Mundhra He can be reached at:[email protected]

12




Identify the key concepts and functions of direct tax.

Know how to calculate income tax provision's.

Describe how uncertain tax positions are accounted for under the rules.

Gradually you will come to know how to prepare and file tax returns.

SET OFF AND CARRY FORWARD

For computation of Gross Total Income (GTI), income from various sources is computed under the five heads of income. If all the sources and heads are having positive income (i.e. profit) then the same can simply be added to compute GTI. However, if certain source(s) or certain head(s) have negative income (i.e. loss) then such loss needs to

be adjusted with income of another source(s) or head(s). Set off means adjustment of loss from one source or one head against income from another source or another head.

If a negative income is not fully set off in the current year, then the unabsorbed loss shall be carried forward to subsequent years subject to certain restrictions and conditions [e.g. Income from other sources (other than losses from activity of owning and maintaining horse races) cannot be carried forward.]

Set off of Loss

Head or Source of Income Intra Head Adjustment u/s 70

Inter Head Adjustment u/s 71

Carry Forward

Income from House Property With any income under the same head

With any income under other head subject to cap of �

2,00,000/-

Yes

Profit & Gains of Business or Profession (Speculative)

With Speculative income only

No Adjustment Yes

Profit & Gains of Business or Profession (Non-Speculative)

Any income under the head

With any income under other head except salary

Yes

Unabsorbed Depreciation Any income under the head

With any income under other head except salary

Yes

Unabsorbed expenditure u/s 35AD

Specified business No Adjustment Yes

Long Term Capital Loss With Long Term Capital Gain

No Adjustment Yes

Short Term Capital Loss Any Capital Gain No Adjustment Yes

Owning and Maintaining Race Horse

Income from such activity

No Adjustment Yes

Other loss under the head Income from Other Sources

With any income under the same head

With any income under other head

No

13



Taxpoint

No loss can be set off against winning from lotteries, crossword puzzles, races, card games, gambling or betting, etc. [Sec.

58(4) & 115BB]

Wherever reference is given for unabsorbed depreciation, it includes reference to unabsorbed capital expenditure on

scientific research and unabsorbed capital expenditure on promotion of family planning among employees

Example 1: Computation of Income under the head “Capital gains” of Mr. X for the A.Y. 2018-19

Example 2: Computation of “Profits & gains of business or profession” of X for the A.Y. 2018-19.

Example 3: Computation of “Income from other sources” of Mr. X for the A.Y. 2018-19

Example 4: Computation of “Income from other sources” of Mr. X for the A.Y. 2018-19

Carry Forward of Loss

In case where the income of an assessment year is insufficient to set off the losses of the year then such losses (which could

not be set off) can be carried forward to subsequent assessment year(s) for set off against income of such subsequent

year(s). However, all losses cannot be carried forward, e.g. losses under the head 'Income from other sources' (other than

loss from 'Activity of owning and maintaining race-horses') cannot be carried forward. Following rules is applicable for

carry forward and set off of loss in subsequent assessment years:

Particulars Case A Case B

Short term capital gain 80,000 (90,000)

Long term capital gain (40,000) 1,00,000

Income under the head “Capital gains” 80,000 10,000


Speculation business 80,000 (90,000)

Non speculation business (40,000) 1,00,000

Profits & gains of business or profession 40,000 1,00,000


Activity of owning and maintaining race-horses 80,000 (90,000)

Rent from land (20,000) 1,30,000

Income from other sources 60,000 1,30,000


Activity of owning and maintaining race-horses 10,000 (90,000)

Lottery income 20,000 1,30,000

Losses on letting out furniture not related to business (40,000) (50,000)

Income from other sources 20,000 1,30,000

14



MULTIPLE CHOICE QUESTIONS

Choose the correct alternative

1. Unabsorbed business losses cannot be carried for more than

a. 7 assessment years

b. 8 assessment years

c. 10 assessment years

d. 12 assessment years

2. Long term capital loss can be adjusted against

a. Any income excluding winning from lottery

b. Any capital gain

c. Any long term capital gain

d. Any speculative business income

3. Loss from Derivative trading is

a. Short-term Capital Loss

b. Speculative business loss

c. Non-speculative business loss

d. Loss u/h 'Income from Other Sources'

4. Loss from specified business covered u/s 35AD can be adjusted against

a. Any other business income

b. Any income other then salary

c. Income from other specified business

d. Cannot be adjusted

5. Unabsorbed depreciation can be carried forward for

a. b. 8 yearsAny number of years

c. 4 years d. 7 years

Sec. Type of loss to be carried forward & set off

Income against which carried forward loss can be set off in next year(s)

For how many years loss can

be carried forward

Is it necessary to

submit return of loss

in time

71B House property loss Income under the head “Income from house property”

8 years No

72 Non-speculation business loss (other than depreciation etc.)

Any income under the head 'Profits & gains of business or profession' (whether from speculation or otherwise)

8 years Yes

32(2) Unabsorbed depreciation, capital expenditure on scientific research and family planning

Any income other than Income under the head Salaries and winning from lotteries, etc.

Indefinite years No

73 Speculation business loss Income from speculation transaction.

4 years Yes

73A Loss of specified business covered u/s 35AD

Income from any specified business.

Indefinite years Yes

74 Short term Capital Loss Income under the head “Capital gains”

8 years Yes

74 Long term Capital Loss Long term capital gain 8 years Yes

74A Loss from activity of owing and maintaining race horses

Income from the activity of owing and maintaining race horses

4 years Yes

15


GROUP: 1, PAPER: 8

COSTACCOUNTING ACCOUNTING (CAC)(CAC)ACCOUNTING (CAC)



A Introduction to Cost Accounting 40%B Methods of Costing 30%

C Cost Accounting Techniques 30%

CMA (Dr.) Subir Kr. DattaPrincipal, Kshudiram Bose Central College, He can be reached at: [email protected]

16




Before taking the examination, it is necessary to read thoroughly the study material first.

After that select the suitable text book or reference books available in the market for your further

study and follow them.

Next, follow the question papers of previous years and you will be able to get a general idea about the

trend or pattern of questions generally set for this type of examination.

So, if you want to score high marks then along with practical problems you have to answer properly

the theoretical part.

Due to lack of theoretical concepts they cannot score good marks not only in the theoretical part but

also in tricky problems.

Prepare notes on the theoretical part to improve your performance in the examination.

Cost Accounting

Today we are leaving in a competitive world and there

is also scarcity of natural resources all over the

world. Optimum utilization of resources is the

urgent need of the day. The roll of Cost Accountants in this

regard plays a vital role all over the world. Starting as a

branch of Financial Accounting, Costing Accountancy has

made a remarkable progress during the last few decades.

Detailed study of theory as well as solving the practical

problems is very much essential for securing good marks in

the exam. You please go through the theoretical part first for

easy understanding the topic and then try to solve the

problems that are in exercise. Start from Chapter one and

try to complete the other chapters serially as this will enable

you to understand better the succeeding chapters. Always

try to remember that in professional examinations,

emphasis is given on testing comprehension, self

expression, understanding and ability to apply knowledge

in divergent situation. Success of these examinations

mainly depends on student's perseverance, seriousness of

study, regularity and through practice.

The following suggestions are given based on my long

term experience -

1. A plane should be developed for completing the

syllabus within specified time.

2. Try to go through your Study Note and know the

syllabus properly.

3. Analyze the trends of setting questions.

4. Time schedule with specified activities, which will

help you to avoid procrastination.

5. Clarity of concepts and self expression is essential

for successful result.

6. Improve your speed by practice and revision to be

able to attempt all questions in limited time.

7. Try to write down all the important terms in your

own words and practice it regularly.

8. The student should remember that all objective

type questions should be answered as it will carry

100% marks.

9. Finally, try to develop a habit of reading the

questions well, underlining and understanding the

specific requirements.

Here the entire syllabus is divided into six main chapters.

In first chapter the basic concept of cost accounting are

discussed, beside its other two branches viz, Financial

Accounting and Management Accounting. The second

chapter described the Elements of cost in details. We know

the three major elements of costs are – Material, Labour and

Overheads. Here the major elements of costs are discussed

elaborately and analyzed element-wise with sufficient

number of examples. Material consists of the major part of

total cost of a product, hence it is necessary to control this

cost very carefully. You should read the scope and objectives

of different Cost Accounting Standards in details. It will

help to grasp the concept of cost accounting easily.

The third chapter is associated with Cost book-keeping,

which includes integrated accounting system also . This

chapter is very easy to understand but the process is lengthy.

In practice, different accounts are to be opened, but it is not

necessary to give much effort to complete its solution.

The chapter Contract Costing is very important for this type

of examination. There are some standard norms for

computation and recognition of profit /loss of incomplete

contract.Students sometimes experience difficulty in

recommending the amount of profit to be taken into account

during a period for long-term contract. Make sure that you

are familiar with various methods/formulas for different

stage of completion and share of profit. Students are also

advised to go through the topic “ Profit on incomplete

contracts based on SSAP-9. ”. Problems on escalation clause

are also very important for this chapter.

The next chapter is Operating Costing. Here we have to find

out operating cost per unit of output. This chapter also

17



includes 'Transport Costing' , 'Hospital Costing', 'Power House Costing' , 'Hotel/ Hostel Costing' etc. Here it is very

important to find out the “Composite Unit” in order to solved the problems.

The chapter Marginal Costing relates to find out Cost-volume-profit relationships. The main thrust should be to follow the

wording and determine the desired impact of cost on profitability. The basic part of the problem is to solve Brake –even-

point. Sometimes a questions gives details of costs but not the split into fixed and variable elements . Students are advised

to segregate total costs into fixed and variable elements using high-low method. For a product of different sales –mix,

contribution per unit of key factor should be found out and then different options should be marked on the same basis, i.e.

contribution per unit of key factor. For easy understanding you have to solve various types of problems.

The next chapter to 'Variance Analysis' which deals with creating responsibilities and identifying the activities or areas of

exceptions. The main purpose of variance analysis is to enable the management to improve the operation for effective

utilization of resources and to increase the efficiency by reducing costs. Some students are afraid of this important chapter

only because of different formulae for different analysis. Only careful study and realization of the requirement in the

problem can eliminate such difficulties. Finally the step should be taken based on the causes of variance.

'Budget and budgetary Control' which requires preparation of 'Flexible Budget', Functional Budget, and 'Cash Budget' for

taking necessary actions. Theoretical and problem oriented questions may be set from this chapter. The students can easily

understand the problems, if theory remains clear. The students are also suggested to go through the theoretical parts-like,

concept of Zero-based budgeting, behavior and classification of Budgets etc very carefully. All functional budgets are

summarized into master budget consisting of a Budgeted Profit and Loss Account, a Balance Sheet and Cash Flow

Statement. a common mistake is to incorrectly deduct closing stocks and opening stocks when preparing Production and

Material Purchased Budget. The students should also go through the theory – like, concepts of Zero-Based Budgeting,

Behavior and Classifications of Budgets etc.

In Overhead distribution computation of Machine Hour Rate is very important, whether the rate is related to a particular

machine or group of machines. Under Composite or Comprehensive Machine Hour Rate. It takes into account not only

expenses directly allocated to machine , but also other expenses which cannot be directly allocated to machine.

Let us take an example of such problem:-

G.M. Ltd , a chemical company having 20 different types of machines, supplied you the following information relating to

the year ended on 31.03.17 in respect of a machine No. 10

(A) Cost of the machine 120000/-

Life 10 years

Scrap value 20,000/-

(B) Overhead Expenses

Rent & Rates 100000/- pa

Heat & Lighting 50,000/- p.a.

supervision 200,000/- p.a.

Special Equipment for Machine No. 10 5,000/- p.a.

Area of the factory 10000 sq.ft

Area occupied by Machine No. 10 1000 Sq. ft.

Power cost Re. 0.80 per hr. when in opera�on .

18



Solution

Computation of Comprehensive Machine Hour Rate

Estimated effective working hrs = ( 3600 + 400) = 4000 hrs

( C) Wages of operator is Rs. 32 per day of 8 hrs including all benefits. He can look after one machine when

it is under set-up and two machine while under operation.

(D) Estimated Production hrs. (A) 3,600 pa

Set-up time hrs 400 pa

Compute comprehensive machine hour rate and also find out the cost of the following job :

Job No. 007

Set up time (hrs) 80

operating time (hr) 120

Particulars Per Annum Rs. Per Hour Rs

Standing Charges :

Depreciation 10000.00

Rents & Rates

10000.00

Heat & Lighting 5000.00

Supervision 10000.00

Special Equipment 5000 .00

40000.00 10.00

0.80

10.80

120000 - 20000

10

100000× 1000

10

100050000 ×

10000

200000

20000

Comprehensive Machine hour Rate

Set up Operation

Fixed Rate 10.00 10.00

Power —--- 0.80

Wages of Operator 4.00 2.00

Comprehensive MHIR 14.00 12.80

Statement showing cost of Job No. 007

Particulars H.R. Hours

Taken

Amt.

Set up 14.00 80 1,120.00

Operation 12.80 120 1,536.00

2656.00

19


GROUP: 2, PAPER: 9, Part- i

OPERATIONSMANAGEMENT & STRATEGICMANAGEMENT & STRATEGICMANAGEMENT MANAGEMENT (OMSM)(OMSM)MANAGEMENT & STRATEGICMANAGEMENT (OMSM)



CMA Ankan K BandyopadhyayaHe can be reached at:[email protected]

Operation Management

20




Operations Management develops skills in problem solving, project management,

communication, and managing effectively in team-based work environments.

Eventually, student's ability for leadership positions in the production and service industries

gets increased.

To solve business processes, it helps to apply knowledge of fundamental concepts of operations

management and helps to apply knowledge of approaches to operational performance

improvement.

Operations Management

In continuation to last issue we will discuss on Facility Layouts---Product layouts and Fixed Layouts;

Product Layout:

Also called the straight-line layout or layout for serialised manufacture.

The equipment here is laid out according to the sequence in which it is used for making the product.Under this layout material is fed into the first machine andfinished products come out of the last machine. In between, partly finished goods move from machine to machine,the output of one machine becoming the input for the next.

Equipment here is dedicated to parts and products and if the same process is needed elsewhere in the system it is duplicated

almost regardless of utilization.

As a result the number of equipment in a product layout is much more as compared to process layout. Therefore the

utilization of the equipment has to be sufficiently high to justify the higher level of capital investment necessary in such type

of layout.

It means that the volume of production should be large with less variety of products so that machine setting time can be

maintained at low.

Under this system each line layout caters to one product.

Product layout is applicable more in assembly rather than in fabrication. This is true because machine tools for fabrication

jobs commonly have fixed machine cycles and that makes it difficult to attain balance between successive operations. In

assembly type operations work is more likely to be manual and the total job can be divided into smaller elements for

Opern-I Opern-II Opern-III

Sub-assemblyTestingAssembling

Testing Packing Shipping

21



completion in different work centers. Since variety, as in job or batch, is less part of work in one center (overloaded station)

can be transferred to another center (under loaded station) i.e. constraints arising in such layout can be managed by

balancing the workload between different stations.

Principle of Minimum Travel &Principle of Sequence are very well satisfied in a Line layout. But this can be true when there is only one standard production. But if another type of product is to be made, then the present line up of equipment may not correspond with the flow of the new product resulting in high costs due to excessive material movement and excessive idle times of machinery and manpower.

Line balancing is the assignment of work to work centers in a line process so as to attain the desired output rate with the

smallest number of work stations.

Thus the line that produces at the desired pace with the fewest workers is the most efficient one.

Line balancing creates workstations with workloads as evenly balanced as possible. It aims to create workstations so that

the capacity utilization for the bottleneck is not much higher than for the other workstations in the line.

Line balancing must be performed when a line is set up initially, when a line is rebalanced to change its hourly output rate or

when a product or process changes.

Steps in line balancing:

Separating the work into Work Elements;

Obtain the time standards for each element;

Identify the work element called immediate predecessors which must be done before the next element can begin;

Construct the Precedence Diagram;

Illustration:

Agri Horticulture Society, a manufacturer of lawn and garden equipment, is designing an assembly line to produce a new

fertilizer spreader, the Big Boomer. Using the following information on the production process, construct a precedence

diagram for the Big Boomer:

Work Element Time (Sec) Immediate Predecessor(s)

A 40 None

B 30 A

C 50 A

D 40 B

E 6 B

F 25 C

G 15 C

H 20 D,E

I 18 F,G

Total= 244

22



Illustration: Agri Horticulture Society's manager just received latest forecasts of Big Boomer sales for the next year. He

wants its production line to be designed to make 2400 boomer per week for at least the next 3 months. The plant will operate

40 hours per week.

a) What should be the line's cycle time?

b) What is the smallest number of work stations that he could hope for in designing the line for this cycle time?

c) Suppose that he finds a solution that requires only five stations. What would be the line's efficiency?

Answer:

a) Convert the desired output rate (2400 units /week) to an hourly rate by dividing the weekly output rate by 40 hours

per week to get r = 60units per hour. Then the cycle time is

c = 1/r = 1/60(hour/unit) = 1minute/unit = 60 seconds/unit.

b) Now calculate the theoretical minimum for the number of stations by dividing the total time, Σt, by the cycle time, c

= 60. Assuming perfect balance we have

TM (theoretical Minimum) =Σt/c = 244 Seconds/60 Seconds = 4.067 or 5 stations

c) Now calculate the efficiency of a five-station solution

Efficiency (%) = (Σt/nc)x 100 = (244/5*60) x100 = 81.3%

Decision Rule (an example):

Create one station at a time. For the station now being created, identify the unassigned work elements that qualify for

assignment: They are candidates if

1. All of their predecessors have been assigned to this station or stations already created;

2. Adding them to the workstations being created will not create a workload that exceeds the cycle time.

A 40

B 30

D40

H20

C50

F25

E 6

G 15

I18

23



Fixed Position Layout:In this layout, the material remains in a fixed position, but the machinery, tools, workmen etc are brought to the material.The movement of men and machines to the product is advisable because the cost of moving them would be less than the cost of moving the product which is very bulky.

Also called static layout, this type is followed in the manufacture, if bulky and heavy products, such as locomotives,ships, boilers, air crafts and generators.

Such a layout may be preferred when the equipment and the machinery is small in number and size and where the workmen are highly skilled to perform the various small jobs on the product.

Suggestions:This study notes need to be read thoroughly. Supplementary readings could be made from other resources. This issue is based on Modern Production/Operations Management by Buffa and Sarin.Production and Operations Management by SN Cherry, Operations Management by R.S Russell & BW Taylor,Discussions are made here as an extension & supplementary to the knowledge shared on the topic in study guide. This is for updating of knowledge and could be used as an aid to the study guide. This writing mayoptmize benefit once Guide book on the paper 9- Operations Management & Strategic Management written and issued by Institute on Syllabus -16is thoroughly consulted.

A41

C50

B30

F25

D40

G15

H20

E6

I18

“ “

24


GROUP: 2, PAPER: 9, Part- ii

OPERATIONSMANAGEMENT & STRATEGICMANAGEMENT & STRATEGICMANAGEMENT MANAGEMENT (OMSM)(OMSM)MANAGEMENT & STRATEGICMANAGEMENT (OMSM)



CMA (Dr.) Sumita ChakrabortyJt. Director, StudiesShe can be reached at:[email protected]

Strategic Management

25




The course will follow in general terms the strategy development process from audit to

formulation of strategic plans, their implementation and evaluation.

Students will be introduced to strategic management in a way so that their understanding

can be better.

The ultimate aim of the course is to develop students as future managers who will add value

by 'strategically managing' the organisation's resources and capabilities.

STRATEGIC MANAGEMENT

Strategic Planning

The stages in Strategic Planning are:

Stage I: Strategic Option GenerationsAt this stage, a variety of alternatives are considered, relating to the firm's product and markets, its competitors and so forth. examples of strategies might be:

(a) Increase market share

(b) Penetration into international market (c) Concentration on core competencies (d) Acquisition or expansion etc.

Stage II - Strategic Options evaluationEach option is then examined on its merits.(a) Does it increase existing strengths ?(b) Does it alleviate existing weaknesses ?(c) Is it suitable for the firm's existing position ?(d) Is it acceptable to stakeholders ?

Stage III - Strategic SelectionIt involves choosing between the alternative strategies. This process is strongly influenced by the values of the managers in selecting the strategies.

Steps in Strategic Planning:A systematic approach to formalizing strategic plans consists of the following steps:(i) An that encompasses assessing internal analysis

company strengths and weaknesses, financial performance, people, operational limitations, corporate culture, current positioning in the market(s), the overall characterization of the condition of the company and critical issues facing by the organization.

(ii) An that focuses on analyzing external analysiscompetitors, assessing market opportunities and threats, evaluating changing technology that could impact the organization, analyzing regulatory or legislative concerns, changes and trends in the market(s) the company operates in and other potential outside influences on the organization.

(iii) Summarizing the current situation based on the information gathered and evaluated in steps one and two. This step brings together relevant and critical data and information and allows members of the planning team to more easily get a feel for what opportunities and obstacles lie ahead.

(iv) Development of a mission, vision or purpose statement. In this step, the team is starting the process of focusing the organization and its people on what the organization is all about and what is important to the organization.

(v) Goal setting. every organization needs goals. again, focus is a critical element in the success of any business. this step may be the most important of all of the strategic planning steps because it establishes the framework and basis for the development of the other key elements of the plan.

(vi) Defining objectives that support the goals. Objectives are more specific in nature and are supportive of the goal. they bring into even greater focus to the goals of the organization.

(vii) Development of strategies. Strategies begin defining how the goals and objectives are going to be achieved.

(ix) While not all strategic plans include tactics, a good strategic plan will include at least the key tactics thought to be important to supporting the strategies developed in step 7. generally tactics are more fully developed and added to the plan as time goes on. Tactics are the specific tasks associated with carrying out strategies.

Strategic Management and Strategic Planning : distinction

It is focused on producing strategic results; new markets;

new products; new technologies etc.

It is focused on making optimal strategic decisions

It is management by results. It is management by plans.

It is an organizational action process. It is an analytical process.

It broadens focus to include psychological, sociological and

political variables.

It is focussed on business, economic and technological

variables.

It is about choosing things to do and also about the people

who will do them.

It is about choosing things to do.

26



Strategic Planning and long-range Planning:

The basic divergence between strategic planning and long-range planning lies in the difference in the assumption regarding the future environment of an organisation. In case of long-range planning current knowledge about future conditions is known with certainty that can be relied upon by executives and accordingly, the course of action for achievement of organisational goals is drawn on the basis of this knowledge. In the other hand, in long range planning the future is forecasted through extrapolation of the historical growth.

As shown in the figure above, in case of long-range planning, objectives forecasted through extrapolation are translated into budgets, programmes and profit plans. These are finally implemented. An operating control system is established and the feedback is provided which suggests a change in objectives, if required. the strategic planning leads to the setting-up of two sets of goals – operating performance goals and strategic goals. the operating performance goals are translated into operating budgets and strategic goals are translated into strategic budgets. accordingly two types of control namely, operating control and strategic control are established.

Long range planning

Forecast based on extrapolation

Budgets Programmes Profits Plan

Implementation

Operation control

Strategic Planning

Strategy

Prospects Objectives

OperatingPerformance

Strategicgoals

Operating programmes/budgets

Strategic programmes/budgets

Implement by units Implement by projects

Operating control Strategic control

27


GROUP: 2, PAPER: 10

COST & MANAGEMENTACCOUNTING AND FINANCIALACCOUNTING AND FINANCIALMANAGEMENTMANAGEMENT(CMFM)(CMFM)ACCOUNTING AND FINANCIALMANAGEMENT(CMFM)



Dr. Swapan Sarkar, Assistant Professor Department of Commerce,University of CalcuttaHe can be reached at: [email protected]

A 50%

B 50%

28




The paper Cost & Management Accounting and Financial Management (Group II; Paper 10) is a unique blend of theoretical elaborations and practical illustrations. The aim of this paper is to equip the students with a working level knowledge regarding the two disciplines and prepare a ground for a few advanced level papers like Strategic Financial Management (Final Group 3: Paper 14), Strategic Cost Management decision Making (Final Group 3:Paper 15) and Strategic Performance Management and Business Valuation (Final Group 4: Paper 20) in the CMA Final Course. The entire syllabus of the paper is segregated into two segments namely Cost & Management Accounting (Section A: Full Marks 50) and Financial Management (Section B: Full Marks 50). Each of the individual sections has further been divided into five chapters each highlighting a specific aspect of the subject concerned. In this section of e- bulletin we shall have a series of discussion on each of these chapters to provide a meaningful assistance to the students in preparing themselves for the examination at the short end and equip them with sufficient knowledge to deal with real life complications at the long end.

Section BChapter 10: Capital Structure Theories:

Net Operating Income (NOI) Approach:

Main Theme:

The main limitations of NI approach are the assumptions of constant cost of debt and equity capital and no change in the

risk perception of the investors. In reality however, the second assumption seems to be irrational. As a result, a totally

opposite model is proposed which is known as Net Operating Income (NOI) approach.

According to NOI approach, the value of a firm is indifferent to its capital structure. In other words, it is not possible to change the value of any firm by changing the debt-equity mix. Thus there is no single capital structure that can be called optimal, rather all capital structures are optimal as they produce the same value. Capital structure is a matter of irrelevance to the investors.

Assumptions:

Net Operating Income approach is based on the following assumptions.

a) The overall cost of capital (K ) does not vary with the degree of leverage but remains constant for a given industry risk 0

class.

b) The investors determine the market value of the firm from the overall viewpoint. The value of the firm (V) is found by

capitalizing the net operating income (EBIT) at the overall cost of capital (K ).0

So, . Since both EBIT and K are constant, V will also remain constant. 0

c) The value of equity is a residual of V after subtracting the value of debt (D) i.e. the market value of equity (E) = V – D

d) The cost of debt (K ) is a constant and hence cost of equity (K ) =d e

e) Cost of equity can also be obtained by the formula, K = K + (K – K ) ×e 0 0 d

Explanation:

According to NOI approach, when a firm increases its degree of leverage it saves in terms of its overall cost of capital,

because, cost of debt is relatively lower. However, such savings get exactly offset by the increase in cost of equity capital.

This is because, increase in leverage makes the firm riskier in the minds of the investors, as a result of which they demand

for higher cost of equity. This ultimately keeps the overall cost of capital at the same level as earlier. Since both EBIT and

K remain constant, investors value the firm from the overall viewpoint and hence firm value i.e. capitalized value of EBIT 0

at K also remains constant. Therefore, by changing the capital structure it is not possible to change the cost of capital or 0

the value of the firm.

EBITV =

K0

EBIT -I EBT=

E ED

E

29



Behaviour of the Overall Cost of Capital; Graphical Presentation:

In the above diagram K is constant and thus represented by a straight line parallel to the horizontal axis. As leverage d

increases, use of additional debt generates savings in the overall cost. However, such savings get exactly offset by increase

in the cost of equity (K ) due to higher perceived risk of the investors. As a result K moves upwards and K becomes a e e 0

straight line representing a constant K . 0

Formula to be Used:

1. Market Value of the firm, = V =

2. Value of Equity = E = V - D, Where D = Market Value of Debt Capital

3. Cost of equity (K ) = e

Note: In case market value of debt is not available assume Market Value of Debt = Book Value of Debt.

Case Study 1:

M Ltd. has an expected net operating profit of Rs.480000. It has Rs. 1000000, 9% debt capital. The overall capitalization

rate is 12%.

a) Calculate the value of the firm and equity capitalization rate under Net Operating income Approach.

b) If the firm decides to raise its debt capital by an additional Rs.600000 and use such proceeds to buy-back the existing

equity shares, then what will be the effect of such a policy on the value of the firm and equity capitalization rate?

Solution:

(a) Computation of the value of the firm and equity capitalization rate. (under existing condition)

Given, Cost of debt capital (K ) = 9%d

Overall capitalization rate (K ) = 12%0

Net operating profit (EBIT) = Rs. 480000

So, Value of the firm (V) = = Rs. 4000000

Value of Debt (D) = Rs. 1000000

Value of equity (E) = V – D = Rs. 4000000 – Rs. 1000000 = Rs. 3000000

Earnings before tax = EBT = EBIT – I = RS. 480000 – Rs. (10000000.09) = Rs. 390000

Equity capitalization rate or Cost of Equity (K ) = = 13%e

Various Cost of Capital (K , K , K )d e 0

Degree of leverage (D/V)

Ke

K0

Kd

Figure 2: Behaviour of K , K , K under NOI Approachd e 0

EBIT

K0

EBIT - I EBT D= or K = K + (K - K ) ×e 0 0 dE E E

EBIT 480000=

K 0.120

EBT 390000=

E 3000000

30



Alternatively, K = K + (K – K ) × e 0 0 d

(a) Computation of the value of the firm and equity capitalization rate. (Under proposed condition)

Given, Cost of debt capital (K ) = 9%d

Overall capitalization rate (K ) = 12%0

Net operating profit (EBIT) = Rs. 480000

So, Value of the firm (V) = = Rs. 4000000

Value of Debt (D) = Rs. 1600000

Value of equity (E) = V – D = Rs. 4000000 – Rs. 1600000 = Rs. 2400000

Earnings before tax = EBT = EBIT – I = RS. 480000 – Rs. (16000000.09) = Rs. 336000

Equity capitalization rate or Cost of Equity (K ) = = 14%e

Alternatively, K = K + (K – K ) × = 14%e 0 0 d

Thus with increase in debt capital value remains the same and equity capitalization rate increases to cover the

additional risk.

Case Study 2:

Two firms, P and Q are identical in all respect (and belong to the same risk class) except their leverage. While firm P is an

all equity firm, the other one is a levered firm Rs. 600000, 8% debt capital. Both the firms have identical expected EBIT of

Rs.300000. Equity capitalization rate of firm A is 15%. Calculate the value of the firms and equity capitalization rate of

firm K.

Solution:

Since, firm A is an all equity firm, its overall cost of capital = cost of equity capital.

Moreover, since both the firms belong to the same risk class, they will have similar overall cost of capital.

Calculation of value of the firm (V) and equity capitalization rate (K ). e

D 1000000= (12 -9)× = 13%

E 3000000

EBIT 490000=

K 0.120

EBT 336000=

E 2400000

D 1600000

= 12 + 12 - 9 ×E 2400000

Particulars Firm A Firm K

Value of Debt Capital (D) Nil Rs. 600000

Cost of debt capital(k )d 8% 8%

Overall cost of capital (k )0 15% 15%

EBIT Rs. 300000 Rs. 300000

Value of the firm (V) = Rs. 2000000 Rs. 2000000

Value of equity (E) = V - D Rs. 2000000 Rs. 1400000

EBT =EBIT –I = EBIT – D kd Rs. 300000 Rs. 252000

Cost of equity (k ) = e 15% 18%

EBIT

K0

EBT

E

31


GROUP: 2, PAPER: 11

INDIRECTTAXATION TAXATION (ITX)(ITX)TAXATION (ITX)



A Canons of Taxation - Indirect Tax & Central Excise 35%B Customs Law 15%

Ms. Poushali DasAsstt. Professor, Scottish Church CollegeShe can be reached at:[email protected]

32



Learning objectives:

The concept of tax and the objective for its levy

The concept of direct and indirect tax and the differences between the two

The basic features of indirect taxes

What are the principal indirect taxes

As to how the indirect taxes are administered in the country

GST – What is GST in India? Goods & Services Tax Law Explained

GST is an Indirect Tax which has replaced many Indirect Taxes in India. The Goods and Service Tax Act was passed in the Parliament on 29th March 2017. The Act came into effect on 1st July 2017.

In this article, we take a closer look at what is GST and the reason why it is making business and taxes simpler and easier.

1. What is GST?

Goods & Services Tax Law in India is a that is levied on every comprehensive, multi-stage, destination-based taxvalue addition.

In simple words, Goods and Service Tax is an indirect tax levied on the supply of goods and services. GST Law has replaced many indirect tax laws that previously existed in India.GST is for the one indirect tax entire country.So, before Goods and Service Tax, the pattern of tax levy was as follows:

Under the GST regime, the tax will be levied at every point of sale. In case of interstate sales, Central GST and State GST will be charged. Intra-state sales will be chargeable to Integrated GST.Now let us try to understand the definition of Goods and Service Tax – “GST is a comprehensive, multi-stage,destination-based tax value addition. that will be levied on every ”

Multi-stageThere are multiple change-of-hands an item goes through along its supply chain: from manufacture to final sale to the consumer.Let us consider the following case:

Purchase of raw materials

Production or manufacture

Warehousing of finished goods

Buying RawMaterials

VAT

VAT

VAT

VAT + Excise Duty

ManufactureSale to

Wholesaler/Warehousing

Final Sale toConsumer

Sale to Retailer

33



Buying RawMaterials

Manufacture

Final Sale toConsumer

Sale toWholesaler/

Warehousing

Sale to Retailer

34

Sale to wholesaler

Sale of the product to the retailer

. Sale to the end consumer

Goods and Services Tax will be levied on each of these stages, which makes it a multi-stage tax.

Value Addition

The manufacturer who makes biscuits buys flour, sugar and other material. The value of the inputs increases when the

sugar and flour are mixed and baked into biscuits.

The manufacturer then sells the biscuits to the warehousing agent who packs large quantities of biscuits and labels it. That is another addition of value after which the warehouse sells it to the retailer.

The retailer packages the biscuits in smaller quantities and invests in the marketing of the biscuits thus increasing its value.GST will be levied on these value additions i.e. the monetary worth added at each stage to achieve the final sale to the end customer.

Destination-BasedConsider goods manufactured in Maharashtra and are sold to the final consumer in Karnataka. Since Goods & Service Tax (GST) is levied at the point of consumption, in this case, Karnataka, the entire tax revenue will go to Karnataka and not Maharashtra.

2. Journey of GST in IndiaThe GST journey began in the year 2000 when a committee was set up to draft GST Law. It took 17 years from then for the Law to evolve. In 2017 the GST Bill was passed in the Lok Sabha and Rajya Sabha. On 1st July 2017 the GST Law came into force.



3. Advantages of GSTGST will mainly remove the Cascading effect on the sale of goods and services. Removal of cascading effect will directly impact the cost of goods. The cost of goods should decrease since tax on tax is eliminated in the GST regime.GST is also mainly technologically driven. All activities like registration, return filing, application for refund and response to notice needs to be done online on the GST Portal. This will speed up the processes.

35



4. What are the components of GST?

There are 3 taxes applicable under GST: CGST, SGST & IGST.

Collected by the Central Government on an intra-state sale (Eg: Within Maharashtra)CGST: Collected by the State Government on an intra-state sale (Eg: Within Maharashtra)SGST: Collected by the Central Government for inter-state sale (Eg: Maharashtra to Tamil Nadu)IGST:

In most cases, the tax structure under the new regime will be as follows:

Illustration: Let us assume that a dealer in Gujrat had sold the goods to a dealer in Punjab worth Rs. 50,000. The GST rate is

18% comprising of only IGST. In such case, the dealer has to charge Rs. 9,000 as IGST. This IGST revenue will go to the Central Government.

The same dealer sells goods to a consumer in Gujarat worth Rs. 50,000. The GST rate on the good is 12%. This rate comprises of CGST at 6% and SGST at 6%.

The dealer has to collect Rs. 6,000 as Goods and Service Tax. Rs. 3,000 will go to the Central Government and Rs. 3,000 will go to the Gujarat government as the sale is within the state.

5. What changes has GST brought in?

In the pre-GST regime, tax on tax was calculated and paid by every purchaser including the final consumer. This tax on tax is called Cascading Effect of Taxes.

GST avoids this cascading effect as the tax is calculated only on the value-add at each stage of transfer of ownership. Understand what the cascading effect is and how GST helps by watching this simple video:GST will improve the collection of taxes as well as boost the development of Indian economy by removing the indirect tax barriers between states and integrating the country through a uniform tax rate.

Illustration:Based on the above example of biscuit manufacturer along with some numbers, let's see what happens to the cost of goods and the taxes in a pre GST and GST scenarios. Tax calculations in Pre GST regime:

Transaction New

Regime

Old Regime

Sale within

the State

CGST +

SGST

VAT + Central

Excise/Service tax

Revenue will be shared equally

between the Centre and the State

Sale to

another State

IGST Central Sales Tax

+ Excise/Service

Tax

There will only be one type of tax

(central) in case of inter-state sales.

The Center will then share the IGST

revenue based on the destination of

goods.

Action Cost 10% Tax Total

Manufacturer 1,000 100 1,100

Warehouse adds label and

repacks @ 300

1,400 140 1,540

Retailer advertises @ 500 2,040 204 2,244

Total 1,800 444 2,244

36



Along the way, the tax liability was passed on at every stage of the transaction and the final liability comes to rest with the customer. This is called the where a tax is paid on tax and the value of the item keeps Cascading Effect of Taxesincreasing every time this happens.

Tax calculations in GST regime:

In the case of Goods and Services Tax, there is a way to claim credit for tax paid in acquiring input. What happens in this case is, the individual who has paid a tax already can claim credit for this tax when he submits his taxes.

In the end, every time an individual is able to claim input tax credit, the sale price is reduced and the cost price for the buyer is reduced because of a lower tax liability. The final value of the biscuits is therefore reduced from Rs. 2,244 to Rs. 1,980, thus reducing the tax burden on the final customer.

Action Cost 10%

Tax

Actual

Liability

Total

Manufacturer 1,000 100 100 1,100

Warehouse adds label and repacks @ 300 1,300 130 30 1,430

Retailer advertises @ 500 1,800 180 50 1,980

Total 1,800 180 1,980

37


GROUP: 2, PAPER: 12

COMPANYACCOUNTS & AUDIT ACCOUNTS & AUDIT (CAA)(CAA)ACCOUNTS & AUDIT (CAA)



A 50%

B 50%

Dr. Malay Kr. NayakAssociate Professor, Dept. Of Commerce,M.B.B.College,TripuraHe can be reached at: [email protected]

38




Apply appropriate judgment derived from knowledge of accounting theory, to financial analysis

and decision making

Effectively define the needs of the various users of accounting data and demonstrate the ability to

communicate such data effectively, as well as the ability to provide knowledgeable

recommendations.

Prepare financial statements in accordance with Generally Accepted Accounting Principles.

Demonstrate an understanding of current auditing standards and acceptable practices, as well as

the impact of audit risk on the engagement.

ACCOUNTS & AUDIT

Examinees are to be very cautious about divisible

profits and distribution of dividends. Let us discuss

today on pivoting divisible profits.

What is divisible profit?

This refers to the portion of profits i.e. the excess of income

over expenditure including provision for Taxes and

Depreciation, which are available for distribution as

dividend to the share holders of the company. But this does

not mean that any profit will be distributed if available. The

available profit should be such that is legally distributable

in accordance with the provisions contained in the

Companies Act 1956/ 2013, The Income tax Act 1961, The

Articles of Association of the Company.

Whether Capital Profit can be considered for

distribution as dividends?

Under normal circumstances, these profits should not be

distributed. But these are distributable only on the

conditions that:

Such distribution is authorized by The Articles of

Association.

Such surplus is actually realized in cash/ remains

after a proper valuation of all assets.

The capital losses are made good.

Whether a Company can pay dividend out of

capital?

Sec.123 of The Companies Act 2013 expressly provides that

no dividend can be paid except out of the profits of the

company/ out of the funds provided for the purpose by the

central or state governments. A dividend is a share of

profits of a Company.

State the reasons for prohibiting the payment of dividend

out of capital.

T h e s h a r e c a p i t a l a s m e n t i o n e d i n t h e

Memorandum of Association of a Company is a

fund meant for payment to the creditors in the

event of a company being wound up. This means

that the capital is liable to be spent in carrying on

the business of a company and not for giving it

back to the members/ shareholders.

The payment of dividend out of capital amounts

to a reduction of share capital on voluntary basis.

The payment of dividend out of capital affects the

value of the assets of a company. It also affects the

liquidity position of a company.

Whether dividends can be declared without

taking into account past clauses?

In the format of balance sheet, any debit in the Profit &

Loss account is to be set off against the revenue reserves of

a Company. This means that the loss of any financial year

must be made good out of past undistributed profits. In

the absence of past undistributed profits held in the form

of revenue reserves, the question arises whether losses

brought forward from previous year should be covered

before the dividend can be declared from the current

year's profits. The answer is that there is no legal

obligation for a company to make good a debit balance on

its Profit & Loss account resulting from past losses before

distributing current profits, but so much of the loss

sustained by a company in 1 or more financial years, as is

attributable to the amount of provision made for

depreciation, must be set off against the current profits of

a Company before a dividend can be declared.

What is the mode of payment of dividend?

Any dividend payable in cash may be paid by cheque/

warrant/ in any electronic mode to the share holder

entitled to the payment of the dividend.

What is the provision of interim dividend?

The Board of Directors of a Company may declare Interim

dividend during any financial year out a surplus in the

Profit & Loss account and out of the profits of the financial

year in which such interim dividend is sought to be

declared.

39



Provided that, in case of the company has incurred Loss during a current financial year upto the end of the quarter

immediately preceding the date of declaration of Interim dividend, such Interim dividend shall not be declared at a rate

higher than the average dividends declared by a company during the immediately preceding 3 financial years.

What is the provision of the Companies Act regarding declaration of dividend?

Sec.123 of The Companies Act 2013 states no dividend shall be declared or paid by a company for any financial year except

a) Out of the profits of the Company for that year arrived at after providing for depreciation in accordance with the

provisions of sub sec. (2) or out of the profits of the company for any previous financial year/ years arrived at after

proving for depreciation in accordance with the provisions of sub sec. And remaining undistributed or out of both.

b) Out of money provided by the Central Govt. Or a State Govt. For the payment of dividend by the company in

pursuance of a guarantee y that govt.

What is the provision of making reserve?

A company may before the declaration of any dividend in any financial year transfer such percentage of its profits for that

financial year as it may consider appropriate to the reserves of the company.

Students are advised to go through study materials, The Companies Act 2013 and reliable textbooks. They may expect

questions from this theme in every term of examination. That's why it is most important. Get enjoyment in the flow of

study.

40

Leadership Matrix

Leadership is perceived as a practical skill encompassing the ability of an individual to “lead” others. The leadership

could be autocratic, participative or laissez-faire.The leadership could come as an instance of inheritance,

nomination or acquisition. Princely kings are the examples for inherited leadership; bureaucratic appointments are

the models for leadership by nomination; and democratically elected leaders fit into the nomenclature of

acquisition. However, it is the fruitful outcome that counts for the leader to be remembered as a leader.

The leader inspires the populace, motivates and guides them towards achieving focused goals. At the functional

level, the leader enables the team in implementing the planned targets.Studies of leadership have produced several

theories involving umpteen traits that are instrumental in carving a leader.We choose a dozen of the traits as being

more important than the others. Here follow the Chosen Dozen.

1. Vision

Great leaders have the ability to look ahead and anticipate the things-to-happen well in advance. They have the

acumen to see through the future. They have a clear idea of the direction in which they are moving and as to what

they intend to accomplish. Having a clear vision turns the individual into a special type of person and shores up the

individual over others. This quality of vision changes a 'transactional commoner' into a 'transformational leader'.

Leaders with foresight do always reap the gains of the “first mover advantage.” In the Indian context “Make in

India” is an example of transformational vision.

2. Values

Many a time, a leader is known by the values he stands for. Values refer to the lasting ideals shared by a community.

Values nurture and influence the human behaviour and serve as broad guidelines in all eventualities. A leader

advocates the values that he believes to be good for the community irrespective of the fact that the perceptions may

differ from country to country, region to region and religion to religion. For example, Indian values are founded on

joint family system whereas American values are structured on nucleus family system. Other things apart, human

values propound honesty, integrity and fair attitude across the universe. The deeds and acts of a leader tend to add

specific beneficial value to the community. Abraham Lincoln's anti slavery drive and Mahatma Gandhi's

nonviolence movement may be cited as value models of immense impact.

3. Inspiration

Leaders possess the ability to inspire the people to fall in line with their principles and goals. Inspiration kindles the

spirit of motivation and leads to massive multiplication. Recall the first meeting between the young Narandranath,

come to be known as Swami Vivekananda later, and the sage, Ramakrishna Paramahamsa. Naren was a very logical

and intellectual boy with full of fire. He confronted Ramkrishna too with the same customary question that he

normally put forward to the spiritual men he had met, “Have you seen God?". Ramakrishna answered, “Yes, I have

seen God. I see Him as I see you here, only more intensely!" Naren was inspired and Swami Vivekannada was born.

It is a historical fact, now, that Swami Vivekananda went on to inspire the whole world for generations.

4.� Charisma

Charisma is avirtue of attraction endowed on the select few. At times charisma is considered as a divine bestowal.

CMA (Dr.) Sreehari ChavaCost & Management Consultant,Nagpur, Maharastra,He can be reached at:[email protected]



41

Very few leaders are known to possess the charisma. A leader, with charisma, can mesmerize the target audience

with astounding magnetism. Charisma creates an invisible aura of influence thereby casting a spell bound impact

on the community. Eminent personalities like John Kennedy, Pandit Jawaharlal Nehru and Atal Bihari Vajpayee

are regarded for their charismatic leadership.

5. Creativity

Leaders are creative. Their thinking is incessantly 'outside the box'. Creativity is the foundation for inventions and

innovations. Situations are different from time to time and are quite difficult at times. It is up to the leader to think

outside the box and find a solution for a difficult situation with a quick decision which must also be a good. Henry

Ford faced a situation like this when demand for his vehicles was so high that he couldn't possibly cope with. Instead

of going in for the routine approach of hiring more people to produce more, he thought with creativity and

developed the concept of 'assembly line of production' for a galaxy of entrepreneurs to follow suit. It is no wonder

that the economic advancements achieved by USA and many of the European countries are mostly on account of the

creative innovations over the last few decades.

6. Competency

Competency is a specific attributeof successful leaders. Competency is the ability to make effective use of the

capabilities. Competency propels conversion of intangible capabilities into tangible end-results. Competency

facilitates synergic output. Competency leads to competitive advantage. Competency is the Key Success Factor that

an individual possesses in marshalling the resources on hand to achieve the ambitious goal. A competent leader can

prove to be the winning difference to an odd team. Think of Lord Rama who vanquished the mighty Lanka with the

help of nomadic monkey army. Rama's competency speaks of the towering elevation that a competent captain can

bring in to a team of any sorts.

7. Commitment

Great Leaders are committed to the core. Commitment is that characteristic of leadership that elevates a leader from

the general masses. Commitment is dedication for the cause. Commitment paves the way for the realizable effects. A

leader is the one who sets the tone of commitment for others to emulate. Commitment generates greater respect and

recognition fo ra leader. Mother Teresa's commitment to charitable works brought in her intercession by Pope

Francis in December 2015 leading the process for her to be recognised as a saint.

8. Courage

Among the leadership qualities, courage is the most identifiable outward trait. Courage makes a leader valiant.

Courage comes to play in risky situations. Courage implies willingness to take risks towards achieving goals with no

assurance of success. As human life is full of uncertainties, every action entails a risk of some kind. At times, it is the

courage alone that draws the line between the leaders and others. Lokmanya Tilak declared “Freedom is my Birth

Right” which eventually lead to Indian Independence. And it is that exemplary courage that sets the great leaders

aside.

9. Perseverance

Leaders are known to be firm and resolute in their principles and policies. It is the quality of perseverance that

enables a leader to be unwavering and determinate. Perseverance springs up firmed-up beliefs. The underlying

theme is 'Believe in what you Do & Do what you Believe'. It is a historical fact that Shivaji's perseverance in fighting

for Hindu Dharma had ultimately led to his incarnation as Chatrapati.

10. Focus

Focus on the target is what a leader preaches and practices with concentration. Leaders always focus on the results.

They focus on what must be achieved by themselves, by others, and by the team as a whole. The focus, always, is on



42

the collective strengths of the team. The leaders have the ability to call the shots and make sure that everyone is

focused and concentrated on the most valuable use of their time and efforts as are essential to achieve the targeted

end results. Focus provides unidirectional approach to the entire team as such. The focused aim is to win the war

and not the stray battles. On the individual front, it is well said that Arjuna turned out to be the best ever archer

because he had the focus in letter and spirit.

11. Humility

Humility is humbleness. The best leaders are known to be ever humble.Great leaders are those who are strong and

decisive but also humble. Humility portrays the self-confidence and self-awareness that extend to recognize the

value of others without having any feeling of being threatened. Humility does not mean that one is weak or unsure of

oneself. It means that one is willing to admit that one could be wrong at times. It also means that one is willing to give

the credit where and when it is due. Humility gets results. Humility allows one to acknowledge one's mistakes. The

leader with humility is one who passes on the credit for success to the team and takes the blame on self for the short

falls.The great guru Gautama Buddha is known for compassionate humility.

12. Bonding

A leader multiplies several-fold through the means of bonding. Bonding implies sticking together through thick and

thin. Bonding is that trait which enables a leader to align with masses. Bonding fosters loyalty, spreads team spirit

and facilitates delegation. Bonding leads to team building. Bonding creates collective strengths. Successful

corporate leaders acknowledge the trait of bonding as a significant reason for their growth. Leaders gain the

cooperation of others by making a commitment to get along well with each key person every single day. An

individual always has a choice when it comes to a task: He can do it himself, or he can get someone else to do it for

him. Which is it going to be? The answer is 'Bonded sticks are perpetually stronger!'

Quick Take

The dozen of the traits, discussed in the preceding paragraphs, are important elements that go to make a 'Leader'.

The beauty of it is that these traits can be cultivated through diligent learnings and practices. The leaders, referred to

in the narratives, possess all of these traits plus something more. The list is, thus, inclusive and not exclusive at all.

Insights into the life sketch of these role model leaders would add to the proficiency inculcations of any common

individual. And, there is no bar that prevents a commoner from becoming a leader. So, Start up, Gear up, Raise up

and Make in a Leader!



43

Examination Examination

TIME TABLETIME TABLE

Day & Date Intermediate Course Examination Syllabus - 2016 Time 2.00 p.m. to 5.00 p.m

Monday,11th June, 2018

Financial Accounting (FAC)

Tuesday,12th June, 2018

Laws & Ethics (LNE)

Wednesday,13th June, 2018

Direct Taxation (DTX)

Thursday,14th June, 2018

Cost Accounting (CAC)

Friday,15th June, 2018

Operations Management & Strategic Management (OMSM)

Saturday,16th June, 2018

Cost & Management Accounting and Financial Management (CMFM)

Sunday,17th June, 2018

Indirect Taxation (ITX)

Monday,18th June, 2018

Company Accounts & Audit (CAA)



44

PRACTICALPRACTICALPRACTICALAdviceAdviceAdvice

Prac�cal support, informa�on and advice to help youget the most out of your studies.

ABOUT YOUR STUDIES - INTERMEDIATE COURSE



Examination

given in Study Note

MTPs & RTPsRead Study Notes

Solve Excercises

Assess Yourself

Appear For

45

Submission

Updation of E-Mail Address/Mobile:

Students are advised to update their E-Mail id and Mobile Numbers timely so that important communications are not missed as the same are sent through bulk mail/SMS nowadays. Student may update their E-Mail id/ Mobile Number instantly after logging into their account at www.icmai.in at request option.

Dear Students,

We are very much delighted to receive responses from all of you; for whom our effort is!We have noted your queries and your requests will definitely be carried out. Further, requesting you to go through the current edition of the bulletin. All the areas will be covered gradually. Expecting your responses further to serve you better as we believe that there is no end of excellence! One of the mails received is acknowledged below.

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SUBMISSIONSUBMISSIONSUBMISSION


Behind every successful business decision, there is always a CMA 46

Message from

Directorate of Studies

Dear Students,

We have stepped into 2018 and with new enthusiasm for the future to come, it is also a time to reflect on the year gone by and

the beautiful moments shared with all. Express your gratitude and spare your thoughts for all who have supported you and

remember to make a new year resolution to do much better in every sphere of your life.

‘Learn from yesterday, Live for today, Hope for tomorrow’

For the smooth and flawless preparation. Directorate of Studies have provided meaningful tips which will help you to gain

sufficient knowledge about each subject.“Tips” are given in this E-bulletin by the knowledge experts for the smooth

encouragement in you preparation. We are sure that all students will definitely be benefitted by those tips and that will help

them to brush up their knowledge and also to swim across.

Take the course seriously from the very beginning but don’t be panicky. Please try to follow the general guidelines,

mentioned below; which may help you in your preparation.

Essentials for Preparation:

Conceptual understanding & Overall understanding of the subject both should be clear.

Candidates are advised to go through the study material provided by the Institute in an analytical manner.

Students Should improve basic understanding of the subject with focus on core concepts.

The Candidates are expected to give to the point answer, which is a basic pre-requisite for any professional

examination.

To strengthen the answers candidates are advised to give answer precisely and in a structured manner.

In-depth knowledge about specific terms required.

Write question numbers correctly and prominently.

Proper time management is also important while answering.

Please Note:

For your information, GST under New Syllabus has already been uploaded. Pl follow the given link:

Desired Link- Revised Contents-http://icmai.in/upload/Students/Syllabus2016/Syllabus2016_Revised_Contents.pdf

New Study Materials based on GST has been uploaded too. Please refer to that for the smooth flow of your preparation:

Intermediate Study Material-http://icmai.in/studentswebsite/Syl‐2016‐Inter.php

Final Study material-http://icmai.in/studentswebsite/Syl‐2016‐Final.php

Be Prepared and Get Success;

Disclaimer:Although due care and diligence have been taken in preparation and uploading this E-bulletin, the Institute shall not be responsible for any loss or damage, resulting from any action taken on the basis of the contents of this E-bulletin.



47

Glimpses of Interactive E vent jointly organised by Governance Now and Sri Adhikari Brothers (SAB) group on " C o r p o r a t e G o v e r n a n c e f o r S ustainable E conomic Gr owth" on 28th February, 2018 at New Delhi.

National seminar on GST-Jointly Organized by the Inst i tute & Bhubaneswar Chapter, dated 27th & 28th January 2018 at Bhubaneswar, Odisha.

Glimpses of National Seminar on “CMAs Partner in Vision 2022- for Vibrant India” organized by the WIRC of the Institute during 10th & 11th February, 2018 at Mumbai

Glimpses of 39th Cost Conference on “Transforming India through Cost Governance” jointly organized by the EIRC and Howrah Chapter of the Institute during 9th & 10th February, 2018 at Kolkata

SNAPSHOTS



48

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