ACCOUNTING POLICY CPT
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CA CPT Exam Pattern 2017
CA CPT Question paper will be divided into four parts i.e. Part 1 - Fundamentals of Accounting and Mercantile Laws, Part 2 - Mercantile Laws, Part 3 - General Economics and Part 4 - Quantitative Aptitude.
The test for two parts will be taken in the first session and test for other two will be taken in the second session. Thus, there will be two question papers which have to be attempted by the candidates in two sessions on the same day.
The question paper carries 200 objective type questions for a total of 200 marks
For every wrong answer, 0.25 marks will be deducted from the maximum obtained.
The exam conducting authority, ICAI has also released CA CPT sample papers 2017 and other study material for the aspirants. CA CPT 2017 sample papers and other study material is completely for free. The CA CPT sample papers includes mock test papers based on June 2017 examination and model question papers which include two volumes carrying more than 5000 multiple choice questions which candidates can download and practice while preparing for CA CPT 2017.
The Institute of Chartered Accountants of India (ICAI) is the national professional accounting body of India. It was established on 1 July 1949 as a statutory body under the Chartered Accountants Act, 1949 enacted by the Parliament (acting as the provisional Parliament of India) to regulate the profession of Chartered Accountancy in India. ICAI is the second largest professional Accounting & Finance body in the world in terms of membership, after American Institute of Certified Public Accountants. ICAI is the only licensing cum regulating body of the financial audit and accountancy profession in India. It recommends the accounting standards to be followed by companies in India to National Advisory Committee on Accounting Standards (NACAS). and sets the accounting standards to be followed by other types of organisations.
What are 'Accounting Policies'
Accounting policies are the specific principles, rules and procedures implemented by a company's management team and are used to prepare its financial statements. These include any methods, measurement systems and procedures for presenting disclosures. Accounting policies differ from accounting principles in that the principles are the accounting rules and the policies are a company's way of adhering to those rules.
BREAKING DOWN 'Accounting Policies'
Accounting policies are a set of standards that govern how a company prepares its financial statements. These policies are used to deal specifically with complicated accounting practices such as depreciation methods, recognition of goodwill, preparation of research and development costs, inventory value and the consolidation of financial accounts. These policies may differ from company to company, but all accounting policies are required to conform to Generally Accepted Accounting Principles (GAAP) and/or International Financial Reporting Standards (IFRS).
Accounting policies can be thought of as a framework in which a company is expected to operate; however, the framework is somewhat flexible, and a company's management team can choose specific accounting policies that are advantageous to the financial reporting of the company.
The Importance of Understanding a Company's Accounting Policies
An Example of Accounting Policies
Accounting policies can be used to legally manipulate earnings. For example, many companies are allowed to report inventory using either the first-in, first-out (FIFO) method or the last-in, first-out (LIFO) method of accounting. With FIFO, when a company sells a product, the inventory produced first is considered sold. With LIFO, when a product is sold, the last inventory produced is considered sold. In periods of rising inventory prices, a company can use one of these accounting policies to increase its earnings.
Accounting principles are lenient at times, and the specific policies of a company are very important. Looking into a company's accounting policies can signal whether management is conservative or aggressive when reporting earnings. This should be taken into account by investors when reviewing earnings reports. Also, outside accountants who are hired to review a company's financial statements should check the company's policies to ensure they conform to standard accounting principles.