PDF · Test series
AS 4 and AS 5 Solved Test Questions for CA Inter Advanced Accounting
- Shared by
- Kavyansh
- Course
- CA Inter
- Subject
- Advanced Accounting
- Added
- 10 Nov 2026
Part of: CA InterAdv Accounting
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This is a solved answer set from a chapter test covering AS 4 (Events Occurring After the Balance Sheet Date) and AS 5 (Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies). The questions ask whether an event after the year end is a contingency, an adjusting event or a non-adjusting event, and whether a tax demand payment can be shown as an extraordinary item. It suits CA Inter students revising Advanced Accounting who want to check their reasoning on these standards.
What the Answers Cover
The preview shows answers to four questions. The first two look at events after the balance sheet date, such as a suit filed after year end and a property sale whose deed was registered later, and explain why each one is treated as a contingency or a non-adjusting event. The third question checks whether a GST demand paid by a consultancy firm can be treated as extraordinary, with reference to what counts as an ordinary activity. The fourth question works through a court award decided before the financial statements were approved and shows how it is handled as an adjusting event with an upward revision of the provision.
How to Use These for Revision
Read each question first and try to classify the event yourself before opening the answer. Compare your reasoning with the answer, paying attention to the dates given in each case, because the timing of the event against the balance sheet date and the approval date often decides the treatment. Note the reasoning language used for AS 4 and AS 5 so you can reuse it in descriptive answers in the exam.
Who Should Read This
This note is useful for CA Inter students preparing Advanced Accounting who are working on the AS 4 and AS 5 chapters and want practice in applying the standards to short case-based questions. It is a test-style set, so it works best alongside your study material rather than as a standalone summary.
Key topics in these notes
- AS 4 events after balance sheet date
- Adjusting vs non-adjusting events
- Contingent liabilities after year end
- Sale of immovable property after balance sheet date
- AS 5 extraordinary items
- Prior period items
- Provision revision for court awards
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Frequently asked questions
What is the difference between an adjusting event and a non-adjusting event under AS 4?
An adjusting event provides evidence of conditions that existed at the balance sheet date and requires changes to amounts in the financial statements. A non-adjusting event relates to conditions arising after the balance sheet date and is generally disclosed, not adjusted.
Can a GST demand paid by a company be shown as an extraordinary item under AS 5?
The answer in this set says no, because providing consultancy services is an ordinary activity of the company, so the tax paid on that demand is also part of ordinary activities and cannot be treated as extraordinary.
Why is the court award in the Raj Ltd. question treated as an adjusting event?
The answer explains that the dispute arose in the year under review, a provision was already made, and the court decided before the financial statements were approved, so the decision provides evidence that adjusts the provision.
Does a suit filed after the balance sheet date affect the year-end accounts?
According to the answer in this set, a suit filed after the balance sheet date does not relate to conditions at that date, so it is treated as a non-adjusting event and may be disclosed as a contingent liability.
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