AS 4 and AS 5 Test: Contingencies, Adjusting Events and Prior Period Items for CA Inter Advanced Accounting

The paper focuses on AS 4, which deals with contingencies and events occurring after the balance sheet date, and AS 5, which deals with net profit or loss for the period, prior period items and changes in accounting policies. The first question asks you to classify a list of post-balance-sheet events. The second question looks at revenue recognition where possession has passed but legal formalities are pending. The third and fourth questions test the difference between extraordinary items and ordinary expenses, and how a later court decision affects a provision made in an earlier year. Each question carries 5 marks, with a total of 20 marks for the test.

Attempt the test under timed conditions, allowing about 40 minutes for solving and 15 minutes for reading, as indicated on the paper. Write down the reasoning for each classification, because the marks depend on giving reasons with reference to the standard and not just a one-word answer. After solving, compare your answers with the standard's definitions of adjusting events, non-adjusting events and prior period items. Repeat the questions where you were unsure of the classification.

This test suits CA Inter students preparing for the Advanced Accounting paper who have finished the chapters on AS 4 and AS 5. It is especially useful in the final weeks before the exam, when practising standard-based descriptive questions helps in scoring well in the theory and application parts of the paper.

• Contingencies under AS 4
• Adjusting events after balance sheet date
• Non-adjusting events after balance sheet date
• Revenue recognition on sale of building without registration
• Extraordinary items under AS 5
• Prior period items and provisions under AS 4
• Net profit or loss for the period under AS 5