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CMA Foundation Paper 2: The Complete Guide to Fundamentals of Financial & Cost Accounting
Master the syllabus, formulas, and problem-solving for the December 2026 exam with this definitive resource.
Welcome to your ultimate strategic guide for CMA Foundation Paper 2: Fundamentals of Financial & Cost Accounting. This comprehensive resource, crafted specifically for the December 2026 attempt, distills the entire syllabus into a clear, actionable, and exam-focused plan. Paper 2 is a 100-mark, 100% Multiple Choice Question (MCQ) paper, testing both conceptual understanding and practical application.
📊 Syllabus Overview & Marks Distribution
Understanding the weightage is your first step to efficient preparation. Allocate your study time proportionately.
| Section | Module | Approx. Weightage | Key Topics Covered |
|---|---|---|---|
| Part A: Financial Accounting (70 Marks) | 1. Accounting Fundamentals | ~30 Marks | Principles, Journal, Ledger, Trial Balance, Depreciation |
| 2. Special Transactions | ~15 Marks | Bills of Exchange, Consignment, Joint Ventures | |
| 3. Final Accounts | ~25 Marks | Trading, P&L, Balance Sheet, Non-Profit Organizations | |
| Part B: Cost Accounting (30 Marks) | 4. Fundamentals of Cost Accounting | ~30 Marks | Cost Concepts, Classifications, Cost Sheet Preparation |
📈 Strategic Insight: Notice that 70% of your paper revolves around Financial Accounting. While Cost Accounting has only 30% weightage, it’s often considered more straightforward. Allocate approximately 60-65% of your preparation time to Financial Accounting, especially to Final Accounts and Depreciation which are high-scoring areas.
📚 Module 1: Accounting Fundamentals (The Bedrock of Accounting)
1.1 The Four Frameworks of Accounting
Think of accounting frameworks as the “rulebooks” that govern how we record and report financial information. Understanding these helps you appreciate why certain rules exist.
| Framework | What It Governs | Governing Body/Standard |
|---|---|---|
| Conceptual Framework | The underlying principles and concepts (like accrual, going concern) | Generally Accepted Accounting Principles (GAAP) |
| Legal Framework | Statutory requirements for maintaining books of accounts | Companies Act, 2013; Partnership Act |
| Institutional Framework | Accounting standards and professional guidelines | ICMAI, ICAI (Ind AS, AS) |
| Regulatory Framework | Sector-specific regulations for financial reporting | SEBI, RBI, IRDA |
1.2 Accounting Principles, Concepts & Conventions
These aren’t just textbook terms—they’re practical guidelines that prevent chaos in accounting. Let’s simplify them.
Core Accounting Concepts (The Non-Negotiables)
- Going Concern Concept: We assume the business will continue operating indefinitely, not shutting down soon. This is why we depreciate assets over their useful life rather than expensing them immediately.
- Accrual Concept: Revenue is recorded when earned (not when cash is received), and expenses are recorded when incurred (not when paid). This gives a truer picture of profitability.
- Consistency Concept: Once you choose an accounting method (like depreciation method), you should stick to it year after year for comparability.
- Dual Aspect Concept: The foundation of double-entry bookkeeping. Every transaction has two equal and opposite effects. Expressed as: Assets = Liabilities + Capital.
Practical Example: Accrual vs Cash Basis
Situation: In March 2026, you sell goods worth ₹50,000 on credit. Payment is received in April 2026.
- Accrual Basis (What we follow): Revenue of ₹50,000 is recorded in March’s Profit & Loss Account, even though cash hasn’t arrived. The debtor (customer) appears in the Balance Sheet.
- Cash Basis (What some small businesses might do): Revenue would only be recorded in April when cash is received.
Exam Tip: The accrual concept is fundamental to modern accounting. Expect at least 2-3 MCQs testing your understanding of its implications.
1.3 Capital vs Revenue: The Classification That Changes Everything
Misclassifying capital and revenue items is a common student error that distorts profits and asset values. Here’s how to never get it wrong.
| Aspect | Capital Expenditure/Receipt | Revenue Expenditure/Receipt | Why It Matters |
|---|---|---|---|
| Definition | Creates enduring benefit (≥ 1 year), increases earning capacity | Benefits current period only, maintains earning capacity | Capital items affect Balance Sheet; Revenue items affect P&L |
| Example (Expenditure) | Purchasing a delivery van ₹7,00,000 | Spending ₹5,000 on petrol for that van | Van is an asset (depreciated), petrol is an expense (deducted fully) |
| Example (Receipt) | Taking a bank loan of ₹10,00,000 | Receiving ₹20,000 from a customer for sales | Loan increases liability, sales increase revenue |
| Impact on Profit | No direct impact (only via depreciation) | Directly reduces/increases profit | Wrong classification = Wrong profit calculation |
1.4 The Accounting Cycle: From Transaction to Final Accounts
Visualize accounting as a 8-step cycle that repeats every accounting period (usually a year).
The 8-Step Cycle:
- Identify Transactions: Sale, purchase, payment, receipt—any economic event.
- Record in Journal: The book of original entry (chronological record).
- Post to Ledger: Transfer journal entries to individual accounts (T-format).
- Prepare Trial Balance: List all ledger balances to check arithmetical accuracy.
- Make Adjustments: Account for accruals, prepayments, depreciation, etc.
- Prepare Adjusted Trial Balance: Trial balance after incorporating adjustments.
- Prepare Final Accounts: Trading & Profit & Loss Account (for profit/loss) and Balance Sheet (financial position).
- Close the Books: Transfer nominal accounts to prepare for next period.
🔢 Solved Example 1.1: Complete Journal Entry with Analysis
Transaction: On 15th January 2026, M/S Sunrise Traders purchased machinery worth ₹5,00,000 from Perfect Machines Ltd. They paid ₹2,00,000 by cheque immediately and agreed to pay the balance after 3 months.
Step-by-Step Analysis:
- Accounts Affected: Machinery Account (Asset), Bank Account (Asset), Perfect Machines Ltd. (Creditor/Liability).
- Nature of Accounts: Machinery (Real – Debit what comes in), Bank (Real – Credit what goes out), Perfect Machines Ltd. (Personal – Credit the giver).
- Application of Rules:
- Machinery comes into business → Debit Machinery A/c
- Bank balance goes out → Credit Bank A/c (for ₹2,00,000)
- Creditor gives credit → Credit Perfect Machines Ltd. A/c (for ₹3,00,000)
Date: 2026 Jan 15
Machinery A/c Dr. 5,00,000
To Bank A/c 2,00,000
To Perfect Machines Ltd. A/c 3,00,000
(Being machinery purchased partly by cheque and partly on credit)
Why this is important: This single entry tests your understanding of:
1. Treatment of fixed assets
2. Dual aspect (both Bank and Creditor affected)
3. Proper narration
4. Date format
1.5 Depreciation: Accounting for the Wear and Tear
Depreciation is not about valuation but about allocation of cost. The two main methods test different computational skills.
| Parameter | Straight Line Method (SLM) | Written Down Value Method (WDV) |
|---|---|---|
| Core Idea | Equal charge every year | Diminishing charge every year |
| Formula | Depreciation = (Original Cost – Scrap Value) ÷ Useful Life | Depreciation = Book Value at beginning × Fixed Percentage |
| Annual Depreciation | Constant throughout | Decreases every year |
| Book Value at End | Reduces uniformly to scrap value | Reduces rapidly initially, then slowly |
| Suitability | Assets with consistent utility (furniture, buildings) | Assets with higher efficiency loss in initial years (vehicles, machinery) |
🔢 Solved Example 1.2: Depreciation Calculation (SLM vs WDV)
Problem: A machine was purchased on 1.4.2023 for ₹8,00,000. Installation charges were ₹50,000. Its estimated useful life is 5 years with a scrap value of ₹50,000. Calculate depreciation for the first 3 years using (a) Straight Line Method, (b) Written Down Value Method @20%.
Step 1: Calculate Original Cost
Purchase Price: ₹8,00,000
Add: Installation Charges: ₹50,000
Total Cost: ₹8,50,000
Step 2a: Straight Line Method Calculation
Annual Depreciation = (Cost – Scrap Value) ÷ Useful Life
= (8,50,000 – 50,000) ÷ 5 = ₹1,60,000 per year
| Year | Opening Book Value | Depreciation | Closing Book Value |
|---|---|---|---|
| 2023-24 | 8,50,000 | 1,60,000 | 6,90,000 |
| 2024-25 | 6,90,000 | 1,60,000 | 5,30,000 |
| 2025-26 | 5,30,000 | 1,60,000 | 3,70,000 |
Step 2b: Written Down Value Method Calculation
Rate: 20% on diminishing balance
| Year | Opening Book Value | Depreciation @20% | Closing Book Value |
|---|---|---|---|
| 2023-24 | 8,50,000 | 1,70,000 (8,50,000 × 20%) | 6,80,000 |
| 2024-25 | 6,80,000 | 1,36,000 (6,80,000 × 20%) | 5,44,000 |
| 2025-26 | 5,44,000 | 1,08,800 (5,44,000 × 20%) | 4,35,200 |
Key Observation: Under WDV, the book value after 3 years (₹4,35,200) is higher than under SLM (₹3,70,000). WDV never reaches zero, while SLM reduces to scrap value exactly at the end of useful life.
⚠️ Common Exam Pitfall: Students often forget to add installation/transportation costs to the original cost when calculating depreciation. Remember, all costs necessary to bring the asset to its intended location and condition for use form part of the asset’s cost.
📈 Module 2: Accounting for Special Transactions (15 Marks)
2.1 Bills of Exchange: The Formal IOU
A Bill of Exchange is a negotiable instrument—a written, unconditional order from one party (drawer) to another (drawee) to pay a specified sum to a third party (payee) on demand or at a fixed future date.
Why Businesses Use Bills of Exchange:
- Credit Security: Converts an open trade credit into a formal, legally enforceable document.
- Liquidity Tool: The holder can discount it with a bank for immediate cash (less a discount charge).
- Evidence of Debt: Serves as clear proof in case of disputes.
🔢 Solved Example 2.1: Bill of Exchange with Discounting
Scenario: Amit sold goods to Sumit for ₹1,00,000 on credit. On 1st March 2026, Sumit accepted Amit’s draft for ₹1,00,000 payable after 3 months. Amit immediately discounted the bill with his bank @12% p.a. The bill was dishonored on due date and the bank paid ₹200 as noting charges.
Required: Pass journal entries in Amit’s books.
1. When Sumit becomes debtor:
Sumit A/c Dr. 1,00,000
To Sales A/c 1,00,000
(Being goods sold to Sumit on credit)
2. When bill is drawn and accepted:
Bills Receivable A/c Dr. 1,00,000
To Sumit A/c 1,00,000
(Being Sumit’s acceptance received)
3. When bill is discounted with bank:
Bank A/c Dr. 97,000
Discount A/c Dr. 3,000
To Bills Receivable A/c 1,00,000
(Being bill discounted with bank @12% p.a.)
Calculation: Discount = 1,00,000 × 12% × 3/12 = ₹3,000
4. When bill is dishonored:
Sumit A/c Dr. 1,00,200
To Bank A/c 1,00,200
(Being bill dishonored and bank paid noting charges)
5. Transfer of discount (if not yet written off):
Profit & Loss A/c Dr. 3,000
To Discount A/c 3,000
(Being discount on bill transferred to P&L)
2.2 Consignment Accounting: Goods Sent, Not Sold
Consignment is when the owner (consignor) sends goods to an agent (consignee) who sells them on the owner’s behalf for a commission. Ownership remains with the consignor until sale.
| Term | Meaning | Accounting Treatment |
|---|---|---|
| Consignor | Owner of goods who sends them | Debit Consignment A/c with all costs |
| Consignee | Agent who receives and sells goods | Credited with sales, debited with expenses incurred |
| Consignment Stock | Unsold goods with consignee | Valued at cost + proportionate expenses, shown in Balance Sheet |
| Commission | Consignee’s remuneration | Ordinary % on sales + Del Credere (extra for risk) |
📝 Exam Focus: Consignment problems often test:
1. Valuation of closing stock (cost + proportionate non-recurring expenses)
2. Calculation of commission (ordinary vs. del credere)
3. Preparation of Consignment Account and Consignee’s Account
Expect at least 5-7 marks from this topic.
2.3 Joint Ventures: Short-Term Business Partnerships
A Joint Venture is a temporary partnership between two or more parties for a specific business undertaking. Once the project is complete, the venture dissolves.
💡 Memory Tip: Think of Joint Venture as a “project-based partnership” while a Partnership firm is a “continuous business relationship.” JVs are accounted for using either (a) Separate Books Method or (b) No Separate Books Method (Memorandum JV Account).
⚖️ Module 3: Preparation of Final Accounts (25 Marks)
3.1 The Final Accounts Trinity
Final accounts tell the business’s financial story: Trading Account (gross profit/loss), Profit & Loss Account (net profit/loss), and Balance Sheet (financial position).
| Account | Purpose | Key Formula | Time Period |
|---|---|---|---|
| Trading Account | Calculates Gross Profit from trading activities | GP = Net Sales – Cost of Goods Sold | For the accounting period |
| Profit & Loss Account | Calculates Net Profit after all expenses | NP = GP + Other Income – All Expenses | For the accounting period |
| Balance Sheet | Shows financial position at a point in time | Assets = Liabilities + Capital | As on a specific date |
🔢 Solved Example 3.1: Comprehensive Final Accounts
Trial Balance of XYZ Traders as on 31st March 2026:
| Particulars | Debit (₹) | Credit (₹) |
|---|---|---|
| Capital A/c | 5,00,000 | |
| Drawings A/c | 40,000 | |
| Purchases & Sales | 8,00,000 | 12,00,000 |
| Opening Stock | 1,50,000 | |
| Wages | 1,20,000 | |
| Salaries | 1,80,000 | |
| Rent Received | 30,000 | |
| Furniture | 2,00,000 | |
| Debtors & Creditors | 2,50,000 | 1,80,000 |
| Cash at Bank | 1,50,000 | |
| Total | 18,90,000 | 18,90,000 |
Adjustments:
1. Closing Stock valued at ₹2,00,000 (not recorded in books).
2. Depreciate Furniture by 10%.
3. Outstanding Salaries ₹20,000.
4. Prepaid Rent ₹5,000.
Solution:
XYZ Traders – Trading & Profit & Loss Account for year ended 31st March 2026
| Particulars | ₹ | Particulars | ₹ |
|---|---|---|---|
| To Opening Stock | 1,50,000 | By Sales | 12,00,000 |
| To Purchases | 8,00,000 | By Closing Stock | 2,00,000 |
| To Wages | 1,20,000 | ||
| To Gross Profit c/d | 3,30,000 | ||
| Total | 14,00,000 | Total | 14,00,000 |
| To Salaries (1,80,000+20,000) | 2,00,000 | By Gross Profit b/d | 3,30,000 |
| To Depreciation on Furniture | 20,000 | By Rent Received (30,000-5,000) | 25,000 |
| To Net Profit (transferred to Capital) | 1,35,000 | ||
| Total | 3,55,000 | Total | 3,55,000 |
Balance Sheet as on 31st March 2026
| Liabilities | ₹ | Assets | ₹ |
|---|---|---|---|
| Capital: | Fixed Assets: | ||
| Opening Balance | 5,00,000 | Furniture (2,00,000-20,000) | 1,80,000 |
| Add: Net Profit | 1,35,000 | Current Assets: | |
| Less: Drawings | (40,000) | Closing Stock | 2,00,000 |
| Closing Capital | 5,95,000 | Debtors | 2,50,000 |
| Current Liabilities: | Prepaid Rent | 5,000 | |
| Creditors | 1,80,000 | Bank Balance | 1,50,000 |
| Outstanding Salaries | 20,000 | ||
| Total | 7,95,000 | Total | 7,95,000 |
3.2 Non-Profit Organizations: Different Purpose, Different Accounts
NPOs (like clubs, charities, hospitals) don’t aim for profit. Their financial statements reflect this different objective.
| NPO Statement | Equivalent in Business | Key Difference | Important Treatment |
|---|---|---|---|
| Receipts & Payments A/c | Cash Book Summary | Includes ALL cash/bank transactions | Capital & Revenue items mixed |
| Income & Expenditure A/c | Profit & Loss Account | Includes ONLY revenue items of current period | Excludes capital receipts/payments |
| Balance Sheet | Balance Sheet | Has Capital Fund instead of Capital | Shows life membership, legacy as capital |
💡 Key Conversion: To prepare Income & Expenditure A/c from Receipts & Payments A/c:
1. Exclude opening/closing cash/bank balances
2. Adjust for outstanding/prepaid items
3. Include only revenue items for current period
4. Deduct depreciation on fixed assets
5. Include only current year’s subscription/rent/etc.
💰 Module 4: Fundamentals of Cost Accounting (30 Marks)
4.1 Cost Accounting vs Financial Accounting: The Fundamental Difference
| Basis | Financial Accounting | Cost Accounting |
|---|---|---|
| Primary Objective | Show profitability & financial position to external users | Provide cost information for internal management decisions |
| Users | Shareholders, creditors, government, public | Managers, employees, internal departments |
| Nature of Information | Historical, monetary, overall business | Current & future oriented, quantitative, department-wise |
| Legal Requirement | Mandatory for companies | Voluntary (except for specified industries) |
| Time Period | Usually annual | As needed (daily, weekly, monthly) |
4.2 Cost Concepts & Terminology (CAS-1 Compliant)
The Cost Accounting Standard (CAS-1) by ICMAI provides uniform terminology. Here are the most important ones:
| Term | Definition | Example | Why Important |
|---|---|---|---|
| Cost Object | Anything for which cost measurement is required | Product, service, project, customer | Starting point of cost analysis |
| Cost Unit | Unit of quantity for cost measurement | Per kg, per liter, per machine hour | Enables per unit cost calculation |
| Cost Centre | Location, person, or item for which costs are accumulated | Production Dept, Machine No. 5, Supervisor | Helps in cost control and responsibility |
| Profit Centre | Segment responsible for both costs and revenues | Product line, Division, Regional office | Evaluates segment profitability |
| Cost Driver | Factor that causes a change in cost | Labor hours, Machine hours, No. of setups | Basis for allocating overheads |
4.3 Cost Classification: The Many Ways to Slice Cost Data
Three Key Classifications You Must Know:
1. By Nature or Element:
• Direct Material: Raw material identifiable in final product (wood in furniture)
• Direct Labor: Wages of workers directly involved in production
• Direct Expenses: Other direct costs (royalty, hire charges)
• Overheads: All indirect costs (Factory, Office, Selling & Distribution)
2. By Function:
• Production Cost • Administrative Cost • Selling & Distribution Cost • R&D Cost
3. By Behavior (Most Important for Decision Making):
• Fixed Cost: Remains constant in total despite activity changes (rent, salaries)
• Variable Cost: Changes in direct proportion to activity (raw material, power)
• Semi-variable Cost: Partly fixed, partly variable (telephone: fixed rental + variable calls)
4.4 Cost Sheet: The Masterpiece of Cost Accounting
A Cost Sheet is a statement that shows various components of total cost and profit. It’s not just a calculation—it’s a diagnostic tool for management.
🔢 Solved Example 4.1: Complete Cost Sheet with Missing Figures
Problem: From the following particulars, prepare a Cost Sheet for the year ended 31.03.2026 and find the missing figures:
| Particulars | ₹ |
|---|---|
| Direct Material Consumed | ? |
| Direct Wages | 2,00,000 |
| Factory Overheads (100% of Direct Wages) | ? |
| Office Overheads (20% of Works Cost) | ? |
| Selling & Distribution Overheads (₹10 per unit sold) | ? |
| Units Produced | 10,000 |
| Units Sold (at ₹100 each) | 8,000 |
| Profit | ? |
| Opening Stock of Finished Goods (1000 units) | ? |
| Closing Stock of Finished Goods (3000 units) | ? |
Additional Information:
1. Prime Cost = ₹5,00,000
2. Rate of Gross Profit on Sales = 20%
3. Stock of finished goods is valued at cost of production
Step-by-Step Solution:
Step 1: Calculate Missing Figures in Sequence
1. Direct Material Consumed:
Prime Cost = Direct Material + Direct Wages
5,00,000 = Direct Material + 2,00,000
Direct Material = ₹3,00,000
2. Factory Overheads: 100% of Direct Wages = ₹2,00,000
3. Works Cost: = Prime Cost + Factory Overheads
= 5,00,000 + 2,00,000 = ₹7,00,000
4. Office Overheads: 20% of Works Cost = 20% of 7,00,000 = ₹1,40,000
5. Cost of Production: = Works Cost + Office Overheads
= 7,00,000 + 1,40,000 = ₹8,40,000
6. Cost of Production per unit: = Total Cost of Production ÷ Units Produced
= 8,40,000 ÷ 10,000 = ₹84 per unit
7. Value of Opening Stock (1000 units): = 1000 × ₹84 = ₹84,000
8. Value of Closing Stock (3000 units): = 3000 × ₹84 = ₹2,52,000
9. Cost of Goods Sold: = (Opening Stock + Cost of Production) – Closing Stock
= (84,000 + 8,40,000) – 2,52,000 = ₹6,72,000
10. Selling & Distribution Overheads: = ₹10 per unit × 8,000 units sold = ₹80,000
11. Cost of Sales: = Cost of Goods Sold + Selling & Distribution Overheads
= 6,72,000 + 80,000 = ₹7,52,000
12. Sales Value: = 8,000 units × ₹100 = ₹8,00,000
13. Profit: Gross Profit = 20% of Sales = 20% of 8,00,000 = ₹1,60,000
Check: Sales (8,00,000) – Cost of Sales (7,52,000) = ₹48,000 (This is actual profit)
Note: There’s inconsistency in the problem. The given “Rate of Gross Profit on Sales = 20%” doesn’t match our calculation. In exam, you’d proceed with calculated figures unless instructed otherwise.
Cost Sheet for the year ended 31.03.2026
| Particulars | Amount (₹) | Per Unit (₹) |
|---|---|---|
| Direct Material Consumed | 3,00,000 | 30.00 |
| Direct Wages | 2,00,000 | 20.00 |
| Prime Cost | 5,00,000 | 50.00 |
| Add: Factory Overheads | 2,00,000 | 20.00 |
| Works/Factory Cost | 7,00,000 | 70.00 |
| Add: Office & Administration Overheads | 1,40,000 | 14.00 |
| Cost of Production (10,000 units) | 8,40,000 | 84.00 |
| Add: Opening Stock of Finished Goods (1,000 units) | 84,000 | 84.00 |
| Less: Closing Stock of Finished Goods (3,000 units) | (2,52,000) | 84.00 |
| Cost of Goods Sold (8,000 units) | 6,72,000 | 84.00 |
| Add: Selling & Distribution Overheads | 80,000 | 10.00 |
| Cost of Sales | 7,52,000 | 94.00 |
| Sales (8,000 units) | 8,00,000 | 100.00 |
| Profit (Balancing Figure) | 48,000 | 6.00 |
Analysis: The cost sheet reveals that production cost is ₹84 per unit but with selling overheads, total cost becomes ₹94 per unit. Selling at ₹100 gives only ₹6 profit per unit (6% margin). Management might need to reduce production costs or increase selling price.
⚠️ Common Cost Sheet Errors:
1. Including selling overheads in cost of production (they go in cost of sales)
2. Valuing stock at selling price instead of cost
3. Forgetting to adjust opening and closing stock
4. Including financial expenses (interest) in product cost (they’re not included)
🎯 50+ Practice Problems Section (Condensed Format)
This section provides a curated set of problem types you MUST practice. We’ve included one sample solution for each category. For full 50+ problems with detailed solutions, download our CMA Paper 2 Practice Workbook (link at end).
Category 1: Journal & Ledger (10 Problems)
Sample Problem J1: Compound Journal Entry
Transaction: Started business with cash ₹5,00,000; deposited ₹4,00,000 in bank; purchased furniture ₹50,000 by cheque; bought goods for cash ₹30,000; sold goods to Amit on credit ₹40,000.
1. Cash A/c Dr. 5,00,000
To Capital A/c 5,00,000
2. Bank A/c Dr. 4,00,000
To Cash A/c 4,00,000
3. Furniture A/c Dr. 50,000
To Bank A/c 50,000
4. Purchases A/c Dr. 30,000
To Cash A/c 30,000
5. Amit A/c Dr. 40,000
To Sales A/c 40,000
Category 2: Depreciation (8 Problems)
Sample Problem D3: Change in Depreciation Method
Problem: A machine purchased for ₹10,00,000 on 1.4.2022 (scrap ₹1,00,000, life 5 years) was depreciated by SLM. On 1.4.2024, method changed to WDV @25%. Calculate depreciation for 2024-25.
SLM Depreciation p.a. = (10,00,000 – 1,00,000) ÷ 5 = ₹1,80,000
Book Value on 1.4.2024 = 10,00,000 – (2 × 1,80,000) = ₹6,40,000
WDV Depreciation for 2024-25 = 25% of 6,40,000 = ₹1,60,000
Category 3: Final Accounts (12 Problems)
Sample Problem F5: Final Accounts with Multiple Adjustments
Key Adjustments: Outstanding expenses, prepaid income, depreciation, provision for doubtful debts, goods taken for personal use, interest on capital. (Full problem in workbook)
Category 4: Cost Sheets (15 Problems)
Sample Problem C8: Cost Sheet with Process Loss
Situation: Input 10,000 kg @ ₹20/kg. Normal process loss 5% of input. Actual output 9,300 kg. Scrap realized ₹5/kg. Prepare cost sheet showing cost per kg.
Total Material Cost = 10,000 × 20 = ₹2,00,000
Less: Scrap Value (500 kg × ₹5) = ₹2,500
Net Material Cost = ₹1,97,500
Effective Output = 9,300 kg
Cost per kg = 1,97,500 ÷ 9,300 = ₹21.24 (approx.)
🚀 8-Week Study Plan for December 2026 Exam
| Week | Focus Area | Daily Target | Weekly Milestone |
|---|---|---|---|
| Weeks 1-2 | Accounting Fundamentals | 2 hours theory + 50 MCQs | Complete Module 1 with all concepts |
| Weeks 3-4 | Special Transactions & Final Accounts | 3 hours (2 theory + 1 practical) | Solve 5 complete final accounts |
| Week 5 | Cost Accounting Basics | 2.5 hours + 30 MCQs | Prepare 10 different cost sheets |
| Week 6 | Revision & Weak Areas | 3 hours topic revision | Identify & strengthen weak topics |
| Week 7 | Mock Tests & Speed Practice | 1 mock test daily (100 MCQs in 2 hours) | 5 full mocks with analysis |
| Week 8 | Formula Revision & Last-minute | 1 hour formulas + 1 hour MCQs | Confidence for exam day |
📱 Digital Tools to Use:
1. ICMAI’s MCQ App for practice on-the-go
2. Excel for practicing depreciation and cost sheet calculations
3. YouTube channels (like CMAKnowledge) for visual explanations
4. Previous 5 years’ question papers (pattern analysis)
🎯 Last-Minute Revision Formula Sheet
Financial Accounting:
• Gross Profit = Net Sales – Cost of Goods Sold
• Cost of Goods Sold = Opening Stock + Purchases – Closing Stock
• Capital = Assets – Liabilities
• SLM Depreciation = (Cost – Scrap) ÷ Useful Life
• WDV Depreciation = Opening Book Value × Rate%
• Bank Reconciliation: Balance as per Cash Book ± Adjustments = Balance as per Pass Book
Cost Accounting:
• Prime Cost = Direct Material + Direct Labour + Direct Expenses
• Factory Cost = Prime Cost + Factory Overheads
• Cost of Production = Factory Cost + Office & Administration OH
• Cost of Sales = Cost of Goods Sold + Selling & Distribution OH
• Profit = Sales – Cost of Sales
