Paper I — Q1
Answer the following questions in about 150 words each : (10×5=50) (a) Briefly explain the significance of Accounting Standard-7…
Answer the following questions in about 150 words each : (10×5=50) (a) Briefly explain the significance of Accounting Standard-7 (AS-7). 10 (b) Explain why the companies issue right shares. How are right shares different from bonus shares ? 10 (c) Discuss the main aspects of audit of a banking company in India. 10 (d) Define fair rent and annual rent under income from house property as per Indian Income Tax Act, 1961. Explain it with an example. 10 (e) What is job costing ? How is it different from process costing ? Explain. 10
हिंदी में प्रश्न पढ़ें
निम्नलिखित प्रश्नों में से प्रत्येक का उत्तर लगभग 150 शब्दों में दीजिए : (10×5=50) (a) लेखाकरण मानक-7 (ए एस-7) के महत्व को संक्षेप में स्पष्ट कीजिए। 10 (b) स्पष्ट कीजिए कि किन कारणों से कंपनियाँ राइट शेयर निर्गमित करती हैं। राइट शेयर, बोनस शेयरों से किस प्रकार भिन्न होते हैं ? 10 (c) भारत में बैंकिंग कंपनी की लेखापरीक्षा के मुख्य पहलुओं की विवेचना कीजिए। 10 (d) भारतीय आयकर अधिनियम, 1961 के अनुसार मकान सम्पत्ति से आय के अंतर्गत उचित किराया और वार्षिक किराया को परिभाषित कीजिए। इसे एक उदाहरण द्वारा स्पष्ट कीजिए। 10 (e) जॉब लागत (कॉस्टिंग) क्या है ? यह प्रक्रिया लागत (प्रोसेस कॉस्टिंग) से किस प्रकार भिन्न है ? समझाइए। 10
Directive word: Explain
This question asks you to explain. The directive word signals the depth of analysis expected, the structure of your answer, and the weight of evidence you must bring.
See our UPSC directive words guide for a full breakdown of how to respond to each command word.
How this answer will be evaluated
Approach
The directive 'explain' requires clear exposition with reasoning across all five parts. Allocate approximately 30 words per mark (150 words × 5 parts), spending roughly 3 minutes per sub-part. Structure each answer with a precise definition or core concept first, followed by elaboration, and end with a brief significance statement. For (a), begin with AS-7's scope on construction contracts; for (b), contrast rights vs bonus shares through purpose and accounting treatment; for (c), prioritize RBI guidelines and statutory audit requirements; for (d), use a numerical illustration for fair rent calculation; for (e), distinguish through cost accumulation method and industry applicability.
Key points expected
- (a) AS-7: Covers construction contracts, revenue recognition methods (percentage completion vs completed contract), cost allocation principles, and disclosure requirements per ICAI framework
- (b) Right shares: Pre-emptive rights, raising fresh capital without diluting control, lower issue price; distinction from bonus shares (capitalization of reserves vs fresh infusion, SEBI regulations)
- (c) Banking audit: RBI prudential norms, NPA classification and provisioning, SLR/CRR compliance, income recognition policy, fraud reporting, and concurrent/statutory audit distinction
- (d) Fair rent vs Annual rent: Section 23 definitions, municipal valuation standard rent comparison, gross annual value computation; numerical example showing higher of fair rent and annual rent
- (e) Job costing: Customized product costing, cost sheet per job, suitable for construction/printing; contrast with process costing (continuous mass production, cost per process period, equivalent units concept)
Evaluation rubric
| Dimension | Weight | Max marks | Excellent | Average | Poor |
|---|---|---|---|---|---|
| Demand-directive understanding | 20% | 10 | For (a) explains 'significance' through revenue recognition impact; for (b) addresses both 'why' (reasons) and 'how different' (comparison); for (c) covers 'main aspects' comprehensively; for (d) defines both terms then illustrates; for (e) defines job costing before contrasting—no part treated as mere definition | Addresses directive partially—defines terms adequately but misses 'significance' in (a), omits 'why' in (b), or lists aspects without discussion in (c); comparison in (b) and (e) lacks depth | Misreads directive—describes when explanation needed, or treats all parts identically without adjusting to 'discuss' vs 'define' vs 'explain' nuances; major parts left incomplete |
| Content depth & accuracy | 20% | 10 | Precise technical accuracy: AS-7 references Ind AS 115 convergence, SEBI ICDR for rights issue pricing, RBI circulars on NPA norms (DBOD.No.BP.BC), Section 23(1)(a)-(b) IT Act distinctions, equivalent units in process costing—no conceptual errors | Broadly correct content with minor inaccuracies—confuses AS-7 with AS-9, mixes rights and bonus share accounting, generic banking audit points without RBI specificity, or oversimplified costing distinctions | Fundamental errors—wrong standard number, treats rights and bonus as identical, ignores statutory framework for banking audit, incorrect GAV computation, or reverses job vs process costing characteristics |
| Structure & flow | 20% | 10 | Each 150-word segment self-contained with micro-structure: definition→elaboration→significance; clear visual separation between parts; logical progression within comparisons (point-by-point for rights/bonus and job/process); no abrupt jumps | Adequate structure with some parts well-organized but others rambling; comparisons done in paragraph form without clear point-wise distinction; word limit exceeded in some parts causing compression in others | Disorganized—no clear part separation, stream-of-consciousness writing, missing definitions, or all five parts merged into indistinguishable blocks; severe imbalance (e.g., 200 words on (a), 50 on (e)) |
| Examples / case-law / data | 20% | 10 | (d) includes worked numerical example: property with municipal value ₹3L, fair rent ₹2.5L, standard rent ₹2.8L, actual rent ₹2.4L—clearly computing GAV; (c) cites specific RBI circular years; (b) references SEBI ICDR 2018 pricing formula; (e) names industries (shipbuilding vs cement) | Generic or implied examples without specifics—mentions 'for example' without numbers in (d), refers to 'RBI guidelines' without circular reference, or states 'construction industry' without elaboration | No examples whatsoever in (d) despite explicit demand; no regulatory references; purely theoretical treatment; or invented case law/data that misrepresents actual provisions |
| Conclusion & analytical edge | 20% | 10 | Each sub-part ends with concise significance—(a) AS-7 prevents profit distortion in long-term contracts; (b) rights issue preserves shareholder democracy; (c) banking audit stability linkage; (d) anti-avoidance in fair rent; (e) costing method choice affects pricing strategy; demonstrates integrated understanding | Some parts have weak or missing conclusions; conclusions merely restate points without analytical value; or one strong conclusion with others trailing off due to word pressure | No conclusions in any part; answers end abruptly with last fact; or attempts grand unified conclusion that ignores part-specific demands; demonstrates time management failure |
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