The Hindu Business Line : Remember what a `forgetting curve' is?

IF WITHIN an hour you do not revise what you have read, 50 per cent of it could be forgotten. If you take more than 24 hours to revise, there is a loss of 82 per cent. If you take more than a month to revise, almost 99 per cent will be forgotten.

If all this is frightening, there is an antidote — the remembering graph: On an average, we remember 20 per cent of what we read, 30 per cent of what we hear, 40 per cent of what we see, 50 per cent of what we say, 60 per cent of what we do, and 90 per cent of what we read, see, hear, say and do. This and more tips are in Advantage CA — Reaching the Top by V. Pattabhi Ram and Seetha Srikanth. Read on:

A goal must have a deadline. Otherwise, they remain as dreams. Remember, in a hockey match you have 70 minutes to win, draw or lose. It won't do to say, "I want to become a chartered accountant." You will have to say, "I want to become a CA by May 2004."

In using leisure hours, it is always better to actively participate in some sport or pastime than to be a passive spectator. You can profit more by playing table tennis for half an hour than by watching a cricket match for two hours. Better to take a 10-minute brisk walk on the sand than to sit on the beach sipping coke.

The CA course treats you like a responsible adult and lets you have the freedom of studying by yourself. You have to become disciplined and allot time as you think fit. It takes time to get your system accustomed to do things differently. Therefore, startling positive results won't be immediate. They will be slow and incremental, but they will be real.

If procrastination is the thief of time, doing a sloppy job when you do it the first time around is its first cousin; for you will now have to redo it. The best way to get that extra hour in the day is to do it right the first time itself. Thus when you study a topic, study it actively — question it, make notes, and so on.

It is easier to earn the first 50 per cent of the marks for any question. Unless you are working in complete ignorance, you will always earn more marks per minute while answering a new question than while continuing to answer the one that is more than half-done. So you earn many more marks by half completing two answers than by completing either one individually.

A book that can nudge you to the winning score.

AS mastery

FLOWCHARTS for each Accounting Standard, a glossary covering important definitions from AS, hundreds of objective questions and examples — all these find a place in First Lessons on Accounting Standards for CA PE-2, by M. P. Vijay Kumar. A few glimpses:

In determining cash flows from operating activities, we have to consider the nature of business of the entity, as also underlying transactions.

For instance, in the case of an entity whose primary business relates to money lending and investments, cash flows attributable to receipt of interest/dividend and payment of interest would be classified under operating activities.

Government grants can be in the nature of promoter's contribution. Examples include a capital subsidy for a project. Such grants should be credited to capital reserve and treated as part of shareholders' funds; no repayment is ordinarily expected in respect of such grants.

Lease is to be classified at its inception itself — as finance or operating lease. Such a classification is linked to the substance of the agreement rather than its form.

Determination is based on the extent to which the risks and rewards attributable to ownership of the asset lie with lessor or lessee. If the arrangement transfers to lessee "substantially all the risks and rewards incidental to ownership", the transaction is classified as a finance lease. Else, it is an operating lease.

There are two views on what a balance-sheet is intended to portray. To most users, it is derived from the transactions of the company and is a repository of unexpired costs and revenues. To some, it is an indication of the `value' of an entity's assets.

Measurement and recognition of impairment loss is a vital element in AS-28. Once an assessment of `net selling price' or `value in use' is made, such an assessment value is compared with the carrying amount of asset for determining impairment loss. When the carrying amount is higher than the net recoverable amount, the difference is to be charged to the P&L A/c immediately.

Take the first steps in the AS alley.

Audit standards

AUDIT is a trust profession, it is said. And to further it, the Institute of Chartered Accountants of India brings out standards for auditing. R. G. Rajan's First Lessons on Auditing and Assurance Standards introduces readers to the AAS, explaining the concepts and providing illustrations.

There is a bunch of objective questions on the standards. A sampler:

There is no benchmark to state if fee from a particular client is more than acceptable level. However, there can be a situation of possible lack of independence if there is over-reliance on a particular client.

The extent to which an existing auditor can discuss the affairs of a client with an incoming auditor will depend on the client's permission to do so, and on the professional and legal responsibilities relating to such disclosure.

If an entity purchases a capital asset, as a statutory auditor you are only interested in the internal controls in respect of its purchase, correct accounting and proper disclosure.

But if you are an internal auditor, you can make an analysis of lease or buy decision and even question the decision-making process adopted by the management.

Determination of accounting estimate may be simple (provision for taxation) or complex (provision for warranty liability) depending on the nature of the item and it may be either routine (regularly done as in provision for retirement liabilities, estimating the useful life of an asset) or non-routine (amount of compensation that may be payable pending the settlement of a case).

Take the first steps, and let them be sure steps.

Law lessons

STUDENTS are often at a loss when it comes to studying laws. To get them overcome law-phobia, M. P. Vijaya Kumar puts together First Lessons on Business & Corporate Laws for CA PE-2.

The book covers Sections 1 to 208 of the Companies Act, and also a whole lot of business laws such as the Negotiable Instruments Act, the Indian Contract Act, the Payment of Bonus Act, and so on. A few excerpts:

A company, though a legal person, is not a citizen either under the Constitution of India or the Citizenship Act, 1955. However, a company has both nationality and residence. Though a company has no fundamental rights that are available to citizens, it can claim some protection — such as right to equality.

Buyback is a simple form of repayment of excess capital. A company may purchase its own shares or other specified securities out of — free reserves, securities premium account, or proceeds of any shares or other specified securities.

One man cannot constitute a valid meeting. However there are five circumstances where one-man meeting is possible. Section 174 (quorum in an adjourned meeting), Section 167 (AGM held as directed by NCLT), Section 186 (EGM as ordered by NCLT), class meeting and creditor's meeting.

A contract creates obligations. Performance of a contract means the carrying out of these obligations.

Parties to a contract must either perform or offer to perform their respective promises, unless such performance is dispensed with or excused under the provisions of the Companies Act and any other law.

Partnership is not a product of status as in the case of a joint family business. It also does not arise by operation of law as in the case of co-ownership.

Similarly, it cannot arise by mere joint acquisition of property. Partnership can arise by contract only.

Well laid out for easy understanding.

(Books courtesy: Snow White Publications P Ltd. www.swpindia.com)

Tailpiece

"What is required if I have to massage the account books?"

"Lots of toil and presentable figures."

ReadingRoom@TheHindu.co.in

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