Top 50 Technical Interview Questions for CA Articleship: Practical Preparation Guide

Model Answer: Inventory is valued at the lower of historical cost and net realizable value (NRV). Cost comprises purchase cost, conversion costs, and other costs incurred in bringing inventories to their present location and condition, excluding abnormal wastage and selling expenses. NRV is the estimated selling price in the ordinary course of business less estimated costs of completion and selling expenses. Under Ind AS 2, reversal of write-downs is permitted if circumstances change, whereas AS 2 does not allow reversal.

Model Answer: Borrowing costs directly attributable to the acquisition, construction, or production of a "qualifying asset" (an asset that necessarily takes a substantial period of time, typically 12 months or more, to get ready for its intended use or sale) are capitalized. Capitalization commences when expenditure on the asset is being incurred, borrowing costs are being incurred, and activities necessary to prepare the asset are in progress. Capitalization suspends during extended periods of active development interruption.

Model Answer: Ind AS 116 eliminates the operating versus finance lease distinction for lessees. Lessees must recognize a Right-of-Use (ROU) asset and a corresponding Lease Liability on the balance sheet for all leases (except short-term leases under 12 months and low-value assets). Instead of operating lease rent in the P&L, the income statement reflects ROU depreciation and lease liability finance interest.

Model Answer: For businesses, the standard threshold is ₹1 Crore turnover. However, under the proviso to Section 44AB(a), the threshold increases to ₹10 Crore if aggregate cash receipts and aggregate cash payments each do not exceed 5% of total gross receipts and payments respectively. For professionals, the threshold is ₹50 Lakhs (or ₹75 Lakhs under Section 44ADA if 95%+ transactions are digital).

Model Answer: Section 43B(h) disallows any sum payable to a micro or small enterprise beyond the time limit specified in Section 15 of the MSMED Act 2006 (15 days if no written agreement; up to 45 days if written agreement exists). Crucially, the deduction is allowed only on actual payment in the year of disbursement; the proviso permitting payment before the ITR due date does not apply to Section 43B(h). Furthermore, medium enterprises and traders are outside the scope of Section 43B(h).

Model Answer: Section 194C governs payments to contractors/sub-contractors for carrying out "work" (1% for individual/HUF, 2% for other entities; threshold: ₹30,000 single contract or ₹1,00,000 aggregate). Section 194J governs fees for professional services (10%), technical services (2%), and royalty (2%/10%), with a ₹30,000 annual threshold per category.

Model Answer: Under Section 16(2) of the CGST Act, four mandatory conditions are: (a) possession of a tax invoice or debit note; (b) details of invoice communicated in GSTR-2B; (c) actual receipt of goods or services; and (d) payment of tax to the Government by the supplier and valid return filing under Section 39 by the recipient.

Model Answer: Under the second proviso to Section 16(2) read with Rule 37, if the recipient fails to pay the supplier the invoice amount plus tax within 180 days from the invoice date, an amount equal to the ITC availed must be paid along with interest under Section 50. Once payment is subsequently made, the recipient can reclaim the ITC without any limitation of time under Section 16(4).