What are Derivatives?

A derivative is anything that 'derives' its value from an underlying. In the Financial Terminology, a derivative is a contract, in the form of a 'future' or an 'option' deriving value from the 'spot price' or the 'underlying.'

For example, let's take the example of Nifty, an index at the National Stock Exchange of India. 

Consider Nifty as an underlying for deriving value of the 'futures' contract of Nifty, i.e. Nifty Future. In other words, a 'Nifty Futures' contract shall derive its value from Nifty. The price movement of this Nifty Future contract will be in accordance with the Nifty spot price. 

What should I know before applying for Service Tax Registration?

As the subject is quite vast, I would start with a disclaimer that there are a number of ways in which a service provider or receiver may become liable under the service tax laws. What follows is only some preliminary information.

- Service providers with turnover of less than Rs. 10 lakhs per annum fall under the definition of "small service providers" and are therefore not required to charge service tax on the basic value of their services. However, they are required to obtain a service tax registration as soon as they cross the turnover of Rs. 9 lakhs in a financial year.

- In the first year when a person's turnover from services crosses Rs. 10 lakhs, he is required to charge service tax from the bill raised immediately after crossing the said threshold limit. However, he will have to charge and deposit service tax right from the first bill of the following financial year.

- In case a person provides service under a franchisee of a brand name, the benefit of small service provider is not available.

- You may be required to deposit service tax under the reverse charge mechanism as a service receiver too. The provisions for such reverse applicability normally cover recipients of services like Goods Transport Agency, Manpower Supply, Rent-a-cab Operator, Works Contracts, etc.

- You will have to file your half-yearly service tax return online twice a year in October and April.

- To register, visit aces.gov.in and click on the "Service Tax" tab. Once you register yourself, you will get a log in ID and password. You may log in to fill your form for registration and then send it in hard copy to the Service Tax Department along with the required documents such as PAN, address proof, ID proof, etc.

Is there any further fall left in the stock market after the crash in August, 2015?

It is difficult to predict the market movements, especially in such volatile atmosphere where markets across the Globe have witnessed extremely volatile sessions.

For example, on August 24, 2015, NASDAQ was hit by lower circuits in the initial trading hours, then it recovered sharply to erase all the losses of the day, and fell again. All these wild movements, in one trading sessions.

What is the reason for the recent stock market crash on Monday 24 Aug 2015? Is the next recession on its way?

There are a number of reasons being cited for the sell off that the markets witnessed on August 24, 2015. Chinese economy slowing down and its currency devaluation, falling crude oil prices etc.

It is important to understand that the crash didn't just happen overnight or something that wasn't on the cards. 

Crisis in Greece have been doing the rounds for the past several months which had made the sentiment across the Global financial markets, nervous.

Chinese markets have been witnessing major sell-offs for weeks now. Adding to it, the Chinese currency devaluation.

Crude oil hasn't been able to check the downfall from $100/bbl to $45/bbl levels, and continues to fall.

How can I form a Company in India?

Your question is specific to formation of a company. So I am assuming you want to know the process of forming a private limited or limited company under the Companies Act, 2013.

You will have to apply for a name from the Ministry of Corporate Affairs, and also file with them a detail of promoter Directors of the proposed company. The promoters must have a DIN (Director's Identification No.) and also be the first shareholders of the company.

The preliminary documents for formation of a company in India include the Memorandum of Association and Articles of Association. These will have to be carefully and professionally drafted, after which they will be signed by the promoters and filed with the Registrar of Companies.

Thus, to summarize, ensure that the following information or documents are available with you before you initiate the process:

1. DIN of the promoters (can be applied for with the ROC)

2. ROC's approval of the proposed name of the company

3. Memorandum and Articles of Association

4. Address for registered office of the company (copy of rent agreement or No Objection Certificate from landlord along with proof of his ownership of the property)

5. Digital signatures of the Directors

Currently, all of this process can be carried out by filing just one form (INC-29) with the ROC. You can download all the relevant forms from the MCA website here: Company Forms Download

I would suggest taking the help of some professional, such as a Chartered Accountant, Cost Accountant or Company Secretary, who may also be required to certify certain documents.

What is the difference between a Certified Accountant and a Chartered Accountant?

In India, UK and a number of other countries including Australia, a Chartered Accountant is a title that can be used only by a person who has passed the CA course of the Institute of Chartered Accountants of India.

In the USA, a Certified Public Accountant is a person who has completed the CPA program of the 

If a person used the term "Certified Accountant", it is normally assumed that he is a qualified professional of some such recognized professional body. If not, a person should specify that he holds a certificate in accounting from some training institute, which may not be the apex professional institute for governing CA's and CPA's, so as to not misrepresent himself.

You can read about the CA course in India here: Chartered Accountancy

and the CPA course of the USA at the following link: CPA

What are the major areas of practice for an Indian Chartered Accountant?

A general CA practitioner could be providing any of the following services:

1. Filing of Tax Returns, such as Income Tax, VAT and Service Tax Returns

2. Writing of a business' books of account i.e. outsourcing of book keeping function for an organization

3. Conducting audits such as statutory audit under Companies Act, 2013 or Tax Audit under the Income Tax Act, 1961; or conducting internal audit (monthly, quarterly or half-yearly) as per management requirements so as to identify issues in statutory compliance and accounting records on a regular basis to enable timely correction.

4. Certifications of various financial documents and claims as filed by businesses with bankers or government authorities. For example, issuing certificate 15CB for foreign remittances, certifying financial projections of a business prepared under given assumptions.

5. Assistance in obtaining financing from financial institutions and banks by preparing financial projections of proposed business activities and fulfilling other compliances, as required.

6. Representation of clients before various government authorities such as Income Tax Department (before the Assessing Officer, Commissioner of Income Tax Appeals, Income Tax Appellate Tribunal), VAT or Service Tax Department, Ministry of Corporate Affairs (Registrar of Companies, Regional Director), Directorate General of Foreign Trade, etc.

7. Assistance in setting up of businesses (partnership, LLP, company, trust, etc.) and obtaining all important registrations including, but not limiting to IEC Code, FSSAI License, Registration for obtaining benefit under Section 80G of the Income Tax Act, etc.

8. Filing of regular returns and documents with the Ministry of Corporate Affairs, plus maintenance of statutory records under the Companies Act.

9. Providing legal opinion on matters related to tax laws and corporate laws.

Can I find a job as a CA in a start up?

A CA can be taking care of the statutory, accounting and taxation matters for a start up. But more than looking for a job at a start-up, it would be better that you decide to provide your services to a number of start ups.

There are some start-up hubs in places like Delhi, Hyderabad, Bangalore, etc. These are offices where a number of small businesses and start ups share working space. An example of one such place is 91SpringBoard. You can visit such start up hubs and speak to the people working there to find out if you can help them in any way with your skills and expertise.

You can check out the website of 91SpringBoard here: The startup growth hub

Can there be a Balance Sheet with no closing stock?

Otherwise a very simple question with a simple answer, but I would like to answer this with a few specific examples to give you more clarity.

Firstly, to speak about the basics, a balance sheet is the statement of assets and liabilities of a business on a particular day. The stock at the end of any particular day is the closing stock for that day, and thus, in case a business has some inventory, the value for such inventory will have to be shown in the balance sheet to reflect a true picture of the business' assets on that day.

Now, to give you examples of situations in which there will be no closing stock.

1. In case the business is of a service provider, who is not dealing in any goods. His nature of work would not require him to maintain any stocks. E.g. Chartered Accountant, Lawyer

2. In case the realizable value of the stock at the end of a day is nil (zero), the balance sheet may not reflect the value of closing stock.

3. For a commission agent or a consignee, who keeps stock of another for sale, without being the owner of such stock himself, there will appear no closing stock value in the balance sheet despite there being physical presence of stock.

4. If a person keeps stock-on-approval basis, which means that he has physical stock received from the supplier, but it will not be accepted till the time the same has been approved by the management. In such cases too, the closing stock figure may not reflect the value of such inventory.

5. For job workers, who perform customised operations on the principal manufacturers' stock, the value of closing stock may be zero, as they are not the owners of the stocks lying with them.

6. Where the value of the stocks are not that material and only nominal, they may be (after careful consideration of the materiality of such inventory), booked under consumables and treated as consumed as and when they are purchased. For example, in case a doctor has some stock of medicines lying with him, which may not be of a very high amount, and he may be using them on his patients as and when required, they will be treated as consumables and not closing stock, owing to the nature of such item.

I am a CA Final Student who is interested in Finance. Should I start CFA simultaneously?

You can take the CFA Level 1 exam right now. But if your CA Final attempt is just about a year away, I would suggest taking up CFA Level 2 only after passing your finals.

CFA is a good course in Finance, but to be honest, the Indian industry still prefers CA's over CFA's in most Finance fields. You can easily take up CFA after completing your CA. I suggest so because there are not a lot of common subjects between the two courses, except for Strategic Financial Management in CA Final. It would be best that you pick up the new skills that CFA may bring to you only after being done with CA. It wouldn't be wise to get distracted when an enormous course like CA Final lies ahead of you.

I have seen a lot of my peer Chartered Accountants working in roles that are more Finance based than Accounts centric, and their practical experience has helped them more to progress in their roles than a CFA degree, which most of them do not have. This in no way undermines the importance of studying the CFA course content. I would only suggest taking one thing at a time.

What are Sensex and Nifty Indexes

Sensex and Nifty are the stock market indexes, constructed and managed solely by the Bombay Stock exchange and the National Stock exchange, respectively. Both the BSE and the NSE are two different stock exchanges in the Indian Financial System.

CNX Nifty is owned and managed by India Index Services and Products Ltd. (IISL).  IISL is India's first specialised company focused upon the index as a core product. IISL is a subsidiary of the NSE.

Sensex is an index comprising of the best 30 stocks, among some 5000 stocks listed on the BSE. 

Nifty is an index comprising of the best 50 stocks, among some 1500 stocks listed on the NSE.

What is Internal Audit?

Internal Audit is an audit of records, operations and procedures of an organization when conducted by the staff of the organization itself. It is an in-house audit process carried out to identify areas of weak internal controls and concurrent rectification of errors and strengthening of controls.

The Internal Audit process may also be outsourced to a firm of certified accountants and auditors, as it is believed that such outsourcing will ensure that professionally qualified and well skilled personnel will conduct the audit in a systematic manner. Such outsourcing may also be cost-efficient as having a team of full-time employees employed for internal audit may turn out to be a costly affair.

The manner in which External Audit differs from Internal Audit is primarily in the scope of their checking as well as independence. An External Auditor may carry out an audit which may be statutory in nature, and with the objective to check if all operations are being conducted or records maintained as per the applicable statutes or laws. Whereas, the Internal Auditor's scope of working is defined by the management, and it focuses only on areas where the management wants it to conduct a check.

External Audit is an independent audit, where outsiders come and audit a business' records with a rational, unbiased, third-person perspective. On the other hand, internal audit is susceptible to bias and personal relations of the internal auditors with the respective managers and employees.

What is it like for an ENFJ person to be an Accountant?

So that the others who read this answer understand the context of the question better, I would like to highlight a few characteristics of ENFJ personality type, which is one of the sixteen personality types as per the Myers-Briggs classification.

ENFJ's generally have the following traits:

• Genuinely and warmly interested in people
• Value people's feelings
• Value structure and organization
• Value harmony, and good at creating it
• Exceptionally good people skills
• Dislike impersonal logic and analysis
• Strong organizational capabilities
• Loyal and honest
• Creative and imaginative
• Enjoy variety and new challenges
• Get personal satisfaction from helping others
• Extremely sensitive to criticism and discord
• Need approval from others to feel good about themselves

Given these traits of wanting to be surrounded by people and having a creative streak, it is believed that ENFJ's do well at jobs that require them to interact with a lot of people and practice their creativity.

An accountant's is a desk job, which in the traditional sense involves neither creativity nor a lot of public interaction.

However, I am a Chartered Accountant and an ENFJ personality type, and this is what I think about my work.

- I attend a number of seminars on professional topics such as those related to taxation, corporate laws and accounting in the capacity of both a participant as well as a speaker, which ensures that I meet a lot of new people frequently. I also teach at a few educational institutes whenever the opportunity arises because interacting with students gives me a lot of satisfaction. Further, writing for professional journals also gives me a sense of satisfaction as because of such writing, I receive some emails and hence my social circle expands.

- As traditionally expected, the role of a practicing Chartered Accountant is not confined to his desk. I have to visit a number of tax authorities and other government officials on a regular basis to represent my clients. Such representation requires me to present my clients' cases in a convincing manner, which again tests both my creativity as well as my people skills to an extent.

- As the owner of my own enterprise, I am required to manage my subordinates, my clients, get resources to be in order, all of which is something that ENFJ's love to do.

- In my free time, I also maintain a humor blog, where I write about random everyday events, thus ensuring that I am in constant touch with writing, a hobby that I enjoy a lot.

Therefore, it would be wrong to view accounting as a job that is theoretically not in line with an ENFJ personality type. I believe that irrespective of where an ENFJ may be, he will find it easier to find opportunities to interact with people and act on them, as compared to the introvert personality types.

What does a Cost Accountant do?

A Cost Accountant is a professional who tries to answer questions related to production or operations by undertaking an analysis of various costs that are incurred by a business.

The decisions affected through a cost accounting study could be any of the following non-exhaustive list:

- What are the variable costs for producing one unit of a product?

- What are the fixed costs that a business will have to incur even if it shuts operations?

- Which product out of all product offerings of a business is the most profitable and should be produced more?

- Are there any products which are required to be manufactured not because they are profitable, but because due to their presence another profitable product sells more?

- For how many units of a product sold will the company recover all of its costs and begin making profits?

- Would the additional amount spent on incurring a cost translate into higher profits for the business?

The costs incurred by a business can be classified into the following types to take such decisions:

- Fixed, variable

- Short term, long term

- Production cost, selling cost

- Process cost, batch cost

- Per unit cost, cost per batch per month

In India, a professional degree in Cost & Management Accounting is offered by the Institute of Cost Accountants of India. In the UK, the Chartered Institute of Management Accountants (CIMA) offers various courses in cost accountancy.

You can read more about cost accounting and these courses here:

CIMA

Cost Accountancy

Can I get a job outside India with a CS degree?

Corporate Laws are specific to a country. So, it is unlikely that you will receive a job outside India only on the basis of a CS degree from ICSI. However, you should consider the various Memorandum of Understanding that ICSI has with other institutes from other countries. A list of MoU's can be seen here on the institute's website: MOUs

I enjoy studying Accounts and Taxation. How should I choose a Department for my CA Articleship?

I always thought I hated theory subjects, but to be honest, at work, I love drafting legal opinions. Even though the subjects you study in the CA curriculum give a good enough idea about the actual nature of such assignments at work, but I would still suggest that you experience every kind of assignment before you take a decision.

I mean, you may have a checklist in your head about the kind of boy or girl you may get attracted to, but the one you may fall head over heels for, may be completely different from your idea of the most ideal partner.

Give everything a shot in your articleship experience. In my opinion, a firm that offers sufficient job rotation is better to opt for at the time of training.

Reading Suggestions for Tax Laws in India

1. Dr. Girish Ahuja's book for Direct Taxes

2. Dr. Ashok Batra and Dr. V.S. Datey's books on Service Tax and VAT

3. Padhuka's book on Indirect Taxation for CA Final to understand Excise and Customs. An easier read would be books on the subject by CA Vineet Sodhani for CA Final.

I'm in my 1st year of CA articleship. How should I prepare for CMA simultaneously?

Things will seem easier if you recognize the fact that most of the subjects are common to both the courses. As after my IPCC, I had well over two years to attempt my finals, preparing for CMA helped me keep in touch with all the subjects and not lose the momentum of preparing for exams in the daily grind of office work.

I found the official study material of ICWAI to be not as exam focused as I expected it to be. So my primary source for preparation was the material I used to prepare for the CA exams, supplemented by the Revisionary Test Papers and Suggested Answers given by ICWAI.

In my experience, I found a couple of errors in the final answers given in the RTP's, which I could easily recognize because of the concepts I had studied for CA. I found that the actual exam bore a lot of similarity to the questions in the RTP's. Thus, do not ignore them.

Also, theory questions enjoy a much meatier weightage in the CMA exams as compared to their presence in the CA exams. Thus, be well prepared in concepts and chapters that you may not have studied in the CA curriculum.

How do I prepare for the GMAT?

I would suggest the following:

1. Take the GMAT Prep Mock Test 1 without any preparation to check how much preparation (and in which type of questions) you need to reach your desired score.

2. Do all the questions from the Official Guide, and check the answers even for questions that you answer correctly, so as to understand the reasoning provided by the GMAC for the correct answer, and ensure that your reason to select it is the same as theirs.

3. Go through an additional resource to prepare for each of the sections that you think you require additional practice in. My suggestion would be to use Manhattan's guides for the various types of questions tested on the GMAT.

4. Download 700+ level questions for each of the subjects from the internet (can be easily found through a quick Google search). Websites like the GMAT Club (gmatclub.com) have a number of files with such questions. Practice all possible questions from this resource and check explanations for the answers to these questions either on the gmatclub's forum or on Manhattan's official forum. I would suggest paying close attention to Ron Purewal's explanations on the Manhattan forum.

5. Purchase a set of mock tests and try to take at least two every week. Analyze all your answers.

6. Take the GMAT Prep Mock test 2 around three days before the actual exam, and irrespective of your score, just chill.

How can a CA become a Lecturer in India?

Chartered Accountants are invited as visiting faculty to various colleges, including a number of private colleges for the MBA program. So, you wouldn't need any other qualification to be eligible for teaching as a guest lecturer.

However, if you wish to be enrolled as a permanent lecturer at a recognized university, you might have to first do a Masters degree in Commerce (assuming that would be your area of interest) and then take the NET exam.

How to prepare for CA IPCC in 9 months?

Assuming you're someone who is preparing for IPCC without having completed your graduation in commerce, nine months is sufficient time for you to be able to prepare.

You may want to take coaching classes for practical subjects that you haven't studied before. Classes could help for subjects like taxation, financial management and financial accounting. Just ensure that you put in enough hours of self-study outside of the classroom.

And irrespective of whether you take coaching or not, I would suggest starting with practical subjects because it takes a lot of practice for you to grasp the concepts in their completeness. So, devote at least six hours a day to these papers.

Make notes for theory subjects. Simple pointers that would help you revise after you've completed the course twice.

Lastly, do not forget the Practice Manuals.

Which is a better combination: CA + LL.B. or CA + CS?

It is difficult to answer such questions without knowing the context or the basis on which you want to compare the two options. However, I'll attempt an answer on the basis of some assumptions.

The question before us is: CA + LL.B. > CA + CS?

As CA is common to both LHS and RHS, we'll remove that for the time being. Now, the similarity between both CS and LL.B. is that they both are law focused courses. The CS curriculum attempts to make you study corporate laws in depth, whereas an LL.B. course will make you study a number of laws ranging from civil to criminal. At this point, people will have varying opinions on which is a better course and the debate will continue.

But, if we now consider the fact that you want to primarily be a CA, and then pursue a degree (CS or LL.B) that is law focused, it would suggest that you would like to practice in corporate law and tax law matters as a Chartered Accountant. If that is true, I would suggest going for LL.B. as an additional degree because a CA or a CS cannot represent his client before the High Court or the Supreme Court. So, in case you grow in your profession and would want to litigate before these courts, you would need a membership of the Bar Council, for which an LL.B. degree is a pre-requisite.

Thus, in my opinion, CA + LL.B. will be a better combination of qualifications.

What is the advantage and disadvantage of studying for both CA and CS together?

There's a lesson my father gave me a few years ago, and it seems to have stuck with me like velcro laced with glue.

"Remember that no effort that you may put into gaining knowledge ever goes waste."

Thus, in my opinion, to pursue knowledge not with the objective of collecting qualifications, but to learn more is a much greater motivator in life than is a motive to achieve some quantifiable gain.

The biggest advantage of pursuing these 2 qualifications would be that your learning on how to handle exam pressure and present answers in professional exams while you take one set of exams, will help you when you prepare for exams of the other course.

In addition, you will do a study of subjects like general and commercial laws, labor laws, securities law and taxation laws from a different perspective in CS than you would in CA. I observed CS to focus on polishing a professional's knowledge about the procedures of these laws, while CA's curriculum focuses on the essence of the law. While the latter may seem more important, you cannot understate the importance of the former too.

The only disadvantage I can think of is one which may come in making time management a big issue for you to handle well. But let's look at it as an opportunity instead to make you a more efficient time manager.

I hope you find the courage to do much more than you think you're capable of. All the best!

I have failed CA Final exams thrice. My family is insisting that I take up a job instead at this age of 23.

In my opinion, you should not get distracted by money matters and study harder for the next attempt. Maybe, your reason for failure could be not your lack of knowledge, but a lack of skill to present what you know.

You should apply for copies of your answer sheets from the Institute and then compare them to the last attempt's Suggested Answers. This will clearly show you where you could be going wrong in presenting the kind of answer that ICAI is looking for.

I would also suggest, like I always do, thorough reading of the Practice Manuals. A number of students ignore this brilliant resource. Please treat it as your Bible. Further, do not ignore the RTP's and the applicable amendments in Tax and Law.

Also, in case you feel you may want to work a little only to break the monotony of sitting at home for the past year, you could probably take a part-time four hour job for a month or two to break the monotony and tackle the subjects afresh. However, tread on this advice with caution. I would primarily suggest the focus of Arjuna, the archer, and not resting till you achieve your goal.

I have failed CA-IPCC for the 3rd time. Should I do an LL.B. instead?

I know that it is a tough time for you, as it would be for any one who fails to pass these exams despite attempting thrice. But, I wouldn't want you to underestimate yourself already. Sure, these exams may be tough. But maybe, you understand all the concepts, but just don't know how to present it in the best manner to secure maximum marks.

I would suggest downloading the Suggested Answers for the past 3 attempts and applying for copies of your answer scripts from the institute. Please compare your written answers to the ICAI's suggested answers. It will help you identify areas where you need to present what you know better.

If you haven't earlier, please study from the Practice Manual now. You must know the answer to every single question in the Manual. Study the RTP's and the amendments thoroughly.

And don't settle for something that you may believe to be easier than CA. Passing the LL.B. exams may seem much easier, but practicing Law is not an easy task. It would be wrong to base your decision to study law on your current failure to pass the CA exams. However, you must pursue Law if you think that is your calling and it genuinely interests you more than the CA curriculum.

Can I do Full-Time MBA Program and Prepare for CA Final Exams simultaneously?

I'd say nothing is impossible in the world, but your question makes me realize that you can think of doing this only after your articleship training is over and you are yet to pass your CA finals.

There are various different ways in which an MBA course is conducted. In my opinion, the most value is accorded to an MBA degree from an institute which really tries to make it a learning experience by giving you a number of assignments, pop-quizzes, projects, and where you are required to be on your toes for at least a year and a half, if not for the complete two years.

In case you plan to pursue an MBA from a respectable B-school, which is known to have a goodwill, a brand image and respectability in the eyes of recruiters, I would suggest not to mix both CA final and your MBA together. This is because preparation for the CA exams takes a lot of dedicated single-focus effort, and your full-time MBA program will not leave you with enough time to prepare for your CA exams. So please finish off your CA first and then put all you have in preparing to get into one of the best MBA colleges from your list of prospective schools.

How should I revise Direct Tax after doing VG Sir's classes?

I have no idea what VG Sir's classes are like and I haven't seen his material. However, I do know that he is one of the most popular teachers for Direct Taxation in CA Final. I'd prefer to give a suggestion which is independent of any coaching bias or preference for any private CA coaching institute's material.

Start with the Practice Manual. You have already taken classes, which means that you have studied the course at least once. Even if you think you may have forgotten a number of things and would have to revisit all of it, just drop everything else for the moment and study the official Practice Manual. It will make you brush up on most of the important concepts from a very actual-exam-questions perspective and also help you to gauge areas where you might need to revisit the text and commentaries on the law.

After you're done with the Practice Manuals, go through the primary book you have studied taxation from, which may be your tutor's notes. It's important not to change the source of study very close to the exams because you have already put in a lot of hours to get accustomed to a certain kind of presentation, which is different for every author.

The Practice Manual will however add a fresh perspective that you will need to be able to tackle every kind of question that the exam may ask.

Which is the most important trait required of a student to become a Chartered Accountant?

Throughout school and college, I would see that there used to be some students who would not study for crazy number of hours in a day, but still end up doing pretty well in the tests and exams. And then there were a few others who had to really slog and put in hours of hard work to place themselves in the top scorers. It was reasonable to see how both types of people did very well academically, where the former were smart and mentally sharp, which helped them stay at the top, and the latter were hard workers who earned their laurels with effort and pride.

I used to think how both kinds of people will do well at academics irrespective of the curriculum they study. However, my stint with the Chartered Accountancy exams made me realize how this is not a course for people who are used to getting by with only being smart and not putting in hours of study.

The CA curriculum, especially of the Final stage, is so vast and exhaustive that it takes one hours of hard work to familiarize oneself with it. Subjects like Direct Taxation, Indirect Taxation, Corporate Laws, Auditing, Financial Reporting, Management Accounting are covered in such depth that just reading all of the study material once does not help. A student has to firstly, put in hours to understand the concepts, and then practice/learn the subjects repeatedly to make himself familiar with the curriculum. There is only a limit to which you can perform in these exams by logic alone. You have to learn the law, the provisions of various statutes and know how to apply them as per Accounting Standards and other Guidelines which may differ from country to country and industry to industry.

I used to (and this may sound extremely cocky) think of myself as someone who used to get by in school and college without studying for subjects too much. But I kid you not, I had to literally give up on everything else and study for over 12 hours a day, day in and day out for at least 4 months to go through my CA Final course just once.

Obviously, qualities like your manner of expression and presentation in the exam paper, your experience and learning during the articleship period and many other things help in the way you perform in the exam, but irrespective of whether you are fit or fat or Punjabi or Tamil or book-smart or street-smart or a boy or a girl or anything in the world that breathes, the primary thing required of you when you enroll into the CA course is to take your curriculum seriously and study it religiously every day. If you work hard enough, there is nothing stopping you from becoming a Chartered Accountant. It takes determination and toil and I'm sure if you love the profession like members of the Institute of Chartered Accountants of India do, you will soon find yourself as a member of the ICAI family.

I see that CFA freshers get much lesser annual pay packages than CA's in India.

Like I told you in the previous answer, traditionally speaking, CA is the most respected profession in the commerce stream in the country, and obviously it gets its share of worth in terms of salaries and pay packages. But at the same time, I also know of people who have not even studied CFA and are making millions in the financial markets. It just goes to show that eventually, your degree is just a piece of paper. What you really are interested in matters more because that inner drive will take you everywhere you want to be.

Now, if you're really looking for a traditionally secure job, I think people consider CA to be a safer bet than CFA in India even today. Hope this answers.

Which is better: CFA or CA?

There is no definitive answer to which is better. It completely depends on your interests. You may find Finance more interesting a subject than Accountancy or Taxation. In such a case CFA would be better FOR YOU because it interests you more.

CA is traditionally considered to be the best educational qualification in commerce in India and therefore also enjoys more stability and respect. However, times are changing and your skills in anything you do define how far you will go in life.

Please explain the 3 types of Accounts: Personal, Real and Nominal with their Rules of Debit and Credit

Accountancy aims at recording every kind of financial transaction in such a way that there is an equal consideration being passed on from Mr. Debit and Mr. Credit to each other. Therefore, the basic structure of accountancy is such that Debit should equal to Credit.

In such a scenario, it was found that we should classify accounts into 3 primary types viz. Personal, Real and Nominal.

Personal Account: It refers to a person or institution capable of entering into a financial transaction. For example, Shah Rukh, Salman, Bank of Baroda, All India Bakchod, Kanan Gill.

Such a person/institution will either give something or take something in a financial transaction. The person who receives is Mr. Debit and the one who gives is Mr. Credit. Hence, Debit the Receiver; Credit the Giver.

Real Account: It refers to a thing which can be given or taken. For example, Shah Rukh may give a "hit movie" and Salman may not give "a shit". Here, both "hit movie" and "shit" become what we refer to as real accounts. To put it more in the perspective of accountancy, things like "cash" and "stock" are real accounts i.e. capable of being given or taken. Thus, you Debit what comes in; Credit what goes out.

Nominal Account: This refers to items of income or expense. For example, your earning from a game of Flash at a Diwali cards' party is an income and will be called "Credit", whereas your loss of money at such a game of cards will be called "Debit". Similarly, things like "interest", "commission" when earned are incomes and are Credit. On the other hand, expenses like "rent", "salaries", "festival expenses" are Debit. Thus, Debit all Expenses and Losses; Credit all Incomes and Gains.

However, it gets tricky in case a nominal account is recorded not in terms of an expense or income, but in context of it having become payable or accrued or receivable i.e. as an asset or liability. In such a case, it turns into a Personal Account. To explain this with an example: "Interest" is a Nominal Account, whereas "Interest Payable" or "Interest Receivable" is a Personal Account. The reason is that when you record only the income or expense, it is a simple Nominal Account; but when you record the fact of it having become a liability due for payment or an asset due to be received, then it becomes a Personal Account because it is receivable from or payable to a person.

To illustrate:

To record interest expense paid in cash, we write:

Interest ... Debit        Rs. 100

To Cash                     Rs. 100

This means, interest (debit all expenses) has been paid in cash (credit what goes out).

But when you want to record an accrued income or expense, say interest payable as on a date without actually paying it because the due date for payment will be sometime later (in the next accounting period), you pass the entry:

Interest ...Debit         Rs. 100

To Interest Payable   Rs. 100

Here, interest is debited because (debit all expenses) and the liability in the form of "Interest Payable" is credited... because when the interest will actually be paid, "Interest Payable Account" will become the receiver (Debit the Receiver) of interest actually paid in cash. The entry will be as follows.

Interest Payable ...Debit    Rs. 100

To Cash                              Rs. 100

Hope this provides some clarity.