Skip to content

CA Intermediate · Advanced Accounting · Applicability of Accounting Standards

Meera Traders Pvt Ltd is an unlisted company with turnover of Rs 40 crore and borrowings of Rs 8 crore in the preceding year. It is not a bank, insurer or financial institution and has no listed securities. Which statement about the company's applicability of Accounting Standards is correct?

Meera Traders is a Level II entity. It is unlisted, not a bank or insurer, and its turnover of Rs 40 crore and borrowings of Rs 8 crore are below the Rs 250 crore and Rs 50 crore limits, so it can use the exemptions available to Level II.

  1. AIt is a Level I entity and must comply with all Accounting Standards fully
  2. BIt is a Level II entity and may claim exemptions given to Level IICorrect
  3. CIt is a Level III entity and may claim Level III exemptions
  4. DIt is outside the scope of all Accounting Standards

Explanation

Level I needs listing, bank or insurer status, turnover above Rs 250 crore or borrowings above Rs 50 crore. Meera is none of these. Level II covers unlisted companies with turnover up to Rs 250 crore and borrowings up to Rs 50 crore. Its turnover (Rs 40 crore) and borrowings (Rs 8 crore) are within those limits, so Level II applies.

Did you get it right without looking?

One question tells you little. A timed set on Applicability of Accounting Standards shows your real accuracy, how long you take and where you lose marks.

Practise Applicability of Accounting StandardsFree diagnostic mock

More Applicability of Accounting Standards questions