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What is Opportunity Cost?

What is Opportunity Cost?

 

This concept is applicable only when an organisation has limited resources. Use of  these limited resources (key factory) for one alternative, deprives you from using it for another alternative.  This opportunity lost is commonly known as opportunity cost.

 

Example 1 :

Mr. A wanted to become a Chartered Accountant.  But he also loves cricket and wants to play for Indian cricket team. However, both the options demand lot of time and efforts.

Mr. A chose to do CA and hence he left the cricket coaching.  The opportunity cost of doing CA is to leave Cricket.

However, if a student could pursue both the career options i.e. CA and also Cricket in the same time, then there is no opportunity cost.

 

Example 2 :

Our company at present has a capacity to produce only 10,000 units in a year.  However, market can accept any number of units which we can produce.  We sell our product in the market @  Rs. 100 per unit.  The variable cost of our product is Rs. 60 per unit.  Hence, contribution is Rs. 40 per unit.  Our total fixed cost is Rs. 1,00,000 p.a.

While producing these 10,000 units, we also produced 500 defective units, which are scrapped and could not be sold to the customers.  In this situation, we could sale only 9,500 good units to our customer.

In this situation, the opportunity cost of these 500 defective units shall be the loss of contribution from these units i.e. 500 units x Rs. 40 per unit = Rs. 20,000

Total loss to our organisation is :

            = Variable cost of production + Opportunity cost

            = ( 500 units x Rs. 60 ) + ( 500 units x Rs. 40 )

            = 30,000 + 20,000 = Rs. 50,000

Note : Fixed cost of Rs. 1,00,000 p.a. is to be ignored in this calculation, because whether we produce & sale 9,500 units or 10,000 units, this cost is going to be incurred.  Hence, it is irrelevant.

 

 

 

 

Example 3 :

Our company at present has a capacity to produce only 10,000 units in a year.  However, market can accept only 6,000 units.  We sell our product in the market @  Rs. 100 per unit.  The variable cost of our product is Rs. 60 per unit.  Hence, contribution is Rs. 40 per unit.  Our total fixed cost is Rs. 1,00,000 p.a.

We produced total 6,500 units, out of which, 500 units were defective and hence scrapped. We sold 6,000 good units to our customer.

In this situation, the opportunity cost of these 500 defective units is NIL.

Because, in this example, key factor is not production but it is sales demand.  We have satisfied the entire market demand of 6,000 units and we lost no opportunity to sale.  Hence, there is no opportunity cost in this situation.  In example 2, the market demand was unlimited and in the current situation, it is limited, hence there is a difference.

However, loss to our organisation due to defective production is :

            = Variable cost of production

            = ( 500 units x Rs. 60 ) = Rs. 30,000

Note : Fixed cost of Rs. 1,00,000 p.a. is to be ignored in this calculation, because whether we produce & sale 9,500 units or 10,000 units, this cost is going to be incurred.  Hence, it is irrelevant.

 

Common mistakes made in online coaching

Dear Student Friends,

 

There are many advantages of watching the video lectures as per your convenience and comfort.  However, there are few Mistakes also.  Please understand them and avoid these mistakes to take full benefit of the video lecture products.

 

Mistake No. 1 :

Some students feel that just by buying the video lectures of various subjects, their work is over.  They fail to understand that, these lectures are also to be viewed and understood carefully. It requires quality time.

Solution :

If you are going to view the lectures regularly and carefully and if you are going to allot time for it, then only buy them.  Else, the money will get wasted.  This product is good only for self disciplined students.  Those who want forced discipline, should join either Live batch or Virtual batch.

Mistake No. 2 :

Some students buy many subjects together to get a combination discount.  However, if you activate all of them together out of curiosity, the expiry period will start getting counted and the product will expire before viewing all the lectures.

Solution :

It is better to buy one product at a time and finish it fully.  Don't worry much about losing the discount.  At the most, you may buy 2 products at a time, but not more.

Mistake No. 3 :

As the start and stop button is in your hand, some students study it in any sequence, they fast forward the lecture to complete it faster, skip the theory discussion, don't do the calculations on their own, some students don't write the answer in their notebook etc.

Solution :

Watch all the lectures, including theory in the same sequence.  Sit with calculator and notebook.  Solve the questions along with faculty and note down all the necessary details in your notebook.  Unless you put yourself in a self discipline mode, you won't benefit.

Mistake No. 4 :

Some students do multi-tasking.   That is : the mobile is on, TV is on and the video lecture is also on.  It will cause disaster only.

Solution :

Go to your study room or study table, put the ear phone or head phone while watching the video lectures.  Keep the mobile phone in silent mode and away from you.  Take divorce from TV till you become CA.  There is no way out.  No compromise. No short cut to success.

Mistake No. 5 :

Some students watch the lectures in sharing mode with other student friends, to save money.  However, it leads to more talking, non matching of common timings to sit together, poor visibility of lectures on the same laptop by many etc.

Solution :

First of all, it is difficult to co-ordinate with self schedule itself, it will be further difficult to co-ordinate with friends to sit together at common time.  You will end up wasting time.  Time is the most precious resource, which a CA student has.  Use your own time, as you use money.  It is better to save an attempt (i.e. 6 months), instead of saving money.

Mistake No. 6 :

Some students believe that everything is available for FREE on You Tube and there is no need to buy any lectures.  They can study all the subjects from internet or pirated lectures etc.

Solution :

It is partially correct.  But searching for lectures on You Tube and internet will waste your substantial time.  You may end up viewing something irrelevant, you may not be able to link one lecture with another.  You won't have printed notes with you, no help for difficulty solving etc.  Again you may lose 6 months of your life.  Loss of 6 months is the loss of highest salary which you would earn in these 6 months.  Why do this trial & error with your career.

Instead, subscribe to ICAI Cloud Campus and use their services at a very low cost.  But then you need to trust ICAI and their faculty.  Your 'Trust' in a 'Faculty' is more powerful than the Faculty itself.

You may use free video lectures on YouTube for revision purpose only.  Once you have understood the basic concepts, then you can revise and study from anywhere in any sequence.  Avoid first time study using free lectures.

Mistake No. 7 :

Some students believe that by taking the photocopy of the printed notes and notebooks of their friends, they will understand everything at a very low cost.

Solution :

If you are exceptionally talented, then yes.  Then you can understand from ICAI module itself.  However, it doesn't work in majority cases (i.e. average students). You will only derive mental satisfaction that you have everything with you.  You do have it on piece of paper or on your mobile but not in your mind.  Avoid it.

Difficulty No. 8 :

After studying the subject for the first time, a student tends to forget it over a period of time.  What to do and how to revise?

Solution :

This is a common problem with every human being.  The possible solutions are :

(a)  Use the extra views given in the video lectures for revision purpose, if the product has not yet expired.

(b)  Buy the revision lectures of the same faculty (if available).

(c)  Get the same lectures renewed by paying some nominal amount.

(d) Teach other friends.  Teaching is the best way of learning and revising.

(e)  Form small groups of common friends.  Divide the subjects between yourself.  One friend should study one topic in detail and then explain it to other friends.  This way, all of you can share the responsibility and help each other.

 

 

Best of Luck and Wish you Happy Learning !

 

 

 

 

* * * * *

How to Plan Studies - for CA Inter Students

For Students joining CA Intermediate after passing Foundation Exam :

 

  1.       As far as possible plan to appear for both the groups.  It gives you the benefit of set off of surplus marks for aggregation purpose and there is a chance of AIR.
  2.       After Foundation result, you have 9 months for your INTERMEDIATE exam.  For example, if you clear FOUNDATION in Nov. 2020 exam, result will be declared in January, 2021 and your first INTERMEDIATE attempt is due in Nov. 2021.  It means, you get study time between February, 2021 to October, 2021 i.e. a period of 9 months.  Let’s plan for these 9 months -
  3.       Generally, first 3.5 months goes for Group I preparation & classes etc.  Next 2.5 months goes for Group II preparation & classes. In short, 6 months will go for first time study of the subject.
  4.       It is natural for human being to forget.  Hence, next 2 months should be spent for revising each subject.  You have to prepare brief notes for revision purpose, so that in less time you can revise the whole syllabus. If you find it difficult to do revision on your own, then you may think of joining revision classes or make use of revision video lectures available on website for sale.
  5.       Last one month should be used for Self Testing i.e. for Test Series.  You may join the paid test series of ICAI or any coaching institute or download the past question papers of ICAI from website and solve it at home in a time bound manner.  Then check your answers with the suggested answers of ICAI.
  6.       From self testing exercise, you will come to know your areas of strength and weakness.  Please improve upon the areas of weaknesses.  The self testing will provide you the feel of exam and then you will be fully confident to take up your main ICAI exam.
  7.       Those who don’t do the self testing before actual exam, will make their first trial in either May or November.  This trial may cost you 6 months.  Hence, it is strongly recommended to appear for few tests before the actual exam conducted by ICAI.  Our past experience shows that those students who do self testing at home stand a much better chance of clearing the exam in the first attempt.
  8.       Once the exam is over, relax for few days and join ICAI Information Technology Training (ITT) of 100 hours and Orientation Course.  Complete it before your INTERMEDIATE result is declared.  So that immediately after the result, you are eligible to join articleship training.
  9.       Those students, who are very confident about their CA Foundation result, may join the coaching for CA Intermediate, immediately after appearing for Foundation exam.  In such case, they will get few extra months for preparation and revision.

 

For Students joining INTERMEDIATE after Graduation (Direct Entry) :

 

  1.       Direct entry students will have tough time managing their articleship training with coaching classes.
  2.       These students may take one group at a time due to heavy schedule.  They may join classes or do self study in the morning and evening time.
  3.       However, if you do not find the classes which are suitable for your time schedule, then you may make use of video lectures on pen drive for convenience.  So that you can make your own time table of study.
  4.       Direct entry students can also take the clue from points written above for FOUNDATION students.  They also have to do revision and self testing before the exam as mentioned above.

 

Students appearing for Group I only :

 

  1.       Those students who find it tough to handle both the groups together for any reason, may go for single group at a time.
  2.       Such students should first appear for Group I after thorough preparation. Just after appearing for Group I exam, they should immediately prepare for Group II till the time result of Group I is declared.  If they clear Group I, then they can spend the remaining time in revising Group II.  In case, if they fail in Group I, they should revise both the groups in the remaining time and should appear for both groups together in the next attempt.

 

Important Note for all INTERMEDIATE students :

  1.       Those who are committed to do CA, are advised to do B.Com externally.  This will reduce your burden of attending college, completing project book or journal, practical, internal exam etc.  So that, you can fully concentrate on your CA preparation without any disturbance.   ICAI has already done some tie up with Indira Gandhi National Open University (IGNOU) in this regard.  CA students are exempted from certain subjects of B.Com.
  2.       There is a huge transformation from FOUNDATION to INTERMEDIATE.  You are shifting from Objective type (MCQ) questions to Subjective type (Essay type) questions. Hence, you have to develop the habit of writing.  You need to justify the answer by writing all the steps.  Writing skill is very important for INTERMEDIATE and Final.
  3.       Do not study from multiple books or study material.  You are likely to get confused.  Generally, 90% contents in all the study material are same.  But due to difference in the way of presentation of each teacher or author, you will get confused.  Please stick to one literature, one teacher or one author only.

 

 

 

 

 

* * * * *

Reasons for Failure in CA Exam

Dear Student Friends,

 

Few students are lucky to clear the CA examinations in the very first attempt.  However the statistics shows that majority students take more than one attempt to clear the exams.

 

Those who fail but are sincere at their work, ask me a common question i.e. "Why they have failed" and 'What to do to get success in the next attempt".

 

The reasons for failure could be many.  I would list down some of the reasons for failure to do self analysis and would like to suggest the possible solutions as well.  I hope it might be useful to you.

 

Reason No. 1 :

Lack of writing practice.

 

Solution :

Please appear for mock test papers before the actual exam.  Either join paid test series of ICAI or Private Classes or download the past exam papers and suggested answers of ICAI and do it at home.  But it is a must to know where we are and in which area the improvement is required.  The trials and errors should be done before the actual exam and not in the exam itself. Appear for theory papers also, whether you like it or not.

 

Reason No. 2 :

Lack of written communication in English.

 

Solution :

The students who have studied in local language, generally lack in English.  You may join the English speaking classes, read English newspapers and books.  Have a good dictionary from English to your local language.  Try to communicate in English with other friends.  After becoming CA also, you will need it.  Hence work on it right now.

 

Reason No. 3 :

Lack of Analytical Skills.

 

Solution :

Analytical skill means the ability to read, understand and interpret the question, forming a cause and effect relationship, logical reasoning and thinking etc. To some extent, it is connected with mathematical skills also.  This is the biggest problem faced by many students.

You need to develop the logical thinking habit and should be able to interpret the given situation.  It requires practice and hard work.  It needs to be developed and cannot be gifted by someone to you.

It is a brain work and can be improved over a period of time.  You may consult the related experts in this field.

Our present education system has to be blamed for this, to some extent.  If you are told only to remember and write, then you cannot develop the habit of independent thinking.  One must develop this habit of forming an independent opinion about a given situation.

For example - subjects like Cost Management and Financial Management require more of analytical skills.  Subjects like Direct Tax, Indirect Tax, Audit, Laws etc. require more of memory skills. However, if you go deeper, you will find logic everywhere.

 

Reason No. 4 :

Writing speed.

 

Solution :

In today's world, we are fast loosing the habit of writing.  Our fingers work faster on Smart Phones or Laptops.  But the moment, you hold a pen in your fingers and try to write on a piece of paper, the speed goes down drastically.

One should develop the practice of writing by taking down dictations from teachers and preparing notes in the classroom while learning.  I have come across with the students, who just watch the video lectures of a faculty (like a movie) and are reluctant to write down anything in the notebook.  These students will have to wait till the time ICAI introduces fully computerized examination system.

 

Reason No. 5 :

 

Solution :

Very rarely, we have noticed that the handwriting of a student is such that the faculty is unable to understand it.  It means, your handwriting should be legible and understandable.

You may write a paragraph in running writing and give it to your friend to read.  If your friend understands what you have written, then your handwriting is legible.  Else, you need to improve using the techniques adopted in early days of schooling.

 

Reason No. 6 :

Lack of Sincerity, Regularity and Dedication.

 

Solution :

Generally, majority of the CA students are sincere, regular and dedicated.  However, few pampered children lack these qualities.

If everything is easily available in life, then one looses the motivation to work hard.  However, CA course requires lot of hard work, regularity and dedicated efforts.  Either develop this or leave the course.

If you are super rich or belonging to business family and if you feel that doing CA is a big challenge, then it is better to hire a CA instead of doing CA.  You may concentrate more on developing successful businesses and become a job provider.

 

Reason No. 7 :

There is no inner urge to do CA.

 

Solution :

Sometimes, people join CA course because their parents told them to do so or their friends are doing it or it is a cheaper course or there is nothing else to do in life etc.etc.

If there is an inner urge to do CA, then only you will succeed.  First of all, you should believe in yourself and your own ability, that you can do CA.

When it comes from inside, then you will be ready to face any difficulty, but you will become CA.  However, if someone has forced you to join CA, then it becomes difficult to pass.

It is a mental game.  "If you think, you can become CA, you are right".  "If you think, you cannot become CA, you are still right".  It means, you should have that inner urge and passion to do CA.

 

Reason No. 8 :

Doing multiple things with CA course.

 

Solution :

Some students try to pursue multiple courses along with CA course.  Like, CS, CWA, MBA etc.   If you are exceptionally brilliant and can handle it together, then there is no problem.

However, if we try to do multiple things together, we lose the focus of CA course and our time / attention gets diverted.  I personally feel, if we concentrate fully on CA, then it is achievable with reasonable efforts.

 

Reason No. 9 :

Dummy Articleship.

 

Solution :

Some students are fortunate to get dummy articleship from their friends or relatives.  It may be useful sometimes, that you will get additional time for your studies.

However, our course is designed in such a manner that Theory + Practical should go hand in hand.  It will complement each other.  During genuine articleship training, you learn a lot which is useful for your studies and during your studies, you will get lot of inputs for articleship.  Thus, both are dependent and complementary to each other.

Articleship training teaches you a lot, which cannot be taught through books.  Like, how to deal with boss, how to deal with clients, how to get the work done from government department, how to handle work pressure, handling ego of people, balancing between work and studies etc.  All this will be useful in post qualification life as well.

 

Reason No. 10 :

Addiction of Mobile / Internet.

 

Solution :

Now a days, it is hard to find a person walking on a street without looking at his mobile.  Some have practiced the art of driving while looking in to mobile phone.  We have reached to a level of addiction with mobile phone.

Smart phones and internet are very good inventions.  They are designed to make our life easier and to save our time to work.  However, the fact is that we have become the 'Slave' of mobile instead of making mobile phone our slave.

The data available on internet is an ocean without any boundaries. We are living in a world of information explosion. Hence, it is important to understand what is relevant for us and what is irrelevant.  Else, your entire free time will be consumed by your Mobile phone and you will never have the time for studies.

 

Reason No. 11 :

Unequal weightage given to different subjects.

 

Solution :

It is a common trend to pay more attention to the subjects we love (i.e. generally practical subjects) and pay very low attention to the subjects which we don't love (i.e. generally theory subjects).

We have to keep a balance between the two.  You will notice that some students score very good marks (say above 80) in one subject and score very low marks (say below 30) in another subject.  But, the result is Fail.  Don't ignore a subject all together, even if you don't like it.  Naturally, try to score maximum in those subject which you love.  It is help you for scoring the aggregate 50% marks.

 

 

 

 

 

Reason No. 12 :

Referring multiple study material for one subject or studying with multiple teachers for one subject.

 

Solution :

You may do the careful selection of One study material for one subject and One teacher for one subject.  For doing this selection, you may take the opinion of many, take your own time and then fix it.  Don't change your preference every now and then, unless you have made a serious error in selection.

Some students have a habit of collecting every possible study material on each subject from all friends and relatives.  It may confuse you more.

CA students already get limited time for studies.  If you try to refer multiple study material, then you will fall short of time and you are likely to get more and more confused.  Because, same thing might be explained in a different manner by a different author or a teacher.

Contents might be almost same but the way of explanation and style of teaching may be different.  I have noticed that, those who refer multiple literature, often end up getting more confused.

Hence, concentrate and revise from the same literature which you had referred.  Those who joined coaching classes, should refer the same study material provided by the coaching classes.

Those who are doing it on their own, should rely on the study material of ICAI.  Reference books may be used, but only for reference and not for regular studies.  Same literature will also provide you the flow of studies without any contradictions.

Have full faith and trust in the author or teacher, to whom you are referring.  Else, have full faith in your own ability and study on your own, you will still get through.

 

 

Wish you Happy Learning and hope to see you as CA soon!

 

 

 

 

* * * * *

 

Opportunity Cost of Defective items

Relevant Cost of Defective Items Produced :

 

Query :

Sometimes in the answer we consider opportunity cost while calculating the relevant cost of defective items and sometimes not. Why it is so?

 

Solution :

The opportunity cost concept is relevant only when we lose the opportunity to earn, by making an alternative use of the same resources.  This concept works only when the resources are in short supply i.e. key factor.

 

For Example :

Our company at present is producing and selling 10,000 units in the market @ ` 100 per unit.  The variable cost of these units is ` 60 per unit.  Hence, contribution is ` 40 per unit.

While producing these 10,000 good units, we also produce 500 defective units, which are scrapped and cannot be sold to the customers.  Our total production in this situation is 10,500 units (good + bad) together.

The question is, what should be the relevant cost of these 500 defective units?

 

Situation 1 :

If our sales is restricted to 10,000 units only i.e. we cannot sell more than 10,000 units in the market, then the relevant cost of defective units is :

Variable cost of production = 500 units x ` 60 per unit = ` 30,000.

Because, we have spent this money without getting anything out of it.

If we further assume that the scrap value of these defective units is ` 5,000 then -

the net relevant cost shall be = 30,000 - 5,000 =  ` 25,000.

 

Situation 2 :

If we assume that our product has a further sales potential, and we could have sold these 500 units also in the market, if they were not defective -

then the relevant cost of defective units shall be :

Variable cost of production = 500 units x ` 60 per unit = ` 30,000.

Opportunity cost (i.e. loss of contribution) = 500 units x ` 40 per unit = ` 20,000

The total relevant cost shall be = Variable cost + Opportunity cost

                                                   = 30,000 + 20,000 = ` 50,000

If we further assume that the scrap value of these defective units is ` 5,000 then -

the net relevant cost shall be = 50,000 - 5,000 =  ` 45,000.

Alternatively,

Either we can sell these 500 units as good units @ ` 100 and earn ` 50,000 revenue OR

sell these 500 units as scrap and earn a revenue of ` 5,000.

Using differential approach, the net relevant cost shall be = 50,000 - 5,000 =  ` 45,000.

Note : This alternative calculation is for Situation 2 only.

What is Success?

CA Rakesh Agrawal, Pune

 

My Dear Friends,

I do not possess TV at my home, neither I am very active on social media. Majority of my lockdown time is spent in reading books. I have a collection of good books. 

My reading, observation and experience motivated me to write and share something with you all. I am going to share my views with you on a very general topic and that is 'Success'.  Everyone wants to be successful in his/her life.  I am just sharing my views below.  I am sorry, if it becomes little lengthy, but at the same time, it may be worth reading and implementing.

 

What is Success?

  • Success means different things for different people.  Everyone has their own perception about success.  It is very difficult to define it in general.  Still, I will try to and divide it in 3 important phases of life :
  • Age Group (Below 25) : In this age, success mainly means, academic success.  During this period, you take a formal education and reach an academic goal.
  • Age Group (25 to 50) : In this age, success mainly means, financial success. 
  • Age Group (Above 50) : In this age, success mainly means, success of your children.  Keeping good health and high spirit is also a success at this age.

 

Qualities required for becoming Successful

  • Regularity, Sincerity and Excellence in whatever you do
  • Honesty is the best policy in long run
  • Good health is a must for success
  • Good communication (i.e. effective communication) skills and
  • Risk taking ability (i.e. taking a calculated risk)

 

Exceptions to the above

  • Sometimes people argue that someone has become successful without the above qualities, due to sheer luck or by wrong means. 
  • I do agree in very few cases.  However, exceptions doesn't prove the rule.
  • My observation says that the people who possess the above qualities have much better chance (say above 90%) of becoming successful.
  • Those who do not possess the above qualities have a very low chance (say below 5%) of becoming successful.
  • Please don't use 'Money' as the only criteria to measure success.

 

My Views for Age Group below 25

  • Set an academic goal of your life.
  • Give your 100% in whatever you are doing.
  • Stay away from distractions in life, which takes you away from your goal.
  • Please don't become a 'Slave' of mobile phone.  Infact, mobile phone is your slave.  Use mobile, don't allow mobile to use you. 
  • Fix the time slots in a day (maximum twice) for social media.  For example, half an hour two times in a day i.e. maximum one hour per day.  In today's world, you cannot live without social media.  But don't overspend your productive time on it.
  • The above two points are applicable for the people of all age groups. However, if you get addicted to mobile phone at an early age itself, then it would be difficult to recover later on in life.
  • You may develop some hobbies, you may take active part in sports and other cultural activities.  One must focus on overall development instead of being good only in academics.
  • Few people from this age group believe that having following 4 things means success i.e. (a) Having a mobile phone (b) Having a Debit / Credit card in the pocket (c) Having a Bike and (d) Freedom to do anything.  Then please remember that it is a short lived success.
  • Spending parents hard earned money without any restriction doesn't mean success.  Parents money should be spent for satisfying your 'Needs' only and the money you earn should be spent for satisfying your 'Wishes'. 
  • Inculcate good habits like : (a) Regularity (b) Sincerity (c) Punctuality (d) Honesty (e) Proper Planning & Execution etc.  These will be useful throughout your life.

 

My Views for Age Group 25 to 50

  • This is the Golden Period of your life.  You are on the top of the world and full of energy and enthusiasm.
  • The success of this 25 years journey largely depends upon the strong foundation laid in the first 25 years.  Also, the success in this period will decide the outcome of remaining years of your life.
  • Earn a good amount of money.  However, earn this money with your hard work, intelligence and honesty.  Not by cheating people.
  • How much you have earned is important, but at the same time How you have earned it is equally important.  My observation says that money earned by wrong means doesn't stay longer with you and it doesn't provide happiness or fulfillment in life.
  • During the age of 25 to 50 years, you work hard to earn money.  At the same time, save some money and invest it properly for the remaining life. So that after crossing the age of 50, your money should work hard to earn more money for you.
  • Please stay away from excess greed.  Some people will approach you and will promise you to multiply your money without efforts and very quickly.  Please be aware of such people.  It doesn't happen in reality.  I am telling this out of my own experience.  I had also lost some money in the past and I treated it as a cost of learning.
  • You should identity different sources of revenue over a period of time.  So that you are not fully dependent on one stream of income only.  It is a de-risking policy, better known as diversification.
  • Those who possess some business acumen and a little risk taking ability, should venture in to some kind of business instead of doing service for lifetime.
  • It is always better to be a 'Job Provider' than a 'Job Seeker'.  It takes some time, few trials, failures and huge amount of efforts to build a successful business.  However, once you are successful in a venture, then there is no looking back.
  • It is always advisable to have a 'Term Insurance Plan' for a good amount, the moment you get married.  Please remember, I said 'Term Insurance Plan' and not any other insurance plan.  Please consult your insurance adviser for details.
  • You should also build an 'Emergency Fund'.  It should be invested at a safe place. The fund amount should be equal to your average spending for 6 to 12 months.  This will provide you a back up against (a) loss of job suddenly (b) failure in your business venture or any other emergency situation.
  • This is the age of dual responsibility : (a) nurturing our children and (b) taking care of our aging parents.  Those who are able to manage both these responsibilities effectively are successful people.  Some people call it as 'Work Life Balance'.
  • Please give some time to maintain your health also.  I think 30 minutes to 1 hour daily is sufficient.  I have seen some people who have sacrificed their health to earn money and then sacrificed their money to regain the health.  Health is Wealth.  Never ignore it.

 

My Views for Age Group above 50

  • If you have managed the first two phases of life successfully, then in this last phase, one should relax and enjoy the fruits of success.
  • It is the age of spending time with your grand children and remembering your own childhood while playing with them.
  • It is the age of using your wisdom to help and guide your grown up children to scale new heights.  But carefully distinguish between helping them and interfering them. It is a delicate matter and to be handled with care.
  • It is the age by which, one should put their business in an 'Auto Pilot' mode.
  • One must have accumulated and invested a good amount of money by this age.  This clever investment should provide you a good source of income.
  • Please keep the financial control with you only and do not hand it over fully to your children. Don't be emotional.  Be practical at this stage.
  • It is the time to give back to the society.  You may contribute to the society in whatever way you can.  You may give your time or money or both for the social cause of your choice.  There is a joy in giving as well.
  • Keep yourself active and healthy, if you want to enjoy this phase.  Never retire fully.  It should be a partial retirement, so that you also get some free time to do whatever you wished to.  Please remember : "It is better to wear out than rust out".
  • Towards the end of our life, if we can embrace 'Death' with a 'Smile' and 'Fulfillment', I think we have achieved 'Success' in life. 
  • I feel that, death is just an indication that your 'Present Role' on this earth is over and you are getting ready for a 'New Role' again. 

 

How to be Successful & Happy

  • There are only two formulae for this :
  • Do whatever you love to do, else
  • Start loving what you are doing

        

Concluding Note

  • If you believe that the above article is of some use to you, then please save it for future use. You may share with anyone you love to.
  • My observation says that you will find something new in the above pages, whenever you read it again.  Because, as we grow in age, we develop better understanding of life and then we find new meanings of success in life.
  • There is a difference between 'Knowledge' and 'Wisdom'.  'Knowledge' can be acquired from books, universities and of course Google.  However, 'Wisdom' comes only by experience.
  • I have used my observation and experience to write the above article.  If it helps you or guides you in a very small way also, then I will feel happy to have contributed in your journey of life.

        

         Success is a Journey not a Destination !

 

CA Rakesh Agrawal, Pune

Website : www.CaRakeshAgrawal.in

 

 

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Daily Time Table - for CA Students

Daily Time Table - for CA Students

 Once you get a complete free time for CA study, then you may implement the following time table with suitable modifications, if required.

 Getting the whole day free for study is possible only in the last few months before the exam. It is the most important and crucial time.

 Last few months before the exam should be well planned and equally well executed. Stay away from all types of distractions during this period.

 

Time Table for Revision Time

Plan

5:00 to 6:00 AM

Get up and get ready with bath.

6:00 to 8:30 AM

Theory Subject

8:30 to 9:00 AM

Breakfast

9:00 to 11:00 AM

Theory Subject

11:00 to 11:15 AM

Small Break

11:15 AM to 1:15 PM

Theory Subject

1:15 to 1:45 PM

Lunch Time

1:15 to 3:00 PM

Rest Time – take a nap

3:00 to 3:15 PM

Fresh up and have a cup of tea

3:15 to 5:30 PM

Practical Subject

5:30 to 6:00 PM

Relax and have some refreshing drink, check SMS, WA, FB etc. quickly.

6:00 to 8:00 PM

Practical Subject

8:00 to 9:00 PM

Dinner Time and Relaxation Time

9:00 to 11:00 PM

Practical Subject

11:00 PM

Compulsorily go to bed. You have get up early tomorrow at 5:00 AM

Key to Success

Strict Implementation of Time Table

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How to Plan Studies - for CA Final Students

 

How to Plan Studies - for CA Final Students

                 CA Final Students will fall in the following 2 categories:

1. A student who has cleared both the groups of IPCC and joined CA Final along with articleship training, gets a period of 2.5 years (i.e. 30 months) to study for CA Final exam.

2. Those students who are from direct entry (i.e. through graduation route) or those who cleared Group II of IPCC during articleship training will get lesser time to prepare for CA Final.

 In both the above cases, the most difficult task is to manage the balance between articleship and study.

 Let’s first plan for 24 hours available in a day. One must take a rest of minimum 6 and maximum 8 hours in a day. Good rest is a must to keep working efficiently for the whole day.

 Articleship training (including travelling time) will consume approx 8 to 10 hours in a day.

 Your daily routine like getting ready, having food etc. will consume approx 2 hours in a day.

 Now, you might be left with approx 6 hours in a day for studies. Let’s say 1 hour goes in checking Emails, SMS, WA and mobile related issues. It means, you are effectively left with 5 hours for study. Let’s be more realistic and practical.

 Now, spend this time for effective study. Join the coaching classes only in the morning or in the evening time. If you join the classes in the morning as well as in the evening, then it will be too hectic for you. Keep one patch of morning or evening free for revision at home. This is very important.

 If you find that attending coaching classes is very difficult for you, due to time constraint, then you may opt for online coaching or offline video lectures through pen drive & DVD.

 As far as possible, plan for both the groups together.

 Your regular studies or coaching classes should get over 6 months before the exam.

 In the last 6 months before the exam, you should devote 4 months for revision of 8 papers (15 days for 1 paper) and last 2 months for self testing (1 paper per day per week x 8 weeks).

 It means, you should have appeared for each paper atleast 8 times before the exam. Self testing can be done only after the revision is over. Self testing involves either joining paid test series of ICAI or Coaching Institutes or downloading the ICAI question papers and solving them at home in a time bound manner.

 Your 30 months, should get utilized as follows : (a) First 24 months for Regular studies, (b) Next 4 months for Revision and (c) Last 2 months for Self testing.

 The above plan may not be suitable for each one of you. In that case, you can modify this plan to suit your needs and requirements.

 For the purpose of your regular studies, please keep full trust or faith in any one teacher or one author or ICAI study material. If you choose multiple sources of learning for one.

subject, you are most likely to get confused. You may end up wasting your valuable time.

 Generally, 90% contents in all the study material are same. But due to difference in the way of teaching style or the manner of presentation or language used by different teacher or author, you will get confused. Please stick to one literature, one teacher or one author per subject only. This is very important. I have noticed that, the students who study more and more are likely to get more and more confused.

 Refer the other literature only as a reference book but only one study material as a regular study book.

 Please note that, effective study is important and not the number of hours spent of studies. Study with understanding only and not just for the sake of studying. It is a very common question from students, asking for how many hours they should study for CA course. There is no fixed formula for it.

 You should decide for how much time you can study with concentration. Generally, a normal student can concentrate up to maximum 2 hours at a stretch. In such case, you should take a small break (to recharge you battery) of 15 to 30 minutes and then start studying again. If you feel sleepy, please take a power nap of 30 minutes (set an alarm) and then return back to your studies.

 Very important : Have confidence in your own ability. Feel motivated and focused. Keep cool. Don’t panic and don’t get distracted. Avoid exam fever. It is not the matter of life and death. It is just an exam.

 Best of luck !

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How to Prepare for Theory Subjects

How to Prepare for Theory Subjects

 Select any one good study material for reading. It might be classroom notes or a good book of a good author or ICAI study material. Do not read from multiple literature.

 Refer other books or literature, only for reference purpose i.e. in case of difficulty. But select one good study material for complete reading like a text book.

 Sit with the English Dictionary of your choice.

 Read with understanding only. Don’t read just for the sake of reading. It should be effective study.

 If you feel sleepy, please take a power nap of 15 minutes, wash your face and start reading again.

 Once you finish a topic, make a summary notes in a separate notebook. It should contain only important points for the purpose of revision in future.

 In future, whenever you want to revise the theory subject, you should be able to do it with the help of summary notes. It is possible, if you have done a careful reading with understanding for the first time.

 

How to Write Theory Paper

 Do not write a very lengthy answer to the theory question. It is not an essay writing competition.

 ICAI want you to write the answers in brief and to the point, covering all important points. You may write the answers in points format or small paragraphs or in a distinguish between format also.

 You may underline the important points while writing or may use CAPITAL letters to highlight your point.

 Please remember that use of sketch pen, highlighter, red pen, green pen etc. is not allowed. You may either use blue pen or black pen only.

 You may quote an example or case law as may be necessary to improve the quality of your answer. You may use your own language while writing the theory answers, but try to cover all the important points.

 You are not expected to remember the entire answer by heart and reproduce it as it is. It is not possible and it will kill your writing skill as well.

 In case of law and tax related papers, use the legal language, sections, case laws to illustrate your answer.

 If you don’t know the answer at all, it is better to avoid the question. Don’t bluff and spoil your impression. Do not waste your time and examiner’s time.

 Please remember, in ICAI examination, Quality is rewarded and not the Quantity.

 Best of Luck !

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Choosing CA Firm for Articleship

How to Choose a CA Firm for Articleship

 Majority students have a tendency to treat the articleship training as a roadblock in becoming CA. However, the fact is that this 3 years training makes you smart and a competent chartered accountant.

 There is always a difference between theory and practice. There is a lot of difference between reading Income Tax from books and doing the Income Tax work of a client. Similarly, there is a lot of difference between reading Audit book and doing audit work of a client.

 CA course is designed in such a manner that you get an opportunity to know both i.e. Theory and Practice. This really makes you a Perfect CA. Simply speaking, don’t ignore articleship training.

 Now, the main question is in which CA firm we should join the articleship training.

 We should divide the CA firms in 3 broad categories i.e. (1) Big firms, (2) Medium firms and (3) Small firms.

 Each of these firms have certain pluses and minuses. Please remember that you will not find all pluses at one place. Let’ understand them carefully, so that you can take an informed decision.

 

Joining Big Firms :

 Big firms are those where you have multiple CA partners, CA employees, huge number of article clerks, the business of the firm is spread across the globe. The most famous big 4 firms by the name are – E&Y, Deloitte, KPMG and PWC. There are other big firms also having their offices in various cities.

 These firms will pay you a very good amount of stipend ranging from ` 15,000 per month to 30,000 per month during the tenure of articleship. It means, those who want financial help should join these firms.

 You will get to learn a corporate culture in these firms. These firms are known for their meticulous planning and execution skill. You will learn how to talk, how to dress, how to write, how to present yourself and so on. It will groom your personality.

 You will get an opportunity to travel India and sometimes abroad. Those who love travelling may give preference to these firms.

 There is a high degree of specialization in these firms. It means, you will either be placed in Statutory Audit Department or Internal Audit Department or Direct Tax Department or Indirect Tax Department or Transfer Pricing or Project Financing etc. In short, you will become a specialist in one particular field.

 If your objective is to get a job in the corporate world after becoming CA, then this is a clear choice. If you want to settle abroad in future, then also you may join these firms.

 The only drawback is that your time schedule is tight. Work pressure is higher and you are left with little time for study. You won’t get leave as per your choice, you will be discouraged to attend college and classes. In this case, you should prefer external degree for graduation.

Joining Small Firms :

 Small firms are generally the sole proprietorship firms. These firms generally operate from one place only and have a local office in your city.

 These firms have a local client base and they handle variety of work of small clients. You can develop personal relationship with those clients.

 Stipend amount is very low. These firms will pay basic minimum amount as prescribed by ICAI.

 In these firms, you get to learn many things. There is a personal touch with the boss. There is a homely atmosphere, flexible timings, no work pressure, very few outstation visits etc.

 If you do not love much travelling, you want home food daily, relaxed routine, want to attend college and coaching classes, you should prefer this option.

 If you are interested in starting your own practice after becoming CA, then this is the best option.

 

Joining Medium Firms :

 Medium firms are generally the partnership firms. These firms may have 3 to 4 partners, few CA employees and 25 to 100 articles. These firms have one head office and few branch offices in other cities.

 These firms have few corporate clients, few educational trusts, some large business clients and small individual clients as well.

 The stipend will be neither too high or too low.

 In these firms also, you get to learn variety of things. There is a personal touch with the boss. There is a homely atmosphere plus some touch of corporate culture.

 There will be occasional outstation visits also. In busy season, there will be a huge work pressure and sometimes there will be a relaxed schedule also.

 There is some scope for flexibility, some scope for attending college and tuitions etc.

 It combines the pluses and minuses of Big firms as well as Small firms.

 If you are in a confused state of mind about joining big firm or small firm, then prefer medium firm.

 If you are not sure about whether you will start your own practice in future or you will join a job, then this option is the best.

 

Important Note :

The above guidelines are to help you out in case of confusion. However, if you are still undecided, then use a lottery system by picking a chit at random. Trust your favourite God. Either way, your decision is right, if you take the articleship training seriously. Give your best and you get the best in return. Your career mainly depends upon how you perform on the job or in practice. Avoid comparing with other friends to reduce frustration and confusion.

Best of Luck !

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