JAIIB AFM 2026 Exam Analysis 10 May, Questions Asked

The JAIIB AFM 2026 examination presented a moderate challenge, with a significant emphasis on theoretical concepts. Aspirants encountered a blend of foundational accounting principles, financial management techniques, and regulatory standards. Understanding the structure and key topics of this paper is crucial for effective preparation and future attempts.

JAIIB AFM Exam Paper Analysis 2026

The overall difficulty of the JAIIB AFM 2026 paper was moderate. A substantial portion, estimated at 70% to 80%, consisted of theory-based questions. Numericals played a comparatively smaller role, with approximately 5 to 10 questions, though this number could vary across exam slots.

JAIIB AFM 2026 Exam Paper Analysis: Key Topics and Concepts

Depreciation

Depreciation remains a most important topic. Questions frequently cover methods like the Written Down Value (WDV) Method. The formula for the Written Down Value (WDV) Method is:

Depreciation = Previous Year Value × Percentage of Depreciation

For example, if a previous year's balance is 40,000 with a 10% depreciation rate, the depreciation is 4,000. For the subsequent year, the value becomes 36,000 (40,000 - 4,000), and depreciation is 10% of 36,000, equaling 3,600.

Cumulative Preference Shares

Cumulative Preference Shares were a subject of inquiry. These are preference shares where, if profits are insufficient to pay dividends in the current year, the dividend is carried forward to the next year. In the following year, the company distributes both the current year's dividend and arrears of dividend from previous periods, provided there are sufficient profits.

Goodwill

A question was asked concerning the Goodwill account. Goodwill is an Intangible Asset. In accounting, assets are recorded under Real Accounts, which are categorized into:

• Tangible Real: For physical assets like land and buildings.

• Intangible Real: For non-physical assets such as Goodwill, patents, copyrights, and trademarks.

The Golden Rule of Real Accounts states: Debit what comes in and Credit what goes out.

Accounting Standard (AS) 26

Accounting Standard (AS) 26 was part of the exam. This standard addresses the Accounting of Intangible Assets, providing guidelines for their recognition, measurement, and disclosure in financial statements.

Forensic Audit

A question focused on Forensic Audit. These audits are conducted for fraud investigation and criminal investigation, typically in cases of financial fraud or other crimes.

Earnings Per Share (EPS)

The formula for Earnings Per Share (EPS) was tested.

EPS = (Profit After Tax - Preference Dividend) / Number of Equity Shares

Costing Methods

A question related to Multiple Costing appeared. The distinction between Unit Costing and Multiple Costing is important:

Non-Performing Assets (NPA) Provisioning

NPA Provisioning was another key area. Banks are required to make provisions for different categories of NPAs:

Trade Bills and Accommodation Bills

A question about Trade Bills specifically referred to a bill not representing an actual sale. Such a bill is identified as an Accommodation Bill.

Forex Numerical: Forward Rate

A numerical question on Forex involved the Forward Rate. The formula for the Forward Rate is:

Forward Rate = Spot Rate + Forward Point

Forward Points are derived from the interest rate differential between two currencies.

Capital Asset Pricing Model (CAPM)

The Capital Asset Pricing Model (CAPM) was included. This model calculates the expected return on an asset based on its risk. The concept is related to risk-free assets and market risk.

Bond Valuation

Bond Valuation questions involved calculations using PVIF (Present Value Interest Factor) and PVIFA (Present Value Interest Factor of an Annuity) methods.

Golden Rules of Accountancy

The Golden Rules of Accountancy were a fundamental topic. Accounts are classified into three types, each with a specific rule:

1. Personal Account: Deals with individuals, artificial persons (like companies), and representative persons (e.g., outstanding expenses).

• Rule: Debit the Receiver, Credit the Giver.

2. Real Account: Deals with assets (tangible and intangible).

• Rule: Debit what Comes In, Credit what Goes Out.

3. Nominal Account: Deals with expenses, losses, profits, and gains.

• Rule: Debit all Expenses and Losses, Credit all Profits and Gains.

Balance Sheet vs. Profit & Loss Account

Questions distinguished between items in the Balance Sheet and the Profit & Loss Account.

• The Balance Sheet contains balances of Real Accounts and Personal Accounts.

• Nominal Accounts are closed by transferring them to the Profit & Loss Account and are not carried forward to the next accounting period.

Share Capital Categories

Questions covered different types of shares, specifically Sweat Equity and Bonus Shares. A comparison helps distinguish them along with Employee Stock Option Scheme (ESOS):

Indian Accounting Standards (Ind AS) vs. Accounting Standards (AS)

A question on Ind AS 116 (Leases) highlighted the difference between these standards.

• Accounting Standards (AS): Issued by the Institute of Chartered Accountants of India (ICAI).

• Indian Accounting Standards (Ind AS): Based on IFRS (International Financial Reporting Standards) and notified by the Ministry of Corporate Affairs (MCA).

Corporate Social Responsibility (CSR)

Corporate Social Responsibility (CSR) was also asked. CSR is mandatory for qualifying companies, requiring them to spend 2% of their average net profits of the preceding three years on CSR activities.

Cash Book vs. Passbook

A question on the Cash Book appeared. The distinction between Cash Book and Passbook entries is crucial for reconciliation:

This difference necessitates a Bank Reconciliation Statement (BRS).

Accounting Standard (AS) 4

Accounting Standard (AS) 4 was tested. It deals with Contingencies and Events Occurring After the Balance Sheet Date.

Net Profit Margin Ratio

The Net Profit Margin Ratio formula was a direct question.

Net Profit Margin Ratio = (Net Profit / Total Sales) × 100

Calculating this ratio requires data from the Profit & Loss Account.

Yield to Maturity (YTM)

A question on Yield to Maturity (YTM) was asked. This metric represents the total return an investor expects to receive if they hold a bond until maturity.

Debtors Turnover Ratio

The Debtors Turnover Ratio formula was examined.

Debtors Turnover Ratio = Net Credit Sales / Average Account Receivables

GST Threshold Limit

The GST Threshold Limit was tested for both goods and services:

Forfeiture of Shares

A question on Forfeiture of Shares involved its definition and general entry. Forfeiture of shares occurs when a shareholder fails to pay the calls made on shares. The company reclaims the shares, and any amount already paid is confiscated.

The General Entry for Forfeiture of Shares is:

• Debit: Share Capital Account (Number of Shares Forfeited × Amount Called per Share)

• Credit: Calls in Arrears Account (Amount Remaining Unpaid on Forfeited Shares)

• Credit: Forfeited Shares Account (Amount Already Paid by the Shareholder on Forfeited Shares)

Current Yield

The Current Yield formula was asked.

Current Yield = (Annual Coupon Payment / Current Market Price) × 100

Rights Issue

A question on Rights Issue was posed. A Rights Issue is an offer to existing shareholders to purchase new shares, typically at a discounted price, in proportion to their current holdings. This mechanism allows companies to raise capital while preventing the dilution of control by existing owners.

Cost of Goods Sold (COGS)

Questions on Cost of Goods Sold (COGS) were present.

The COGS Formula is:

COGS = Opening Stock + Purchases + Direct Expenditure - Closing Stock

Related to this, Profit = Sales - COGS.