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Old Wednesday, December 15, 2010
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Default Assalam u Alaikum

Thank you for posting the Paper. Can you kindly confirm question No 3, Paper I. As I found that the debit and credit balances don't match. I guess there is a difference of 404250. It would be appreciated if you can repost the question.
Regards,
Fahad


Quote:
Originally Posted by Usman Naseer View Post
ACCOUNTANCY & AUDITING, PAPER-1

Q.2 Give short answer to the following:
i. Define each component of accounting equation.
ii. Identify stakeholders in Insurance Company.
iii. Identify the meaning of accounting related acronym GAAP.
iv. Define adjusted trial balance.
v. Describe financing activities in the context of cash.
vi. Explain the difference between financing reporting and financial statements.
vii. Explain salvage value of an asst.
viii. Define Franchises and licenses
ix. Explain acronym FOB destination.
x. Explain accrual accounting system.
xi. Explain Matching Concept.
xii. Define Debit Note.
xiii. Describe re-valuation Accounts.
xiv. What is meant by interim accounts?
xv. Bring out the importance of preparing Trial Balance.


Q.3 The Following Balances appeared in the books of X Ltd. As on 31st December 2006.

Debit Balances Rs. Credit Balances Rs.
Building 50,000 Subscribed & Paid up Capital 3,00,000
Purchases 50,451 General Reserve 1,25,000
Manufacturing Exp 1,79,500 Unclaimed Dividends 3,663
Establishment Exp 1,407 Trade Creditors 18,029
General Charges 15,539 Sales 4,91,974
Machinery 10,000 Depreciation Reserve 35,500
Motor Vehicles 7,500 Interest on Investments 4,272
Furniture 250 Profit & Loss A/c (01-01-06) 8,423
Opening Stock 86,029 Staff Provident Fund 18,750
Book Debts 11,690
Investments 1,44,475
Cash 36,120
Director’s Fees 900
Interim Dividend 7,500
TOTAL 1,005,611 TOTAL 1,005,611

From these balances and the following information, preparethe company’ Balance Sheet as on 31st December, 2006 and its profit and Loss Account for the year on that date:

a) The stock on 31st December, 2006 was valued at Rs. 74,340.
b) Provide Rs. 5,000 for depreciation on fixed assets, Rs. 3,250 for Managing Director’s commission and Rs. 750 for the company’s contribution to their staff provident Fund.
c) Interest accrued on investment amounted to Rs. 1,375.
d) A provision of Rs. 4,000 for taxes in respect of profit 2006 is considered necessary.
e) The directors propose a final dividend @ 5%

Q.4. The following data are extracted from the published accounts of two companies in an industry:
X CO. Ltd Y CO. Ltd
Rs. Rs.
Sales 16,00,000 15, 00,000
Profit after tax 61,500 79,000
Equity Capital 5,00,000 4,00,000
(Rs. 10 per share fully paid)
General Reserve 1,16,000 3,21,000
Long- Term Debts 4,00,000 3,30,000
Creditors 1,91,000 2,74,500
Bank Credit (short term) 30,000 1,00,000
Fixed Assets 7,99,500 7,95,000
Inventories 1,65,500 4,40,500
Other Current Assets 2, 72,000 2,26,000

You are required to calculate the following Ratios of both companies;
(a) Current ratio
(b) Quick Ratio
(c) Net profit Ratio
(d) Stock turn over
(e) Debt equity ratio


Q.5. Rizwan Company is preparing a cash budget for July. The following estimates were made:
(a) Expected cash balance, July 1, Rs.5, 000.
(b) Income tax rate is 40% based on accounting income for the month, payable in the following month.
(c) Rizwan’ s customers pay for 50% of their purchase during the month of purchase and the balance during the following month. Bad debts are expected to be 2%
(d) Merchandise is purchased on account for resale, with 25% of purchases paid for during the month of purchase and the balance paid during the following month.
(e) Marketing and administrative expenses are all paid in the current month.
(f) Dividends of Rs.15, 000 are expected to be declared and paid during July.
(g) Rizwan’s desire is to have a minimum month –end cash balance of Rs.5, 000.
(h) Other budgets include the following estimates:

June (Rs.) July (Rs.)
Sale (all on account) ------------------ 30,000 40,000
Purchase --------------------------- 10,000 15,000
Depreciation Expenses--------------- 5,000 6,000
Cost of Goods Sold------------------ 12,000 16,000
Other marketing expenses ---------- 9,000 10,000

Requirement: Prepare a cash budget for July. (25)

Q.6. Given below is the Receipts and payments account of the Fan Club for the (25)
year ending 31st December 2006:

Rs. Rs.
Balance B/D 10,250 Salaries 6,000
Subscription: Genera expenses 750
2005 400 Drama expenses 4,500
2006 20,000 Newspapers etc. 1,500
2007 600 Municipal taxes 400
Donations 5,400 Charity 3,500
Proceeds of drama tickets 9,500 investments 20,000
Sale of waste paper 450 Electricity 9,000
TOTAL 47,100 TOTAL 47,000

Prepare the Club’s income and expenditure account for the year ended on 31st December , 2006 and its balances sheet as on that data, after taking the following information into account:

a) There are 500 members, each paying an annual subscription of Rs. 50,
Rs. 500 being in arrears for 2005.
b) Municipal taxes amounting to Rs.400 per annum have been paid upto 31st March 2007, and Rs. 500 for salaries is amounting .
c) Buildings stood in the books at Rs. 50,000 and it is required to write off depreciation at 5 percent.
d) Three percent interest has accrued on investment for five months.
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