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FEDERAL PUBLIC SERVICE COMMISSION
COMPETITIVE EXAMINATION FOR RECRUITMENT TO POSTS
IN BPS – 17 UNDER THE FEDERAL GOVERNMENT, 2002.

ACCOUNTANCY AND AUDITING

PAPER - II

TIME ALLOWED: THREE HOURS MAXIMUM MARKS:100

NOTE: (i) Attempt FIVE questions in all. Including question No. 9 which is compulsory.
(II) Select at least ONE QUESTION from each of the PART A,B,C and D. All questions carry equal marks.

PART – A (COST ACCOUNTING)

1. Explain ten uses of Cost Accounting in real life. Highlight points giving edge to Cost Accounting over Financial Accounting in respect of above uses.

2. A product passes through two processes. The output of each process is treated as raw material for the next process. The expenditures incurred during a period were as under

PARTICULARS…………..…… PROCESS: A (Rs.) …………PROCESS: B (Rs.)
Raw materials………………………..….. 400,000 …………………….....200,000
Direct labour………………………………...60,000……………………...……40,000
Factory overhead…………………..…..100,000……………………...….100,000
Total management cost……....560,000……………...…. 340,000

10,000 units were issued to the process – A and after processing, the output of each process is as under:

PARTICULARS………OUTPUT/(UNITS) ……NORMAL LOSS/%
Process A ………………..…...… 9,750………………....………2
Process B…………………...…... 9,400……………………....…5
No stock of material or work in process was left at the end

Required:
Prepare Process Accounts to show the cost of the finished articles.

PART – B (AUDITING)

3. State and explain Limitations of Audit. Outline an audit program for vouching acquisition of fixed assets in a limited company.

4. Explain duties of an auditor for conducting various types of audits under the Companies Ordinance 1984.

PART – C (INCOME TAX)

5. Present a lucid review of tax rates governing various types of income tax assesses contained in the First Schedule of the income Tax Ordinance, 1979.

6. The following information available in respect of Mr. “A” for the assessment year 2002 – 2003.

Basic salary……….……….……….……….……….………… 360,000
Arrears of salary……….……….……….……….………….. 50,000
Leave encashment……….……….……….……….………. 25,000
House rent allowance……….……….……….………….. 360,000
Rent received is as under:
- Repairs……….……….……….……….……….……………. 100,000
- Interest on loan for house construction ………. 75,000
- Municipal tax ……….……….……….……….……….….. 15,000
- Insurance premium paid ……….……….…………….. 10,000

Required: Compute taxable income for assessment year 2002 – 2003.

PART – D (BUSINES ORGAZIATION AND FINANCE)

7. Currently business combinations are taking place globally and domestically. State principles governing business combinations as part of negotiation.

8. State comprehensive note on terms and conditions governing long term financing relating to an industrial concern.


COMPULSORY QUESTION

9. Write only the correct answer in the Answer Book. Do not reproduce the questions.

(1) Prime cost is calculated as under:
(a) Manufacturing Cost/Cost of Goods Sold
(b) Direct Method plus factory overheads
(c) Direct labour + Direct Material
(d) None of these

(2) Process Cost is very much applicable in:
(a) Construction Industry
(b) Pharmaceutical Industry
(c) Air line company
(d) None of these

(3) The latest computation of variances of manufacturing overheads is in one the following ways:
(a) Two variance approaches
(b) Three variance approaches
(c) Four variance approaches
(d) None of these

(4) Random sampling in auditing means:
(a) Selection through convenience sampling
(b) Selection through scientific sampling approach
(c) None of these

(5) Expenditure incurred in procuring machinery is:
(a) An admissible expenditure for tax purposes
(b) No admissible for tax purposes
(c) None of these

(6) Increase in income constitutes:
(a) Inflows
(b) Outflows
(c) None of these

(7) M & A stands for:
(a) Mergers & Analysis
(b) Mergers & Acquisitions
(c) Mergers & Allocation
(d) None of these

(8) An endowment insurance policy can be taken in respect of:
(a) Fire insurance
(b) Accident insurance
(c) Life insurance
(d) None of these

(9) Audit and special audit are the same:
(a) In Insurance Company
(b) In Banking Company
(c) None of these

(10) Acid test is the same as:
(a) Quick test
(b) Liquid test
(c) None of these
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