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.


1. “Cost Accounting is considered as a tool of management.” Explain various aspects of the above statement and explain dimensions as to how cost accounting can serve as tool of management.

2. The following standards have been established for the operating of the X Company:

Standards:
Materials: Quantity per unit 2½ yards price per yard Rs. 17.
Labour: Time per Unit 3.6 hours. Hourly rate Rs. 18.40
Overhead: Fixed charge Rs. 24,000 per month
Variable rate Rs. 15.00 per unit.
Production for the month 40,000 units
Actual Reports for the month of April
Production 41,200 Units
Material used 10,510 yards at average of Rs. 17.40
Labour 15,276 hours at average of Rs. 18.80
Overhead – variable: Rs. 66,750

Required: Prepare a statement showing actual and standard costs and amounts of variances. Use the two variance method for overhead.


3. Differentiate between “Internal Control” and “Internal Audit”. Suggest ten point Internal Control System for Inventories.

4. Present a lucid analysis for Liabilities of an Auditor. Cite case Law wherever relevant.


5. Present salient features of law governing Income from Business under the current income tax of Pakistan.

6. The following information relating to Miss Y is available relating to year ended on 30-6-2003:

PARTICULARS ……..……..……..…..……..Rs.
Salary ……..……..……..……..……..……..….. 240,000
Bonus received……..……..……..……..……..…60,000
Conveyance allowance received ……..…..…7,600
Leave encashment……..……..……..………....80,000
Dividend received……..……..……..……..…...70,000
Income from prize bonds……..……..….....100,000

Required: Compute Taxable Amount for assessment year 2003 – 2004.


7. Currently several Business Combinations are taking place. These are through several methods including Mergers and Acquisitions:

Required:
(a) List steps involved in Business Combinations
(b) Explain five benefits of Business Combinations

8. Explain the formulas governing the following ratios to be calculated in a large manufacturing Company:

(1) Times Interest (Mark up) earned.
Note: State minimum acceptable standard.

(2) Debt Servicing Ratio

(3) Liquid Ratio
Note: Suggest the minimum acceptable ratio

(4) Debt Equit Ratio
Note: Suggest a fair ratio in a capital intentive company project.



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

(1) Rent of the premises constitutes variable expenses for cost allocation:
(a) True
(b) False

(2) Sugar used in a sugarcane company is:
(a) Variable cost
(b) Fixed cost
(c) None of these

(3) An auditor is liable under the following circumstances:
(a) Third Party Liabilities
(b) Fraud perpetrated in highly sophisticated circumstances
(c) None of these

(4) Agricultural income is taxable under the Income Tax Laws of Pakistan:
(a) True
(b) False

(5) Principal and markup payment within one year constitutes long term liability for disclosure in the balance sheet of a company.
(a) True
(b) False

(6) Ordinarily one can have the following partners in a partnership in Pakistan under the Partnership Act 1932.
(a) 10
(b) 20
(c) 30
(d) None of these

(7) Working Capital finance can be termed as “Running Finance” in a limited company.
(a) True
(b) False

(8) Income from Capital gains arising out of trading on a stock strange in Pakistan is taxable these days:
(a) True
(b) False

(9) Conversion Cost is calculated as under:
(a) Labour Plus Materials
(b) Labour plus overheads
(c) None of these

(10) Current Ratio can be calculated as under:
(a) Current Liabilities/Current Assets
(b) Current Assets/Current Liabilities
(c) None of these

__________________
The Me you have always known, the Me that's a stranger still.