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Accounting and Auditing Paper 2000
FEDERAL PUBLIC SERVICE COMMISSION COMPETITIVE EXAMINATION FOR RECRUITMENT TO POSTS IN BPS – 17 UNDER THE FEDERAL GOVERNMENT, 2004. ACCOUNTANCY AND AUDITING, PAPER - l TIME ALLOWED: 3 HOURS MAXIMUM MARKS: I00 Note: Attempt FOUR questions in all, including QUESTION NUMBERS 1 AND 6 which are COMPULSORY. Question No. 1carries 40 marks and all others carry 20 marks each. 1. The following is the trial balance of Rehman & Co for the year ended on December 31,1999: Particulars Debits Rs. Credits Rs. Capital 1,1 70,000 Sundry Creditors 1 ,420,000 Discount Received 45,500 Bank overdraft 260,000 Provision for bad debts 39,000 Purchase returns 48,000 Sales-net 5,323,410 Profit on sale of fixed assets 156,200 Insurance claims 74,300 Opening stock 785,000 Plant and Machinery 1,105,000 Fixtures and Fittings 97,500 Freehold Premises 1,175,000 Purchases 2,850,000 Salaries 182,000 Sundry Debtors 71 5,000 Marketing Expenses 195,000 Manufacturing Expenses 390,000 Carriage inward 27,300 Carriage Outward 26,000 Factory expenses 130,000 Bad Debts 9,750 Markup and bank charges 69,500 Discount 8,120 Insurance 9,750 Cash at Bank 59,040 Cash in hand 60,270 Postage, telephone and Stationery 55,290 Traveling and conveyance 36,890 Auditors Remuneration 350,000 8,536410 8,536,410 The following adjustments are required to be made: 1. Closing stock Rs.741,000 2. Depreciation: Plant and Machinery @ 5%. Fixtures and Fittings @ 10%. 3. Insurance (Un-expired) Rs. 6,500 4. Prepaid Salary Rs. 7,800 5. Outstanding mark upon bank overdraft Rs. 13,000 6. Bad debts provisions to be reduced to 5% on sundry debtors. Required: Prepare trading, profit and loss account and balance sheet as at December 31, 1999. 2. The following balance sheets relate to Waqar Ltd. and Shahab Ltd. as at December 31, 1999: Particulars Waqar Ltd. Rs. Shahab Ltd.Rs. Capital Liabilities Paid up Capital (Rs. 10 per ordinary share) 4,000,000 1,600,000 Retained Earnings as on December 31, 1998. 902,000 750,000 Profit for 1999 352,000 570,000 Unsecured Loan (Payable 2014) - 600,000 Current Liabilities 1,074,000 520,000 6,328,000 4,040,000 Assets Freehold Property - net of Depreciation - 1,980,000 Other. Fixed Assets- net of Depreciation 3,646,000 700,000 96,000 Shares in Shahab Ltd. at cost 1,440,000 - Current Assets 1,242,000 1,360,000 6,328,000 4,040,000 Waqar Ltd. acquired its shares in Shahab Ltd. on December 31, 1998. The Board of Directors of Waqar Ltd require Rs. 8,000,000 to finance a new project and have approached bank to borrow this amount. Required: (a) Prepare a consolidated balance sheet of the Holding Company as at December 31, 1999. (b) Offer comments on the proposal to borrow Rs. 8,000,000 from the bank. 3. Explain and differentiate between a fixed budget and a flexible budget. State benefits of both the above types. Illustrate your answer while differentiating both the above types. 4. The following ledger balances have been extracted form Sunrise Bank Ltd. for the year ended on December 31, 1999: Particulars Rs. Share Capital paid up 100,000 shares of Rs. 100 each 10,000,000 Reserve Fund invested in Government Bonds 5,000,000 Current Accounts 151,221,100 Deposit Accounts t 34,601,150 Acceptance for customers 7,714,100 Endorsements and Guarantees 370,100 Cash 1,132,700 Cash with State Bank of Pakistan 10,060,500 Owing by foreign correspondents 1,002,200 Short Term Loans . . 32,410,300 Investments 44,412,700 Investment on account of Reserve Fund in Government Bonds 5,000,000 Bills Discounted 31,141,200 Loans and Advances to Customers 77,283,500 Bank Premises 1,268,900 Customers Liability for acceptances 7,714,100 Endorsements and Guarantees per centra 370,100 Markup income 2,661,300 Commission earned 221 ,200 Profit and Loss Account, balance brought forward 802,600 General expenses 912,100 Bad debt written off 643,550 Additional information: Reserve Rs.32 1,900 for rebate on bills discounted. The Profit and Loss Account Balance is the balance left on that account after the payment of interim dividend amounting to Rs. 1,000,000. Further particulars of loans and advances to customers etc are as under: 1. Debts considered good in respect of which the bank is fully secured Rs. 8,084,200. 2. Debts considered good secured by the personal liability of one or more parties as under: (a) Bills discounted Rs.3 1,141,200 (b) Debts due on demand, Cash Credits, Temporary overdrafts and personal security Rs. 77,283,500 (c) Debts owing by foreign correspondents, Considered good Rs. 1,002,200 Required: Prepare a profit and loss account and balance sheet as at December 31, 1999 as per requirements of the Banking Companies Ordinance, 1962. 5. Illustrate various ratios pertinent to the analysis of the following: (a) Stock Market Evaluation (list at least three with models and illustrations) (b) Bankers - for long term loans (list at least four with models and illustrations). 6. The following multiple choice questions are available. Give correct answer in your answer book in the following suggested format: Correct Answer S.No. of Question (Indicate alphabet) Rationale (1) Double entry book-keeping was fathered by: (a) F.W.Taylor (b) Henry Fayol (c) Lucas Pacioli. (2) Funds Flow Statement and sources and application statement are:’ (a) Synonymous (b) Antagonistic (c) None of these. (3) Depreciation in spirit is similar to: (a) Depletion (b) Amortization (c) Depression. 4) Balance Sheet is always prepared: (a) for the year ended. (b) As on a specified date. (c) None of these. (5) In Insurance, the following Profit and Loss Accounts are prepared: (a) Separate for Fire, Marine, and Accidents etc. (b) Consolidated for (a) above. (c) None of these. (6) Partners in Pakistan can today be fixed at the following numbers: (a) 20 (b) 50 (c) 75. (7) Flexible budget is a budget with the following features: (a) Changes with volume of production. (b) Changes with variable expenses (c) Changes in Direct material. (8) Break Even can be calculated as under: (a) ______VC_______ FC- TR TC (b) FC I- VC TR (c) None of these. (9) Quick Ratio can be computed as under: (a) Quick . Assets/Quick Liabilities (b) Quick . Liabilities Current Assets (c) Current Assets/ Current Liabilities (10) In straight line method of depreciation, the written down value of a fixed asset will be at the end of the life of the asset as under: (a) Rupee one (b) Rupee zero (c) None of these. (11) Sales budget must be prepared: (a) Independently (b) Depending on production capacity (c) Based on Sales forecasts of market. (12) Consolidation of subsidiary accounts in the balance sheet of a unlisted Holding company is at present in Pakistan: (a) Compulsory (b) Voluntary (c) Required. (13) Retained earning is synonymous to: (a) Accumulated profit and loss account (b) Profit for the year (c) None of these. (14) The requirements of an audit report for a Banking Company in Pakistan is under: (a) Under the Banking Companies Ordinance, 1962. (b) Under the Companies Ordinance, 1984. (c) Under (a) and (b) above. (15) Deferred Taxation is: (a) Fixed asset (b) Fixed liabilities (c) Part of Owners Equity. (16) Investment Corporation of Pakistan follows: (a) Open-end mutual funds (b) Closed-end mutual funds (c) None of these. (17) Directors Report is ---- in respect of financial report constituent. (a) Mandatory for a limited Company (b) Voluntary for a limited Company (c) None of these. (18) Every limited Company in Pakistan is required by law to include the following along with financial reports: (a) Ratio Analysis (b) Chairman’s Review (c) None of these. (19) Cash budget excludes the following: (a) Non-Cash items (b) Cash items (c) Purchase on Credit items. (20) NGOs are legally required to: (a) Prepare accounts in a prescribed manner under the law. (b) Prepare accounts as desired by donors. (c) None of these. |
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ACCOUNTING AND AUDITING, PAPER - ll Time Allowed: 3 Hours Maximum Marks: I00 Note: Attempt FIVE questions in all, including Question No. 9 which is Compulsory. ONE question must be attempted from each PART. All questions carry equal marks. PART (A): COST ACCOUNTING 1. Explain the concept of standard cost accounting. State how will you compute various variances relating to material labour and factory overheads in an industrial enterprise, which is following standard cost accounting system. 2. An electronic manufacturing company designs and manufactures electronic computing machines. For the month of October the following information is available from the records: Jobs completed……………………………………..Job. 1………………………….Job. 2………………………...Job. 3 ……………………………………………………………….(Rs.)……………………………(Rs.)……………………………(Rs.) Selling price of job………………………………..350,000……………………..300,000……………………….330,000 Material costs……………………………………….120,000……………………..120,000……………………….105,000 Labor cost – DM cost applied on the basis of 125% of DL cost……………………….79,000…………………………84,000………………………….67,000 Units made and sold (number)……………….150……………………………..175……………………………....140 DM - Direct Manufacturing DL - Direct Labour Required: a. Prepare an income statement for the month of October. b. Compute operating profit or loss for each job. c. Calculate profit or loss per unit for each job completed. PART (B): AUDITING 3. Through a tabulated approach differentiate between Audit and Investigation. How will you investigate suspected cash fraud in payroll of an industrial organization? 4. Explain major constituents of Auditors Report prepared for a listed company on annual basis audit work. Also state four types of qualifications, which an audit report may possibly contain. PART (C): INCOME TAX 5. For determining taxable profits of a business, Income Tax Ordinance, 1979 lists several allowable deductions. State at least ten deductions with brief description. 6. The following information of Mr. Muhammad Latif for three year ended on June 30, 2000 is available: ……………………………Particulars…………………………………………………………………………………Rs 1. Salary Income……………………………………………………………………………………………..140,000 2. Part time work income……………………………………………………………………………..……36,000 3. Dividend received from listed companies…………………………………………….….….…50,000 4. Interest received on approved government savings schemes……………..….….…2,000 5. Investment in approved securities/shares………………………………………….…….…..50,000 Required: 1. Calculate taxable income. 2. Compute tax liability. Relevant tax rates for computing tax liability are as under: On Rs.100,000 @ 5% Rs.%,000. On next Rs.100,000 @ 10%. On next Rs.100,000 @ 15% PART (D): BUSINESS ORGANISATION AND FINANCE 7. Identify various financial institutions of Pakistan. State their role and major contributions to the economy of the country. 8. Joint Stock Companies now are popularly known as Corporate Sector. State various types of Joint Stock Companies, which can be set up under the Companies Ordinance, 1984 in Pakistan. Describe the procedure of establishing a public limited company in our country. COMPULSORY QUESTION 9. MCQs 1. Fixed Cost: a. Changes with production b. Never changes even if production capacity is doubled c. None of the above 2. Conversion cost is: a. Material Cost + Overhead Cost b. Direct Labour + Material Cost c. Labour Cost + Overhead Cost 3. Process Costing is relevant to: a. Cement industry b. Job Order cost oriented Projects c. None of the above 4. Operating Profit is: a. Profit after deducting financial costs b. Profit after deducting taxes c. Profit after deducting normal operating expenses including depreciation 5. A good Cost Accounting System is: a. If it computes estimated cost only b. If it cannot be reconciled with financial accounts c. If it enables management to increase productivity and rationalize cost structure 6. Verification includes: a. Checking Vouchers b. Examining audit report c. None of the above 7. Stratified audit sample means: a. Randomly selected items for audit b. Purposively selected items for audit c. Items carefully selected from each group 8. Internal Control is totally synonymous with: a. Internal check b. Internal audit c. None of above 9. Audit of a bank is generally conducted through: a. Routine checking b. Couching c. Balance sheet audit 10. An auditor is liable for his annual audit of accounts o: a. Creditors b. Bankers c. Owners 11. Income Tax is levied on: a. Agricultural Income b. Presumptive Income c. None of above 12. If a firm has paid super-tax, its partners may follow any one of the following behaviours: a. No need to pay income tax, even if the income exceeds the taxable limit. b. Pay income tax, even if the income does not exceed the taxable income. c. Pay income tax as required under the law. 13. A resident multinational company need not: a. Pay income tax, if it s caused under Double Taxation agreement. b. If it is not enjoying tax exemption under the Income Tax Ordinance, 1979 (Second Schedule). c. None of above 14. Income Tax rates are the same for: a. Limited Companies b. Banking Companies c. None of above 15. Super Tax on companies is: a. In vogue in Pakistan b. Not in vogue in Pakistan c. None of above 16. Current Ratio is calculated as: a. Fixed Assets/Current Liabilities b. Current Liabilities/Current Assets c. Current Assets/Current Liabilities 17. Short-term loan can be described as: a. If the period is three years b. If the period is less than one year c. If the period is over one year 18. A partnership, in today’s Pakistan, under the current law can have the following number of partners: a. 50 b. 20 c. 100 19. Combination can be best described as: a. Restructuring of Capital of a Company b. Reduction of Capital of a Company c. Amalgamation of two different types of businesses 20. Sources of funds can be I creased by: a. Describing selling prices b. Increasing expenditure c. None of above
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