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Accountancy and Auditing Papes 2003
FEDERAL PUBLIC SERVICE COMMISSION COMPETITIVE EXAMINATION FOR RECRUITMENT TO POSTS IN BPS 17 UNDER THE FEDERAL GOVERNMENT, 2003. ACCOUNTANCY AND AUDITING PAPER - I TIME ALLOWED: THREE HOURS MAXIMUM MARKS:100 NOTE: (i) Attempt FIVE questions in all. Including question No. 5 & 6 which are compulsory. Qs 5 carries 40 marks. All other questions carry EQUAL marks i.e. 20 marks each. (ii) Give workings to solution of questions, wherever relevant. 1. Explain various concepts of Budgeting as practiced globally. State budgeting system being followed in Pakistan. Identify five limitations of the above system and suggest directions of change for improvement, 2. Explain various legal provisions governing principles of accounting and provisions relating to preparation of financial statements relating to banks in Pakistan. 3. Peshawar Manufacturing Company was established in June, 1999 to manufacture a single product using a machine costing Rs. 1,000,000. The machine is expected to last for four years and then have a scrap value of Rs. 130,000. The machine will produce a similar number of goods each year and annual profit before depreciation is expected to be in the region of Rs. 500,000. The Finance Manager has suggested that the machine should be depreciated using either the Straight Line Method or the Reducing Balance Method. If the latter method is used, it is estimated that depreciation rate of 40% would be appropriate. Required: (1) Calculate annual depreciation charge and net book value of the machine at the end of 2000, 2001 and 2002 using: (a) Straight Line Method (b) Reducing Balance Method (2) Offer your comments on the use and implication of these two methods for the years 2000 to 2002. (3) Advise management as to which method should be more appropriate. 4. The Directors of Master Public Limited Company requires Rs. 500 million to invest in a new project. Extracts from the financial statements are as under: Profit and Loss Account for the year ended December 31: PARTICULARS 2001 (MILLION Rs.) 2002 (MILLION Rs.) Sales . ..6,175 .. 6,329 Operating profit .. 350 . 320 Less: Interest payable .. ... 30 .. .. 30 Net Profit before Income Tax . 320 . . 290 Net Profit after tax . 128 . .... 116 ---------------------------------192 . .. 174 Summarized Balance Sheet as at December 31: PARTICULARS . 2001 (MILLION Rs.) 2002 (MILLION Rs.) Assets: Fixed assets (Net) . .901.. .. .. .1,664 Stocks .. .447.. .. .. .426 Debtors .. .... ..308.. .. . ... .. ..321 Balance at Bank . .. 52.. .. . .. 11 TOTAL .. .. ..... ..1,708 .. .. ... .1,822 Capitals & Liabilities: Paid up Capital.. . .... .500. .. . .....500 Reserves and surpluses . .525. .. .......649 Loan 10% debentures .300. .. . ......300 Creditors .. . . 205. .. ... .... 207 Taxation payable .. 128. .. ... ....116 Dividends .....50. .. . . .... 50 TOTAL . .1,708. .. ....1,822 Required: Undertake financial analysis by using pertinent ratios and present your candid view on the performance of the Company. COMPULSORY QUESTION PARTICULARS . . . ..Rs. Property at cost . . . .. 90,000 Equipment at cost . . ..57,000 Stock . . . . . 27,000 Purchase . . . . . .259,000 Sales . . . . .. 405,000 Discount allowed . . . ... ..3,370 Provision for depreciation Property . .12,500 Provision for depreciation Equipment . 32,500 Discount received . . . .. .4,420 Salaries and wages . . . ..52,360 Bad debts . . . . . .. 1,720 Loan interest . . .. 1,560 Carriage outward . . . . 5,310 Other operating expenses . . . 38,800 Trade debtors . . . . ..46,200 Trade creditors . . . ... . 33,600 Provision for doubtful debts . . . ..... 280 Cash in hand . . . ..... 151 Bank overdraft . . . .. ... 14,500 Drawings . . . . ..... 28,630 Loan @ 15% . . . . .. . 12,000 Capital July 1, 2002 . . . . .. 98,101 The following additional information as at June 30, 2003 is available: 1. Stock at the close of business was valued at Rs. 25,900. 2. Depreciation for the year ended on June 30, 2003 has yet to be provided as follows: (a) Property: 1% using straight line method (b) Equipment: 15% using straight line method 3. Salaries and wages are accrued Rs. 1400 4. Other operating expenses include certain expenses prepaid by Rs. 1500. Other expenses include this heading are accrued by Rs. 2000. 5. The provision for doubtful debts is to be adjusted so that it is 0.5% of trade debtors as at June 30, 2003. 6. Purchases include goods valued at Rs. 1040 which were withdrawn by Mr. Irshad for his personal use. Required:
(1) Acid Test Ratio is calculated as under: (a) Current Assets/Current Liabilities (b) Fixed Assets/Current Liabilities (c) Liquid Assets/Current Liabilities (d) None of these (2) Deferred cost is a: (a) Liability (b)Asset (c) None of these (3) Work Sheet is: (a) Balance Sheet (b) Fund Flows Statement (c) A combination of Profit and Loss Account and Balance Sheet items (d) None of these (4) Banks, for the preparation of financial statements, are governed under: (a) Banking Companies Ordinance, 1962 (b) State Bank of Pakistan Act (c) None of these (5) Return on investment is computed: (a) Investment/Profit x 100 (b) Profit x 100/Investment (c) None of these |
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FEDERAL PUBLIC SERVICE COMMISSION COMPETITIVE EXAMINATION FOR RECRUITMENT TO POSTS IN BPS 17 UNDER THE FEDERAL GOVERNMENT, 2003. 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. 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. PART B (AUDITING) 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. PART C (INCOME TAX) 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. PART D (BUSINES ORGAZIATION AND FINANCE) 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. COMPULSORY QUESTION 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
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The Me you have always known, the Me that's a stranger still. |
#3
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sir i think variable cost per unit in Q.2 of paper II is Rs 1.5/unit instead of 15/unit. The question can not be solved with RS 15/unit. It also seem incompatible with actual variable cost per unit which i have calculated as Rs 1.62/unit. Please correct me if i am wrong.
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#4
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Quote:
1(c) 2(b)3(c)4(a)5(c)
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#5
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Quote:
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"Death of the heart is the ugliest death there is." |
#6
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Cureent ratio:C/A-CL
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"Death of the heart is the ugliest death there is." |
#7
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answer of msq no. 2 is none of these. An auditor has the reponsibility to form an opinion on the financial statements rather than validating it. Accordingly, he incurs no liability if he had maintained reasonable diligence
Secondly, current ratio is CA/CL. What you have stated is working capital (CA-CL) |
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