CSS Accounting and Auditing Past Paper 2016

Instructions specific to this paper

• Attempt FOUR Questions from PART-II, selecting TWO questions from EACH SECTION.
• Use of calculator is allowed.
• Attempt ONLY FOUR questions from PART-II by selecting ATLEAST ONE question from

Questions

1. Q. 25 marks

   Global Service Company was organized on April 1, 2015. The company prepares quarterly financial statements. The adjusted trial balance at June 30, 2015 is given below. Debits Credits Cash 5,190 Accumulated depreciation 700 Accounts receivable 480 Notes payable 4,000 Prepaid rent 720 Accounts payable 790 Supplies 920 Salaries and wages payable 300 Equipment 12,000 Interest payable 10 Dividends 500 Unearned rent revenue 400 Salaries and wages expense 7,400 Share capital-ordinary 11,200 Rent expense 1,200 Service revenue 11,360 Depreciation expense 700 Rent revenue 900 Supplies expense 160 Utilities expense 350 Interest expense 40 Total Debits 29,660 29,660 (a). Prepare an income statement for the Quarter April 1 to June 30. (10) (b). Prepare statement of Retained Earnings. (c). Prepare a Balance Sheet with proper headings. (5)

2. Q. 320 marks

   What is materiality? Discuss materiality in planning and performing an Audit in relations to ISA-320.

3. Q. 420 marks

   Financial Statements of a company are prepared in accordance with International Financial Reporting Standards. Being an Auditor what consideration would be taken while planning & performing Audit based on this condition?

4. Q. 510 marks

   (a). The records of the Electronic Equipment Company show the following information for the year ended 31 December 2015: ( Rs.) Material purchased 1,946,700 Inventories, January 1, 2015: 1) Finished goods (100 calculator) 43,000 2) Material 268,000 Direct labour 2,125,800 Factory overhead 764,000 Marketing expense 516,000 General and administrative expenses 461,000 Sales (14,200 calculators) 6,634,000 Inventories, December 31, 2015: 1. No unfinished work on hand. 2. Finished goods (200 calculators) costed at Rs.395 each. 3. Material 167,000 Required: An income statement for the period. The number of units manufactured. The unit cost of calculators manufactured. The gross profit per unit sold. The income per unit sold. The ratio of gross profit to sales. The income to sales percentage. (b). The Homes Garments Company has decided to distribute the costs of service departments by the algebraic method. The producing departments are Cutting department and Sewing department. The service departments are Maintenance and cafeteria, and monthly data are: Actual factory overhead Costs before distribution Services provided by (Rs.) Maintenance Cafeteria Cutting department 126,000 40% 50% Sewing department 87,000 50% 30% Maintenance department 30,000 --- 20% Cafeteria 26,400 10% --- Required:: (10) Total factory overhead of producing department Cutting after distribution of service department costs.

5. Q. 610 marks

   (a) What is Sales Tax? What procedure a person should follow to get himself registered under Sales Tax Act, 1990? What are conditions under Sales Tax Act, 1990, where registration becomes compulsory? (b) Shahid Dairy Products Ltd is registered manufacturer of Ice-Cream. Data (10) regarding its business for the month of May-2015 is given below. . 1. Sales to registered persons Rs. 300,000 2. Sales to consumer (Including tax) Rs. 150,000 3. Sales to Non registered person Rs. 100,000 4. Sales to school children during factory visit Rs. 20,000 5. Sales of Dairy products to retailers Rs. 200,000 6. Purchase of Milk & vegetables without brand name Rs. 70,000 7. Purchase of Milk & vegetables from registered person Rs. 50,000 8. Purchase of cream from non-registered person Rs. 80,000 9. Ice Cream flavour imported Rs. 30,000 10. Purchase of syrup from wholesaler (used in ice cream) Rs. 18,000 Required: Compute the sales Tax liability of Shahid Dairy Products Ltd for month of May-2015 (Note: Purchase of Milk & Ice cream at Sr. No 6 & 7 is Zero rated)

6. Q. 710 marks

   (a). The budgeted results of Best Gases Limited are as under: Product Sale value (Rs.) PV ratio % Oxygen gas 1,250,000 50 Nitrogen gas 2,000,000 40 Acetylene gas 3,000,000 30 Fixed overheads for the period are Rs 2,511,000. The management is worried about the results. Required: Prepare a statement showing amount of loss, if any being incurred at present and recommend a change in the sale value of each product as well as the total sale value maintaining the same sale-mix which will eliminate the said loss. (b). Fedder manufacturing company provides the following information concerning its 2015 operations: Number of units produced 45,000 Selling price per unit (Rs.) 30 Variable costs per unit (Rs.): Direct labour 6 Direct material 7 Manufacturing overhead 3 Selling and administrative 2 Fixed costs(Rs.): Manufacturing overhead (Rs.) 180,000 Selling and administrative (Rs.) 116,000 Units sold 33,000 There was no beginning inventory for the firm. Required: Prepare an absorption costing income statement for Fedder manufacturing company. (10) Prepare a variable costing income statement for Fedder manufacturing company. Reconcile the difference in profits under the two income statements.

7. Q. 810 marks

   (a) Define & explain Business Cycle and discuss its implications in detail. (b) Mr. Tom has $ 50,000/- that he can deposit in any of the three saving accounts for a period of three years. Bank A compounds interest on annual basis, Bank B compounds interest on semi-annually basis and bank C compounds interest on quarterly basis. All these banks have a stated rate of 5% per annum. Required: (1) Compute Effective Annual Rate (EAR), Mr. Tom can earn from each bank. (4) (2) What amount would Mr. Tom have at the end of 3rd year, leaving all interest (6) paid on deposit (no withdrawals), from each bank?

Standard FPSC instructions

Printed on this and every CSS paper.

• Part-II is to be attempted on the separate Answer Book.
• All the parts (if any) of each question must be attempted at one place instead of at different places.
• Write Q. No. in the Answer Book in accordance with Q. No. in the question paper.
• No page/space be left blank between the answers. All the blank pages of the Answer Book must be crossed.
• Extra attempt of any question or any part of the attempted question will not be considered.