CSS Accounting and Auditing Past Paper 2017

Instructions specific to this paper

• Attempt ONLY FOUR questions from PART-II, selecting TWO questions from EACH
• Use of Calculator is allowed.
• Attempt ONLY FOUR questions from PART-II, selecting AT LEAST ONE questions from

Questions

1. Q. 220 marks

   What system of Internal check would you recommend for a large manufacturing company to prevent fraud in connection with the purchase of raw material on credit basis?

2. Q. 320 marks

   A fraud has been committed in a business. Being a Manager of Accounts you are asked by the authorities to take up investigative measures and steps to extract the fraudulent matter. Discuss the measures and steps you will take in this regard.

3. Q. 420 marks

   The following financial data were taken from the annual financial statements of Smith Corporation: Details 2007 2008 2009 Current assets $ 450,000 $ 400,000 $ 500,000 Current liabilities 390,000 300,000 340,000 Sales 1,450,000 1,500,000 1,400,000 Cost of goods sold 1,180,000 1,020,000 1,120,000 Inventory 280,000 200,000 250,000 Accounts receivable 120,000 110,000 105,000 Required: (A). Based on these data, calculate the following for 2008 and 2009: 1. Working capital 2. Current ratio 3. Acid-test ratio 4. Accounts receivable turnover 5. Merchandise inventory turnover 6. Inventory turnover in days (B). Evaluate the results of your computations in regard to the short-term liquidity of the firm.

4. Q. 520 marks

   The marketing department of Graber Corporation has submitted the following sales forecast for the upcoming fiscal year. 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Budgeted unit sales . 16,000 15,000 14,000 15,000 The selling price of the company’s product is $22.00 per unit. Management expects to collect 75% of sales in the quarter in which the sales are made, 20% in the following quarter, and 5% of sales are expected to be uncollectible. The beginning balance of accounts receivable, all of which is expected to be collected in the first quarter, is $66,000. The company expects to start the first quarter with 3,200 units in finished goods inventory. Management desires an ending finished goods inventory in each quarter equal to 20% of the next quarter’s budgeted sales. The desired ending finished goods inventory for the fourth quarter is 3,400 units. Required: 1. Prepare the company’s sales budget and schedule of expected cash collections. 2. Prepare the company’s production budget for the upcoming fiscal year.

5. Q. 620 marks

   (A) Identify the main features of Income Tax ordinance 2001. Also discuss the exemptions and tax concessions available to a taxpayer under that ordinance. (B) Mr. Ahmed is an employee of a company. He has submitted the following information for the tax year 2016. Rs. Basic Salary per annum 340,000 Bonus 56,000 Cost of living allowance 66,000 Dearness allowance 32,000 Rent free unfurnished accommodation – annual value 162,000 Company maintained car for personal and official use, cost of vehicle is. 980,000 Utility allowance 58,000 Leave encashment 31,600 Leave Fare Assistance provided every year 22,600 Hotel bills paid by the company relating to a pleasure trip 28,400 Employee’s contribution towards provident fund 30,000 Zakat paid under Zakat and Ushr Ordinance 15,000 Tax deducted by the company for salary 35,000 Required: Compute the total income, taxable income and tax liability of Mr. Ahmed.

6. Q. 720 marks

   (A) Identify the major barriers that hamper global business in an open economy. (B) Consider a coupon bond that has a face value of $1000, has a yield of 16%, pays a semi annual coupon of 70, and matures in one year 'assuming that the bond will pay the face value amount that the cost coupon payment on the maturity date. Calculate the price of the bond.

7. Q. 820 marks

   (A) Describe the economic systems, also Identify which system is more beneficial for the economic development of the country. (B) XYZ company presently pays a dividend of $ 1.50 per share on its common stock. The company expects to increase the dividend at a 20% annual rate the first four years and at the rate of 13% at the next four years then the growth on the dividend at a 7% thereafter. This phased growth patterns is in keeping with the expected life cycle of earnings. You are required a 16% return to invest in this stock. What value should you place on a share of this Stock?

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.