Financial Accounting-p1-(nov-08), Icab

Financial Accounting and Cost Accounting Time allowed – 3 hours Maximum marks – 100 [N.B. – The figures in the margin indicate full marks. Questions must be answered in English. Examiner will take account of the quality of language and of the way in which the answers are presented. Separate answer scripts should be used for each section. Different parts, if any, of the same question must be answered in one place in order of sequence.]

Section I Marks 50 Marks 1. (a) What conditions need to be satisfied as per BAS for interest to be treated as revenue? (b) What is the objective of BASs followed for (i) Borrowing cost (ii) Inventory (iii) Property, Plant and Equipment?

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2. Following are the Trial Balances of A Ltd. and its Rajshahi Branch as on December 31, 2007:

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Head office (Tk.)

Stock on 1st Jan. 2007 Purchases Wages Manufacturing Exp Machinery: Head office Branch Furniture: Head office Branch Rent Salaries Debtors General Expenses Goods received from Head Office Cash in hand and at Bank Branch Account

Rajshahi (Tk.)

45,000 110,000 80,800 35,400 100,000 50,000 5,000 2,000 6,000 32,000 38,000 18,000

Head office (Tk.)

Rajshahi (Tk.)

16,400 Creditors

20,300

5,400

25,600 Goods sent to Branch 13,100 Sales 6,800 Head Office A/c Capital in Shares of - Tk.10 each - Discount earned

14,400

-

330,200 -

69,900 28,000 -

- Purchase Returns 3,400 11,000 8,000 4,000

-

14,400

10,300 36,000 568,500

1,500 104,200

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200,000 1,100

300

2,500

600

568,500

104,200

Closing Stock at head office was Tk.38,700 and at Rajshahi was Tk.28,700. Depreciation is to be allowed at 10% on machinery and at 15% on furniture. Rent still payable in respect of 2007 is Tk.300 (for Branch). Prepare the Trading and Profit and Loss Accounts, and the consolidated Balance Sheet. 3. Following have been extracted from the trial balance of Commercial Banks Ltd. as at 31 December, 2007: Tk. Tk. Bills discounted 12,36,00,000 Rebate on bills discounted (31.12.2007) 17,53,000 Discount received 62,65,000 Following have been revealed upon further analysis of the bills discounted: Amount of bills Tk. 27,50,000 73,00,000 4,18,00,000 2,19,00,000

Due dates Rate of discount % 31.12.07 6.5 06.03.08 6 15.03.08 5 18.06.08 6.5 Please turn over

–2– You are required to pass appropriate journal entries for the above and show how the relevant items will appear in the Profit and Loss Account of the bank for the year to 31 December, 2007 and in its Balance Sheet at 31 December, 2007.

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You are further required to write appropriate but short note to the accounts stating the bank’s accounting policy on the items.

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4. (a) Explain the terms, surrender value and paid up value used in life assurance business. Why these can not be found in other insurance business? (b) From the following figures appearing in the books of Fire Insurance Division of a General Insurance Company, show the amount of claim as it would appear in its Revenue Account for the year ended 31 December, 2007. Direct Business Re-insurance (Tk.(million) Tk.(million) Claims received during the year 500 600 Claims settled during the year 480 540 Claims payable – 1.1.2007 760 10 31.12.2007 812 5 Management expenses 8 Survey fee 3 Legal and professional 5

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Section II Marks 50 1. (a) State what do you understand by the following terms used in a costing system: (1) Allocation (2) Apportionment and (3) Absorption. (b) Your factory buys and uses a component for production at Taka 10 per piece. Annual requirement is 2000 pieces. Carrying cost of inventory is 10% per annum and ordering cost is Taka 40 per order. The Purchase Manager proposes that, as the ordering cost is very high, it is advantageous to place a single order for the entire annual requirement. He also says that, if we order 2,000 pieces at a time, we can get a 4% discount from the supplier.

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Evaluate this proposal and make recommendation. 2. (a) Define Specific Order Costing and Operation costing with example. (b) Distinguish between Purchase Order and Purchase Requisition. (c) Miza Chemicals Ltd. obtain three joint products X, Y and Z from a process. Cost upto the point of separation of the products for a particular period amounting to Tk.50,000. Other particulars are as follows:

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Product X Y Z

No. of Units Units of raw material used 700 200 500 300 300 500 1,500 1,000 Apportion the joint cost of Tk.50,000 to products X, Y and Z on the basis of (i) Physical measurement (ii) Average unit cost.

3. (a) From the following particulars you are required to workout the earnings of a worker for a week under (a) Straight Piece Rate (b) Differential Piece Rate (c) Helsey Premium Bonus Scheme (50% sharing) and (d) Rowan Premium Bonus Scheme: Weekly working hours Hourly wage rate Normal time taken per piece Normal output per week Actual output for the week Differential piece rate

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48 Tk.7.50 20 minutes 120 pieces 150 pieces 80% of piece rate when output is below normal and 120% of piece rate when output is at or above normal. Please turn over

–3– (b) A manufacturing company provides you with the following information relating to Process II for the month of April 2008: a) Opening Work in Progress b) Units introduced c) Expense charged to Process:

d) e)

f) g) h) i)

Nil 10,000 units @Tk.5 per unit Material Tk.19,500 Labour Tk.64,750 Overheads Tk.32,400 Normal loss in Process 1% of input Closing work in Progress 350 units Degree of completion: Materials 100% Labour & overheads 50% Finished output 9,500 units Degree of completion of abnormal loss Materials 100% Labour & overheads 80% Units scrapped as normal loss were sold Tk.Tk,2 per unit. All the units of abnormal loss were sold at Tk.3 per unit.

You are required to prepare: (i) Statement of Equivalent Production (ii) Statement of cost (iii) Process II Account (iv) Abnormal Loss Account.

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4. (a) Exim Ltd. A manufacturing company using a historical cost system and applies overhead on the basis of predetermined rates. The following data available from the records of the company for the year ended March 31, 2008: Taka Manufacturing Overheads 850,000 Manufacturing overheads applied 750,000 Work in Progress 240,000 Finished Goods Stock 480,000 Cost of Goods Sold 1,68,000 Apply different methods for disposal of unabsorbed overheads showing the implications of each method on the profits of the company.

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(b) A transport service company is running five buses between two towns which are 50 kilometer apart. Seating capacity of each bus is 50 passengers. The following particulars were obtained from their books for the month of April 2008: Wages of Drivers, Conductors and Cleaners Salaries of Office Staff Diesel Oil and other oil Repair and Maintenance Taxation, Insurance etc. Depreciation Interest and other expenses

Taka 24,000 10,000 35,000 8,000 16,000 26,000 20,000 139,000

Actually passengers carried were 75% of seating capacity. All buses run on all days of the month. Each bus made one round trip per day. Find out the cost per passenger – kilometer.

– The End –

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