THE INSTITUTE OF CORPORATE SECRETARIES OF PAKISTAN

C.I.S EXAMINATION JULY 2013

MODULE A PAPER: INTRODUCTION TO ACCOUNTING GROUP I

Time allowed 3 Hours Max. Marks: 100

Instructions: Attempt all questions and submit workings, which will be treated a part of
answer.

Q1. Choose the right answers from the following situations: (10)
a) When current assets are equal to current liabilities. What will the current ratio :
i) 1:1 ii) 2:2 iii) 3:1
b) The balance of Un-appropriated profit in the balance sheet as under is shown as :
Current year balance Rs. 1,250,000
Previous year balance Rs. 1,000,000
i) Net Profit ii) Reserves iii) Assets
c) When 16% Sales Tax is Rs. 16,000, what will the Sales value :
i) Rs. 100,000 ii) Rs. 116,000 iii) Rs. 84,000
d) Classify the advances from customer into :
i) Debtors ii) Liabilities iii) Deposits
e) What is the main purpose of maintenance of Bank Book on transaction basis :
i) Receipts & Payments ii) Maintain serial order of cheques
iii) Bank reconciliation
f) What is the particular cost control?
i) Purchases verification ii) Sales enhancement iii) Low inventory
maintenance.
g) When the creditors at end of the year is increased what will the impact on cash flow:
i) Increase in Cash flow ii) Decrease in Cash flow
iii) Increase in bank balances.
h) The nature of assets is Debit. Expenses are also debited. What it means as
expenses are debited :
i) Services are earned ii) Payments are made
iii) Loss is incurred.
i) The Company has a Share Capital of Rs. 10,000,000 (1,000,000 ordinary shares of
Rs. 10/- each). The Board of Directors of the Company has announced a dividend
of Re.0.50 per share. What will be the percentage of dividend declared?
i) 5% ii) 10% iii) 15%

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 j) The achievement from the quarterly Budgeted Sales target of Rs. 5,000,000,
actual sales was Rs. 4,500,000. What is the variance in percentage and whether is
favourable or unfavourable :
i) 10% ii) 5% iii) 4.5%
Q2. Explain any five (5) of the following accounting terms used in financial statements
(20)
a. Accounting policies b. Current assets
c. Current maturity of Long d. Treatment of normal wear and
Term Loans tear in fixed assets
e. Cost of production f. Administrative overheads
g. Share Capital h. Preliminary expenses
i. Gross Profit

Q3. What is the Revenue Recognition, when the accounting policies are as under:
(10)
a) Sales are recognized on dispatch of goods to the customers.
b) Income on investment is recognized on time basis.
c) Dividends are recognized on receipts of dividend warrants.
d) Invoices to the customers are raised during the year of Rs. 4,000,000. Some of the
receipts of the invoices are received after year end i.e., 30 June 2012, amounting
Rs. 500,000.
e) 10% per annum interest on investment of Rs. 1,200,000 is due on 31 July 2012.
f) Dividend warrant of Rs. 100,000 is received on 10 July 2012.
g) Calculate the revenue to report in Profit & Loss A/c for the year ending 30 June
2012.

Q4. a) Prepare a Bank Reconciliation Statement as on June 30, 2012 from the following
information: (10)
Rupees
Particulars
Balance as per Bank Statement on 30 June 2012 1,000,000
Cheques issued but not presented in the Bank 200,000
Cheques deposited but not credited by the Bank 100,000
On-line deposits in the Bank but not recorded in Bank
Book/Ledger 500,000
Bank charges not recorded in bank book/ledger 20,000
Post dated cheques issued and recorded in bank book ledger but
are not become due on 30 June 2012 200,000

b) What will be reported bank balance for the balance sheet as at 30 June 2012?

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Q5. Prepare the adjusted Trial Balance of ABC Company for the year ending June 30,
2012 from the following data and adjustments given hereunder: (20)

Debit balances Amount Credit balances Amount

Fixed assets –Net 800,000 Capital 500,000
Investment 200,000 Retained earnings 200,000
Stocks 240,000 Sales 600,000
Debtors 150,000 Short term loans 100,000
Prepaid rent 12,000 Short term loans 100,000
Cash & Bank balances 50,000 Creditors 50,000
Accrued expenses 2,000

Total 1,452,000 Total 1,452,000

Additional Information:
Following adjustments are required in the above accounts:
i) Depreciation is to be provided @ 10% per annum on straight-line basis on net
fixed assets.
ii) The management has decided to write off the debtors by the amount of
Rs.50,000 being more than three years old.
iii) In a lawsuit, it has been decided that the company is liable to compensate to
debtors for short sales of Rs.10,000.
iv) Rent is paid in advance for the year and is due on September 1, 2012 no
adjustment has been made in the accounts as yet.
v) 10% annual interest income is due on September 30, 2012.
vi) Quarterly payment of mark up on short term loan is due on 31st July 2012 @
15% per annum.
vii) A receipt of Rs. 40,000 as advances from customers is recorded as sales.
viii) A physical count of stock shows a decrease over the book balance by Rs.
10,000. The company normally shows as ‘Stock Loss’ and charge the cost in the
income statement.
ix) Unpaid expense bills on June 30, 2012 are of Rs. 10,000.

Q6. Prepare the Profit & Loss account and Balance Sheet of AB & Co. (Pvt) Ltd. for the
year ending June 30, 2012.
(10)
([Link] ‘000’)
Collections from customers during the year 5,000
Opening debtors 100
Opening Capital 600
Investment by owner during the year 50
Purchases 4,200
Creditors 200
Operating expenses 500
Fixed assets –net 1,000
Depreciation for the year on fixed assets-net balance 10%
Unpaid expense bills on June 30, 2012 50
Debtors at end 200

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 Taxation for the year 20%
Stock at end 400
Advances to suppliers of goods 240
Cash & Bank balances 100
Un-appropriated Profit & (Loss) balance 100

Q7. Find out the amount debtors at end of the year from the following information:
(8)
(Rs. in ‘000)
Debtors at beginning of the year 200
Sales during the year 5,000
Cheques from customers received & deposited 4,000
Cheques dishonoured 60
Sales return 20
Sales discount 30
Ascertained bad debts 50

Q8. Pass the necessary journal entries to correct the errors and omission occurred in data:
(12)
a) Stock of Rs. 5,000 has been debited to Accounts Receivables.
b) A party of Payable is paid Rs.10,000 and entered in Accounts Receivables.
c) Sales of Rs. 15,000 are entered in Sales Return account.
d) Bad debts of Rs. 5,000 are debited to Sales account.
e) A remittance of Rs. 100,000 in bank from export sales is not recorded in the book.
f) Depreciation expense on fixed assets of Rs. 10,000 is credited to bank account.

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