CSS Accountancy & Auditing Past Paper 2023
Paper-I (Subjective) 80 Marks
Attempt ONLY FOUR questions from Paper-I PART-II by selecting TWO questions from EACH SECTION. (20×4)
SECTION – I
Q.2 (A) What are the Accounting Principles? Define any four accounting principles shortly.
(B) What are the Accounting Conventions? Define any four accounting conventions shortly.
(C) The below mentioned balances are extracted from the books of Emerging Technologies Pvt. Ltd. as on 31st August 2022.
Required: Prepare a Trial Balance as on that date in a proper format.
Q.3 (A) Deluxe Software Private Limited closes its books on 31st December every year. You are provided with the following data:
Required:
- On the basis of above data, compute the following for the year 2020 and 2021:
a. Earnings per share (EPS)
b. Return on closing equity (ROE)
c. Book value per share (BV)
(B) Compute dividend per share and rate of dividend for the year 2022.
(C) For the year ending 31st December 2022, the management decided to aim for EPS Rs.4.00 (9% higher than for the year 2021) and return on closing equity of 25%. Compute the estimated book value as at 31st December 2022 assuming that management targets are achieved. Also compute estimated figures for Profit after Tax, Dividend, and Equity.
Q.4 (A) Post-closing Trial Balance of Premium Fabrics Private Limited for the year ended December 31, 2021, and 2022 are as follows:
Additional Data:
- During the year 2022, a dividend @ 10% was distributed to the shareholders. The paid-up value of each share is Rs. 10/-.
- A motor vehicle, having an original cost of Rs. 100,000 and depreciated book value of Rs. 60,000, was sold for Rs. 80,000.
- Gross funds generated from operations during the year were Rs. 1,060,000.
Required: Prepare a cash flow statement of Premium Fabrics as per IAS-7 for the year 2022.
(B) Mr. Haider started a business on March 1st, 2022, with a capital of Rs. 645,000. His newly appointed bookkeeper records transactions on simple papers. His cash book page shows the following transactions for the year.
On December 31st, 2022, the value of closing stock is Rs. 46,000. The payables and receivables are Rs. 125,000 and Rs. 80,000, respectively. The useful life of the motorbike is 8 years, and the salvage value will be Rs. 32,000. The bookkeeper decided to use the straight-line method of depreciation for the whole useful life of the motorbike.
Required: Prepare a Trading and Profit and Loss Account and Balance Sheet as on December 31st, 2022.
SECTION – II
Q.5 (A) Eagle Star is a manufacturing company. The Company uses the Rowan Premium bonus scheme for its workers’ payroll. Workers are also entitled to a dearness allowance of Rs. 2,400 per week of 48 hours. Mr. Afzal is one of the workers of that company. His basic wage rate is Rs. 1,200 per day of 8 hours. His time sheet for the week is as under:
Required: Calculate the gross wage of Mr. Afzal for the week.
(B) An automobile factory will use 500,000 tyres for its production in the coming year. The incremental cost of placing an order is Rs. 8,000. The cost of storing a tyre for the whole year is Rs. 2,000. The lead time on an order is 5 days, and the company wishes to keep a reserve supply of two days’ usage. Usage per day will be constant throughout the 250 working days of the year.
Required:
- Calculate Economic Order Quantity.
- Calculate Reorder Point.
Q.6 (A) A manufacturing company of Lahore submits the following information for the year ending 31st December 2022:
Required: Prepare an Income Statement for the year ended 31st December 2022.
(B) Khizra Manufacturing Corporation has a fixed cost for the year ended 31st December 2022 of Rs. 400,000. The variable cost per unit is Rs. 20, and each unit sells at Rs. 100.
Required:
- Break-even point (both in units and value).
- If turnover for the next year is Rs. 800,000, calculate the estimated contribution and profit, assuming the cost and selling price remain the same.
- A profit target of Rs. 400,000 has been desired for the next year. Calculate the turnover required to achieve the desired result.
Q.7 The Balance Sheet of Fazal Din & Co. as on 31st December 2021 was as follows:
During the year 2022, the retained earnings increased by 50% as a result of good business. No dividend was paid during the year. Balances of accounts receivables, prepaid expenses, current liabilities, and paid-up capital were the same as 31st December 2022 as they had been on 31st December 2021. Inventories were reduced as follows:
- Material 50%
- Work in process 50%
- Finished goods 33-1/3%
Fixed assets were reduced by depreciation of Rs. 4,000 charged 3/4th to factory overhead and 1/4th to administrative expenses. Sales were made of Rs. 60,000 on account of finished goods costing Rs. 40,000. Direct labor cost was Rs. 9,000. Factory overhead was applied at the rate of 100% of direct labor cost, leaving Rs. 2,000 under applied, which was closed to the cost of goods sold account. Total marketing and administrative expenses amounted to 10% and 15%, respectively, of the gross sales.
Required:
(A) An Income Statement for 2022, along with the details of Cost of Goods Manufactured and Sold.
(B) A Balance Sheet as on 31st December 2022.
Q.8 A chemical factory manufactures three kinds of chemicals namely Eucalyptus oil, Hexachlorobenzen, and Toxaphene. In the last week of December 2022, the records were:
Normal working hours per week are 38. Overtime is paid at the premium of 50% of the normal hour rate.
Group Incentive Scheme:
A group incentive scheme is in operation. The time saved is expressed as a percentage of hours worked and is shared between the group as a proportion of the hours worked by each grade. The incentive rate is 75% of the normal hour rate.
Required:
Prepare the payroll for the last week of December 2022 showing the basic pay, overtime, and incentive amount as separate totals for each grade of labor.
Paper-II (Subjective) 80 Marks
Attempt ONLY FOUR questions from Paper-II PART-II by selecting at least ONE question from EACH SECTION. (20×4)
SECTION – I (AUDITING)
Q.2 Define professional skepticism and explain its key characteristics. Why should auditors act as though there is always a potential conflict of interest between the auditor and the management of the enterprise under audit?
(20)
Q.3 What are CAATs? What are some audit procedures that can be performed using CAATs? What advantages are derived from using CAATs in the financial statement audit?
(20)
Q.4 Define and explain the differences among several kinds of employee frauds that might occur at an audit client.
SECTION – II (BUSINESS TAXATION)
Here’s your question exactly as provided:
Q. 5
a. Zia inherited certain assets from his father in the year 20×1. The fair market values of the assets on the date of inheritance were as follows:
Required:
(i) Based upon the above information, compute the taxable income of Zia and Ishaq for the tax year.
(ii) Give a brief explanation for the items not included in the taxable income.
Here’s your question as provided:
Q. 6
Explain the correct tax treatment in each of the following situations:
- Mr. Hamza made a total contribution of Rs. 150,000 as a donation to the approved institution mentioned in the 13th schedule. His total income from a business during the tax year 2023 is Rs. 1,800,000.
- Nine years ago, Masood inherited a rare sculpture of Buddha which had a fair market value of Rs. 200,000 on the date of inheritance. In August 2022, the sculpture was sold by him at Rs. 500,000.
- In June 2022, Imran entered into an agreement for the sale of the residential plot to Ibrahim, who paid an advance of Rs. 500,000. According to the agreement, Ibrahim was required to pay the balance by August 31, 2022. However, instead of paying the balance amount, he terminated the sale agreement. Imran forfeited the advance of Rs. 500,000 in accordance with the terms of the agreement.
- In September 2022, Adnan sold his personal car, Toyota Corolla, to one of his cousins at the price of Rs. 500,000 whereas the fair market value of the car was Rs. 2,000,000. The car was purchased by him six years ago at a cost of Rs. 1,000,000.
- Imran was working as a Chief Financial Officer in Dawood Pakistan (Pvt) Limited, which is a wholly owned subsidiary of Dawood AG, Germany. According to the Company’s policy, Imran was sent on secondment to Germany on January 1, 2022, for a period of five years. During this period, half of his salary will be credited to his bank account in Pakistan, whereas the remaining portion will be received by him in Germany.
- Maqsood provided consultancy services to a listed company. In consideration for his services, he received a net amount of Rs. 45,000 after a tax deduction of Rs. 5,000.
SECTION – III (BUSINESS STUDIES AND FINANCE)
Here’s your question presented as you requested:
Q. 7.
Fitch Industries is in the process of choosing the better of two equal-risk, mutually exclusive capital expenditure projects, M and N. The relevant cash flows for each project are shown in the following table. The firm’s cost of capital is 9%.
i. Calculate each project’s payback period.
ii. Calculate the net present value (NPV) for each project.
iii. Calculate the internal rate of return (IRR) for each project.
iv. Summarize the preferences dictated by each measure you calculated, and indicate which project you would recommend. Explain why?
Q. 8. How have globalization and information technology created new opportunities for entrepreneurs? How does an aging population create opportunities for entrepreneurs? Describe current demographic trends that suggest new goods and services for entrepreneurial businesses.