ACCOUNTING

Timeallowed1hours
Totalmarks100

[N.B.Thefiguresinthemarginindicatefullmarks.QuestionsmustbeansweredinEnglish.Examinerwill
takeaccountofthequalityoflanguageandofthewayinwhichtheanswersarepresented.Different
parts,ifany,ofthesamequestionmustbeansweredinoneplaceinorderofsequence.]

Marks
1. Financialstatementsarerequiredtogiveatrueandfairviewofthefinancialresultsofthe
entityExplaininthelightofBFRS.
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2. Mr.XbroughtTk.20,000ascapital.HepurchasedamarketstallfromMr.YforTk.12,000.Healso
purchasedsomeflowersfromatraderinwholesalemarketatacostofTk.8,500ofwhichTk.1,500
on credit. This leaves Tk.1,000 in cash, after paying for the stall and goods for resale, X keeps
Tk.750inthebankandkeepsTk.250insmallchange.Heisnowreadyforhisfirstdayofmarket
tradingon1July2009.

PrepareopeningbalancesheetofMr.Xason1July2009anddeterminecapitalandliabilities.

3. AccordingtoBFRSframeworkwhoaretheusersofaccountinginformationandwhataretheirneeds?

4. Whyitisimportanttodistinctincomeandexpenditureintocapitalandrevenue?Statewhichof
thefollowingitemsarecapitalexpenditureandwhy?
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(a) Purchaseofmachinery
(b) Depreciationofbuilding
(c) Repairsofcomputer
(d) Extensionofofficebuilding
(e) Customdutypaidonmachinerywhenimported.

5. WhatisthemeaningoffollowingtermsasperBASFramework?
a. Prudence
b. Substanceoverform.

6. Recorded in the sales day book and the purchases day book of a business are the following
transactions:
i) ThebusinesssellsgoodsoncredittoMr.PforTk.2,00,000
ii) ThebusinessbuysgoodsoncreditfromQLtd.forTk.4,00,000

Howandwherearethesetransactionspostedintheledgeraccountsfromthebooksoforiginalentry? 5

7. At 31 March 2010, the balance in K. Rahman & Cos cash book was Tk.52,500 debit. A bank
statementon31March2010showedK.Rahman&Co.tobeincreditatthebankbyTk.1,12,700.
Oninvestigationofthedifference,itwasestablishedthat:
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i) ThecashbookhadbeenovercastbyTk.1,500onthedebitside.
ii) ChequespaidinbutnotyetcreditedbythebankwereTk.3,300.
iii) ChequesdrawnnotyetpresentedtothebankwereTk.65,000.
Prepareastatementreconcilingthebalanceperthebankstatementtothebalanceperthecashbook.

[Pleaseturnover]

8. a) DefineGoingconcernasperBAS1.
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b) A retailer commence business on 1 January and buys 20 washing machines, costing Tk.10,000.
Duringtheyearhesells18machinesatTk.15,000each.Howshouldtheremainingmachinesbe
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valuedat31Decemberinthefollowingcircumstances?
i) Heisforcedtoclosedownhisbusinessattheendoftheyearandtheremainingmachineswill
realizeonlyTk.6,000eachinaforcedsale.
ii) Heintendstocontinuehisbusinessintothenextyear.

9. HowinventoriesaremeasuredasperBAS2?ExplaintheconceptofNetRealizablevalue(NRV).

10. ST Manufactures Limited, a Textile equipment manufacturing company for retail industry. The
inventoryofSTcurrentlyvaluedatcost.Thereisamarketforthepartcompletedproductateachstage
ofproduction.Thecoststructureoftheequipmentisasfollows:

ProductionProcess1ststage
Conversioncosts2ndstage
Finishedproduct

Cost
perunit
Taka
100,000
50,000
150,000

Sellingprice
Perunit
Taka
105,000

170,000

ThesellingcostsareTk.1,000perunitandSThas100,000unitsatthefirststageofproductionand
200,000 units of the finished product at 31 May 2010. Shortly before the year end, a competitor
releasedanewmodelontothemarketwhichcausedtheequipmentmanufacturedbySttobecome
lessattractivetocustomers.Theresultwasareductioninthesellingpriceto145,000ofthefinished
productand95,000for1ststageproduct.

DeterminethevalueofclosingstockstoberecordedintheSTsbooksofaccounts.

11. ExplainChangesinAccountingEstimatesaccordingtoBAS8withexamples.

12. WriteamemorandumtotheBoardofDirectorsofabankingcompanyjustifyingtherationaleforre
estimatingtheusefullivesofthefixedassetsandchangingthedepreciationmethodfromReducing
BalanceMethodtoStraightLineMethod.

13. An assets had a cost of Tk.1,00,000, an estimated useful life of 10 years and a residual value of
Tk.18,000. At the start of year 3 a review shows its remaining useful life was unchanged but the
residualvaluewasreducedtonil.
Calculatethedepreciationchargeforeachyear1to3onthestraightlinebasis.

14. PQRcommencedtradingon1January2001.OnthatdatehepurchasedabuildingforTk.1,20,000to
be depreciated over 30 years with residual value. After five years trading on 1 January 2006 PQR
concludes his building has a fair value of Tk.175,000. It still has a further 25 years of useful life
remaining.
GiveJournalentriesforrevaluation.

[Pleaseturnover]

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15. ThebalancesheetofMarcellusLtd.at31December20X1isasfollows:

ASSETS
EQUITYANDLIABILITIES
OrdinaryShareCapital(80,000shares@Tk.10pershare)
Sharepremiumaccount
Retainedearnings
Equity
Liabilities
Totalequityandliabilities

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Tk.
40,000

8,000
10,000
6,000
24,000
16,000
40,000

Thedirectorsdecidedtomakea1for5bonusissue.Thiswillbefollowedbya1for3rightsissueat
Tk.32pershare.
ShowtherevisedbalancesheetofMarcellusLtd.afterbothshareissueshavetakenplace.

16. On1January20X8GwynFoodStoreshadgoodsininventoryvalueatTk.10,000.During20X8itsowner
purchasedsuppliescostingTk.50,000.Salesfortheyearto31December20X8was80%oftotalstock
amountedtoTk.62,000.

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Computetheamountofprofitforthatperiod.
17. At1April20X8abusinesshadtotaloutstandingdebtsofTk.12,500.Duringtheyearto31March20X9
thefollowingtransactionstookplace.

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a) CreditsalesTk.46,000
b) PaymentsfromcustomersTk.48,000
c) Twodebts,forTk.280andTk.480,weredeclaredirrecoverableandthecustomersarenolonger
purchasinggoodsfromthecompany.Thesearetobewrittenoff.
Preparethetradereceivableaccountandtheirrecoverabledebtsaccountfortheyear.

18. Annieisasoletraderwhodoesnotkeepfullaccountingrecords.Thefollowingdetailsrelatetoher
transactionswithcreditcustomersandsuppliersfortheyearended30June2009:
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Tradereceivables,1July2008
Tradepayables,1July2008
Cashreceivedfromcustomers
Cashpaidtosuppliers
Discountsallowed
Discountsreceived
Contrabetweenpayableandreceivablesledgers
Tradereceivables,30June2009
Tradepayables,30June2009

Taka
130,000
60,000
686,400
302,800
1,400
2,960
2,000
181,000
84,000

What figure should appear in Annies income statement for the year ended 30 June 2009 for
purchases.

TheEnd