CSS Accountancy & Auditing 2006

PART – A: (COST ACCOUNTING)

Q1. Explain the rationale supporting cost Accounting. How will it contribute to the efficient allocation of resources? Illustrate your answer.

Q2. Pervaiz Products Company uses a standard Cost System. For the year ended March 31 the company results may be summarized as under:

Particulars Standard Actual

Production (in units)

Material price per pound

Material quantity

Direct Labour hours

Direct Labour Cost per hour

Factory overhead:

(Variable expenses) 490.000

(Fixed expenses) 210.000

700,00

Actual overhead 140,000

Rs. 60,00

280,000Ibs

7,000

Rs. 22,50

700,000 143,000

Rs.62,50

290,000Ibs

6,900

Rs.22,00

Rs.716,500

There is no inventory of work-in-process at the beginning or at end of the above fiscal year.

Required:

(1) Prepare a statement showing analysis of variances.

(2) Compute actual and standard cost per unit of product.

PART – B (AUDITING)

Q3. State major contents of Annual Audit Report of a listed Public limited company under the Companies Ordinance, 1984.

Q4. Differentiate amongst the following:

(a) Internal Audit (b) Internal Control

(c) External Audit

PART – C: (INCOME TAX)

Q5. Define the following terms as have been used in the Income Tax Ordinance, 2001:

(a) Amalgamation

(b) Business

(c) Depreciable

(d) Income

Q6. The following particulars in respect of Mohammad Ali for the year ended on June 30, 2005 are available:

Particulars Rs

(1) Salary per month

(2) House property let out @ Rs. 3000 pm

(3) Profit on his 1/3rd share from a tailoring shop (AOP)

(4) Director’s fee

(5) Divided received from companies listed on Stock Exchange in Pakistan

72,000

36,000

33,600

21,000

9,600

He is a sleeping partner in the above AOP

Required:

Compute taxable income

PART – D: (BUSINESS ORGANIZATION & FINANCE)

Q7. Present a lucid analysis of operational of a joint Stock Company.

Q8. Explain major role of financial institutions. Are there any limitations in respect of their impact?

COMPULSORY QUESTION

Q9. Present your answer in the following format. Overwritten answers will carry no marks. One marks is for correct answer and one mark is for rationale: No True/False Rationale

(1) Every limited company is legally required to get their account audited by a practicing Chartered Accountant. (True/False)

(2) Conversion Cost consists of Director Material. (True/False)

(3) Standard Costing Procedures are not relevant in job costing. (True/False)

(4) Second Schedule is annexed to the Income Tax ordinance, 2001 and deals with exemptions from income tax. (True/False)

(5) There can never be an insurance of a Valid nature without insurable interest. (True/False)

(6) A loan taken from a bank for a period longer than two years is known as short-term loan. (True/False)

(7) Income Tax is livable on every person with an annual income of Rs. 80,000. (True/False)

(8) Audit Engagement letter is always obtained after the end of the audit. (True/False)

(9) Internal Audit is compulsory under the Companies Ordinance, 1984. (True/False)

(10) Cost Accounting and Financial Accounting can be never be reconciled. (True/False)