ICMA Questions Dec 2012

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Page 1 of 55 THE INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF BANGLADESH CMA DECEMBER – 2012 EXAMINATION FOUNDATION LEVEL SUBJECT: 001. PRINCIPLES OF ACCOUNTING Time: Three hours Full Marks: 100 All questions are to be attempted. Show computations, where necessary. Answer must be brief, relevant, neat and clean. Start answering each question from a fresh sheet. Q. No. 1. (a) Mr. Z believes revenues from credit sales may be earned before they are collected in each. Do you agree? Explain. (b) Store equipment was purchased for Tk. 1500. Instead of debiting the Store Equipment account, the debit was made to Delivery Equipment. Of what help will the trial balance be in locating this error? Why? (c) Sonali Enterprises had a capital balance of $ 3,16,000 at the beginning of the period. At the end of the accounting period, the capital balance was $ 3,96,000. 1. Assuming no additional investment or withdrawals during the period, what is the net income for the period? 2. Assuming an additional investment of $ 26,000 but no withdrawals during the period, what is the net income for the period? (d) Platinum Corporation opened a business on August 1. On August 31, the balance sheet showed cash $ 18,000, Accounts Receivable $ 3,400, Supplies $ 1,200, Office Equipment $ 12,000, Accounts Payable $ 7,200 and Platinum Corporation, Capital, $ 27,400. During September the following transactions occurred: 1. Paid $ 6,200 cash on accounts payable. 2. Collected $ 2,600 of accounts receivable. 3. Purchased additional office equipment for $ 4,200, paying $ 1,600 in cash and the balance on account. 4. Earned fees of $ 11,800, of which $ 5,000 is paid in cash and the balance is due in October. 5. Withdrew $ 1,200 cash for personal use. 6. Paid salaries $ 11,400, rent for September $ 1,800, and advertising expenses $ 200. 7. Incurred utility expenses for the month on account is $ 340. 8. Received $ 14,000 from Hindustan Bank-money borrowed on a note payable. Required: Prepare a tabular analysis of the September transactions with August 31, balances. The column headings should be: Cash + Accounts Receivable + Supplies + Office Equipment = Notes Payable + Accounts Payable + Platinum Capital . [Marks: (2+3+5+10) = 20] Q. No. 2. (a) What is the meaning of taking a physical inventory? (b) The selection of an inventory cost flow method is a decision made by accountants – Do you agree? Explain. (c) National Star Company accounts for its inventory using the LIFO method under periodic inventory procedure. Purchases, Sales and inventory data for the year ended December 31, 2011, are: Merchandise inventory January 1 4,000 units @ $ 40.00 Purchases: January 7 10,000 units @ 48.00 July 7 20,000 units @ 56.00 December 21 12,000 units @ 64.00 During 2011, 32,000 units were sold for $ 25,60,000, leaving an inventory on December 31, 2011, of 14,000 units. Required: (1) Compute the gross margin earned on sales during 2011. (2) Compute the change in gross margin that would have resulted if the purchase of December 21 had been delayed until January 6, 2012. (3) Recompute the gross margin assuming that 18,000 units rather than 12.000 units were purchased on December 21, at the same cost per unit. (4) Solve parts 1, 2, and 3 using FIFO method. [Marks: (2+3+15) = 20]

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All ICMA Questions of Dec, 2012

Transcript of ICMA Questions Dec 2012

  • Page 1 of 55

    THE INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF BANGLADESH CMA DECEMBER 2012 EXAMINATION

    FOUNDATION LEVEL SUBJECT: 001. PRINCIPLES OF ACCOUNTING

    Time: Three hours Full Marks: 100 All questions are to be attempted. Show computations, where necessary. Answer must be brief, relevant, neat and clean. Start answering each question from a fresh sheet.

    Q. No. 1. (a) Mr. Z believes revenues from credit sales may be earned before they are collected in each. Do you agree?

    Explain. (b) Store equipment was purchased for Tk. 1500. Instead of debiting the Store Equipment account, the debit was

    made to Delivery Equipment. Of what help will the trial balance be in locating this error? Why? (c) Sonali Enterprises had a capital balance of $ 3,16,000 at the beginning of the period. At the end of the

    accounting period, the capital balance was $ 3,96,000. 1. Assuming no additional investment or withdrawals during the period, what is the net income for the

    period? 2. Assuming an additional investment of $ 26,000 but no withdrawals during the period, what is the net

    income for the period? (d) Platinum Corporation opened a business on August 1. On August 31, the balance sheet showed cash $

    18,000, Accounts Receivable $ 3,400, Supplies $ 1,200, Office Equipment $ 12,000, Accounts Payable $ 7,200 and Platinum Corporation, Capital, $ 27,400. During September the following transactions occurred: 1. Paid $ 6,200 cash on accounts payable. 2. Collected $ 2,600 of accounts receivable. 3. Purchased additional office equipment for $ 4,200, paying $ 1,600 in cash and the balance on account. 4. Earned fees of $ 11,800, of which $ 5,000 is paid in cash and the balance is due in October. 5. Withdrew $ 1,200 cash for personal use. 6. Paid salaries $ 11,400, rent for September $ 1,800, and advertising expenses $ 200. 7. Incurred utility expenses for the month on account is $ 340. 8. Received $ 14,000 from Hindustan Bank-money borrowed on a note payable.

    Required: Prepare a tabular analysis of the September transactions with August 31, balances. The column headings should be: Cash + Accounts Receivable + Supplies + Office Equipment = Notes Payable + Accounts Payable + Platinum Capital .

    [Marks: (2+3+5+10) = 20] Q. No. 2. (a) What is the meaning of taking a physical inventory? (b) The selection of an inventory cost flow method is a decision made by accountants Do you agree? Explain. (c) National Star Company accounts for its inventory using the LIFO method under periodic inventory procedure.

    Purchases, Sales and inventory data for the year ended December 31, 2011, are: Merchandise inventory January 1 4,000 units @ $ 40.00 Purchases: January 7 10,000 units @ 48.00 July 7 20,000 units @ 56.00 December 21 12,000 units @ 64.00 During 2011, 32,000 units were sold for $ 25,60,000, leaving an inventory on December 31, 2011, of 14,000 units.

    Required: (1) Compute the gross margin earned on sales during 2011. (2) Compute the change in gross margin that would have resulted if the purchase of December 21 had been

    delayed until January 6, 2012. (3) Recompute the gross margin assuming that 18,000 units rather than 12.000 units were purchased on December

    21, at the same cost per unit. (4) Solve parts 1, 2, and 3 using FIFO method.

    [Marks: (2+3+15) = 20]

  • Page 2 of 55

    CMA DECEMBER 2012 EXAMINATION FOUNDATION LEVEL SUBJECT: 001. PRINCIPLES OF ACCOUNTING

    Q. No. 3. (a) When the total cash inflows exceed the total cash outflows in the statement of cash flows, how and where is this

    excess indentified? (b) The President of AB Company is puzzled. During the last year, the company experienced a net loss of Tk.

    800,000 yet its cash increased Tk. 300,000 during the same period of time. Explain to the President how this could occur.

    (c) On May 31, 2011, MONALISA Company had a cash balance per books of $ 28,907.50. The bank statement from National Commercial Bank on that date showed a balance of $34,023.00.A comparison of the statement with the cash account revealed the following facts: 1. The statement includes a debit memo of $ 200.00 for the printing of additional company checks. 2. Cash sales of $ 4,180.75 on May 12, were deposited in the bank. The cash receipts journal entry and the

    deposit slip were incorrectly made for $ 4,230.75. The bank credited Monalisa Company for the correct amount.

    3. Outstanding checks at May 31, totaled $ 6,381.25 and deposits in transit were $ 4,680.75. 4. On May 18, the company issued check no. 1181 for $ 3,425.00 to M. Helal, on account. The check, which

    cleared the bank in May, was incorrectly journalized and posted by Monalisa Company for $ 3,290.00. 5. A $ 10,000.00 note receivable was collected by the bank for Monalisa Company on May 31, plus $ 400.00

    interest. The bank charged a collection fee $ 100.00. No interest has been accrued on the note. 6. Included with the cancelled checks was a check issued by Taher Company to P. Jamal for $ 3,000.00 that

    was incorrectly charged to Monalisa Company by the bank. 7. On May 31, the bank statement showed on NSF charge of $ 3,500.00 for a check issued by W. Huda, a

    customer, to Monalisa Company on account. Required: (1) Prepare a bank reconciliation at May 31, 2011. (2) Prepare necessary adjusting entries for Monalisa Company at May 31, 2011.

    [Marks: (3+3+14) = 20] Q. No. 4. Listed below are selected items from the financial statements of PHP manufacturing Company for the year ended December 31, 2011.

    Particulars Amount ($) Notes Payable to HSBC 99,000 Income tax payable 63,000 Loss contingencies relating to lawsuit 2,00,000 Accounts payable and accrued expenses 1,63,230 Mortgage notes payable 2,40,864 Bonds payable 22,00,000 Premium on bonds payable 1,406 Accrued bond interest payable 1,10,000 Pension expenses 61,400 Unearned revenue 25,300

    Other information: (i) The notes payable owed to HSBC is due in 30 days. PHP has arranged with this bank to renew the notes for an

    additional two years. (ii) PHP has been sued for $2,00,000 by someone claiming the companys pumps are excessively noisy. It is

    reasonably possible, but not probable, that a loss has been sustained. (iii) The mortgage note is payable at $8,000 per month over the next three years. During the next 12 months, the

    principal amount of this note will be reduced to $1,69,994. (iv) The bonds payable mature in seven months. A sinking fund has been accumulated to repay the full maturity of

    this bond issue. Required: (a) Using the given information, prepare the current liabilities and long-term liabilities sections of a classified

    balance sheet at December 31, 2011. (b) Explain briefly how the information in each of the four numbered paragraphs (given above as other information)

    affected your presentation of the companys liabilities. [Marks: (10+10) = 20]

  • Page 3 of 55

    CMA DECEMBER 2012 EXAMINATION FOUNDATION LEVEL SUBJECT: 001. PRINCIPLES OF ACCOUNTING

    Q. No. 5. (a) Loop Company is doing significant work to revitalize its warehouses. It is not sure whether it should capitalize

    these costs or expense them. What are the implications for current year net income and future net income of expensing across capitalizing these costs?

    (b) SBJs non-current asset register gives the cost and accumulated depreciation to date for every non-current asset held by the company. Prior to charging depreciation for 20X4, the total carrying amount of all non-current assets on the register at 31 December 20X4 was $147,500. At the same date, the non-current-asset accounts in the nominal ledger showed the following balances:

    Cost to date Accumulated Depreciation Motor vehicles $48,000 $12,000 Plant and machinery 120,000 30,000 Office equipment 27,500 7,500

    You are told that: (i) An item of plant costing $30,000 has been sold for $23,500 during 20X4. The loss on disposal was $800.

    No entries have been made for this disposal in the nominal ledger, but the asset has been removed from the non-current-asset register.

    (ii) A motor car was purchased on 1 October 20X4 and correctly recorded in the nominal ledger. Its cost was as follows: List price of vehicle $24,000 Trade discount 20% Sales tax added at 17.5% Insurance $360 Annual vehicle licence tax $130 Painting of company name $100 (no sales tax)

    The vehicle has not been entered in the non-current asset register. (iii) Office equipment was purchased during 20X4, and entered on the non-current asset register but not in the

    nominal ledger. Until the omission can be investigated fully, its cost is deemed to be the difference between the balances on the non-current asset register and the nominal ledger at 31 December 20X4 (prior to charging depreciation for the year).

    (iv) Depreciation for 20X4 is to be charged as follows: Motor vehicles 25% per annum straight line on an actual time basis Plant and machinery 10% per annum straight line, with a full years depreciation in the

    year of purchase Office equipment 10% per annum reducing balance, with a full years depreciation in

    the year of purchase Requirements (a) Calculate the balances at 31 December 20X4 for cost and depreciation to date on the three non-current

    asset accounts (prior to the charging of depreciation for 20X4). (b) Calculate the depreciation for each class of non-current asset for 20X4.

    [Marks: {4+(10+6)} = 20]

    =THE END=

  • Page 4 of 55

    THE INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF BANGLADESH CMA DECEMBER, 2012 EXAMINATION

    FOUNDATION LEVEL SUBJECT: 002. BUSINESS COMMUNICATION AND OFFICE MANAGEMENT.

    Time: Three hours Marks: 100 Answer THREE questions from each part, where Q. No. 4 and 8 are compulsory. Answer must be brief, relevant, neat and clean. Use a fresh sheet for answering each question. Start answering each question from a fresh sheet.

    GROUP A: BUSINESS COMMUNICATION

    Q. No. 1. (a) Describe the roles and importance of communication in management. (b) What are the communication components and how do they interact? (c) Explain the methods to develop learning, reading, listening and writing skills and ability to communicate on your

    respective fields of knowledge. [Marks: (4+4+7) = 15]

    Q. No. 2. (a) Define Business Report (b) Discuss the procedures of report writing (c) Draft a directors report of a public limited company

    [Marks: (2+5+8) = 15] Q. No. 3. (a) Do you think electronic device is a must for business communication? Explain (b) Describe how letter of credit is opened with a bank? (c) Write a CV with a forwarding letter for the post of Cost Accountant

    [Marks: (5+5+5) = 15] Q. No. 4. Write short notes on any FIVE of the followings: (a) Letter of Indemnity. (b) Central Depository System. (c) Credit Rating. (d) Merchant Banking. (e) Letter of Credit. (f) Organization chart. (g) Business ethics. (h) Proxy to AGM.

    [Marks: (5 x 4) = 20]

  • Page 5 of 55

    CMA DECEMBER, 2012 EXAMINATION FOUNDATION LEVEL SUBJECT: 002. BUSINESS COMMUNICATION AND OFFICE MANAGEMENT.

    GROUP B: OFFICE MANAGEMENT Q. No. 5. (a) What is motivation? (b) Do you think motivation for the office employees is necessary? If so, why? (c) Explain Good Relationship between employer and employee is must.

    [Marks: (3+6+6) = 15]

    Q. No. 6. a) How would you define Job description? b) What are the methods of Job evaluation used in an office? Discuss c) Training of office employees is an essential activity in a business organization- Justify the statement

    [Marks: (3+6+6) = 15] Q. No. 7. (a) How can the principles of scientific management be applied in the design and organization of the office of a

    large company? (b) Prepare the organogram of a typical commercial bank operating in our country. (c) How can the Reception Desk in the office of a telecom company be designed?

    [Marks: (5+5+5) = 15] Q. No. 8. (a) Briefly describe the different techniques that may be used in controlling office cost. (b) What can be the components of the job description of an office manager? (c) Office forms can greatly contribute to the enhancement of administrative efficiency of an organization. Give

    arguments in support of this statement. [Marks: (8+7+5) =20]

    ==THE END==

  • Page 6 of 55

    THE INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF BANGLADESH CMA DECEMBER 2012 EXAMINATION

    FOUNDATION LEVEL SUBJECT: 003. QUANTITATIVE TECHNIQUES

    Time: Three hours Full Marks: 100 Answer any TEN questions, FIVE from each Part. All questions carry equal marks. Answer must be brief, relevant, neat and clean. Start answering each question from a fresh sheet.

    PART-A : BUSINESS MATHEMATICS Q. No. 1. (a) A company studies the product preferences of 25,000 consumers. It was found that each of the products A, B

    and C was liked by 8000, 7000 and 6000 respectively and all the products were liked by 1500. Products A and B were liked by 3000, Products A and C were liked by 2000 and Products B and C were liked by 2200. Prove that the study results are not correct.

    (b) Find the rate of interest that compounded annually, will result in tripling a sum of money in 10 years. [Marks: (5+5) = 10]

    Q. No. 2. (a) A firm invested Tk. 20,000 in a new factory that has a net return of Tk. 2,000 per year. An investment of Tk.

    40,000 would yield a net income of Tk. 8,000 per year. What is the linear relationship between the investment and annual income? What would be the return on an investment of Tk. 30,000?

    (b) Find (i) x2( + 5x-1 + 3x2)dx (ii) dxxxx

    )21)(1(23++

    +.

    [Marks: (6+4) = 10] Q. No. 3. (a) Find the equation of the line perpendicular to 5x+7y+35 = 0 passing through the intersection of 3x+4y = 24 and

    4x 5y = 40

    (b) Solve for x: 22x 3.2x + 2 = 0 [Marks: (5+5) = 10]

    Q. No. 4. (a) A man borrows Tk. 2,00,000/- and repays the loan by yearly installments of Tk. 20,000/-, the first installment

    being paid one year after the loan. After how many years will the borrower be out of debt, interest being reckoned throughout at 5% per annum.

    (b) If A =

    100

    001

    010

    , B=

    010

    100

    001

    , than show that B2 = A and B3 = I

    where I is the unit matrix of order 3. [Marks: (4+3+3) = 10]

    Q. No. 5. (a) If the letters of the word WOMAN be permuted and the words so formed be arranged as in a dictionary what

    will be the rank of the word WOMAN?

    (b) If tanx =

    CosSinCosSin

    +

    where and x are both positive and acute angles.

    Prove that Sinx = 2

    1 (Sin Cos )

    [Marks: (5+5) = 10]

  • Page 7 of 55

    CMA DECEMBER 2012 EXAMINATION FOUNDATION LEVEL SUBJECT: 003. QUANTITATIVE TECHNIQUES

    Q. No. 6. (a) If the roots of x2 px + q = 0 are and , form the equation whose roots are ( + + ) and ( - ).

    (b) Find the area of the region enclosed by y = x and y = -x2 . [Marks: (5+5) = 10]

    Q. No. 7. (a) Solve the following system of linear equations by matrix method,

    x + 2y 3z = 6,

    2x y + 4z = 2,

    4x + 3y 4z = 14.

    (b) Total cost of producing x units is 45

    x2 + 175x + 125 and the price at which each unit can be sold for (250 - 25

    x). What should be the output for a maximum profit? Calculate the maximum amount of profit.

    [Marks: (5+5) = 10]

    PART-B : BUSINESS STATISTICS

    Q. No. 1. (a) Define business statistics. Discuss the uses of statistics in business and management decisions. (b) Define variable. Distinguish between (i) Population & Sample (ii) Primary data & Secondary data (iii) quantitative

    variable & qualitative variable. [Marks: (6+4) = 10]

    Q. No. 2. (a) Define measures of central tendency with their classifications. What are the characteristics of a good measure

    of central tendency? (b) The following data gives the weekly wage distribution of the workers of a commercial Organization: Weekly wages

    (in Tk.) 2000-2500 2500-3000 3000-3500 3500-4000 4000-4500

    No. of workers 6 10 22 40 16 (i) Compute arithmetic mean and median of this distribution. (ii) Find the wage range of the central 50% workers. (iii) It is decided to collect tax from those having weekly income of Tk. 3800 and above. What percent of the

    workers are taxable? [Marks: (5+5) = 10]

    Q. No. 3. (a) What are the different relative measures of dispersion? Define variance and standard deviation. (b) A purchasing agent obtained samples of incandescent lamps from two suppliers. He had the samples tested in

    his own laboratory for length of life with the following results. Length of life (hrs) 700-900 900-1100 1100-1300 1300-1500 Lamp of company A: 10 16 26 8 Lamp of company B: 3 42 12 3

    (i) Which companys bulbs give a higher average life? (ii) Which companys lamps are more uniform?

    [Marks: (4+6) = 10]

  • Page 8 of 55

    CMA DECEMBER 2012 EXAMINATION FOUNDATION LEVEL SUBJECT: 003. QUANTITATIVE TECHNIQUES

    Q. No. 4. (a) Define skewness and kurtosis? Explain different types of skewness and kurtosis with necessary graphs. For a

    distribution mean is 50, Pearsons coefficient of skewness is -0.4 and coefficient of variation is 40, find standard deviation, median and mode.

    (b) What do you mean by moment of any distribution? Establish a relationship between first four central moments in terms of raw moments.

    [Marks: (5+5) = 10] Q. No. 5. (a) What are the differences between correlation and regression analysis? (b) The following data gives the information on sales and advertising expenses for last 5 months of a particular

    furniture shop. The data were recorded as follows: Advertising expense (lac Tk.), x 2 4 5 3 8 Sales revenue (lac Tk.), y 7 10 12 8 15

    (i) Draw a scatter diagram. (ii) Fit a linear regression model. (iii) Estimate the sales revenue if advertisement expense is Tk. 20 lac.

    [Marks: (3+7) = 10] Q. No. 6. (a) Define normal distribution with their important properties. What are the differences between Type-I error and

    Type-II error? (b) The mean length of a small counterbalance bar is 43 millimeters. The production supervisor is concerned that

    the adjustments of the machine producing the bars have changed. He asks the Engineering Department to investigate. Engineering Department selects a random sample of 12 bars and measures each. The results are reported below in millimeters:

    42, 39, 42, 45, 43, 40, 39, 41, 40, 42, 43, 42

    Is it reasonable to conclude that there has been a change in the mean length of the bars? Use the 0.05 significance level.

    [Marks: (5+5) = 10] Q. No. 7. (a) Define sampling. Discuss different types of sampling with examples. Explain a situation where judgment

    sampling gives better result than probability. (b) Distinguish between (i) simple hypothesis & composite hypothesis (ii) Level of significance & power of the test

    (iii) Mutually exclusive events and independents events. [Marks: (6+4) = 10]

    =THE END=

  • Page 9 of 55

    THE INSTITUTE OF COST AND MANAGEMENT ACCOUNTANT OF BANGLADESH CMA DECEMBER 2012 EXAMINATION

    FOUNDATION LEVEL SUBJECT: 004. BUSINESS ECONOMICS AND INTERNATIONAL BUSINESS

    Time: Three hours Marks: 100 Answer FIVE questions, taking at least TWO from each group A and B. Show computations where necessary. Answer must be brief, relevant, neat and clean. Start answering each question from a fresh sheet.

    GROUPA: BUSINESS ECONOMICS

    Q. No. 1. (a) Distinguish between Economics and Managerial Economics. Discuss the role of Managerial Economics in

    Management decision making. (b) Explain why economic profit is not always equal to accounting profit. (c) Explain the law of demand and supply with examples of exceptions. [Marks: (7+5+8) = 20] Q. No. 2. (a) Discretionary Fiscal Policy requires deliberate changes in taxes or government outlays or both Explain this

    statement with examples. (b) Distinguish between (any two): (i) GDP and GNP (ii) Inside Money and Outside Money (iii) Inflation and deflation.

    (c) Given below is the data of a nations economy. You have to ascertain the following: (i) GNP at Factor Cost, (ii) NNP at Factor Cost, (iii) Net Domestic Product at Factor Cost, (iv) Net Domestic Product at market prices.

    Data Value in Million BDT GNP at Market Prices 175,000 Net Factor Income from Abroad (-) 382 Subsidies 3,100 Depreciation 9,558 Direct Taxes 2,100 Indirect Business Taxes 7,155

    [Marks: (6+7+7) = 20] Q. No. 3. (a) Illustrate the condition of Excess Demand and Excess Supply. (b) Why does demand curve usually slop downwards to the right? Are there any exceptions to this? (c) Describe the managerial implications of price elasticity and income elasticity of Demand. (d) Suppose a market consists of consumers A, B and C whose inverse demand functions are given below:

    A: P = 30 - 0.50QA B: P = 100 - 0.25QB C: P = 40 - 2.00QC

    Calculate the (i) Market demand function for the commodity and (ii) Determine the equilibrium price and quantity, if the market supply function is given by Qs = 30+3.5P.

    [Marks: (5+4+5+6) = 20] Q. No. 4. (a) What is the difference between Firm and Industry? Describe different ways of increasing profit of a firm? (b) Explain the role of interest rate policy in the investment decision.

    [Marks: (10+10) = 20]

  • Page 10 of 55

    CMA DECEMBER 2012 EXAMINATION FOUNDATION LEVEL SUBJECT: 004. BUSINESS ECONOMICS AND INTERNATIONAL BUSINESS

    Q. No. 5. (a) Distinguish between:

    (i) Direct Cost and Indirect Cost. (ii) Marginal Revenue and Average Revenue. (iii) Explicit Cost and Implicit Cost.

    (b) Calculate average cost, marginal cost, marginal revenue and profit from the following data: Units of output Total Cost (Tk.) Variable Cost (Tk.) Fixed Cost (Tk.) Total Revenue

    (Tk.) 1 500 200 300 300 2 700 400 300 600 3 850 550 300 900 4 1000 700 300 1150 5 1100 800 300 1400 6 1200 900 300 1600

    [Marks: (8+12) = 20] GROUPB: INTERNATIONAL BUSINESS

    Q. No. 6. (a) What are the common Import procedures which Bangladeshi Traders need to observe? (b) Explain the major barrier and limitations in the expansion and diversification of Export from Bangladesh. (c) Describe the specific export development strategies for Bangladeshi products. (d) What do you mean by foreign exchange rate? Describe the impacts of exchange rate change.

    [Marks: (4+5+6+5) = 20] Q. No. 7. (a) What is international business? Distinguish between the theory of Absolute advantage and the theory of

    Comparative advantage. (b) What are the positive and negative economic impacts of transit to India by Bangladesh? Explain.

    [Marks: (10+10) = 20] Q. No. 8. Write short notes on any FIVE of the followings: a. Ownership advantage b. Platform Strategy c. Mercantilism d. Pre-shipment Inspection (PSI) e. Regional Economic Integration f. Regional Trading Arrangements g. Generalized System Of Preferences (GSP)

    [Marks: (4x5 = 20)]

    == THE END ==

  • Page 11 of 55

    THE INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF BANGLADESH CMA DECEMBER 2012 EXAMINATION

    PROFESSIONAL LEVEL-I SUBJECT: 101. INTERMEDIATE FINANCIAL ACCOUNTING.

    Time: Three hours Full Marks: 100 * All questions are to be attempted. * Show computations, where necessary. * Answer must be brief, relevant, neat and clean. * Start answering each question from a fresh sheet.

    Q. No. 1. (a) Define and Illustrate Provisions, Contingent Liabilities and Contingent Assets as per IAS-37 and FASB

    statement no. 5. (b) Explain the accounting for different types of loss contingencies and gain contingencies along with their

    disclosure in the financial statement. (c) The draft financial statement of Minar Ltd. for the year ended December 31, is Currently under reviews, the

    following points have been raised:- (i) An ex-employee has started an action against the company for wrongful dismissal. The companys legal

    team have stated that the ex-employee is not likely to succeed. The following estimates have been given by the lawyers relating to the case: * Legal costs to be incurred whether the claim is successful or not Tk. 10,000. * Settlement of the claim if successful Tk. 1,00,000. Currently, the Provision has been made by the Company in the financial statements.

    (ii) The company has a policy of refunding the cost of any goods returned by dis-satisfied customers, even though it is under no legal obligation to do so. This policy of making refunds is generally known. At the year end, returns totaling Tk. 6,000 have been made.

    (iii) A claim has been made against the company for injury suffered by a pedestrian in connection with building work by the company. Legal advisers have confirmed that, the company will probably have to pay damages for Tk. 2,00,000 but that a counter claim made against the building sub-contractors for Tk. 1,00,000 would probably be successful.

    Required: State with reasons what adjustments, if any, should be made by the company in the financial statements. (d) State which of the following are adjusting events for Swomon Ltd. The financial year ends on June 30, 2011 and

    the accounts are approved on August 17, 2011:- (1) Sales of Closing Inventory on July 3, 2011 at less than cost. (2) The issue of new common shares on July 4, 2011. (3) A fire in the main warehouse occurred on July 7, 2011. All goods were destroyed. (4) A major Credit Customer was declared bankrupt on July 11, 2011. (5) All of the share capital of a competitor, Sayon Ltd. was acquired on July 14, 2011.

    [Marks: (5+5+5+5) = 20] Q. No. 2. The following trial balance has been extracted from the books of accounts of Keya International Ltd. As at 31 March, 2012. Taka T aka Purchases 960,000 - Inventories (at 1 April 2011) 150,000 - Accounts payables - 260,000 Revenue - 2,010,000 Administrative expenses 210,000 - Ordinary share capital - 600,000 Accounts receivable 470,000 - Advance, Deposit and prepayments 200,000 - Bank overdraft - 80,000 Provision for warranty costs - 205,000 Distribution costs 420,000 - Non-current asset investments 560,000 - Investment income - 75,000 Finance cost 10,000 - Freehold land and buildings at cost 200,000 - Term loan - 200,000

  • Page 12 of 55

    CMA DECEMBER 2012 EXAMINATION PROFESSIONAL LEVEL-I SUBJECT: 101. INTERMEDIATE FINANCIAL ACCOUNTING. Q. No. 2 (Contd.) Taka T aka Plant and equipment at cost 550,000 - Plant & equipment Accumulated depreciation (at 31 March 2012)

    -

    220,000 Retained earnings (at 1 April 2011) - 180,000 Final dividend paid for 2011 65,000 - Interim dividend paid for 2012 35,000

    -

    3,830,000 3,830,000 Additional information: (i) Inventories at 31 March 2012 were valued at Tk. 160,000. (ii) The following items are already included in the balances listed in this trial balance. Distribution Costs Administrative Expense Depreciation charge for the year 27,000 5,000 Employee expense 150,000 80,000 (iii) The income tax charge for the year is estimated at Tk. 74,000. (iv) The warranty provision is to be increased by Tk. 16,000, charged to administrative expenses. Product warranty

    period is 2 years. (v) Staff bonuses totaling Tk. 40,000 are to be provided for, charged equally to distribution costs and administrative

    expenses. (vi) The freehold land and buildings were bought on the last day of the accounting period at a bargain price. They

    are to be revalued to Tk. 280,000. (vii) In May 2012 a final dividend for 2012 of 10 paisa per share was proposed on each of the companys 600,000

    ordinary shares. Required: Prepare the following in the books of Keya International Ltd. (a) Statement of Comprehensive Income for the year ended 31 March 2012. (b) Statement of Changes in Equity for the year ended 31 March 2012. (c) Statement of Financial Position as at 31 March 2012 and (d) Notes to the financial statements (if required) in accordance with the requirements of BAS I.

    [Marks: 20] Q. No. 3. The balance sheet of Shaad Chemical Industries Ltd. As at 30 June 2012, including comparative figures, is given below: ASSETS 2012

    Taka 2011 Taka

    Non-current assets Property, plant and equipment 333,000 311,000 Less: Accumulated Depreciation (70,000) (69,000) 263,000 242,000 Investment 50,000 - Total non-current assets 313,000 242,000

    Current assets Inventories 12,000 11,000 Trade and other receivables 29,000 27,000 Cash and cash equivalents 20,000 10,000 Total current assets 61,000 48,000 Total assets 374,000 290,000

    EQUITY AND LIABILITIES Capital and reserves

    Ordinary share capital (Tk. 1 per ordinary share) 95,000 50,000 Share premium 15,000 10,000 Revaluation reserve 12,000 12,000 Retained earnings 149,000 115,000 Total capital and reserve 271,000 187,000

    Non-current liabilities Interest-bearing borrowings (12% Debenture) 50,000 60,000

  • Page 13 of 55

    CMA DECEMBER 2012 EXAMINATION PROFESSIONAL LEVEL-I SUBJECT: 101. INTERMEDIATE FINANCIAL ACCOUNTING. Q. No. 3 (Contd.) Current liabilities

    Trade and other payables 27,000 19,000 Provisions - 2,000 Accruals 19,000 19,000 T ax liability 7,000 3,000 Total current liabilities 53,000 43,000

    Total equity and liabilities 374,000 290,000 You are also given the following information which is already reflected correctly in the accounts. (i) During the year a bonus issue of 1 for 10 was made on the ordinary shares in issue utilizing available profits at

    30 June 2011. (ii) New shares were issued on 1 July 2011. Part of the proceeds was used to redeem Tk. 10,000, 12% debentures

    at par. (iii) Trade and other payable include Tk. 5,000 for 2012 relating to the fixed asset purchases. (iv) During the year certain tangible non-current assets were disposed of for Tk. 20,000. The assets had originally

    cost Tk. 40,000 and had a net book value at the disposal date of Tk. 18,000. (v) The corporation tax charge for the year is Tk. 7,000. Required: Prepare a cash flow statement using indirect method for the year ended 30 June 2012 and the note reconciling profit before tax with cash generated from operations.

    [Marks: 20] Q. No. 4. (a) For the year ending 30th June 2012, the Sales, Purchases, Opening Stock and Closing Stock of a Trader was

    Tk. 5,00,000, Tk. 3,80,000, Tk. 65,000 and Tk. 52,000 respectively. Some goods were destroyed by fire (without realization of any value) during the year.

    If the Trader earned Gross Profit @ 25% on Sales for the year, calculate the value of goods destroyed by fire. (b) At the end of year 2011 the following information for Muttakeen Ltd. Department Store was obtained: Particulars Cost Retail (Tk. 000) (Tk. 000) Beginning inventory 20,460 31,000 Purchases 207,735 337,271 Purchases returns 7,320 12,021 Sales -- 316,148 Sales Returns -- 3,198

    Required: Prepare a schedule computing Muttakeen Ltd.s ending inventory at cost using the Retail Method. (c) Monyem Ltd. purchased machinery from Ananto Ltd. on 30.09.2012. The machinery was ready for use on

    01.12.2010. However it was actually put to use only on 01.05.2011. The price was Tk. 380,44,000 before charging the following: i. Truncated VAT on goods sold @ 4%. ii. Giving a trade discount @ 2% on the quoted price. iii. Transport charges @ 0.25% on the quoted price and iv. Installation charges come to 1% on the quoted price. A loan of Tk. 310,00,000 was taken from the Sonali Bank Ltd. on which interest @ 15% per annum was to be paid. Expenditure incurred on the trial run was as follows: A. Material Tk. 35,000 B. Wages Tk. 25,000 and C. Overhead Tk. 15,005. Find out the cost of the machine and suggest the accounting treatment for the expenses incurred in the internal between the dates 01.12.2010 to. 01.05.2011. The entire loan amount remained unpaid on 01.05.2011.

    [Marks: (5+6+9) = 20

  • Page 14 of 55

    CMA DECEMBER 2012 EXAMINATION PROFESSIONAL LEVEL-I SUBJECT: 101. INTERMEDIATE FINANCIAL ACCOUNTING.

    Q. No. 5. (a) The statutory audit of FYR Ltd. for year ended June 30, 2012, was completed on August 30, 2012. The financial

    statements were signed by the Managing Director on September 8, 2012, and approved by the shareholders on October 10, 2012. The next events have occurred. (1) On July 15, 2012, a customer owing Tk. 900,000 to FYR Ltd. filed for bankruptcy. The financial statements

    include an allowance for doubtful debts pertaining to this customer only of Tk. 50,000. (2) FYR Ltd.s issued capital comprised 100,000 Ordinary Shares. The company announced a bonus issue of

    25,000 shares on August 1, 2012. (3) Specialized equipment costing Tk. 545,000 purchased on March 1, 2012, was destroyed by fire on June

    13, 2012. On June 30, 2012, FYR Ltd. has booked a receivable of Tk. 400,000 from the Insurance company pertaining to this claim. After the insurance company completed its investigation, it was discovered that the fire took place due to negligence of the machine operator. As a result, the insurers liability was zero on this claim by FYR Ltd.

    Required: How should FYR Ltd. account for these three post-balance sheet events? Identify the adjusting and non-adjusting events.

    (b) What are the qualitative characteristics of the financial statements which improve the usefulness of the information furnished therein?

    (c) ZIT plans to dispose of a group of net assets that form a disposal group. The net assets at December 31, 2011, are

    Carrying value at December 31, 2011

    (TK.) Goodwill . 60,00,000 Property, plant, and equipment (PPE) 180,00,000 Inventories 100,00,000 Financial assets (profit of Tk. 20 lac recognized in equity) 70,00,000 410,00,000 Less: Financial liabilities (40,00,000) 370,00,000 On moving to accounting under IFRS, some of the assets had been transferred at deemed cost and had not been remeasured under IFRS. These assets were property, plant, and equipment, and inventory. Under IFRS, property, plant, and equipment would be stated at Tk. 160,00,000 and inventory stated at Tk. 90,00,000. The fair value less costs to sell of the disposal group is Tk. 250,00,000. Assume that the disposal group qualifies as held for sale. Therefore, under IAS 36, any impairment loss will be allocated to goodwill and PPE. Required: Describe how the disposal group would be shown in the financial statements for the year ended December 31, 2011.

    [Marks: (6+5+9) = 20] =THE END=

  • Page 15 of 55

    THE INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF BANGLADESH CMA DECEMBER-2012 EXAMINATION

    PROFESSIONAL LEVEL-I SUBJECT: 102. COST ACCOUNTING.

    Time: Three hours Full Marks: 100 All questions are to be attempted. Show computations, where necessary. Answer must be brief, relevant, neat and clean. Start answering each question from a fresh sheet.

    Q. NO. 1. Six Sigma is a sheet metal fabricator. Its total factory overhead cost is a linear function of machine usage. Different capacity levels (annual) of Six Sigma is given below

    Theoretical Capacity : 25,000 machine hours Practical Capacity : 15,000 machine hours Normal Capacity : 8,000 machine hours Expected Actual Capacity : 10,000 machine hours

    Six Sigma computes predetermined overhead rate by dividing expected actual costs by expected actual capacity at the beginning of each year. During 2011, it actually works for 9,500 machine hours (MH) with actual overheads amounting to Tk.3,385,000. But the budgeted amount of factory overhead was Tk.3,500,000 which would be Tk.3,000,000 at normal capacity. Required: (1) Calculate the amount of over or under applied factory overhead for the year. (2) If it had used practical capacity as the activity level in its predetermined overhead rate calculation for the year,

    what would the predetermined overhead rate have been per MH? (3) Using the predetermined overhead rate as computed in req. 2, compute the price of a product considering the

    information below:

    Direct Material 350 Direct Labor 289 Machine Hours Used 1.5 Mark-up @ 15%

    (4) Without influencing your answer to requirement 1, now assume factory overhead was under applied by Tk.10,000. Give the end-of-period entries to close applied factory overhead to factory overhead control and to close factory overhead control to cost of goods sold.

    (5) Without prejudice to your answers to the preceding requirements, assume overhead was under applied by Tk.10,000 and applied factory overhead has already been closed to factory overhead control. The under applied amount of overhead is to be allocated to inventories and cost of goods sold in proportion to the balances in those accounts. The balances in work in process, finished goods and cost of goods sold are Tk.200,000, Tk.400,000 and Tk.7,400,000 respectively. Give the end-of-period entry to close factory overhead control.

    (6) What are the impacts of requirements 3 and 4 on income statement? Which one is more suitable for factory manager?

    [Marks: 20] Q. NO. 2. (a) Define and distinguish mark-up and margin. What is its bearing in product pricing? (b) Purple Manufacturer owns a sophisticated working environment with modern set up and skilled manpower. Its

    cost accounting department is very much structured in terms of recording and reporting cost data and such reporting is done regularly at the end of each month when it needs new set up for further production. The cost data and other information for the month of June 2012 has been accumulated below from different sources and you are asked to prepare a statement of cost of goods sold and income statement for the month. i. The month started with no inventory and during the month 45,000 kg of raw material was purchased at a

    cost of Tk.7.8 per kg. 1,000 kg was returned back due to inferior quality. Transportation costs attached to the purchase was Tk. 2,080 and born by the supplier as per the condition.

    ii. Purple has 200 workers who are supposed to work for 8 hours a day, 5 days a week and 40 hours in a week each. Regular rate is Tk.8 per hour. If the workers work for any additional hour, these are considered as overtime and are paid at time and a half. But payment in no case goes below the regular rate for the regular hours worked. During the month a total of 34,225 hours were worked in total. (Assume, 1 month = 4 weeks)

    iii. Indirect material costs amounts to 2.5% of direct material consumed on an average.

  • Page 16 of 55

    CMA DECEMBER-2012 EXAMINATION PROFESSIONAL LEVEL-I SUBJECT: 102. COST ACCOUNTING

    Q. No. 2(b) (Contd.)

    iv. Overtime premium is reported as a part of factory overhead and indirect labor costs will be 3% of direct labor costs.

    v. The utility cost is a mixed cost and utility cost function is reached at Y = Tk.2,500 + Tk.0.8X where, Y represents utility costs and X represents number of units produced.

    vi. During the month a total of 12,000 units were produced and sold. For producing 1 unit, 3.5 kg of raw materials are needed.

    vii. Unit selling price is set at Tk.100 for the wholesaler and sold to retailer at a 10% mark up. Purple sales to wholesaler only.

    viii. Sales commission is given at the rate of 2% of sales revenue. ix. Administrative salaries amounted to Tk.20,000 and sales persons salaries amounted to Tk. 12,000 for the

    month. x. Other expenses includes (for the month):

    Category of Costs Amount (Tk.)

    Category of Costs Amount (Tk.)

    Interest expense 2,000 Depreciation - Factory 800 Property tax 1,500 Depreciation - Office 700 Advertising expense 1,000 Freight out 600

    [Marks: (5+15) = 20] Q. No. 3. (a) What are the distinguishing features of a process cost system. (b) The Anderson Company manufactures a mechanical device known as Klebo. The company uses a process

    cost system. The manufacturing operations take place in one department and are given as follows. Material K, a metal, is stamped to form a part which is assembled with one of the purchased parts X. The unit

    is then machined and cleaned after which it is assembled. With two units of part Y to form the finished device known as a Klebo Spray priming and enameling is the final operation.

    Time-and-motion studies indicate that of the total time required for the manufacture of a unit, the first operation required 25% of the labor cost, the first assembly an additional 25% machining and cleaning 12.5% , the second assembly 25%, and painting 12.5%. Factory overhead is considered to follow the same pattern of operations as does labor. The following data to apply to October, the first month of Operation: Material K purchased 100,000 kilograms .. Tk.25,000 Part X purchased 80,000 units. Tk.16,000 Part Y purchased 150,000 units... Tk.15,000 Primer and enamel used .. Tk.1,072 Direct labor.. Tk.45,415 Factory overhead...... Tk.24,905 Units finished and sent to finished goods warehouse.. 67,000 Units assembled but not painted 5,000 Units ready for the second assembly 3,000 Inventories at the end of the month: Material K (kg.). 5,800 Part X (units of part X) 5,000 Part Y (units of part Y) 6,000 Klebos in process (units) 8,000 Units in finished goods inventory. 7,500 Required: A cost of production report showing total costs, equivalent production, unit cost, cost of goods finished and work in process inventories.

    Marks: (5+15) = 20 Q. No. 4 (a) Define Activity Based Costing. (b) What types of costs should not be assigned to products in an Activity- Based Costing system?

  • Page 17 of 55

    CMA DECEMBER-2012 EXAMINATION PROFESSIONAL LEVEL-I SUBJECT: 102. COST ACCOUNTING Q. No. 4(c) (Contd.)

    (c) BROWN Corporation makes a single product A fire resistant commercial filing cabinet that it sells to office furniture distributors. The company has a single ABC system that it uses for internal decision-making. The company has two overhead departments whose costs are listed as below: Manufacturing Overhead Tk. 5,00,000 Selling & Admin. Overhead Tk. 3,00,000 Total Tk. 8,00,000 The companys ABC system has the following activity cost pools and activity measures :

    Activity Cost Pool Activity Measure Assembling Unit Number of units Processing Orders Number of Orders Supporting Customers Number of Customers Other Not Applicable Costs assigned to the Other activity cost pool have no activity measure: they consist of unused capacity and organization sustaining cost neither of which are assigned to Product, Orders & Customers. Brown Corporation distribution the cost of manufacturing overhead and of selling and administrative overhead to activity costs pools based on employees interviews, the result of which are reported below: Distribution of Resources Consumption Across Activity Cost Pools

    Assembling Units

    Processing Orders

    Supporting Customers

    Other Total

    Manufacturing Overhead 50% 35% 5% 10% 100% Selling & Admin Overhead 10% 45% 25% 20% 100% Total Activity 1000 units 250 orders 100 customers

    Required: (i) Perform the first stage allocation of overhead costs to the activity costs pool. (ii) Compute activity rates for activity costs pool. (iii) Office mart is one of the Browns customers last year, office mart ordered filing cabinets for different

    times. Office Mart ordered a total of 80 filing cabinets during the year. Show the overhead costs of these 80 units and 4 orders.

    (iv) The selling price of filing cabinets is Tk. 595 The cost of direct material is Tk. 180 per filing cabinets, and direct labor is Tk. 50 per filing cabinet. What is the product margin on the 80 filing cabinets ordered by Office Mart. How profitable is Office Mart as a customer?

    [Marks: (2+3+ 3+3+3+6) = 20 ] Q. NO. 5. (a) What is reorder point? Does safety stock influence reorder point? (b) What is the impact of changes in number of orders on reorder point? (c) Garish Woodcrafts use mathematical modeling to control inventory. For a typical year, you have been provided

    with the following information: Monthly Requirements 3,000 units Selling Price/Unit Tk. 900 Lead Time 6 days Normal Usage 100 units/day Maximum Usage 150 units/day Minimum usage 50 units/day Cost/Unit Tk.500 Transportation cost each time Tk.150 Documentation cost to place the order Tk.120 Inspection cost for checking each time Tk.180 Storing cost of each inventory Tk. 20 Finance cost of each inventory Tk. 40 Insurance cost per inventory Tk. 15 Loading and Unloading cost Tk.300

    Required: (i) Compute economic order quantity. (ii) Compute the total amount of carrying and ordering costs for the year. (iii) Compute the amount of safety stock, if any. (iv) Compute the amount of normal maximum inventory. (v) Compute the amount of absolute maximum inventory. (vi) Determine the number of days until the next order should be placed, assuming that the present inventory

    level is 1,200 units. (360 days = 1 year) (vii) Why do you need to maintain safety stock in this situation?

    [Marks: 3+2+15 = 20] =THE END=

  • Page 18 of 55

    THE INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF BANGLADESH CMA DECEMBER 2012 EXAMINATION

    PROFESSIONAL LEVEL-I SUBJECT: 103. MANAGEMENT AND MARKETING MANAGEMENT

    Time: Three hours Full Marks: 100 Answer any THREE questions from each part. Answer must be brief, relevant, neat and clean. Start answering each question from a fresh sheet.

    PART- A : MANAGEMENT (TOTAL MARKS-50) Q. No. 1. (a) Management is getting things done by others. Do you advocate the statement? (b) What basic managerial roles and skills should posses by a manager? (c) What are the contemporary issues and challenges face by an organization now a days?

    [Marks: (4+8+4) = 16]

    Q. No. 2. (a) Differentiate between internal and external environment of an organization. (b) Organizational environments affect the effectiveness of an organization. How would you evaluate this

    issue? (c) What is meant by organizational culture?

    [Marks: (4+8+4) = 16]

    Q. No. 3. (a) What factors determine the appropriate span of management in a particular setting? (b) Explain the difference between line and staff positions. (c) Identify the areas of change in an organization. Why do people resist change? How can managers

    help overcome this resistance? [Marks : (6+4+6) = 16]

    Q. No. 4. (a) How would you define and differentiate Corporate level and Business level strategy? Give example. (b) Which strategy should a firm develop first Business level or Corporate level strategy? Explain why? (c) Explain use of SWOT for formulating strategy.

    [Marks : (4+6+6) = 16]

    Q. No. 5. (a) Describe the basic motivational process that employees go through as reflected in expectancy theory. (b) Summarize the basic concepts underlying employee empowerment and participation. (c) Leadership and Management are often related, but are also different Does an organization need

    both? Why or why not? [Marks : (5+5+6) = 16]

    * Two marks are reserved for neatness and relevance.

  • Page 19 of 55

    CMA DECEMBER 2012 EXAMINATION PROFESSIONAL LEVEL-I SUBJECT: 103. MANAGEMENT AND MARKETING MANAGEMENT

    PART- B : MARKETING MANAGEMENT (TOTAL MARKS-50)

    Q. No. 6. (a) What do you understand by marketing management? (b) Discuss the salient features of marketing management. (c) Marketing people market ten types of entities. What are those?

    [Marks: (4+6+6) = 16]

    Q. No. 7. (a) There are several competing philosophies, namely, selling concept, production concept and product

    concept that exist. How are these different from one another? How are these different from the marketing concept?

    (b) Describe the significance of segmentation, targeting and positioning (STP) in a companys marketing strategy.

    [Marks: (8+8) = 16]

    Q. No. 8. (a) How do cultural factors influence our buying pattern? (b) A persons reference groups are the major social factor that influences an individuals consumption

    pattern. How? (c) Explain the five stage model of consumer buying process.

    [Marks: (6+4+6) = 16]

    Q. No. 9. (a) What are the different characteristics of a product that forms differentiation from others? (b) Describe importance of packaging and labeling of a product. (c) Price is not just a number on a tag, it has been the major determinants of a buyers choice explain.

    [Marks: (7+4+5) = 16]

    Q. No. 10. (a) What is the role of marketing communication? (b) Describe the major modes of communication of a Marketing communication mix. (c) Direct marketing has been a fast-growing avenue for serving customers and building long term

    relationship explain. [Marks: (4+6+4) = 16]

    * Two marks are reserved for neatness and relevance.

    =THE END=

  • Page 20 of 55

    THE INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF BANGLADESH CMA DECEMBER 2012 EXAMINATION

    PROFESSIONAL LEVEL-I SUBJECT: 104. INFORMATION TECHNOLOGY

    Time: 2 hours 30 minutes Full Marks: 80 Answer any FOUR of the following questions. Answer must be brief, relevant, neat and clean. Start answering each question from a fresh sheet.

    Q. No. 1. (a) Define Information systems. Describe the key components of Information System. (b) Discuss about system ethics in digital firm. (c) Describe the role of CKO in a company? (d) What are the differences between fourth generation language and conventional programming language?

    [Marks: (4X5) = 20] Q. No. 2. (a) Identify the key elements of the technology infrastructure required to successfully implement e-commerce

    within an organization. (b) What do you think are the biggest barriers to wide-scale adoption of m-commerce by consumers? (c) Describe the multistage model for E-Commerce.

    [Marks: (8+6+6) = 20] Q. No. 3. (a) Identify some of the advantages and disadvantages of purchasing versus developing software. (b) Assume that you have a personal computer that is several years old. Describe the steps you would use to

    perform system review to determine whether you should acquire a new PC. (c) Define the different types of feasibility that systems developer must consider.

    [Marks: (7+7+6) = 20] Q. No. 4. (a) How can management information systems (MIS) be used to support the objectives of the business

    organization? (b) You have been hired to develop group support software (GSS). Describe the features you would include in your

    new GSS software? (c) Describe the difference between a data-driven and a model-driven DSS.

    [Marks: (7+7+6) = 20] Q. No. 5. (a) Describe HTML, http, FTP and URL. (b) How can you design a computerized accounting System of a super store? (c) Describe the Electronic Payment System? (d) What are the Telecommunication Software and Hardware?

    [Marks: (4X5) = 20] Q. No. 6. Short notes: (a) OMR and OCR; (b) Cache Memory; (c) Audit Trial; (d) Internet Protocol; (e) Primary and Foreign Key.

    [Marks: (4X5) = 20]

    =THE END=

  • Page 21 of 55

    THE INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF BANGLADESH CMA DECEMBER 2012 EXAMINATION

    PROFESSIONAL LEVEL-II SUBJECT: 201. ADVANCED FINANCIAL ACCOUNTING-I

    Time: Three hours Full Marks: 100 * All questions are to be attempted. * Show computations, where necessary. * Answer must be brief, relevant, neat and clean. * Start answering each question from a fresh sheet.

    Q. No.1. (a) What are the objectives of Financial Statement in the context of the Framework for the preparation and

    presentation of financial statements? What are the components to be included in a complete set of financial statements as per IAS 1?

    (b) Financial Accounting usually emphasizes on the economic substance of events though the legal form may differ and suggest different treatments. Do you agree? If so, state the circumstances and give example in each case.

    (c) State the circumstances in which an entity may change in accounting policy and explain how a change in policy should be accounted for in accordance with IAS-8.

    (d) Explain the use of and journal entries for a home offices Allowance for Overvaluation of Inventories: Branch ledger account.

    [Marks: (6+5+5+4) = 20] Q. No. 2. (a) Explain the following in the context of accounting for deferred tax:

    (i) Permanent differences, (ii) Timing Differences, (iii) Short-term differences, and (iv) Long-term differences.

    (b) A Ltd. maintains deferred taxation account under liability method since 2010 and at the year end the account shows a balance of Tk. 20 million. Accounts for the year to 31 December 2011 have now been prepared and the following taxation information compiled: (i) Tax rates applicable to the company are:

    2010 35.00% 2011 35.00%

    (ii) Accounting depreciation charged in 2011 has been Tk.60 million but taxation laws would allow Tk.100 million as depreciation for the year.

    (iii) Besides, non-admissible items have been charged in accounts amounting to Tk.2.50 million. (iv) Accounts show a profit of Tk.90 million for the year 2011. Tax liability of 2010 has been recently settled at an excess of Tk.0.50 million provided in the year.

    Required: Prepare the current and deferred taxation accounts of the company for the year ended 31 December 2011.

    [Marks: (8+12) = 20] Q. No.3. (a) Describe the lessees accounting for sale-leaseback transactions. (b) What disclosures are to be made by lessee and lessor for finance lease and operating lease as per IAS-17? (c) Bay Leasing Company signs an agreement on January 1, 2008, to lease equipment to KKK Company. The

    following information relates to this agreement. 1. The term of the non-cancelable lease is 5 years with no renewal option. The equipment has an estimated

    economic life of 5 years. 2. The fair value of the asset at January 1, 2008, is TK.80,000.

  • Page 22 of 55

    CMA DECEMBER 2012 EXAMINATION PROFESSIONAL LEVEL-II SUBJECT: 201. ADVANCED FINANCIAL ACCOUNTING-I Q. No.3. (Contd.)

    3. The asset will revert to the lessor at the end of the lease term, at which time the asset is expected to have a residual value of Tk.7,000, none of which is guaranteed.

    4. KKK Company assumes direct responsibility for all executor costs, which include Tk.900 to Rock Mountain Insurance for Insurance.

    5. The agreement requires equal annual rental payments of Tk.18,142.95 to the lessor, beginning on January 1, 2008.

    6. The lessees incremental borrowing rate is 10%. 7. KKK Company uses the straight-line depreciation method for all equipment. 8. KKK Uses reversing entries when appropriate. Present value of an annuity due at 10% for 5 years is 4.16986.

    Required: (i) Prepare an amortization schedule that would be suitable for the lessee for the lease term. (ii) Prepare all of the journal entries for the lessee for 2008 and 2009 to record the lease agreement, the lease

    payments, and all expenses related to this lease. Assume the lessees annual accounting period ends on December 31.

    [Marks: (4+4+12) = 20] Q. No. 4. (a) What are the disclosure requirements of Changes in accounting estimates as per IAS 8? (b) From the following information (during the year ended 31 Dec, 2011 ) you are required to prepare Combined

    Financial Statements for Carew & Company (Bangladesh) Limited and its branch Chittagong Sales office: Carews

    Office Chittagong Sales office

    Income Statements Tk. Tk. Sales 100000 60000 Opening Inventory 20000 8400 Purchases 95000 6000 Shipment from Carew 0 36000 115000 50400 Shipment to Chittagong office 30000 0 Ending Inventory 25000 7200 Costs of Goods sold 60000 43200 Other Expenses 25000 10000 Net Income to Retained Earnings 15000 6800 Retained Earnings Statements Opening R.E. 57000 0 Net Income from above 15000 6800 Dividend 10000 0 Ending Retained earnings to B/S 62000 6800 Balance sheet Cash 33000 14000 Receivables 20000 25000 Inventory 25000 7200 Investment in Chittagong office 32400 0 Net Plant & Machinery - Carew 75000 0 Net Plant & Machinery - Chittagong 24000 0 Other Assets 30000 0

    Total 239400 46200 Current Liabilities 20000 7000 Long term Notes Payable 50000 0 Carew office 0 32400 Unrealized Profits in Shipments to Chittagong 7400 (1) 0 Capital Stock 100000 0 Retained Earnings From above 62000 6800 Total liabilities & Equity 239400 46200

    (1) Unrealized profit for beginning Inventory is TK. 1,400.00 and for shipment for Chittagong is Tk. 6000.00 [Marks: (5+15) = 20]

  • Page 23 of 55

    CMA DECEMBER 2012 EXAMINATION PROFESSIONAL LEVEL-II SUBJECT: 201. ADVANCED FINANCIAL ACCOUNTING-I

    Q. No. 5. (a) Define and distinguish the following:

    (i) Principal and Agent in consignment business, and (ii) Consignment and Joint Venture.

    (b) Hannan and Mannan are involved in a consignment business where Hannan sends goods as consignor from Narayangonj to Mannan of Barishal for retail sale. The goods are sent by barge. Following are the transactions relating to consignment business:

    500 units were sent @Tk.1,000 each Tk.500,000 Fright charge paid by consignor Tk.150,000 Loading charge paid by consignor Tk. 50,000 Unloading charge paid by consignee Tk. 24,000 Insurance charge paid by consignor Tk. 10,000 Carrying charge to warehouse paid by consignee Tk. 16,000 Warehouse rent paid by consignee Tk. 20,000

    100 units were lost by fire in transit by barge and remaining goods were unloaded from barge. Insurance claim received Tk.120,000. They arranged for remaining 400 units to carry from barge to warehouse and paid carrying charges. But 350 units were received at the warehouse in good condition with no trace of the remaining. 300 units were sold (@ Tk.2,000) at Tk.600,000 and 50 units are left in warehouse. 10% of good units received at warehouse are considered normal loss. Due to decrease in market price, sales price of stock estimated to be @ Tk.1,400. Commission is paid to the consignee @ 5% on sales. Required: Draw a consignment account in the books of Hannan.

    [Marks: (6+14) = 20]

    =THE END=

  • Page 24 of 55

    THE INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF BANGLADESH CMA DECEMBER-2012 EXAMINATION

    PROFESSIONAL LEVEL-II SUBJECT: 202. MANAGEMENT ACCOUNTING

    Time: Three hours Marks: 100 All questions are to be attempted. Show computations, where necessary. Answer must be neat, brief and relevant. Start answering each question from a fresh sheet.

    Q. No. 1. (a) One critic of cost allocation noted, You can avoid the problem of arbitrary cost allocation by simply not

    allocating any common costs to other cost objects. What are your thoughts on this suggestion? (b) T Company makes various types of calculators and other office products. Late in 2011, the firm had 20,000 units

    of model Z-345 in stock. The unit cost was Tk. 18, of which Tk. 6 was allocated fixed overhead. The firm expects to sell 80,000 units of this model in 2012 at Tk. 30 each, but makes only about 60,000 units because the model is being discontinued and 20,000 units are currently on hand. The purchasing agent of a large chain store has approached the sales manager of T Company with an offer to buy the 20,000 units at Tk. 14 each. The sales manager talked to the production manager who pointed out that costs are increasing and showed the following estimates of production costs for model Z-345 in 2012.

    Tk. Materials 8 Labour 4 Variable overhead 4 Fixed overhead 7

    Total 23 The sales manager believed that even if he accepted the special order, he would be able to sell the 80,000 units or so expected for 2012 because the chain store would sell in areas where T Company does little business. Required: Identify the relevant costs and decide whether or not you would accept the order.

    [Marks: (7+15) = 22] Q. No. 2. AB Ltd. manufactures a picnic table which has three components X, Y and Z, one of each being required for each table. The company is working to its full machine capacity of 28,000 hours per period and the machinery used is capable of making all the components. The tables are made in batches of 20 and data relating to current production are: Components Machine hours Variable costs Fixed costs Table costs

    X 6 Tk. 15 Tk. 6 Tk. 21 Y 10 18 7 25 Z 12 18 18 36

    Assembly 32 13 45 Total Cost

    83 44 127 Profit 23 Selling price 150 Over the next budget period the machine capacity cannot be increased although the assembly capacity can be increased as required. The budget for the next period is being prepared. Because sales are buoyant, the purchase of one of the components is being considered and the following quotation has been received:

    Batch of 20 Component Price

    X Tk. 22 Y 28 Z 32

    The company has decided that only one component will be bought from outside in one period. The sales director thinks that he could sell at least 50% more tables than at present and probably 75% more provided that the production capacity was available. You are required to: (i) Recommend which component should be bought from outside if production is increased by 50% and how many

    components should be bought. (ii) Recommend which component should be bought from outside if production is increased by 75% and how many

    components should be bought. [Marks: (10+15) = 25]

  • Page 25 of 55

    CMA DECEMBER-2012 EXAMINATION PROFESSIONAL LEVEL-II SUBJECT: 202. MANAGEMENT ACCOUNTING

    Q. No. 3. (a) What is the difference between a sales forecast and a sales budget? (b) What is the role of sales forecasting in budgeting? (c) V Ltd. Produces two products P and Q. The draft budget for the next month is as under:-

    P Q Budgeted production and sales (unit) 40,000 80,000 Selling price Tk./unit Tk. 25.00 Tk. 50.00 Total Costs Tk./unit Tk. 20.00 Tk. 40.00 Machine hours/unit 2 1 Maximum sales potential (unit) 60,000 100,000 The fixed expenses are estimated at Tk. 9,60,000 per month. The company absorbs fixed overheads on the basis of machine hours which are fully utilized by the budgeted production and cannot be further increased when the budget was discussed. The Managing Director stated that the product mix should be altered to yield optimum profit. The Marketing Director suggested that he could introduce a new Product C, each unit of which takes 1.5 machine hours. However, a processing vat involving a capital outlay of Tk. 2,00,000 is to be installed for processing C. The additional fixed overhead relating to the processing vat was estimated at Tk. 60,000 per month. The variable cost of product C was estimated at Tk. 21 per unit. Required: (i) Calculate the profit as per draft budget for the next month. (ii) Calculate the profit revising the product mix on the basis of data given on P and Q to yield optimum profit. (iii) The company decides to discontinue, either product P or Q whichever is giving lower profit and proposes

    to substitute Product C instead. Fix the selling price of Product C in such a way as to yield 15% return on additional capital employed besides maintaining the same overall profit as envisaged in (ii) above.

    [Marks: {2+2+(5+5+5)} = 19] Q.No.4. Global Airlines is considering offering Business Class service on its transpacific routes. The problem Global faces is that it wants the Business Class service to provide an equivalent return that it obtains from its Economy service. The Business Class fare must be set in such a way that it will provide the same margin per seat as the Economy Class fare. Management has some questions as to the appropriate way to assure that this objective will be met. The published Economy Class fare is Tk. 80,000 one way; however, as noted by the revenue accounting manager, discount fares result in an average Economy Class fare of Tk. 50,000 one way. Business Class service would incur a meal cost estimated at Tk. 4,500 per passenger, whereas the Economy Class meal service cost is Tk. 2,500 per passenger. For the space used for each seat in Business Class, it would be possible to fit in 1.5 Economy Class seats. Baggage handling, reservations, and similar incidental costs are estimate at Tk. 1,000 per passenger for the variable portion of those costs for either class. Fixed costs per flight (crew salaries, fuel, landing fees, etc.) are allocated Tk. 27,500 per passenger for either class. What fare for Business Class meets managements objectives?

    [Marks: 15] Q.No.5. (a) United Company Ltd. produces three products P, Q and R. Data concerning the three products are as follows:

    Product P Q R Selling Price per unit Tk. 120 Tk. 96 Tk. 110 Direct Materials per unit Tk. 32 Tk. 20 Tk. 12 Other Variable Expenses per unit Tk. 40 Tk. 52 Tk. 65

    Demand for the companys products is very strong, with far more orders each month than the company has raw materials available to produce. The material costs Tk. 4 per pound with a maximum of 5,000 pounds available each month. Required: Which orders would you advise the company to accept first..for P, Q or R? Which orders second and third?

  • Page 26 of 55

    CMA DECEMBER-2012 EXAMINATION PROFESSIONAL LEVEL-II SUBJECT: 202. MANAGEMENT ACCOUNTING Q.No.5. (Contd..)

    (b) Dhaka Company Ltd. produces several products from processing 1 ton of clypton, a rare mineral. Material and processing costs total Tk. 60,000 per ton, one-fourth of which is allocated to Product X. Seven thousand units of Product X are produced from each ton of clypton. The units can either be sold at the split-off point for Tk. 8.55 each, or processed further at a total cost of Tk. 25,380 and then sold for Tk. 12 each. Required: Should Product X be processed further or sold at the split-off point? To earn an additional income of Tk. 11,510, what should the selling price per unit for Product X after further processing?

    (c) Zero-Base Budgeting is sometimes called Xerox-Base Budgeting. Do you agree? Why? (d) Write short notes on:

    (i) ABC and Pricing; (ii) Kaizen Budgeting; and (iii) Ethical issues in budgeting.

    [Marks: {6+5+2+(2+2+2) = 19]

    =THE END=

  • Page 27 of 55

    THE INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF BANGLADESH CMA DECEMBER 2012 EXAMINATION

    PROFESSIONAL LEVEL II SUBJECT: 203-COMMERCIAL & INDUSTRIAL LAWS

    Time: Three hours Marks: 100 * Answer SIX questions taking any THREE from each Part including compulsory question No. 5

    and 10. * Answer must be brief, relevant, neat and clean. * Start answering each question from a fresh sheet.

    PART A: COMMERCIAL LAWS Q. No. 1. (a) Discuss how many different ways the parties of a contract may agree to terminate the existence of a contract? (b) What are the essentials that must be present to constitute a valid contract of sales?

    [Marks: (8+7) = 15] Q. No. 2. (a) Describe circumstances in which a contract would be enforceable without consideration. (b) Define Quasi-Contract with few examples.

    [Marks: (8+7) = 15] Q. No. 3. (a) Define Trade Marks. State what are the marks or symbols that cannot be registered as trade mark? (b) Discuss the provision of law for crossing a cheque after issue.

    [Marks: (8+7) = 15] Q. No. 4. (a) What is an award? b) Briefly explain arbitral proceedings as discussed in the Arbitration Act, 2001.

    [Marks: (5+10) = 15]

    Q. No. 5. Write short notes on any 4(four) of the following: (i) Del Credere Agent (ii) Voidable Agreement (iii) Caveat Emptor (iv) Escrow (v) Bill of Lading (vi) Copy Right

    [Marks: (4 x 5) =20]

  • Page 28 of 55

    CMA DECEMBER 2012 EXAMINATION PROFESSIONAL LEVEL II SUBJECT: 203-COMMERCIAL & INDUSTRIAL LAWS

    PART B: INDUSTRIAL LAWS

    Q. No. 6. Describe different kinds of leave entitled to workers in the Labour Act, 2006

    [Marks: 15] Q. No. 7. (a) Differentiate between Closures, Strikes and Lockout. (b) Discuss the provision of entitlement of benefits if a worker dies while in service.

    [Marks: (8+7) = 15] Q. No. 8. (a) Discuss the Garment Factory owners liability to provide children room in the light of the Bangladesh Labour Act

    2006. (b) What are the deductions to be made from wages as per the BLA 2006?

    [Marks: (8+7) = 15] Q. No. 9. Discuss provisions of safety and security as per Bangladesh Labour Act, 2006: (i) Fire. (ii) Heavy Machinery at upper stairs. (iii) Crane and Lift.

    [Marks: (3 x 5) = 15] Q. No. 10. Write short notes on any 4(four) of the following: (i) Wages (ii) CBA (iii) Termination (iv) Retrenchment (v) Discharge (vi) Dismiss

    [Marks: (4 x 5) =20]

  • Page 29 of 55

    THE INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF BANGLADESH CMA DECEMBER-2012 EXAMINATION

    PROFESSIONAL LEVEL-II SUBJECT: 204. TAXATION

    Time: Three hours Marks: 100 All questions are to be attempted. Show computations, where necessary. Answer must be neat, brief and relevant. Start answering each question from a fresh sheet.

    Q. No. 1. Briefly explain the income tax implications in the following cases:

    (a) Non-Government Organization; (b) Public University; (c) Co-operative Bank; and (d) Gratuity fund of an International Organization based in Bangladesh.

    [Marks: (43) = 12] Q. No. 2. (a) What do you mean by Charge of minimum tax as stated under section 16CCC of Income Tax Ordinance,

    1984? What is the rate of minimum tax payable and who will pay this? Explain what is meant by receipts as stated in this section.

    (b) State the recent changes and the limit allowed as tax rebate for the CSR activities of a company for the assessment year 2012-13. What are the new sectors where money can be invested for CSR activities for rebate purpose with effect from July 1, 2012?

    (c) MPH Companys following information is available with you. i. Donated for CSR activities Tk. 10,000,000 (charged in income statement) ii. Profit as per audited statement of accounts Tk.100,000,000. Compute the tax to be paid by the Company, which is an unlisted industrial company.

    [Marks: (53) = 15] Q. No. 3. The following items, among others, are debited to profit and loss account of Rose Cement Ltd. for the year ended 30 June 2012:

    1. Commission (Brokerage) paid for placing the shares of the Company Tk. 1,00,000 2. Compensation to forcedly retired official Mr. A. Malek

    (He is found guilty of improper conduct. He had five years appointment. The directors agreed to pay him on retirement so that he was got rid of.)

    Tk. 2,00,000

    3. Capital expenditure on Hospital for employees of the Company Tk.20,00,000 4. Trade penalties and law expenses (for infringement of the Customs Law) Tk. 2,00,000 5. Anticipated loss written off (assuming that the loss might occur) Tk. 5,00,000

    The Directors of the Company invite your opinion as to which items are deductible in computing the total income of the company for the assessment year 2012-2013.

    [Marks: 10] Q. No. 4. (a) Define capital assets. (b) Explain the rate of capital gain tax as per Second Schedule of Income Tax Ordinance, 1984. What is the gain

    tax rate on capital gain arising from transfer of shares of Private Limited Company? (c) Mr Azam (age 66 years) purchased a machine for his workshop (a proprietorship entity) on 1st August 2009 at

    Tk. 1,80,000. On 31st March 2012 it was sold. Till that date Tk. 1,20,000 was charged as accounting depreciation but as per Third Schedule tax depreciation was Tk. 50,000. The Company has not purchased or has not any plan to purchase a similar machine during two years ending 31st March, 2013. Find out the capital gain if the sales proceed is: (i) Tk. 1,50,000 (ii) Tk. 2,10,000 (iii) Tk. 2,60,000. Mr. Azam had income of Tk. 1,50,000 from other heads of income except Capital Gains. Find out tax liability of Mr. Azam in each of the three cases.

    [Marks: (3+3+6) = 12]

  • Page 30 of 55

    CMA DECEMBER-2012 EXAMINATION PROFESSIONAL LEVEL-II SUBJECT: 204. TAXATION

    Q. No. 5. Mr. S. Alam is a Cost and Management Accountant in practice. He has the following income for the year ended June 30, 2012.

    Taka 1. Share of pre-tax income from CMA partnership firm (Tax duly paid by Firm) 4,99,454 2. Interest income (Gross): a. Interest income from leasing company 12,27,085* b. Bank interest on fixed deposit 5,39,380* c. Bank interest on saving account 49,056* 3. Dividend income (Gross) 6,500* 4. Income from ICMAB as examiner and question setter. 3,07,300 5. Income from Business 58,212 6. Capital gain on sale of shares of a publicly listed company 69,032 7. Income from Government prize bond lottery (Gross) 10,000* 8. He has a house at London, Net house property income was 10,000 pound

    (equivalent to BDT 13,00,000). He paid 1000 pound tax at London. He resides more than 200 days in Bangladesh and he did not remit this income from England to Bangladesh

    9. Income from fisheries 1,00,000 He has the following investment during the year 2011-2012: Bangladesh sanchyapatra 2,00,000 Life insurance premium 28,200 Secondary shares of Ananda Shipyard and Shipways Ltd. 8,00,000

    *Tax has been deducted at source duly. During the year he has paid Tk. 99,800 as advance tax. His total net wealth at the end of the income year is Tk. 3,20,55,500. Compute the total income and tax payable by Mr. S. Alam.

    [Marks: 20] Q. No.6. ABC Bank Ltd., a bank incorporated in Bangladesh, has submitted the following audited income statement showing profit before tax of Tk.258,000 for the income year 2011-2012. You have been provided with the notes supporting the figures to compute the tax liability of the bank for the respective assessment year:

    Particulars Amount (Tk.) Amount (Tk.) Interest income 650,000 Interest paid on deposits and borrowings etc. 200,000 Net interest income 450,000 Income from investments 100,000 Commission, exchange and brokerage 60,000 Other operating income (20+61) 81,000 Total Operating Income (A) 691,000 Less: Operating expenses Payment to employees 215,000 Postage and telegrams 5,000 Rent, rates and insurance etc. 11,000 Legal charges 2,000 Directors fees 2,000 Auditors fees 1,000 Repairs to premises 60,000 Stationery, printing and advertisement 72,000 Stamps 3,000 Charges on loan losses 5,000 Other expenses of business 15,000 Total Operating Expenses (B) 391,000 Profit/(Loss) Before Provision (C=A-B) 300,000 Provisions: Specific provision 12,000 General provision 30,000 Total provision (D) 42,000 Total Profit/(Loss) Before Taxes (C-D) 258,000

  • Page 31 of 55

    CMA DECEMBER-2012 EXAMINATION PROFESSIONAL LEVEL-II SUBJECT: 204. TAXATION Q. No.6. (Contd)

    Supporting Information: a. Accounting depreciation charged was Tk. 50,000 whereas tax depreciation is Tk. 80,000 b. Inadmissible expenses have been found as follows: Perquisites Tk. 50,000 Printing and Advertisement (capital nature) 40,000 Other expenses (tax is not deducted at sources) 10,000 c. Balance Sheet (extract): Paid-up Capital Tk. 2,000,000 Statutory Reserve 750,000 Retained Earnings 250,000 Dividend Equalization Fund 200,000 d. Classification of Loans and Advances: Unclassified Tk. 2,100,000 Sub-standard 850,000 Doubtful 1,145,000 Bad/Loss 10,250,000

    Income tax authority accepted bad debts as loan losses to the extent of Tk. 5,000. e. Entertainment Expenses amounted to Tk. 65,000 for the period.

    [Marks: 15] Q. No. 7. (a) State the provision of section 17 of the Value Added Tax Act, 1991 regarding self-registration. What are the

    procedures of registration under Rule 9 of the Value Added Tax Rules, 1991? (b) Mention the rate of VAT based on value addition applicable to the following service providers:

    (i) Transport Contractor; (ii) Advertising firm; (iii) Printing Press; and (iv) Professional Firm.

    (c) Discuss offences and penalties as enacted under section 37 of the Value Added Tax Act, 1991 and under Rules 4 and 35 of the Value Added Tax Rules, 1991.

    (d) What are the prohibited goods under the Customs Act, 1969? (e) What are the elements of a valid gift for gift-tax purpose?

    [Marks: (5+2+4+3+2) = 16]

    ==THE END==

  • Page 32 of 55

    THE INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF BANGLADESH CMA DECEMBER 2012 EXAMINATION

    PROFESSIONAL LEVEL-III SUBJECT: 301.ADVANCED FINANCIAL ACCOUNTING-II.

    Time: Three hours Full Marks: 100 Start answering each question from a fresh sheet. Show all computations. Answer must be brief, relevant, neat and clean.

    Question No. 1 On 1 July 2010, Batman Ltd. acquired 80% of the share capital of Robin Ltd. for Tk. 264,800. This was sufficient for Batman Ltd. to gain control over Robin Ltd. On that date, the balance sheet of Robin Ltd. consisted of:

    Share capital Tk. 250,000 General reserve 10,000 Retained earnings 10,000 Liabilities 180,000 Tk. 450,000 Cash Tk. 35,000 Inventories 70,000 Land 50,000 Plant and equipment 300,000 Accumulated depreciation (130,000) Trademark 100,000 Goodwill 25,000 Tk. 450,000

    All the identifiable assets and liabilities of Robin Ltd. were recorded at fair value except for:

    Carrying amount Fair value Inventories Tk. 70,000 Tk. 80,000 Land 50,000 70,000 Plant and equipment (cost Tk. 300,000) 170,000 190,000 Trademark 100,000 110,000

    The plant and equipment had a further 5-year life and was expected to be used evenly over that time. The trademark was considered to have an indefinite life. Any adjustments for differences between carrying amounts at acquisition date and fair values are made on consolidation. During the year ended 30 June 2011, all inventories on hand at the beginning of the year were sold, and the land was sold on 28 February, 2011 to Riddler Ltd. for Tk. 80,000. Any valuation reserve created in relation to the land was transferred on consolidation to retained earnings. The income tax rate is assumed to be 30%.

  • Page 33 of 55

    CMA DECEMBER 2012 EXAMINATION PROFESSIONAL LEVEL-III SUBJECT: 301.ADVANCED FINANCIAL ACCOUNTING-II.

    Question No. 1.(contd.) The summarized income information of Batman Ltd. and Robin Ltd. for the year ended 30 June 2011 is as shown below:

    Batman Robin Ltd. Sales revenue Tk. 200,000 Tk. 172,000 Other income 85,000 35,000 285,000 207,000 Cost of sales 162,000 128,000 Other expenses 53,000 31,000 215,000 159,000 Profit before tax 70,000 48,000 Income tax expense 20,000 18,000 Profit 50,000 30,000 Retained earnings (01.07.2010) 30,000 10,000 Transfer from general reserve -- 8,000 80,000 48,000 Interim dividend paid 12,000 10,000 Final dividend declared 6,000 4,000 18,000 14,000 Retained earnings (30.06.2011) Tk. 62,000 Tk. 34,000

    Of the interim dividend paid by Robin Ltd. in the current year, Tk. 5,000 was from profits earned before acquisition date. All other dividends were from the current years profits. During the current year, Robin Ltd. sold a quantity of inventory to Batman Ltd. for Tk. 8,000. The original cost of these items to Robin Ltd. was Tk. 5,000. One-third of this inventory was still on hand at the end of the year. On 31 March 2011, Robin Ltd. transferred an item of Plant with a carrying amount of Tk. 10,000 to Batman Ltd. for Tk. 15,000. Batman Ltd. treated this item as inventory. The item was still on hand at the end of the year. Robin Ltd. applied a 20% depreciation rate to this type of plant. Required: (a) Prepare the consolidation worksheet entries necessary for preparation of the consolidated financial

    statements for Batman Ltd. and its subsidiary for the year ended 30 June, 2011. (b) Prepare the consolidated income statement.

    [Marks: (25+10) = 35]

  • Page 34 of 55

    CMA DECEMBER 2012 EXAMINATION PROFESSIONAL LEVEL-III SUBJECT: 301.ADVANCED FINANCIAL ACCOUNTING-II.

    Question No. 2. Sun-Moon Ltd. operates its Home Office in Dhaka and a Branch at Chittagong. Trial Balance prepared on 31st December, 2010 revealed the following position: Home Office Branch Office Dr. Cr. Dr. Cr. Cash 28,175 - 7,000 - Accounts Receivable 99,750 - 47,250 - Merchandise Inventory 110,250 - 50,400 - Furniture 29,750 - 12,600 - Accumulated Depreciation Furniture - 8,750 - 1,890 Store Supplies 3,290 - 2,030 - Branch Current A/c 110,160 - - - Accounts Payable - 122,897 - 14,700 Home Office Current A/c - - - 106,190 Common Stock (Tk. 10 each) - 227,500 - - Retained Earnings 23,975 - - - Sales - 148,228 - 63,000 Shipment to Branch - 35,700 - - Purchases 87,850 - 14,350 - Shipment from Home Office - - 29,750 - Advertising Expense 9,975 - 2,800 - Freight-in 6,475 - 3,675 - Salary Expense 14,875 - 8,225 - Rent Expense 9,450 - 5,250 - Insurance Expense 9,100 - 2,450 - 543,075 543,075 185,780 185,780 Additional Information: (i) Ending Merchandise Inventory: Cost(Tk.) Market Price(Tk.) Home Office 84,700 85,700 Branch Office 61,100 51,100 (ii) Store Supplies on Hand - Home Office Tk. 1,330 Branch Office Tk. 1,050 (iii) Accrued Salary Expense - Home Office Tk. 910 Branch Office Tk. 400 (iv) Depreciation on Furniture @ 10%

    Required: (a) Income Statement in Columnar Form (b) Consolidated Balance Sheet of the Company (c) Working notes for Combined Financial Statement of Head Office and Chittagong Branch of the

    Sun-Moon Ltd. for 31st December, 2010. [Marks: (6+10+6) = 22]

  • Page 35 of 55

    CMA DECEMBER 2012 EXAMINATION PROFESSIONAL LEVEL-III SUBJECT: 301.ADVANCED FINANCIAL ACCOUNTING-II.

    Question No. 3. Set out below are extracts from the Statement of Financial Position as at 31/10/11 of Quantum Ltd and extracts from the Statements of Income for the companys first two years of trading. Balance Sheet "extract" of Quantum Ltd 31/10/11 Equity Ordinary share capital[ Nominal value Tk. 0.25] Tk. 250,000 Share Premium Tk. 350,000 Revaluation reserve Tk. 85,000 Profit brought forward 31/10/11 Tk. 20,000 Total Equity Tk. 705,000

    Non Current Liabilities 10% Convertible Loan notes Tk. 125,000

    8% Redeemable Preference Shares Tk. 260,000 Tk. 385,000

    Income statement extract for years ended 31/10/12 31/10/11 Profit before interest and tax Tk.125,000 Tk. 74,300 Less Loan interest (Tk.12,500) (Tk.12,500) Less Redeemable Preference dividend (Tk.20,800) (Tk.20,800) Profit before taxation Tk. 91,700 Tk. 41,000 Less Taxation (Tk.28,900) (Tk.16,000) Profit for the year Tk. 62,800 Tk. 25,000 Less Ordinary Dividends (Tk.10,000) Tk. 5,000) Profit Retained Tk. 52,800 Tk.20,000 Notes. (i) On the 1st of May 2012 the company made a bonus issue of one share for every four shares held (ii) On the 31/07/12 the company made a rights issue of one share for every five shares held. The issue

    price was Tk.0.70 per share and the market value of the share at the date of issue was Tk.1.40 per share (iii) The terms of conversion of the loan notes were as follows:

    (a) From 2014 to 2018 100 ordinary shares for every Tk.100 of loan stock (b) From 2019 forward 100 ordinary shares for every Tk.130 of loan stock

    (iv) The rate of corporation tax is 20% Required (a) Calculate the basic Earnings per Share (EPS) for 2012 including the comparative EPS for 2011 that

    would be shown in the financial statements for year 2012. (b) Calculate the diluted EPS for 2012 (c) Explain briefly the importance of the P/E ratio

    Show any EPS, or diluted EPS to THREE decimal places [Marks: (8+6+6) = 20]

  • Page 36 of 55

    CMA DECEMBER 2012 EXAMINATION PROFESSIONAL LEVEL-III SUBJECT: 301.ADVANCED FINANCIAL ACCOUNTING-II.

    Question No. 4. (a) What are share options? How would they be disclosed in a Companys balance sheet? (b) Kurashiki Ltd. Sasebo Ltd. and Kanzawa Ltd. each own 33

    % of the ordinary shares that carry voting

    rights at a general meeting of shareholders of Saga Ltd. Kurashiki Ltd., Sasebo Ltd. and Kanzawa Ltd. each have the right to appoint two directors to the board of Saga Ltd. Kurashiki Ltd. also owns call options that are exercisable at a fixed price at any time and if exercised would give it all the voting rights in Saga Ltd. The management of Kurashiki Ltd. does not intend to exercise the call options, even if Sasebo Ltd. and Kanzawa Ltd. do not vote in the same manner as Kurashiki Ltd. Discuss whether Saga Ltd. is a subsidiary of any of the other entities.

    (c) In February 2008, Sigma Ltd. issued to existing shareholders 36,000 options to buy 36,000 ordinary shares. Each option costs Tk.5.00 and entitles the holder to one ordinary share in Sigma Ltd. at a price of Tk.15.00 per share, exercisable between November 23, 2011 and December 20, 2011. Options not exercised by December 20, 2011 will lapse. Prepare journal entries.

    (d) BAS-27 implicitly adopts the entity concept of consolidation. However, it is argent that the standard letter were taking the entity concept without giving consideration to the objections of consolidated financial statements. Required: (i) What are the main objectives of preparing consolidated financial statements? (ii) How would the choice of objectives affect the adoption of particular concepts of consolidation?

    [Marks: (6+5+6+6) = 23]

    = THE END =

  • Page 37 of 55

    THE INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF BANGLADESH CMA DECEMBER 2012 EXAMINATION

    PROFESSIONAL LEVEL-III SUBJECT: 302. ADVANCED COST ACCOUNTING

    Time: Three hours Full Marks: 100 All questions are to be attempted. Show computations, where necessary. Answer must be brief, relevant, neat and clean. Start answering each question from a fresh sheet.

    Q. No. 1. (a) What is the purpose of a cost of production report? (b) Distinguish between normal (unavoidable) spoilage and abnormal (avoidable) spoilage. (c) Explain how normal and abnormal spoilage should be reported for management purpose. (d) Padma Incorporation produces antibiotic product in its three producing departments. The following quantitative

    and cost data have been made available: Department Production data: Blending Testing Terminal Started into production 8000kg 5400kg 3200kg Transferred to next dept. 5400 3200 ------ Transferred to finished goods ----- ----- 2100 In process(100% materials, 1/3 labor and overhead) 2400 1800 ----- In process(100% materials, 2/3 labor and overhead) ----- ----- 900 Cost charged to departments: Materials Tk. 20670 Tk. 7980 Tk. 14400 Labor Tk. 11160 Tk. 5016 Tk. 11520 Factory over