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Page 1 of 57
THE INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF BANGLADESH
CMA AUGUST, 2011 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. The following trial balance and additional data are of
Mr. X.
Mr. X Trial Balance
As at December 31, 2010
Accounts Titles Debit (Taka) Credit (Taka) Cash 55,000 -
Accounts Receivable 60,000 - Allowance for doubtful accounts -
2,500 Office supplies inventory 5,000 - Prepaid rent 15,000 -
Prepaid advertising 10,000 - Unexpired insurance 6,500 - Office
Equipments 55,000 - Accumulated depreciation-Office Equipments -
6,000 Furniture and Fixture 40,000 - Accumulated
depreciation-Furniture and Fixture - 4,000 Accounts Payable -
30,000 Notes Payable(1/12/2009) - 20,000 Capital - 100,000 Drawings
20,000 - Service Revenue - 200,000 Salaries Expenses 60,000 -
Utilities Expenses 10,000 - Sundry Expenses 21,000 - Delivery
Expenses 5,000 - Total 362,500 362,500
Additional Information: (a) Office supplies on hand at December
31, 2010 Taka 2,000. (b) Rent expenses for 2010 Taka 12,000. (c)
Advertising Expenses for 2010 Taka 8,000. (d) Insurance Expenses
for 2010 Taka 4,500. (e) Allowance for doubtful accounts increased
upto Taka 4,000. (f) Depreciation on fixed assets @ 10%. (g)
Accrued interest on notes payable 10% per year. (h) Salaries
Payable Taka 8,000. Required: (i) A 10 column worksheet. (ii)
Adjusting entries.
[Marks: (12+8) = 20]
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Page 2 of 57
CMA AUGUST, 2011 EXAMINATION FOUNDATION LEVEL SUBJECT: 001.
PRINCIPLES OF ACCOUNTING.
Q. No. 2. (a) BTI purchases motorcycles from various countries
and exports them to Europe. BTI has
incurred these expenses during 2010:
Taka (i) Cost of purchases (based on vendors invoices) 2,500,000
(ii) Trade discounts on purchases 100,000 (iii) Import duties
50,000 (iv) Freight and insurance on purchases 70,000 (v) Other
handling costs relating to imports 200,000 (vi) Salaries of
accounting department 300,000 (vii) Brokerage commission payable to
indenting agents for arranging imports 65,000 (viii) Sales
commission payable to sales agents 100,000 (ix) After-sales
warranty costs 400,000
Required: BTI is seeking your advice on which costs are
permitted under IAS-2 to be included in cost of inventory.
(b) Jalal Printing starts business in July, with cash Taka
20,000. During the month of July, 2010 following transactions took
place:
July 01 Purchased merchandise on account from Jamal and brothers
Taka 8,000. FOB shipping point, terms 2/10, n/30.
July 02 Paid freight charges Taka 500 for the purchase of July
1. July 10 Received credit from Jamal for defective merchandise
returned Taka 1,000. July 12 Sold merchandise on account Taka
6,000, terms 2/10, n/30. Merchandise had a cost
of Taka 5,000. July 16 Purchased merchandise on account for Taka
10,000, terms 2/10, n/30. FOB shipping
point. July 19 Paid in full for the purchase of July 1. July 20
Received a credit from the supplier of July 16 purchase for
merchandise returned
Taka 2,000. July 22 Made sales on account Taka 8,000, terms
2/10, n/30, FOB destination. Merchandise
had a cost of Taka 6,500. July 24 Paid freight charges Taka 600
for the sale of July 22. July 25 Paid in full for the purchase July
16. July 30 Received part payment on account from the customers
Taka 5,000.
Required: Prepare journal entries under net price method being
perpetual inventory system. [Marks: (10+10) = 20]
Q. No. 3. (a) As an auditor, what basic features would you hope
to find in your clients system of cash
control? (b) The cash account of Standard Furniture Service Inc.
disclosed a balance of Tk.34,112.96 on
October, 31. 2009. The bank statements as of October, 31, showed
a balance of Tk.42,418.90. Upon comparing the statement with the
cash records, the following facts were developed: (i) Standards
account had been charged for a customers uncollectible check
amounting to
Tk.2,286 on October 26. (ii) A customers check for Tk.1,450 had
been entered as Tk.1,250 both by the depositor and
the bank but was later corrected by the bank.
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Page 3 of 57
CMA AUGUST, 2011 EXAMINATION FOUNDATION LEVEL SUBJECT: 001.
PRINCIPLES OF ACCOUNTING.
Q. No. 3. (Contd..)
(iii) A two month, 9%, Tk.6,000 customers note dated August 25,
discounted on October 12, had been protested October 26, and the
bank had charged Standard for Tk.6,101.66, which included a protest
fee of Tk.11.66.
(iv) Cheque no. 551 for Tk.2,485 had been entered in the cash
book as Tk.2,449, and cheque no. 542 for Tk.65.80 had been entered
as Tk.658. The company uses the voucher system.
(v) There were bank service charges for October of Tk.78.86 not
yet recorded on the books. (vi) A bank memo stated that M. Sumons
note for Tk.5,000 and interest of Tk.125 had been
collected on October 29, and the bank had been made a charge of
Tk.13.00 (no entry had been made on the books when the note was
sent to bank for collection.)
(vii) Receipt of October 29, for Tk.13,700 was deposited
November 1. The following cheques were outstanding on October
31:
No. 520 ------------------------ Tk. 2,500.00 No. 571
----------------------------- Tk. 1,465.00 521
------------------------ Tk. 6,896.46 573
----------------------------- Tk. 375.80 532
------------------------ Tk. 4,810.50 575
---------------------------- Tk. 551.44 670
------------------------ Tk. 3,550.76 576
----------------------------- Tk. 4,466.30
Required: (1) Construct a bank reconciliation statement, using
the form where both bank and book
balances are brought to a corrected cash balance. (2) Give the
journal entries where necessary.
[Marks: (5+10+5) = 20] Q. No. 4. (a) Why is it necessary to
prepare formal financial statements when all of data are in the
statements
column of the work sheet? (b) From the following information of
Star Repairing Company you are required to prepare an
analysis of each error showing (a) the incorrect entry; (b) the
correct entry and (c) correcting entry. And also prepare a (d)
correct trial balance.
STAR REPAIRING COMPANY Trial Balance April 30, 2009
Dr. (Tk.) Cr. (Tk.) Cash 51,000 Accounts Receivable 32,000
Supplies 8,000 Equipment 1,06,000 Accumulated Depreciation 13,500
Accounts Payable 21,000 Salaries Payable 5,000 Unearned Fees 8,900
Star Capital 1,39,000 Fees Earned 54,500 Salaries Expenses 33,000
Administrative Expenses 4,000 Miscellaneous Expenses 2,900
Depreciation Expenses 5,000 Tk. 2,41,900 Tk. 2,41,900
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Page 4 of 57
CMA AUGUST, 2011 EXAMINATION FOUNDATION LEVEL SUBJECT: 001.
PRINCIPLES OF ACCOUNTING.
Q. No. 4. (Contd..)
A newly qualified CMA reviewed the records and found the
following errors: (i) Cash received from a customer on account was
recorded as Tk.6,500 instead of Tk.
5,600. (ii) The purchase, on account, of a computer costing Tk.
3,400 was recorded as a debit to
supplies and a credit to accounts Payable for Tk. 3,400. (iii) A
payment of Tk. 300 for advertising expenses was entered as a debit
to Miscellaneous
Expense Tk. 300 and a credit to cash Tk. 300. (iv) The first
salary payment of this month was for Tk. 19,000, which included Tk.
5,000 of
salaries payable on March 31. The payment was recorded as a
debit to Salaries Expenses Tk. 19,000. (No reversing entries were
made on April 1)
(v) A cash payment of repair expense on equipment for Tk. 860
was recorded as a debit to equipment Tk. 680 and a credit to cash
Tk. 680.
[Marks: (4+4+4+4+4) = 20] Q. No. 5. (a) Differentiate between
Preferred Stock and Common Stock. (b) Explain Contingent
Liabilities. (c) Zaman Corporation operates in an industry that has
a high rate of bad debts. On December 31,
2010 before an year-end adjustments the balance in Zamans
Accounts Receivable account was Tk.5,55,000 and the allowance for
Doubtful Accounts had a credit balance of Tk.35,000. The year-end
balance reported in the Balance Sheet for the allowance for
Doubtful Accounts will be based on the aging schedule shown
below:
Days Accounts Outstanding Amount Probability of Collection Less
than 16 days Tk.300,000 0.98 Between 16 and 30 days 100,000 0.90
Between 31 and 45 days 80,000 0.85 Between 46 and 60 days 40,000
0.75 Between 61 and 75 days 20,000 0.40 Over 75 days 15,000
0.00
Required: (i) What is the appropriate balance for the Allowance
for Doubtful Accounts on December
31, 2010? (ii) Show how accounts receivable would be presented
on the Balance Sheet prepared on
December 31, 2010. (iii) What is the Taka effect of the year-end
bad debt adjustment on the before-tax income for
2010? [Marks: (3+3+8+4+2) = 20]
= THE END =
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Page 5 of 57
THE INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF BANGLADESH
CMA AUGUST, 2011 EXAMINATION
FOUNDATION LEVEL SUBJECT: 002. BUSINESS COMMUNICATION AND OFFICE
MANAGEMENT.
Time: Three hours Full Marks: 100
Answer THREE questions from each part, where Q. No. 4 and Q. No.
8 are compulsory. Answer must be brief, relevant, neat and clean.
Use a fresh sheet for answering each question. All questions must
be answered in English.
PART-A: BUSINESS COMMUNICATION
Q. No. 1. (a) An effective communication is the key to success
Discuss. (b) What are the barriers of effective communication? (c)
Differentiate between internal and external communication with
examples.
[Marks: (5+5+5) = 15]
Q. No. 2. (a) Discuss the main points regarding importance of
Business Letter. (b) Discuss the different parts of a commercial
letter. (c) Suppose your office building is damaged by fire which
was insured. Lodge a insurance claim to
the insurance company. [Marks: (4+5+6) = 15]
Q. No. 3. (a) Do you think electronic communication technology
is necessary in a business organization? If
so, why? (b) Discuss the procedure how letter of credit is
opened with a bank. (c) Write a CV with a forwarding letter to the
MD of a limited company for the post of Cost
Accountant. [Marks: (3+6+6) =15]
Q. No. 4. Write short notes on any FIVE of the followings: (i)
Bonded warehouse. (ii) Capital Market. (iii) E-mail. (iv) Online
Banking. (v) Organization chart. (vi) Business ethics. (vii)
Dumping. (viii) IPO.
[Marks: (4 x 5) = 20]
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Page 6 of 57
CMA AUGUST, 2011 EXAMINATION FOUNDATION LEVEL SUBJECT: 002.
BUSINESS COMMUNICATION AND OFFICE MANAGEMENT.
PART-B: OFFICE MANAGEMENT
Q. No. 5. (a) What is Office Management? What are the steps in
the process of office management? (b) Discuss the Principles of
Scientific Office Management. (c) State the qualities of a good
office manager.
[Marks: (7+5+3) =15]
Q. No. 6. (a) Why office manual is necessary? (b) Describe the
organogram of a hypothetical company with a diagram. (c) Discuss
the necessity of the departmentation of office work.
[Marks: (3+6+6) =15]
Q. No. 7. (a) Discuss the importance of filing in modern office
management. (b) What are the various systems of office filing? (c)
Discuss the various methods of cost control of an office.
[Marks: (5+5+5) =15]
Q. No. 8. Write short notes on any five from the following: (a)
Job evaluation method. (b) Performance appraisal. (c) Office
automation. (d) Mobile Banking. (e) Office security. (f)
E-commerce. (g) Employer-Employee relationship. (h) Motivation.
[Marks: (4x5) =20]
= THE END =
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Page 7 of 57
THE INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF BANGLADESH
CMA AUGUST, 2011 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 cereal company
finds that the number of people who will buy of its products in the
first
month that it is introduced in linearly related to the amount of
money it spends on the advertising. If it spends Tk.40,000 on
advertising, then 100,000 boxes of cereal will be sold and if it
spends Tk.60,000, then 200,000 boxes will be sold. (i) Write a
linear equation that relates the amount A spent on advertising to
the number x
of boxes the company aims to sell. (ii) How much advertising is
needed to sell 300,000 boxes of cereal?
(b) Find dxdy for xy + yx = ab
[Marks: (3+3+4) = 10] Q. No. 2. (a) The marginal cost C (in
dollars) of manufacturing x cell phones (in thousands) is given
by
C(x) = 5x2 200x + 4000. How many cell phones should be
manufactured to minimize the marginal cost? What is the minimum
marginal cost?
(b) Show that 2(sin6 + cos6) -3 (sin4 + cos4) + 1 = 0. [Marks:
(6+4) = 10]
Q. No. 3.
(a) Carryout the following: (i)
+ 1ee
2x
x
dx (ii)
xsin
x
1 dx.
(b) Find the differential coefficient of sec x with respect to
tan x. [Marks: (6+4) = 10]
Q. No. 4.
(a) If A =
10
01
and B =
i0
0i
then prove that AB= - BA and A2 = B2 =I.
(b) Find that equation of the straight line passing through the
point of intersection of the two lines 2x+3y-1=0 and x-2y+3=0 and
intersects equal portion from both axes.
[Marks: (5+5) = 10] Q. No. 5. (a) If , are the roots of the
equation x2 px + q = 0 form the equation whose roots are
pq
and pq
(b) Find the number of different permutations of the letters of
the word parallel taken all together in which two ls are
consecutive.
[Marks: (5+5) = 10] Q. No. 6. (a) Find the compound interest on
Tk. 6,950.00 for 3 years if interest is payable half yearly, the
rate
for the first two years being 6% p.a. and for the third year
9%p.a. (b) If x =log2aa, y= log3a2a, z= log4a3a prove that xyz + 1
= 2yz.
[Marks: (5+5) = 10]
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Page 8 of 57
CMA AUGUST, 2011 EXAMINATION FOUNDATION LEVEL SUBJECT: 003.
QUANTITATIVE TECHNIQUES.
Q. No. 7. (a) If A = {1, 2, 3}; B = {2, 3, 4}; S = {1, 3, 4}, T=
{2, 4, 5}, verify that (AXB)I (SXT) = (AI S) X (BI T) (b) A factory
produces 200 bulbs for a total cost Tk. 800 and 400 bulbs for a
total cost of Tk. 1200.
Given that the cost curve is a straight line, find the equation
of the straight line and use it to find the cost of producing 300
bulbs.
[Marks: (5+5) = 10]
PART-B: BUSINESS STATISTICS Q. No. 1. (a) How would you Account
for the predominant choice of arithmetic mean as a measure of
central
tendency? Under what circumstances would it be appropriate to
use mode or median? (b) Particulars regarding the income of two
villages are given below:
Village x Village y Number of employees 600 500 Average income
(in Tk.) 1750 1860 S.D. of income (in Tk.) 100 81
(i) In which village is the variation in income greater? (ii)
What is the combined standard deviation of the village x and
village y put together?
[Marks: (4+6) = 10]
Q. No. 2. (a) In what way measures of central tendency
variation, skewness and kurtosis are complementary
to one another in understanding a frequency distribution?
Elucidate. (b) You are given the following frequency distribution
of the daily earning of employees in
company.
Earning (in Rs) Number of workers Earning (in Rs) Number of
workers 50 70 4 130 150 6 70 90 8 150 170 7
90 110 12 170 190 3 110 130 20
Calculate the first four months about the point 120. Convert the
result into moments about the mean.
[Marks: (4+6) = 10]
Q. No. 3. (a) Distinguish between correlation and regressions
analysis and point out their role in business. (b) Find the
regression equation showing the regression equation of capacity
utilization on
production from the following data:
Average Standard deviation Production (in Lakh units) 35.6 10.5
Capacity utilization (in percentage) 84.6 8.5
r = 0.62 Estimate the production when capacity utilization is 70
per cent.
[Marks: (4+6) = 10]
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Page 9 of 57
CMA AUGUST, 2011 EXAMINATION FOUNDATION LEVEL SUBJECT: 003.
QUANTITATIVE TECHNIQUES.
Q. No. 4. (a) Discuss the distinctive features of the Binomial,
Passion and Normal Distributions. When does
a binomial distribution trend to become a normal distribution?
(b) A whole distributor of fertilizer products find that the annual
demand for one type of fertilizer is
normally distributed with a mean of 120 tons and standard
deviation of 16 tons. If he orders only ones a year, what quantity
should be ordered to ensure that there is only a 5 percent change
of running short?
[Marks: (4+6) = 10] Q. No. 5. (a) Define scatter diagram.
Discuss the usefulness of using scatter diagram in studying the
correlation between variables. (b) The sales and experience of
workers of seven shops are given in the below table:
Sales (in Tk.) 30 37 28 42 29 24 38 Experience (in years) 5 6 4
6 6 7 6
Fit a simple regression model of sales on experience. [Marks:
(4+6) = 10]
Q. No. 6. (a) Define probability. Explain addition and
Multiplication law of probability. (b) A box contain 5 red and 6
white balls. 5 balls are drawn at random without replacement.
What
is the probability of getting 2 red and 3 white balls? [Marks:
(4+6) = 10]
Q. No. 7. Write short notes on the followings: (a) Skewness. (b)
Kurtosis. (c) Normal distribution. (d) Type-I error & Type-II
error.
[Marks: (2.5 x 4) = 10]
= THE END =
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Page 10 of 57
THE INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF BANGLADESH
CMA AUGUST, 2011 EXAMINATION
FOUNDATION LEVEL SUBJECT: 004. BUSINESS ECONOMICS AND
INTERNATIONAL BUSINESS.
Time: Three hours Full 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.
GROUP-A: BUSINESS ECONOMICS Q. No. 1. (a) State the importance
of Business Economics for Professional Management Accountant. (b)
Distinguish between:
(i) Business Profit and Economic Profit. (ii) Economic
Objectives and Social Objectives of firms.
(c) Miss Suporna, a CMA professional left her job of Taka 60,000
a month and started consultancy services under the name Suporna
Cost and Management Consultancy Limited with a capital of Taka
5,00,000. She took bank loan of Taka 3,00,000 @interest rate of 15%
p.a. She used a flat of her fathers business house for which she
need not pay any rent, which could be rented out @Taka 10,000 per
month. She earned Taka 20,00,000 in her consultancy business during
2010-11. During the year material costs and services charges were
Taka 80,000 and salaries of employees were Taka 1,20,000 in her
business. Depreciation of equipment was estimated at Taka 10,000.
Calculate business profit and economic profit of Suporna Cost and
Management Consultancy Limited during 2010-11.
[Marks: (4+6+10) = 20] Q. No. 2. (a) State the Law of Demand and
point out its exceptions. (b) Distinguish between
(i) Demand and Needs. (ii) Complementary Goods and
Substitutes.
(c) What are the determinants of Demand of Professional
Management Accountant in Bangladesh? (d) What is the impact of
increase of price of gas for transport in Bangladesh? (e) Give
examples of two price inelastic goods in Bangladesh.
[Marks: (4+6+4+4+2) = 20] Q. No. 3. (a) Distinguish between
Oligopoly and Monopoly market. (b) State how price is determined
under Monopolistic Competition. (c) Give example of two products of
Perfect Competition and two products of Monopolistic
Competition in Bangladesh. (d) Define Monopsony with one
example.
[Marks: (6+7+4+3) = 20] Q. No. 4. (a) State the causes of and
remedies for controlling inflation in the present situation of
Bangladesh. (b) What is the impact of interest rate on investment?
(c) What are the advantages and disadvantages of foreign aid in
financing budget deficit? (d) State the causes of recent share
market debacle (during 2010-11) in Bangladesh.
[Marks: (6+3+6+5) = 20] Q. No. 5. (a) Distinguish between:
(i) GDP and National Income; and (ii) National Income at Market
Price and at Factor Price.
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Page 11 of 57
CMA AUGUST, 2011 EXAMINATION FOUNDATION LEVEL SUBJECT: 004.
BUSINESS ECONOMICS AND INTERNATIONAL BUSINESS.
Q. No. 5. (Contd..)
(b) What are the limitations of National Income as measure of
economic performance of a nation? (c) Calculate GDP and National
Income of Bangladesh during 2009-2010 from the following
information: Dollars in Crores Gross Private Investment 3500
Government Purchase of goods and Services 500 Personal Consumption
of goods and Services 4500 Depreciation Charges 150 Exports 1850
Imports 2250 Gains from sale of Shares during the year 150 Value of
Second hand computer purchased in the country 50 Purchase of land
during the year 120 Gains from sale of old cars during the year
150
[Marks: (6+4+10) = 20]
GROUP-B: INTERNATIONAL BUSINESS
Q. No. 6. (a) State the theory of comparative advantage in
International business. (b) Discuss the determinants of
international business and investment decisions. (c) What are the
advantages of foreign direct Investment in Bangladesh? (d) Discuss
the existing investment incentives to attract foreign investment in
Bangladesh and make
suggestions to improve them. [Marks: (5+5+4+6) = 20]
Q. No. 7. (a) What are the potential sectors for export
promotion in Bangladesh in the present global market
situation? (b) Do you support Preshipment Inspection in
International Business in Bangladesh? Give
arguments in favour of your statement. (c) How WTO has been
affecting international business in the present day world?
[Marks: (8+6+6) = 20]
Q. No. 8. Write short notes on five of the following: (a)
Non-Tariff Barriers. (b) Balance of Trade and Balance of Payment.
(c) Average Cost & Marginal Cost. (d) Monetary and Fiscal
Policies. (e) Impact of Currency Depreciation. (f) Multinational
Corporation (MNC) (g) Product Life Cycle Theory. (h) Back to Back
Letter of Credit.
[Marks: (4 x 5) = 20]
= THE END =
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Page 12 of 57
THE INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF BANGLADESH
CMA AUGUST, 2011 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) Can you explain Interim Financial Reporting,
Capital Market and Money Market? (b) You have been appointed as
Manager Finance of a company named ZYX Ltd. The Finance
Controller of that company asked you to prepare a classified
Balance Sheet in good form for the year ended 31st December-2010
based on the following data:
ZYX Ltd.
Descriptions Ledger Balance (Tk.) Descriptions Ledger
Balance (Tk.) Land 24,00,000 Employees salary tax payable
887,955 Building 82,00,000 0% Interest Bond payable 15,00,000
Equipments 73,50,000 Discount on 0% Int. Bond payable 75,000
Goodwill 625,000 Bank A/C- Citi N.A. 10,00,000 Inventories
11,99,000 Bank A/C- Standard Chartered 750,000 Accumulated dep.-
Building 851,000 Cash in hand 50,000 Accumulated dep.- Equipment
14,60,000 Accounts payable 29,50,000 Notes receivable 27,28,500
Refundable over-paid Income Tax 488,150 Notes payable to banks
13,25,000 Rent payable Short-term 225,000 Income Tax payable
491,810 Share capital @ Tk. 10 par value 10,00,000 Long-term notes
payable-Unsecured 80,00,000 Preferred share @ Tk. 100 par value
750,000 Long-term rental obligations 24,00,000 Trading securities
605,000 Prepaid expenses 439,600
Additional Information: (i) Cost and fair value of marketable
securities are the same. (ii) Assume that note receivable and notes
payable are short-term, unless stated otherwise. (iii) Authorized
share capital was 500,000 no. shares. (iv) Preferred share
authorized was 50,000 no. shares.
[Marks: (3+17) = 20] Q. No. 2. (a) Explain various possible
types of contingent liabilities and there disclosure in the
financial
statements. (b) Listed below are selected items from the
financial statements of A & B Pump Co. for the year
ended December 31, 2010:
Taka Notes payable to Prime Bank 99,000 Income taxes payable
63,000 Loss contingency relating to law suit 200,000 Accounts
payable and accrued expenses 163,230 Mortgage note payable 240,864
Bonds payable 2,200,000 Premium on bonds payable 1,406 Accrued bond
interest payable 110,000 Pension expenses 61,400 Unearned revenue
25,300
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Page 13 of 57
CMA AUGUST, 2011 EXAMINATION PROFESSIONAL LEVEL-I SUBJECT: 101.
INTERMEDIATE FINANCIAL ACCOUNTING.
Q. No. 2. (Contd..)
Other information: (1) The note payable owed to Prime Bank is
due in 30 days. A & B has arranged with this bank to
renew the note for an additional two years. (2) A & B has
been sued for Tk.200,000 by someone claming the companys pumps
are
excessively noisy. It is reasonably possible, but not probable,
that a loss has been sustained. (3) The mortgage note is payable at
Tk.8,000 per month over the next three years. During the next
12 months, the principal amount of this will be reduced to
Tk.169,994. (4) The bonds payable mature in seven months. A sinking
fund has been accumulated to repay the
full maturity of this bond issue. Required: (i) Using this
information, prepare the current liabilities and long term
liabilities sections of a
classified balance sheet at December 31, 2010. (ii) Explain
briefly how the information in each of the above four numbered
paragraph affected
your presentation of the companys liabilities. [Marks: (5+10+5)
= 20]
Q. No. 3. (a) Why would a manufacturing company invest funds in
stocks, bonds, and other securities? (b) The following balances
appeared in the ledger of the Hamja Company on December 31,
2007:
Investment in Belal Corp. Common Stock, par Tk.10, 500 shares
..Tk.10,000 Investment in Belal Corp. 8% Preferred Stock, par
Tk.50, 20 shares ..Tk. 1,500
The Hamja Company uses the first-in, first-out method in
accounting for stock transactions. In 2008, 2009 and 2010 the
following transactions took place relative to the above
investments:
2008 Feb. 15 - Holders of Belal Corp. 8% preferred were given
the right to exchange their holdings at the
rate of 5 shares of Belal Corp. common for each share of
preferred, and the Hmaja Co. made such exchange. Common shares on
the date of exchange were quoted on the market at Tk.30 per
share.
Nov. 21 - Received cash dividends of Tk.1 per share on Belal
Corp. common.
2009 June 15 - Received additional shares of Belal common in a
2-for-1 stock split. (par value of common
was reduced to Tk.5). Nov. 21 - Exercised option to receive 1
share of Belal Corp. common for each 15 shares held in lieu of
a
cash dividend of Tk.1 per share held. The market value of Belal
Corp. common on the date of distribution was Tk.20 per share.
Dividend revenue was recognized at the value of the shares
received.
2010 May 14 - Received a stock dividend of 20% on Belal common.
Sept. 16 - Received warrants representing right to purchase 1 share
of Belal Corp. common for every 6
shares held. On date of warrants issue, the market value of
ex-rights was Tk.28.50, and the market value of rights was Tk.1.50.
Cost of the stock was allocated on this basis. The exercise price
was Tk.20 per share.
Sept.30 - Exercised 900 rights identified with the first lot of
stock acquired and sold remaining rights at Tk.1.25 per right less
brokerage charge of Tk.75.
Dec. 31 - Sold 1400 shares of Belal Corp. common at Tk.32 per
share less brokerage charge of Tk.225. Required: (i) Prepare
Journal entries to record the transactions in Belal Corp. holdings.
(ii) Prepare a schedule showing the balance of Belal Corp. common
stock held by Hamja Company
on December 31, 2010. [Marks: (5+10+5) = 20]
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Page 14 of 57
CMA AUGUST, 2011 EXAMINATION PROFESSIONAL LEVEL-I SUBJECT: 101.
INTERMEDIATE FINANCIAL ACCOUNTING.
Q. No. 4. (a) Most companies prepare their financial statements
under the historical cost convention. In times
of rising prices it has been said that without modification such
financial statements can be misleading. Explain the problems that
can be encountered when users rely on financial statements prepared
under the historical cost convention for their information needs.
(Note: your answer should consider problems with the income
statement and the balance sheet).
(b) The following information is pertinent to Liverich Ltd.
Shares Issued
Treasury shares
Shares outstanding
Preferred shares
1 Jan. 2009 Balance at beginning of year 2,000 200 1,800 500 1
June 2009 Repurchase of shares for cash - 200 1,600 - 1 July 2009
Share issued for cash 600 - 2,200 - 31 July 2009 Stock dividend at
1 share for
every 10 outstanding shares 260 40 2,420 -
1 Sept. 2009 Shares issued in consideration for a factory
building acquired
80 - 2,500 -
31 Dec. 2009 Balance at year end 2,940 440 2,500 500 On 31
October 2009 Liverich Ltd. issued 3% convertible bonds for Tk. 1
Million at par. Each bond (with a par value of Tk. 1,000) is
convertible into 20 ordinary shares at October 2011. On 15 December
2009 the company declared a preferred dividend of Tk. 2.10 per
preferred share and no preferred dividends were declared in the
past. Net profit for 2008 is Tk. 2,100 and net profit for 2009 is
Tk. 3,650. All shares were outstanding for a full period on 31
December 2008. The average fair value of the ordinary shares during
2009 amounted to Tk. 20. Required: Calculate the basic earnings per
share for 2008 and 2009 as would need to be stated
in the 2009 financial statement of Liverich Ltd. [Marks: (5+15)
= 20]
Q. No. 5. (a) An important requirement of the IASBs Framework
for the Preparation and Presentation of
Financial Statements is that in order to be reliable, an entitys
financial statements should represent faithfully the transactions
and events that it has undertaken. Explain what is meant by
faithful representation and how it enhances reliability.
(b) Western Plastic Ltd. is a company, which uses a chemical
process to manufacture plastic container, which it sells at a
markup of 25% on cost. Its inventory consists of raw material, work
in progress and finished goods, and at the end of its first year of
trading it is having problems valuing inventories. You ascertain
the following information: (i) Raw material:
(a) The process needs at least 100,000 kgs of material to
continue working, but a physical inventory count reveals that the
machinery contains 108,000 kgs.
(b) The original cost of the initial 100,000 kgs to set up the
process was Tk.30 per kg and you find an invoice to show that the
last consignment of 20,000 kgs cost Tk.31 per kg. All other
consignments in the year (a total of 200,000 kgs) cost Tk.32 per
kg.
(ii) Work in progress: (a) The work in progress is currently all
60% complete and you discover that there are
50,000 units currently going through the process. (b) The total
number of complete units for the period was, as anticipated,
800,000. (c) The costs for the process for the period were as
follows:
-
Page 15 of 57
CMA AUGUST, 2011 EXAMINATION PROFESSIONAL LEVEL-I SUBJECT: 101.
INTERMEDIATE FINANCIAL ACCOUNTING.
Q. No. 5. (Contd..)
(Tk. 000) Raw materials 200 Direct labor 242 Factory overheads
191 Administrative expenses attributable to production 114
Distribution costs 90
(iii) Finished goods: (a) There are 70,000 units in inventories.
(b) Of (a) above, it was intended to sell 20,000 units at 75p per
unit, a discount of one
third on normal selling price, in a future promotional campaign
(a further 10p per unit distribution cost is to be incurred).
Required: (i) For each of the above categories of inventory,
suggest a method of valuation and show
the value as it would appear in the balance sheet. (ii) If the
information regarding costs for the period were not available,
suggest an alternative
method of valuing finished goods. [Marks: (4+12+4) = 20]
= THE END =
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Page 16 of 57
THE INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF BANGLADESH
CMA AUGUST, 2011 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. (a) What are the three separate parts of a Production
report? (b) I think we made a severe mistake in hiring that new
assistant Cost Accountant said the
Executive Director of Sharmin Industries. Look at this
production report that he prepared for last month for the Finishing
Department. I cant make heads or tails out of it.
Finishing Department Costs: W/I/P inventory (opening), 450
units, 100% complete as to materials, 60% complete as to conversion
costs
Tk. 8,208
Cost transferred in during the month from preceding department,
1950 units Tk. 17,940 Materials cost added during the month
(materials are added when processing is 50% complete in
Finishing
Tk. 6,210 Conversion cost incurred during the month Tk. 13,920
Total Departmental costs Tk. 46,278 Finishing Department costs
assigned to: Units completed and transferred to finished goods,
1800 units at Tk. 25.71 per unit Tk. 46,278 W/I/P inventory
(closing), 600 units, 0% complete as to materials, 35% complete as
to processing
Nil Total Departmental cost Tk. 46,278
Opening W/I/P consists at : Cost transferred in Tk. 4,068,
materials cost, Tk. 1,980 and conversion cost Tk. 2,160. May be he
is struggling to learn our system replied the GM (costing). The
problem is that he is been away from process costing for a long
time, and it is coming back slowly. Its not the format of his
report that I am concerned about. Look at that Tk. 25.71 unit cost
that he is come up with for this month. Doesnt that seem high to
you? said the Executive Director. Yes, if does seem high; but on
the other hand, I know we had an increase in materials prices
during this month, and that may be the explanation replied GM
(costing). Anyway I will get some one else to redo this report and
then we may be able to see whats going on. Sharmin Industries
manufactures a household product that goes through two processing
departments Moulding and Finishing. The company uses the weighted
average method to account for units and costs. Required: (i)
Prepare a revised production report for the Finishing Department.
(ii) Explain to the Executive Director why the unit cost on the new
assistant Cost Accountants
report is so high. [Marks: (3+9+8) = 20]
Q. No. 2. Moni Limited has a single production process for which
the following costs have been estimated for the period ending 30
June 2011:
Material receipt and Inspection cost Tk. 15,600 Power cost Tk.
19,500 Material handling cost Tk. 13,650
-
Page 17 of 57
CMA AUGUST, 2011 EXAMINATION PROFESSIONAL LEVEL-I SUBJECT: 102.
COST ACCOUNTING.
Q. No. 2. (Contd..)
Three Product X, Y and Z are produced by workers who perform a
number of operations on material blanks using hand held
electrically powered drill. The workers have a wage rate of Tk. 9
per hour. The following budgeted information has been obtained for
the period ending 30 June, 2011:
X Y Z Production Quantity (units) 2000 1500 800 Batches of
materials 10 5 16 Direct material (Sq.meter/unit) 4 6 3 Direct
material (Tk.) 5 3 6 Direct labor (Minute)/unit 24 40 60 Number of
power drill operation/unit 6 3 2
Material receipt and Inspection: Number of batches of materials.
Process power: Number of power Drill operations. Material Handling:
Quantity of material (Sq meters) handled. Required: (a) Prepare a
summary which shows the budgeted product cost per unit for each of
the product X,
Y and Z for the period ending June 30, 2011 detailing the unit
costs for each cost element: (i) Using the existing method for the
absorption of overhead costs. (ii) Using an approach which
recognizes the cost drivers revealed in the activity based
costing
investigation. (iii) Discuss the implication of Moni limited
making the decision to switch to activity based
costing. (b) Explain the relevance of cost drivers in activity
based costing. You are advised to make use of
figures from the summary statement prepared in part (a) to
illustrate yours answer. [Marks: (13+7) = 20]
Q. No. 3. (a) How do you differentiate between producing and
Service departments? Explain with a suitable
example. (b) Comilla Power Company has three service departments
and one producing department. Service
departments are Water, Steam and electric power. The technical
relationships between the service departments are that it requires
0.8 kw hours of electricity to pump one gallon of water, 0.5 gallon
of water to generate one Cubic foot of Steam, and 0.15 Cubic feet
of Steam to generate one kw hour of electricity. Each units of
producing department output requires 0.6 gallons of water, 0.9
Cubic feet of Steam and 4.8 kw hours of electricity. The output of
the producing department is 1,00,000 units. Cost data before
service department cost allocations are:
Department VC per unit of service dept. output (Tk.)
Fixed costs at various Service Department output levels
(Tk.) 0-50000 50000-100000 100000-300000 300000-800000 Water
0.0266 4,000 6,000 8,000 N/A Steam 0.2000 5,000 10,000 12,000 N/A
Electric Power 0.0200 6,000 8,000 8,500 9,000 The company can
purchase power externally for Tk. 0.06 per KWH. Required: Develop
computations to support your recommendation as to whether the
company should continue generating electric supply internally or
acquire it externally.
[Marks: (5+15) = 20]
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Page 18 of 57
CMA AUGUST, 2011 EXAMINATION PROFESSIONAL LEVEL-I SUBJECT: 102.
COST ACCOUNTING.
Q. No. 4. The RFL plastic Company has its general office in
Dhaka but has a major plant in Rangpur. A separate set of records
is kept at the home office and at the factory. On December 1 the
factory trial balance showed the follows.
Accounts Dr Cr Material 35,000.00 Work in Process 78,000.00
Finished Goods 6,4000.00 General Ledger _________ 1,77,000.00
1,77,000.00 1,77,000.00
For the most of December the following transaction occurred: (i)
Materials purchased on credit Tk.2,30,000.00 (ii) Direct Materials
of Tk.1,20,000.00 were requisitioned, alongwith Indirect materials
of
Tk65,000.00 and Tk.25,000.00 of supplies. (iii) Total Payroll of
December was Tk.3,00,000.00. In Rangpur Factory Payroll consisted
of
Tk.30,000.00, office Salaries; Tk.80,000.00, sales salaries;
Tk.60,000.00 Indirect Labour and Tk.1,30,000.00 direct labour.
(iv) Factory Overhead is applied at a rate of 210% of Direct
Labour. (v) Material costing Tk.2,750.00 were defective and were
returned to the suppliers. (vi) Payments made to vendor on credit
Tk.2,15,000.00 (vii) Tk. 1,20,000.00 of vendor factory overhead
expenses is recorded , including Tk,20,000.00
depreciation of Factory Machinery. (viii) Goods completed total
Tk.4,83,000.00 (ix) Goods costing Tk.4,50,000.00 were sold on
Tk.6,00,000.00. Required: Journal entries on the basis of the
general office and the factory to record the above
transactions. [Marks: 20]
Q. No. 5. (a) Define Safety Stock & Lead Time. (b) Supermax
Company sells a number of products through its many sells centre.
One of the
products is plastic razor with five blades in a package. The
sale price of blade with razor is Tk.55.00. The package of 5 blades
sells Tk.35.00 per package. The demand for the replacement blades
is at a constant rate 20,000 packages per month. The cost of
manufacturer per package is Tk20.00. The minimum lead time 7 days
from date of order. The ordering cost is Tk.1200.00 & holding
cost is 10% per annum. The Supermax company uses the EOQ
formula.
Required: (i) The economic order quantity. (ii) The number of
orders needed per year. (iii) The total cost of buying and carrying
blades for the year. (iv) Assuming there is no safety stock and the
present inventory level is 4,667, when should be the
next order be placed (One year=360 days). (v) Describe the
shortcomings of EOQ formula.
[Marks: (4+3+3+5+5) = 20]
= THE END =
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Page 19 of 57
THE INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF BANGLADESH
CMA AUGUST, 2011 EXAMINATION
PROFESSIONAL LEVEL-I SUBJECT: 103. MANAGEMENT AND MARKETING
MANAGEMENT.
Time: Three hours Full Marks: 100
Answer any THREE questions from each part. Answers 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) What is strategic planning? (b) What are the
corporate level strategies and business level strategies? (c)
Explain SWOT & Comment on them.
[Marks: (6+6+4) = 16]
Q. No. 2. (a) What are the basic roles of a manager to run an
organization properly? (b) How an organization is benefited by
Managerial skills? (c) Identify the nature of Managerial works.
[Marks: (6+6+4) = 16]
Q. No. 3. (a) What is meant by leadership? (b) How generic
approaches to leadership is different from situational approaches
to leadership? (c) Summarize the political behavior in
organizations with respect to leadership.
[Marks: (6+6+4) = 16]
Q. No. 4. (a) What is management process? (b) What are the
differences between classical and behavioral management
perspective? (c) Skill is the only measuring rod of a manager
discuss.
[Marks: (6+6+4) = 16]
Q. No. 5. (a) Describe how to implement operations system
through supply chain management. (b) What are the benefits of TQM?
(c) Analyze the various types of information system.
[Marks: (6+6+4) = 16]
Two marks are reserved for neatness and relevance.
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Page 20 of 57
CMA AUGUST, 2011 EXAMINATION PROFESSIONAL LEVEL-I SUBJECT: 103.
MANAGEMENT AND MARKETING MANAGEMENT.
PART-B: MARKETING MANAGEMENT (TOTAL MARKS-50)
Q. No. 6. (a) What is meant by effective Marketing Management?
(b) Define Marketing Goals. (c) How would you integrate and manage
Marketing Communications?
[Marks: (6+6+4) = 16]
Q. No. 7. (a) Define advertising. What are its characteristics?
(b) What is the difference between publicity and public relations?
(c) Outline the consumer oriented and trade oriented sales
promotional activities.
[Marks: (6+6+4) = 16]
Q. No. 8. (a) Explain needs, wants and demands with example. (b)
How customer-value is different from satisfaction? (c) Describe the
key-customer markets.
[Marks: (6+6+4) = 16]
Q. No. 9. (a) Define domestic business, international business
and multinational business with example. (b) What are the basic
challenges of international business? Describe. (c) What do you
mean by Global Economy?
[Marks: (6+6+4) = 16]
Q. No. 10. Write short note on: (a) PLC (Product Life Cycle).
(b) Marketing Report. (c) Direct and Indirect Marketing. (d)
Branding.
[Marks: (4 x 4) = 16]
Two marks are reserved for neatness and relevance.
= THE END =
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Page 21 of 57
THE INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF BANGLADESH
CMA AUGUST, 2011 EXAMINATION
PROFESSIONAL LEVEL-I SUBJECT: 104. INFORMATION TECHNOLOGY.
Time: 2 hours 30 minutes Full Marks: 80
Start answering each question from a fresh sheet. All questions
are to be attempted. Show computations, where necessary. Answer
must be brief, relevant, neat and clean.
Q. No. 1. (a) What are the Telecommunication Software and
Hardware? (b) Describe the Electronic Payment System. (c) How
e-mail system can help Electronic Payment System. (d) Discuss
advantages & disadvantages of Electronic Payment System.
[Marks: (5 x 4) = 20]
Q. No. 2. (a) Differentiate between system analysis and system
design. (b) What are the major categories of information system
plan? (c) Draft a information design planning of a new
Manufacturing Company.
[Marks: (6+6+8) = 20]
Q. No. 3. Write short notes on: (a) Search Engine; (b) Executive
information system; (c) Foreign Key; (d) Artificial Intelligence;
(e) Controlling information system.
[Marks: (5 x 4) = 20]
Q. No. 4. Differentiate between: (a) Bluetooth and Wireless. (b)
Netbook and Notebook. (c) ESS & MIS. (d) System software and
Application Software. (e) Compiler and Interpreter.
[Marks: (5 x 4) = 20]
= THE END =
-
Page 22 of 57
THE INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF BANGLADESH
CMA AUGUST, 2011 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) Identify special issues related to deferred Income
taxes. (b) During 2009, ST. Co.s first year of operations, the
Company reports pre-tax financial Income
at Tk. 2,50,000. Tax rate is 45% for 2009 and 4% for the rest
years. ST. Co. expects to have taxable income in each of the next 5
years. The effects on future tax returns of temporary differences
existing at December 31, 2009 are summarized below:
Future years Future taxable (Deductible) Amounts: 2010 2011 2012
2013 2014 Total Installment Sales 32,000 32,000 32,000 - - 96,000
Depreciation 6,000 6,000 6,000 6,000 6,000 30,000 Unearned Rent
(50,000) (50,000) - - - (1,00,000)
Instructions: (i) Complete the schedule below to compute the
deferred taxes at Dec. 31, 2009. (ii) Compute taxable Income for
2009. (iii) Prepare the journal entry to record Income tax payable,
deferred taxes and Income tax expenses
for 2009.
Temporary difference Future Taxable (Deductible) Amounts
Tax rate December 31, 2009 Deferred tax
Asset Liability Installment sales 96,000 Depreciation 30,000
Unearned rent (1,00,000) ------- -------- Total -------
--------
[Marks: (5+2+3+10) = 20] Q. No. 2. (a) For accounting purposes,
we classify accounting changes into three categories. What are
they?
Provide a short description of each. (b) In 2008, the Hi-tech
construction Ltd. entered into a contract to construct a bridge
over the
Padma bridge for Tk.1,00,00,000. The bridge was completed in
2010. In formation related to the contract is as follow:
2008 (Tk.) 2009 (Tk.) 2010 (Tk.) Cost incurred during the year
24,00,000 36,00,000 22,00,000 Estimated costs to complete off year
end 36,00,000 20,00,000 -
Required: A schedule for computation of the revenues, expenses
and profit (Loss) for years as per IAS-II.
[Marks: (6+14) = 20]
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Page 23 of 57
CMA AUGUST, 2011 EXAMINATION PROFESSIONAL LEVEL-II SUBJECT: 201.
ADVANCED FINANCIAL ACCOUNTING-I.
Q. No. 3. (a) How available cash is prorated between unsecured
bank loan, creditors and other unsecured
creditors under Insolvency act 1997? (b) Mr. P. Kotler of Khulna
became insolvent. As on December 31, 2010, his financial
information
were as follows: Taka Creditors for purchase 4,00,000 Salary and
wages to clerk and workers (five months) 9,600 House Rent due (four
months) 10,800 Municipal Tax due 1,500 Income tax payable 15,000
Bank loan secured by lien on merchandise (book value Tk. 6,000)
30,000 Furniture (estimated to realise Tk. 6,000) 12,000
Merchandise Inventory (expected to realise 80%) 90,000 Cash in hand
6,000 Book debts: Good 15,000
Doubtful (expected to realise 50%) 30,000 Bad 9,000
Household furniture 30,000 Bills Receivable (Tk. 6,000 bad)
21,000 Bills payable 30,000 Bills Receivable discounted (Tk. 3000
bad) 9,000 Shares in SP Ltd. (estimated to realize Tk. 2,25,000)
2,74,500 Creditors holding first charge on above shares 60,000
Creditors holding second charge on above shares 180,000 Loss
through betting 15,000 Building (estimated to realise Tk. 1,50,000)
1,20,000 Creditors secured by building 90,000
Mr. P. Kotler started his business five years back with a
Capital of Tk. 2,70,000. His drawings were Tk. 15,000 a year. Out
of his drawings he bought one mobile phone set for his son for Tk.
3,000. Interest on capital Tk. 2,000 per year. Out of the creditors
for purchase Tk. 12,000 is now unclaimable. Mrs. P. Kotler gave a
jewellery valued at Tk. 15,000. Realisation and administrative
expenses paid by the receiver Tk. 15,000. Instructions: Draw up (i)
statement of affairs and (ii) Deficiency account as per Insolvency
act, 1997.
[Marks: (4+16) = 20] Q. No. 4. (a) Under what general conditions
is the installment sales method of accounting preferred to the
full accrual method? (b) What special recognition problems arise
in accounting for franchise fees? (c) On January 1, 2010 Bapa
Company Ltd. sold property for Tk.4,00,000. The note will be
collected as follows:
Year 2010 Tk.2,00,000 Year 2011 Tk.1,20,000 Year 2012
Tk.80,000
The property had cost Bapa Co. Ltd. Tk.3,00,000 when it was
purchased in 2009.
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Page 24 of 57
CMA AUGUST, 2011 EXAMINATION PROFESSIONAL LEVEL-II SUBJECT: 201.
ADVANCED FINANCIAL ACCOUNTING-I.
Q. No. 4. (Contd..)
Instructions: (i) Compute the amount of gross profit realized in
each year, assuming Bapa Co. Ltd. uses
the Cost Recovery method. (ii) Compute the amount of gross
profit realized each year assuming Bapa Co. Ltd. uses the
Installment Sales method. (iii) Show the journal entries for the
year 2010 under both the methods inscribed above.
[Marks: {2+3+(5x3)} = 20]
Q. No. 5. (a) Mention four different transactions originating
with the branch that affect the reciprocal
accounts. (b) The Sun-Moon Company has its Home Office in Dhaka
and a Branch at Coxs Bazar. The
Branch received all its supplies from the Home Office, which are
marked up at 25% on cost. Both the Home Office and Branch uses
perpetual inventory system. The following information were
available from the books of Home Office and the Branch as on
31-12-2010: (i) The Home Office sent a cheque of Tk.50,000 to the
Branch. The Branch deposited the
cheque in its Bank Account. (ii) The Home Office shipped
merchandise costing Tk.2,00,000 to the Branch. (iii) The Branch
purchased merchandise on account costing Tk.20,000 from outside.
(iv) The Branch returned defective merchandise with a billed price
of Tk.5,000 to the Home
Office. (v) The Home Office billed the Branch Tk.25,000 for
services performed and for
depreciation Tk.5,000. (vi) Expenses of Tk.20,000 incurred and
paid by the Branch. (vii) The Branch purchased an equipment
amounting to Tk.50,000. (viii) The Branch sold all the merchandise
received from the Home Office: In cash Tk. 1,00,000 And on accounts
Tk.2,00,000 (ix) The Branch collected Tk.1,50,000 from accounts
receivable. (x) 2% of accounts receivable was uncollectible. (xi)
At the end of the year the Branch had Tk.5,000 of accrued expenses.
(xii) The Branch had an inventory at year end of Tk.20,000, all of
which was purchased by the
Branch from outside. Required: (i) Give journal entries in the
books of both Home Office and Branch. (ii) Give necessary adjusting
and closing entries in the books of Branch. (iii) Give the
adjusting entries in the books of Home Office.
[Marks: (5+15) = 20]
= THE END =
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Page 25 of 57
THE INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF BANGLADESH
CMA AUGUST, 2011 EXAMINATION
PROFESSIONAL LEVEL-II SUBJECT: 202. MANAGEMENT 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) Far East Telecom Ltd. has organized a new division
to manufacture and sell mobile telephones.
Monthly costs associated with the mobile phones and with the
plant in which the mobile phones are manufactured are as shown
below:
Manufacturing costs: Variable costs per unit:
Direct Materials Tk.48.00 Variable manufacturing overheads
Tk.2.00 Fixed manufacturing overheads Tk.3,60,000
Selling and administrative costs: Variable 12% of sale Fixed
(Total) Tk.4,70,000
Far East Telecom regards all of its workers as full time
employees and the company has a long-standing no layoff policy.
Furthermore, production is highly automated. Accordingly, the
company has included in its fixed manufacturing overheads all of
its labor costs. The mobile phones sell for Tk.150 each. During,
September, the first month of operations, the following activity
was recorded:
Units produced 12,000 Units sold 10,000
Required: (i) Prepare an income statement for the month using
absorption costing. (ii) Prepare an income statement for the month
using variable costing. (iii) Reconcile the absorption costing
& variable costing net income, varies if any.
(b) ABC Company Limited having an installed capacity of 1,00,000
units of product is currently operating at 70% utilization. At
current levels of input prices, the FOB unit cost (after taking
credit for applicable export incentives) work out as follows:
Capacity utilization (per unit) FOB unit costs (in Tk.) 70.00
97.00 80.00 92.00 90.00 87.00 100.00 82.00
The company has received three foreign offers from different
sources as under: Source A 5,000 units at Tk.55.00 per unit FOB
Source B 10,000 units at Tk.52.00 per unit FOB Source C 10,000
units at Tk.51.00 per unit FOB Required: Advise the company as to
whether any or all the export order should be accepted or not.
[Marks: (15+10) = 25]
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Page 26 of 57
CMA AUGUST, 2011 EXAMINATION PROFESSIONAL LEVEL-II SUBJECT: 202.
MANAGEMENT ACCOUNTING.
Q. No. 2. (a) Dynamic Foods Ltd. which recently launched a new
product, Tastewell, after initial estimation
of demand and costs, would like to have a review through fresh
projections based on the available information on actual
production, costs, and revenue. The product is sold in one kg home
packs. Performance, pertaining to the previous two quarters,
detailed below, can be projected to the future. There were no
inventories at the end of each quarter. Tax incidence can be
reckoned at 50%.
First quarter (Tk.) Second quarter (Tk.) Sales 60,000 packs
96,00,000 - Sales 80,000 packs - 1,28,00,000 Cost of goods sold
58,00,000 70,00,000 Gross profit 38,00,000 58,00,000 Selling and
administration expenses 48,00,000 52,00,000 Profit before tax
(10,00,000) 6,00,000 Tax (50%) - 3,00,000 Profit after tax
(10,00,000) 3,00,000
Required: (i) What is the break even volume in terms of
quarterly sales of home packs? (ii) On an investment of
Tk.10,00,000 for Tastewell, an after-Tax return of 15% is
expected.
What should be the volume of sales and the sales revenue for
getting this return? (iii) The marketing manager of Dynamic Foods
Ltd. expects a 20% increase in sales over the
second quarter, if a reduction of Tk.10 per pack in price is
coupled with an advertisement outlay of Tk.6,00,000. Should this
proposal be accepted?
[Marks: (5+5+10) = 20]
(b) Compute the missing data indicated by the question marks
from the following: Product R Product S Sales quantity (standard) ?
400 Actual (Units) 500 ? Price/Unit Standard (Tk.) 12 15 Actual
(Tk.) 15 20 Sales price variance ? ? Sales volume variance 1200 F ?
Sales value variance ? ?
Sales mix variance for both the products together is Tk. 450F.
[Marks: 10]
Q. No. 3. Jhonson Building Supplies are prepare to purchase and
sales budget for the year 2009. All sales of Jhonson Building
Supplies (JBS) are made on credit. Sales are billed twice monthly,
on the 10th of the month for the last half of the prior months
sales and on the 20th of the month for the first half of the
current months sales. The terms of the sales are 2/10, net 30.
Based on past experience, the collection of accounts receivable is
as follows:
Within the discount period 80% On the 30th day 18% Uncollectible
2%
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Page 27 of 57
CMA AUGUST, 2011 EXAMINATION PROFESSIONAL LEVEL-II SUBJECT: 202.
MANAGEMENT ACCOUNTING.
Q. No. 3. (Contd..)
The sales value of shipments for May 2009 was Tk. 7,50,000. The
forecasted sales for the next 4 months are:
June Tk. 8,00,000 July Tk. 9,00,000 August Tk. 9,00,000
September Tk. 7,50,000
JBSs average markup on its products is 20% of the sales price.
JBS purchases merchandise for resale to meet the current months
sales demand and to maintain a desired monthly ending inventory of
25% of the next months sales. All purchase are on credit with terms
of net 30. JBS pays for one-half of a months purchases in the month
of purchase and the other half in the month following the purchase.
All sales and purchase occur uniformly throughout the month.
Required: (i) How mach cash can JBS plan to collect from accounts
receivable collections during July 2009? (ii) How mach can JBS plan
to collect in September from sales made in August 31, 2009. (iii)
Compute the budgeted value of JBS inventory on August 31, 2009?
(iv) How mach merchandise should JBS plan to purchase during June
2009? (v) How mach should JBS budget in August 2009 for the payment
for merchandise purchased?
[Marks: (4 x 5) = 20] Q. No. 4. (a) Write short notes on:
(i) Relevant Costing; (ii) Just in Time in Inventory; (iii)
Divisional Profit.
(b) National Company is considering the introduction of a new
product. To determine a target selling price, the company has
gathered the following information:
Number of units to be produced and sold each year 14,000 Cost of
unit produced Tk. 25 Projected annual selling, general &
administrative expenses 50,000 Estimated investment required by the
company 7,50,000 Desired return on investment (ROI) 12%
Required: (i) Compute the markup the company will have to use to
achieve the desired ROI. (ii) Compute the target-selling price per
unit.
[Marks: {(3 x 5) + 10} = 25]
= THE END =
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Page 28 of 57
THE INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF BANGLADESH
CMA AUGUST, 2011 EXAMINATION
PROFESSIONAL LEVEL-II SUBJECT: 203-COMMERCIAL & INDUSTRIAL
LAWS
Time: Three hours Full Marks: 100 Answer FIVE questions taking
at least TWO from each group A and B Answer must be brief,
relevant, neat and clean. Start answering each question from a
fresh sheet.
GROUP A: COMMERCIAL LAW
Q. No. 1. Briefly discuss the following: (a) An agreement is the
sum total of offer and acceptance discuss. (b) Describe whether a
price list to sell goods in a shop can be treated as an offer? (c)
When consent is said to be free?
[Marks: (5+5+10) = 20]
Q. No. 2. Discuss the rules regarding minors agreement in
details.
[Marks: (20)]
Q. No. 3. (a) No seller can give the buyer a better title of
goods than he himself has. Explain. Discuss the
exception of this rule. (b) Discuss the essential elements of
contract for sale of goods. (c) What are the differences between
condition and warranty?
[Marks: (8+6+6) = 20]
Q. No. 4. (a) Discuss the different types or methods of
Arbitration. (b) Describe the provision related to registration
under Trade Mark Act-1940. (c) Describe the law related to
application for and grant of Patent as per Patent and Design
Act-
1911. (d) Mention in what type of work has copy right as per
Copy Right Act2000.
[Marks: (5+5+5+5) = 20]
Q. No. 5. Write short notes on the followings (Any five): (a)
Caveat Emptor. (b) Common Carrier. (c) Sub-agent & Co-Agent.
(d) Quasi Contract. (e) Copy right Board. (f) Bailment &
Pledge. (g) Charter Party. (h) Bill of Lading.
[Marks: (5 x 4) = 20]
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Page 29 of 57
CMA AUGUST, 2011 EXAMINATION PROFESSIONAL LEVEL-II SUBJECT:
203-COMMERCIAL & INDUSTRIAL LAWS
GROUP B: INDUSTRIAL LAW
Q. No. 6. Differentiate between the following: (a) Casual worker
and Badly worker. (b) Temporary and permanent worker. (c) Lay off
and Retrenchment. (d) Probation and Temporary in terms of
employment. (e) Participation Fund and Welfare Fund.
[Marks: (4 x 5) =20]
Q. No. 7. (a) What is dismissal? What are the grounds of
dismissal? (b) Under what circumstances and employer can stop any
section or sections of the establishment
and for that what procedures he has to follow as per the
Bangladesh Labour Act-2006? [Marks: (10+10) = 20]
Q. No. 8. Define the following as per the Bangladesh Labour Act
2006: (a) Manufacturing Process. (b) Commercial Establishment. (c)
Industrial establishment. (d) Wages.
[Marks: (4 x 5) = 20]
Q. No. 9. (a) What are the objectives of Industrial Law? Discuss
the necessity of Industrial Police in the
context of Bangladesh. (b) Define Collective Bargaining Agent.
State the rules regarding appointment and election of
Collective Bargaining Agent. (c) Discuss the employers
responsibility for Payment of Compensation as per the
Bangladesh
Labour Act, 2006.
[Marks: (7+7+6) = 20] Q. No. 10. State the procedures for
settlement of an industrial dispute.
[Marks: 20]
= THE END =
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Page 30 of 57
THE INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF BANGLADESH
CMA AUGUST, 2011 EXAMINATION
PROFESSIONAL LEVEL-II SUBJECT: 204. TAXATION.
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. Write short note on the following under the Income Tax
Ordinance 1984: (a) Return of withholding tax; (b) Corporate Social
Responsibility (CSR) expenditure; (c) Annual Information Return;
(d) Surcharge if net wealth exceeds Tk. 2 crore.
[Marks: (4 x4) = 16] Q. No. 2. (a) What are the conditions to be
fulfilled to keep outside the scope of tax audit under the
Income
Tax Ordinance (ITO) if an assessee shows at least 20% higher
income? (b) In what situation, an assessee will have to pay tax
over and above final settlement of tax
liability under section 82C of the ITO? (c) Specify the
requisite tax to be paid at every stage of First Appeal, Appeal to
the Tribunal,
Reference to the High Court Division and Reference to the
Appellate Division under the ITO. (d) Briefly discuss the role of
Facilitator, Applicant-assessee/Authorized Representative and
Commissioners/Commissioners Representative in resolving dispute
through the Alternate Dispute Resolution under the ITO.
[Marks: (4 x5) = 20] Q. No. 3. From the following particulars
compute the total income and tax liability of Mr. X for the income
year ending 30 June, 2011:- (a) Salary Income:
Basic salary Tk. 20,000 p.m. Entertainment allowance-20% of
basic salary. Bonus equivalent to 2 months basic salary. Free
accommodation (out of which 1 room was sub-let by Mr. X for
Tk.3,000 p.m.). Medical allowance- Tk. 500 p.m. Conveyance
allowance-Tk. 1,200 p.m. Subscription to RPF-10% (Employer also
contributed the same).
(b) Interest on Securities: Interest on SEC approved debenture
Tk. 10,000. Interest on Government securities Tk.70,000 (TDS @ 10%
Tk.7,000 under upfront system 3 years ago).
(c) Income from House Property: Mr. X has one residential
house-one half of which is let out at a monthly rent of Tk. 50,000
and the other half is self-occupied. Following actual expenditures
were incurred by Mr. X for the full house:
Taka Municipal tax 20,000 Repairs and maintenance 60,000
Insurance premium 12,000 Salary of caretaker 30,000 Interest on
house building loan (total loan amount Tk. 32,00,000) 1,47,000
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Page 31 of 57
CMA AUGUST, 2011 EXAMINATION PROFESSIONAL LEVEL-II SUBJECT: 204.
TAXATION.
Q. No. 3. . Contd
(d) Income from Partnership Business: One-third share income
from a partnership firm is Tk. 73,000 (after tax). Firms total
income Tk. 2,25,000. Firm did not pay any tax rather it prefers
appeal and now it is pending at appeal stage.
(e) Capital Gain: Gain from sale of shares of listed companies
Tk. 5,27,335.
(f) Income from Other Sources: Cash dividend (net) from a listed
company Tk. 45,000. Stock dividend of 100 share (Face value Tk.10
but market price on that day Tk. 1,500 per share). Interest (net)
on savings bank account Tk. 5,400.
(g) During the year Mr. X made the following investments:- (1)
Life insurance premium in the name of his dependent old father Tk.
60,000 (Policy Value
Tk. 5,00,000); (2) Investment in secondary shares of listed
companies Tk. 1,00,000; (3) Donation to Prime Ministers relief fund
Tk. 10,000.
[Marks: 20] Q. No. 4. You are given the following Profit and
Loss Account of ABC Company for the year ended 31st December,
2010:
Dr. Cr. Particulars Taka Particulars Taka To Cost of Goods Sold
Salaries and Allowances Rent and Electricity Telephone and Postage
Interest on Loan Traveling Allowance Legal Expenses Advertisement
Charity Audit Fees Income Tax paid in Advance Fines Contribution to
Provident Fund Entertainment Depreciation Net Profit
35,00,000 42,50,000 1,90,000
30,000 35,000 25,000 14,000 31,000 10,000 25,000
2,00,000 20,000 20,000 54,000
1,80,000 5,73,000
By Sales Dividend Interest on Bank Deposit Profit on Sale on
Machineries Interest on Government Securities Sundry Incomes Refund
of Income Tax Bad Debt Recovered
89,80,000 16,000 14,400
30,000
10,000 5,000
30,000 71,600
91,57,000 91,57,000
(1) Depreciation allowed by income tax authority was Tk.
1,15,000. (2) Salaries and Allowances included Tk. 10,50,000 from
which taxes were not deducted at source.
Moreover excess perquisites were given Tk. 3,70,000. All
salaries were paid in cash. Salaries included incentive bonus
Tk.6,00,000. An employees minimum monthly salary was Tk.15,000.
(3) Interest on loan was given to a sister concern. The loan
amount was Tk. 3,50,000 though it was not received through bank
transfer or crossed cheque but it was properly reflected in both
the audited accounts.
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Page 32 of 57
CMA AUGUST, 2011 EXAMINATION PROFESSIONAL LEVEL-II SUBJECT: 204.
TAXATION.
Q. No. 4. .. Contd
(4) Legal expenses included Tk. 10,000 paid for Income Tax
Appeal. (5) Travelling allowance included Tk. 20,000 paid to the
General Manager for overseas traveling in
connection with business. (6) The machine sold was purchased six
years ago and its book value was Tk. 42,000 but its written
down value as per Income Tax law was Tk.12,000. The cost price
and the sales price of the machine were Tk. 62,000 and Tk. 72,000
respectively. Required: Determine the Tax Liability of the Company
(applying tax rate first and then
minimum tax on gross receipt) assuming it to be a listed
company. [Marks: 20]
Q. No. 5. (a) What do you mean by prohibited goods under the
Customs Act 1969? Mention the new items
included in the list of prohibited items under section 15 of the
Customs Act 1969 effective from July 1, 2011.
(b) Discuss the penal provision in the Customs Act 1969
regarding false statement in the documents by the importer.
(c) What are the provisions under the Baggage Rules if a person
booked his luggage by air? (d) Discuss the mode of levy on travel
by air and travel by land and sea. Who is responsible to
collect tax on travel by air? Is there any scope to exempt or
reduce such tax? What is the procedure to get refund to foreign
Travel Tax?
[Marks: (3+2+2+5) = 12]
Q. No. 6. (a) Under section 3(3)(e) of the VAT Act 1991, a
service recipient has been made a legal taxpayer
from 2011-12 through amendment by the Finance Act 2011.
Required:
(i) Give your critical comment on this new provision effective
from 2011-12. (ii) Mention the legal implications of earlier
imposition of VAT on commercial rent as
leaseholder in 2009-10 and on tenant of place and establishment
in 2010-11. (b) What are the new provisions of VAT deducted at
source and VAT collected in advance? How is
input tax allowed for VAT deducted at source and VAT collected
in advance? [Marks: {(3+4) + 5} = 12]
= THE END =
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Page 33 of 57
THE INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF BANGLADESH
CMA AUGUST, 2011 EXAMINATION
PROFESSIONAL LEVEL-III SUBJECT: 301. ADVANCED FINANCIAL
ACCOUNTING-II.
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. The Balance Sheet of MSU Ltd. as on 31st December 2009
is as follows:
Liabilities Amount (Tk.) Total (Tk.) 7% cumulative Redeemable
preference share @ Tk.100 each 5,00,000 Ordinary shares @Tk.100
each 7,50,000 Bank overdraft 1,00,000 Liabilities for goods
supplied 1,50,000 Liabilities for other finance 45,000 Liabilities
for expense 5,000 15,50,000 Assets: Goodwill 2,00,000 Land &
Building 4,00,000 Plant & Machinery 3,00,000 Furniture &
Fixtures 50,000 Motor Car 15,000 Stock in trade 1,80,000 Accounts
Receivable 1,25,000 Cash in hand 5,000 Cash at Bank 25,000 Retained
Earnings 2,50,000 15,50,000
The business has passed through a depression but the worse,
seems to have been over. Preference dividends are in arrear to the
extent of Tk.1,94,240. No depreciation has been provided on the
fixed assets. The net assets appearing in the Balance Sheet as on
31st December 2009 are considered to be worth Tk.7,15,000. The
company is assured of good future. Do you think any re-organization
of capital is desirable? Draft your recommendation in a Report
Form.
[Marks: 20] Q. No. 2. A Ltd., B Ltd., C Ltd. and D Ltd.,
companies form the ABCD Group. Their Balance Sheets at 31st
December 2009 was as follows: (Amounts in Taka)
Liabilities A Ltd. B Ltd. C Ltd. D Ltd. Ordinary share of
Tk.1.00 each 2,00,000 80,000 60,000 20,000 Preference share of
Tk.1.00 each 1,00,000 50,000 - - Retained Earnings 2,50,000 95,000
65,000 25,000 Debentures 50,000 - 30,000 - Sundry Creditors
1,70,000 90,000 40,000 30,000 Taxation 60,000 40,000 25,000 10,000
Proposed Dividend 40,000 30,000 20,000 5,000 Total 8,70,000
3,85,000 2,40,000 90,000
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Page 34 of 57
CMA AUGUST, 2011 EXAMINATION PROFESSIONAL LEVEL-III SUBJECT:
301. ADVANCED FINANCIAL ACCOUNTING-II. Q. No. 2. (Contd.)
Assets: A Ltd. B Ltd. C Ltd. D Ltd. Fixed Assets 4,90,000
2,15,000 86,000 70,000 Investment 1,32,000 87,000 13,000 - Stock
78,000 28,000 70,000 10,000 Sundry Debtors 82,000 36,000 22,000
5,000 Cash 88,000 19,000 49,000 5,000 Total 8,70,000 3,85,000
2,40,000 90,000
You are given the following additional information: (a) A Ltd.
acquired 75% of the ordinary shares and 50% of the preference
shares of B Ltd., in 2004
when the reserves of B Ltd. were Tk.40,000. (b) B Ltd. acquired
80% of the ordinary shares and 2/3rd of the debentures of C Ltd. in
2006 when the
reserves of C Ltd. were Tk.20,000. (c) C Ltd. acquired 40% of
the ordinary shares of D Ltd. on 31st December 2009. (d) A Ltd.
acquired 50% of the ordinary shares of D Ltd. on 31st December
2009. (e) The relevant companies have all taken account of
intra-group dividends receivable by them
including such dividends in debtors and their reserves.
Preference dividends and debenture interest have already been
paid.
(f) The stock of B Ltd. includes goods purchased from C Ltd. at
an invoice price to B Ltd. of cost plus 30%. The cost of these
goods to C Ltd. was Tk.10,000. They are included in the stock of B
Ltd. at a value of Tk.12,000.
You are required to prepare the consolidated Balance Sheet of A
Ltd. and its subsidiaries at 31st December 2009.
[Marks: 20] Q. No. 3. (a) How Govt. Accounting differs from
Non-Govt. Accounting? (b) Discuss importance of Human Resource
Accounting in the perspective of a business entity. (c) The
following information are related to M/S Jamjam Ltd.
Balance Sheet at January 01, 2009 Million (Taka) Property,
plant, and equipment 7,000 Goodwill 3,000 Intangible assets 2,000
Financial assets 6,000 Total non-current assets (a) 18,000 Trade
and other receivables 7,000 Other receivables 1,600 Cash and cash
equivalents 700 Total current assets (b) 9,300 Total assets (a+b)
27,300 Issued capital 6,000 Revaluation reserve 1,500 Retained
earnings 6,130 Total equity (d) 13,630 Interest-bearing loans 8,000
Trade and other payables 4,000 Employee benefits 1,000 Current tax
liability 70 Deferred tax liability 600 Total liabilities (e)
13,670 Total equity and liabilities (d+e) 27,300
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Page 35 of 57
CMA AUGUST, 2011 EXAMINATION PROFESSIONAL LEVEL-III SUBJECT:
301. ADVANCED FINANCIAL ACCOUNTING-II. Q. No. 3. (Contd.) (i) Tax
bases of the above assets and liabilities are the same as their
carrying amounts except for
Tax base Million Taka Property, plant, and equipment 1,400 Trade
receivables 7,500 Interest-bearing loans 8,500 Financial assets
7,000
* The intangible assets are development costs that are allowed
for tax purposes when the cost is incurred. The costs were incurred
in 2007.
* Included in trade and other payables is an accrual for
compensation to be paid to employees. It is allowed for taxation
when the payment is made and totals Tk. 200 million.
(ii) During 2008, a building was revalued. At January 01, 2009,
there was Tk. 1,500 million remaining in the revaluation reserve in
respect of this building.
(iii) The following adjustments to the financial statements will
have to be made to comply with IFRS 1, First-Time Adoption of IFRS,
on January 1, 2009. * Intangible assets of Tk. 400 million do not
qualify for recognition under IFRS 1. * The financial assets are
all classified as at fair value through profit or loss and their
fair value is
Tk. 6,500 million, which is to be included in the IFRS accounts.
* A pension liability of Tk. 50 million is to be recognized under
IFRS 1 that was not recognized under
local generally accepted accounting principles (GAAP). The tax
base of the liability is zero. (iv) The entity is likely to be very
profitable in the future. Required:
Calculate the deferred tax provision at January 1, 2009, showing
the amount of the adjustment required to the deferred tax provision
and any amounts to be charged to revaluation reserve. (Assume a tax
rate is 30%)
[Marks: (3+3+14) = 20] Q. No. 4. Financial information for
Tremendous Enterprises Inc. for the year ended December 31,
2010.
Tremendous Enterprises Inc. BALANCE SHEET
As of December 31, 2010 and 2009 2010 2009 Assets Cash and cash
equivalents Tk. 4,500 Tk. 1,500 Trade receivables 7,500 3,750
Inventory 3,000 2,250 Intangible asset, net 1,500 2,250 Due from
associates 28,500 28,500 Property, plant, and equipment (cost)
18,000 33,750 Accumulated depreciation (7,500) (9,000) Property,
plant, and equipment (net) 10,500 24,750 Total assets Tk. 55,500
Tk. 63,000 Liabilities Accounts payable Tk. 7,500 Tk. 18,750 Income
taxes payable 3,000 1,500 Deferred taxes payable 4,500 3,000 Total
liabilities 15,000 23,250 Shareholders equity: Share capital 9,750
9,750 Retained earnings 30,750 30,000 Total shareholders equity
40,500 39,750 Total liabilities and shareholders equity Tk. 55,500
Tk. 63,000
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Page 36 of 57
CMA AUGUST, 2011 EXAMINATION PROFESSIONAL LEVEL-III SUBJECT:
301. ADVANCED FINANCIAL ACCOUNTING-II. Q. No. 4. (Contd.)
Tremendous Enterprises Inc. STATEMENT OF INCOME
For the year Ended December 31, 2010
Sales Tk. 45,000 Cost of sales (15,000) Gross operating income
30,000 Administrative and selling expenses (3,000) Interest
expenses (3,000) Depreciation of properly, plant, and equipment
(3,000) Amortization of intangible asset (750) Investment income
4,500 Net income before taxation 24,750 Taxes on income (6,000) Net
income after taxation Tk. 18,750
Additional Information: This additional information is relevant
to the preparation of the statement of cash flows: (i) All sales
made by Tremendous Enterprises Inc. (company) are credit sales. All
purchases are
on account. (ii) Interest expense for the year 2010 was Tk.
3,000, which was fully paid during the year. (iii) The company pays
salaries and other employee dues before the end of each month.
All
administration and selling expenses incurred were paid before
December 31, 2010. (iv) Investment income comprised dividends
income form investments in shares of blue chip
companies. This was received before December 31, 2010. (v)
Equipment with a net book value of Tk. 11,250 and original cost of
Tk. 15,750 was sold for Tk.
11,250. (vi) The company declared and paid dividends of Tk.
18,000 to its shareholders during 2010. (vii) Income tax expense
for the year 2010 was Tk. 6,000, against which the company paid Tk.
3,000
during 2010 as an estimate. Required: Using the above financial
information for Tremendous Enterprises Inc., prepare the cash flow
statement according to the requirements of IAS 7 under direct
method.
[Marks: 20]
Q. No. 5. (a) Define ethical behavior. Mention at least six
codes of ethics should be followed by the
practicing Cost and Management Accountants of Bangladesh. (b)
What are the steps/procedures should be followed for recording
transaction of foreign branch in
home country? (c) State the conceptual framework for human
resource accounting. (d) Discuss the general principles of
governmental accounting and state the basic structure of the
form of the governmental accounts. [Marks: (4 x 5) = 20]
= THE END =
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Page 37 of 57
THE INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF BANGLADESH
CMA AUGUST, 2011 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) Express an opinion as to the usefulness of data,
derived from process costing, for the control of
costs. (b) Western Corporation has two producing departments,
Fabricating and Finishing. In the
Fabricating Department, Polyplast is prepared from Miracle Mix
and Bypro. In the Finishing Department, each unit of Polyplast is
converted into six Tetraplexes and three Uniplexes. Service
departments provide services to both producing departments.
The Fabricating and Finishing Departments use process cost
procedures. Actual production costs, including factory overhead,
are allocated monthly.
Service department expenses are allocated to producing
departments as follows:
Expenses Fabricating Finishing Building Maintenance Tk.30000
Tk.15000 Timekeeping and personnel Tk.16500 Tk.11000 Others
Tk.19500 Tk.19500
Materials inventory and work in process are costed on a fifo
basis. The Fabricating Department records for December show:
Quantities (units of Polyplast): In process, December 1 3000
Started in process 25000 Total units to be accounted for 28000
Transferred to Finishing Department 19000 In process, December 31
6000 Normal losses throughout the process 3000 Total units
accounted for 28000 Cost of work in process, December 1: Materials
Tk.13000 Labor Tk.17500 Factory overhead Tk.21500 Tk.52000 Direct
labor cost Tk.154000 Departmental factory overhead (excluding
service department allocation) Tk.132000
Polyplast work in process at the beginning and end of the month
was partially completed as follows:
Materials Labor and Factory overhead December 1 66% 50% December
31 100% 75%
Materials inventory records for December indicate:
Miracle Mix Bypro Quantity Amount Quantity Amount Balance,
December 1 62000 Tk.62000 265000 Tk.18550 Purchase: December 12
39500 Tk.49375 December 20 28500 Tk.34200 Fabricating Department
usage 83200 50000
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Page 38 of 57
CMA AUGUST, 2011 EXAMINATION PROFESSIONAL LEVEL-III SUBJECT:
302. ADVANCED COST ACCOUNTING. Q. No. 1. (Contd..)
Required (1) Compute the equivalent number of units of Polyplast
for materials and conversion costs. (2) (a) Determine the total
Fabricating Department cost to be accounted for.
(b) Compute the unit costs of materials, labor, and factory
overhead for the Fabricating department
(c) Compute the cost of units transferred to the Finishing
Department, and the cost of ending work in process inventory in the
Fabricating Department.
(3) Complete requirements (1) and (2) above, assuming that work
in process inventory is costed using the average method. (Round
unit costs to the nearest Taka)
[Marks: (5+5+5+5) = 20] Q.No. 2. (a) How may the revenue form
the sale of by products be shown on the income statement? (b) When
it is necessary to allocate joint costs to joint products?
(c) PHL Corporation Produces three products Padma, Meghna and
Jamuna. Padma and Jamuna are joint products, while Meghna is by
product of Padma. No joint cost is to be allocated to the
by-product. The production processes for a given year are as
follows: (i) In Department 1, 110000 pounds of material, X, are
processed at a total cost of
Tk.120000. After processing, 60% of the units are transferred to
Department 2 and 40% of the units (now Jamuna) are transferred to
Department 3.
(ii) In department 2, the material is further processed at a
total additional cost of Tk.38000. Seventy percent of the units
(now Padma) are transferred to Department 4 and 30% emerge as
Meghna, the by-product, to be sold at Tk.1.20 per pound. The
marketing expenses related to Meghna is Tk.8100.
(iii) In Department 4, Padma is processed at a total additional
cost of Tk.23660. After processing, Padma is ready for sale at Tk.5
per pound.
(iv) In Department 3, Jamuna is processed at a total additional
cost of Tk.165000. In this department, a normal loss of units of
Jamuna occurs, which equals 10% of the good output of Jamuna. The
remaining good output is sold for Tk.12 per pound.
Required: (1) Prepare a schedule showing the allocation of the
Tk.120000 joint cost between Padma and Jamuna,
using the market value at a split-off point and treating the net
realizable value of Meghna as an addition to the sales value of
Padma.
(2) Prepare a statement of gross profit for Padma, independent
of the answer to requirement (1), assuming that: (a) Tk.102000 of
total joint cost was appropriately allocated to Padma. (b) 48000
pounds of Padma and 20000 pounds of Meghna were available for sale.
(c) During the year, sales of Padma were 80% of the pounds
available for sale. There was no
beginning inventory. (d) The net realizable value of Meghna
available for sale is to be deducted form the cost of
producing Padma. The ending inventory of Padma is to be based on
the net cost of production. (e) All other costs, sales prices and
marketing expenses are those presented in the facts of the
original problem. [Marks: (3+3+7+7) = 20]
Q. No. 3. (a) What are the important factors involved in
selecting the rate to be used for applying the factory
overhead of a producing department? (b) Dynamic Company
manufactures a complete line of radios. Because a large number of
models
have plastic cases, the company has its own molding department
for producing them. The month of April was devoted to the
production of the plastic case for one of the portable radios Model
SX76.
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Page 39 of 57
CMA AUGUST, 2011 EXAMINATION PROFESSIONAL LEVEL-III SUBJECT:
302. ADVANCED COST ACCOUNTING. Q. No. 3. (Contd..)
The Molding Department has two operations molding and trimming;
there usually is no interaction of labor in these two operations.
The standard labor cost for producing 10 plastic cases for Model
SX76 is as follows:
Molding: hour @ Tk.6 Tk.3.00 Trimming: hour @ Tk.4 Tk.1.00
Tk.4.00
During April, 70000 plastic cases were produced in the Molding
Department; however, 10% of these cases had to be discarded because
they were found to be defective at final inspection. The Purchasing
Department had changed to a new plastic supplier to take advantage
of a lower price for comparable plastic. The new plastic turned out
to be of a lower quality, resulting in the rejection of the 7000
cases. Direct labor hours worked and direct labor costs charged to
the Molding Department are as follows:
Molding: 3800 hours @Tk.6.25 Tk.23750 Trimming: 1600 hours @
Tk.4.15 Tk.6640 Total labor charges Tk.30390
As a result of poor scheduling by the Production Scheduling
Department, the supervisor of the Molding Department had to shift
molders to the trimming operations for 200 hours during April. The
company paid the molding workers their regular hourly rate, even
though they were performing a lower-rated task. There was no
significant loss of efficiency caused by the shift. In addition, as
a result of unexpected machinery repairs required during the month,
75 hours and 35 hours of idle time occurred in the molding and
trimming operations, respectively.
The monthly report which compares actual costs with standard
cost of output for April shows the following labor variance for the
Molding Department:
Actual labor cost for April Tk.30390 Standard labor cost of
output {63000 x (Tk.4/10)} Tk.25200 Unfavorable labor variance
Tk.5190
This variance is significantly higher than normal.
Required: (1) Prepare a detailed analysis of the unfavorable
labor variance for the Molding Department,
showing the variance resulting from (a) labor rates; (b) labor
substitution; (c) material substitution; (d) operating efficiency;
(e) idle time.
(2) Evaluate the Molding Department supervisors argument that
the variances due to labor substitution and change in raw materials
should not be charged to the department
[Marks: (4+8+8) = 20] Q. No. 4. (a) How should marketing
expenses be classified in order to find the cost of selling jobs
or
products? (b) Pacific Food Inc., a grocery chain consisting of
these stores, operates in a state that permits each
of