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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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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]
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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=
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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]
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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==
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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]
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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]
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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=
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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]
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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 ==
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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
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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
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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
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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=
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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.
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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?
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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=
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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.
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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]
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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=
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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]
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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?
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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=
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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]
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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]
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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]
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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
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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==
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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%.
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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]
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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]
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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]
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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 =
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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