2 THE INSTITUTE OF BANKER , BANGLADESH (IBB) Banking Diploma Examination, December, 2014 JAIBB/DAIBB Accounting for Financial Services (AFS) Time—3 hours Pull marks—100 Pass marks—S0 [N.B.—The figures in the right margin indicate full marks, Answer question no. 7 and four others.] Ya) (b) ) @ @ ) © @ @ o © @ @ 7) o Require, td) Just give a format of a Balance Sheet according to the Bank Company Act, 1991 How does a Balance Sheet according to Bank Company Act, 1991 differ with a Balance Sheet according to Institutions Act, 19937 Distinguish between GAAP and IFRS. You have earned. interest Tk.'5,000 but the money has not yet been received. Give journal entry in your books. When you prepare cash book everyday why do you have to prepare cash Flow statement again? Debtors Account shows a beginning balance Tk. 80,000, credit sales Tk. 6,00,000, cash sales Tk. 2,00,000, returns inwardTk. 2,500, bad debts Tk, 4,000, doubtful expense Tk. 3,800 (an allowance account is maintained), cash received from debtors Tk. 4,70,000. Prepare the debtors account. In soletradership and partnership business, owners usually run and control the business, but in the public limited companies (PLC), owners do not run and control the business, rather professional managers do this on behalf of the owners. What potential problems a PLC can face in this regard? Give the correcting entries for these errors (i) Purchases overcast Tk. 45,000, (ij) Repairs and maintenance of Tk. 7,300 have been debited to Machinery account, (iii) Cash payment of Tk. 6,000 to Rahim has been debited to Karim. From the following determine cash flow from operation : Net income Tk. 300,000, depreciation was charged Tk. 7,000, decrease in accounts receivable Tk. 5,500, decrease in accounts payable Tk. 6,600, borrowed from bank ‘Tk. 9,00,000, gain on sale of land Tk. 4,00,000. In practice, T-form ledger is not used rather multiple column ledger is used. Then why do we lear this T-from ledger? Prepare the cash book for July 2013 from the following : beginning inventory Tk. 9,000, credit sales Tk. 3,00,000, cash sales Tk, 1,00,000, from one credit customer of Tk. 7,000 received Tk. 6,500 in full settlement of his account, credit purchases in May 3013 Tk. 6,50,000 of which 30% paid in June and 40% payable in July and the rest in August. Electricity bills for June Tk. 3,300 payable in July. In business there is a theory : “business capital cannot be broken”. In order to maintain this theory what accounting principles would you care in preparing an income statement? ABC is a partnership business. From the following prepare B's current account : beginning balance Tk. 70,000 (cr.), fresh capital introduced by him Tk. 9,00,000, interest on capital is payable @ 5%, he drew Tk. 15,000 cash and goods worth Tk. 16,000, interest chargeable on drawings @ 8%, profit of the business is Tk. 13,00,000 equally shared. Assume that only current account is maintained and capital account is not maintained Give two limitations of a balance sheet. Annual rent of your business Tk. 7,00,000, InsuranceTk. 1,00,000, Managers” salaries Tk, 8,00,000 and depreciation Tk. 3,00,000, per unit cost of your product : material Tk. 12, labour Tk. 7, overhead Tk. 3:5 (variable), fixed overhead Tk. 2, selling price is fixed at product cost plus 10% profit (i) Calculate break-even point in taka, (ii) if material cost decreases 10% and labor cost increases 10% what will be the new BEP? Fixed cost is always fixed, Do you agree? Expl Marks 3 5 3 [Please turn over5. 6 (@) An old machine has been disposed of for Tk. 18,00,000. Its cost price was Tk. 29,00,000 and accumulated deprecation on the date of disposal was Tk. 19,00,000. Give the Journal entry for this disposal (6) Write notes on any six — ‘ord; (ii) Worksheet; (iii) Off-balance sheet item; (iv) Window dressing: (v) Reversing entry; (vi) Duty paid value; (vii) Consisteney principle; (viii) Vat income vs. Taxable income. (©) Prepare a bank reconciliation statement :-— Taka Bank balance as per depositor’s record (31-12-13) 13,506 Deposit to the bank by a customer unknown to the depositor 44,700 Outstanding charge 129,478 Bank service charge 750 (Not sufficient fund) NSF charge from customer debited to account by bank 2,300 Cheque to a creditor written Tk. 7,000 but recorded in depositor’s book as ‘Tk. 700 Bank balance as per bank pass book (31-12-13) 1,78,334 (d) Explain objectivity principle in accounting. (a) The summarised accounts of MN Company Ltd. for 2008 and 2009 are given below -— Income Statement for the year ended 31 December 2008 = Taka = 2009 Taka Sales 2,00,000 2,80,000 Cost of sales 1,50,000 210,000 Gross profit 50,000 70,000 Administrative expenses Tk. 46,000 38,000 - Debenture interest a 38,000 __4:000 50.000 Net income 12,000 20,000 Balance Sheet as at 31 December 2008 = Taka = 2009 Taka Fixed assets at cost less depreciation 1,10,000. 1,40,000 Inventory 20,000 30,000 Accounts receivable 25,000 28,000 Bank 5,000 45,000 63,000 Creditors (15,000) (12,000) Bank (10,000) _ 20,000 $1,000 7 130,000 1,91,000 8% debentures (50,000) 1,30,000 ‘Common stock 100,000. Retained Earnings 30,000 1,41,000 Inventory at | January 2008 was Tk. $0,000. Required : (A) Calculate the ratios for 2008 and 2009 : () Gross ‘margin, (ii) Inventory turnover; (iii) Net margin, (iv) Acid test ratio. (v) Working capital, (vi) Return on capital employed (B) Exaluate the performance of the company in2009 compared to 2008. () Explain common-size financial statement analysis with an example. Marks 57, Marks (a) The following is the Trial Balance of Times Ltd. at 31 December 2013 -— 20 ‘Taka ‘Taka Share Capital 2,00,000 Retained Earnings (Dec 31, 2012) 27,500 Premises at cost. * 2,71,000 Provision for depreciation—premises 54,000 Machinery at cost 84,000 Provision for depreciation—machinery 21,000 Purchases. 5,63,700 Sales 9,25,300 General expenses, 14,600 Wages and salaries 1,79,400 Business rates 6,100 icity 4,800 Bad debts. 1,400 Provision for doubtful debts 1,200 Debtors 74,200 Creditors 68,300 Inventory (Dec 31, 2012) 81,900 Bank balance 16,200 12,97,300 _12,97.300 jonal information : () Authorized and issued share capital is divided into 4,00,000 ordinary shares of Tk. 0-50 each, (ii) Inventory on December 31, 2013, Tk. 94,300. (iii), Wages due 2013, Tk. 1,800. (iv) Business rates paid in advance Tk. 700. (x) Dividend of Tk. 20,000 is proposed for 2013. (vi) Provision for doubtful debts is to be increased to Tk. 1,500. (vii) Depreciation charge is to be made on premises of Tk. 25,000 and machinery at the rate of 20% on cost. Required : Income Statement and Balance Sheet for 2013. (b) Explain the limitation (disadvantage) of LIFO Inventory Valuation. 4 (e) Explain two limitations of an income statement. 4 (a) Alam and Company purchased an equipment on January 1, 2008 for Tk. 2,90,000. The 10 0) © machine is expected to have a useful fe of five years and a residual value of Tk. 20,000. Calculate depreciation for 2008, 2009 and 2010 using straightline and reducing balance method. Explain the advantage of reducing balance method over the straightline method Give the Journal entry to record depreciation for year 2008. - 3 [Please turn over