ACCOUNTING

Time allowed- 2:15 hours

Total marks- 100
[N.B. - The figures in the margin indicate full marks. Questions must be answered in English. Examiner will take account of the
quality of language and the manner in which the answers are presented. Different parts, if any, of the same question
must be answered in one place in order of sequence.]
Marks
1. (a) Conceptual Framework of Accounting emphasise on ‘users of accounting information’ rather than
‘stakeholders of accounting information’ whereas auditors issued audit opinion through audit report
to the ‘shareholders’ of the auditee. Why do we require information about an entity’s financial
performance? 4
(b) Going concern is simply the capability of the organization to run its operations sustainably. During
COVID-19 outbreak pandemic, it is crucial to assess ‘going concern’ status of the organization.
Explain how does COVID-19 affect ‘going concern’ of an organization. 4
(c) Measurement is the process of determining the monetary amounts at which the elements of
financial statements are to be recognized and carried in the statement of financial position and
statements of profit or loss and other comprehensive income (Conceptual Framework). This
involves the selection of a particular basis of measurement. A number of these are used at different
degrees and in varying combinations in financial statements. Discuss the measurement basis of
elements of financial statements in accordance with the IASB Conceptual Framework. 5
2. Tamim Consulting Ltd. began operations on October 1, 2020 and completed the following transactions
during the month:
(i) October 1, Issued 25,000 shares of Tk. 10 par value common stock in exchange for Tk.
250,000 cash and rented a furnished office for Tk. 30,000 per month to be paid at the end of
each month.
(ii) October 2, Purchased office furniture valuing Tk. 75,000 on credit.
(iii) October 10, Provided consulting services for a client and immediately collected Tk. 95,000.
(iv) October 20, Entered into a contract with a customer to provide consulting services in the next
month for Tk. 100,000.
(v) October 30, Paid following expenses for the month:
 Office assistant salary – Tk. 20,000
 Utilities bill – Tk. 5,000
Requirement: Identify the specific accounts affected by each transaction and use the rules of debit and
credit for the increases or decreases. 10
3. The Cash Book of DMC Club as at 30th April 2020 shows a balance at the Bank Tk. 19,000 while the
Bank statement disclosed an overdraft amount of Tk. 4,700. Upon investigation, the treasurer discovers
the following errors:
 A cheque paid to S Ltd for Tk. 3,400 had been entered in the Cash Book as Tk. 4,300.
 Cash paid to the Bank for Tk. 1,000 had been entered in the Cash Book as Tk. 900.
 A transfer of Tk. 15,000 to the savings account had not been entered in the Cash Book.
 A receipt of Tk. 100 shown in the Bank statement had not been entered in the Cash Book.
 Cheque drawn amounting to Tk. 400 had not been presented into the Bank.
 The Cash Book balance had been incorrectly brought down at the 1st May, 2020 as a debit
balance of Tk. 12,000 instead of debit balance of Tk. 11,000.
 Bank charges of Tk. 200 did not appear in the Cash Book.
 Receipts of Tk. 9,000 paid into the Bank on 30th April, 2020 did not appear on the Bank
statement until 1st May, 2020.
 A standing order payment of Tk. 300 had not been entered in the Cash Book.
 A cheque for Tk. 500 previously received and paid into the Bank had been returned by the
Bank marked ‘account closed’.
 The Bank received a direct deposit of Tk. 1,000 from an anonymous number.
 Cheques paid into the Bank had been incorrectly totaled. The total amount should have been
Tk. 1,700 instead of 1,500.
Requirement: Prepare a Statement reconciling the difference between the Cash Book balance of Tk
19,000 and overdraft amount of Tk 4,700. 12
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4. A car was purchased for Tk.12,00,000 on 1 January 2016 and has been depreciated at 20% each year
straight line, assuming no residual value. The car was traded in for a replacement vehicle on 31
December 2019 for an agreed figure of Tk.5,00,000.
Requirement: What was the profit or loss on the disposal of the vehicle for the year ended 31
December 2019? 6

5. The following transactions are extracted from MNP Ltd. for the year ended on June 30, 2019:

(i) Plant assets sold at Tk. 5,300 which was purchased 6 years before for Tk. 20,000. The plant
assets were depreciated on a straight line basis assuming useful life of 10 years with no
residual value.
(ii) Issued 10,000 shares of Tk. 10 each at a price of Tk. 43 per share.
(iii) Issued shares for a 70% interest in ABC Co. for Tk. 9,00,000.
(iv) Patent amortization for the year was Tk. 20,000.
(v) Uncollectible accounts receivable amounting to Tk. 27,000 were written off against the
allowance for doubtful debts.
(vi) The company’s net loss for the year Tk. 50,000. Depreciation charged Tk. 22,000 and
realized a gain of Tk. 9,000 on the sale of a land for Tk. 39,000.
(vii) A 3-months Govt. Treasury Bill of Tk. 1,00, 000 was purchased.

Requirement: State the treatment of the above transactions in the Cash Flow Statement of MNP for the
year ended on December 31, 2019: 7
6. Khan Ltd. started its business at the beginning of 2018 with a skilled team of 10 employees. The
employees were hired at salary of Tk. 960,000 each per year. The company provided an increment on
salary by 10% from 1 January 2019. The company also appointed a management trainee at salary of Tk.
672,000 per year on 16 September 2019. Khan Ltd. pays its employees for each month on the first day
of the following month.

Requirements:
(a) Calculate the amount of salaries paid during the year of 2019 and also calculate the amount of
salaries expense charged in Khan’s Statement of Comprehensive Income for the year ended 31
December 2019. 5
(b) Calculate the amount of the accrual for salaries which will be shown in Khan’s Statement of
Financial Position as at 31 December 2019. 5

7. While preparing the trial balance of South Bangla Ltd. as at 31 December 2019, Safura, the Company
Accountant found that total debits does not equal to total credits. She began to check accounting records
to find differences and found the following omissions and errors.
a) On 1 January 2019, Chowdhury Ltd. disposed off an item of plant that had cost Tk. 800,000
and on which Tk. 100,000 depreciation had been charged. The company received a cheque for
Tk. 636,000. The only accounting entry made was to debit cash.
b) The company has bank overdraft balance of Tk. 520,000 in its current account but the balance
has been entered in the trial balance as debit balance.
c) A customer returned goods amounting to Tk. 18,500 but the accountant credited it to the
purchases returns account.
d) On 1 January 2019, a printer for Tk. 50,000 has been purchased and it had been debited to
repairs and maintenance account. The company depreciates its computer equipment at 20% per
annum on a straight line basis.
e) The entity received a cheque for Tk. 750,000 and is debited to cash. It has also been debited to
receivables from customers.

Requirement: Provide the required accounting entries to correct each of the errors identified above. 10

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8. The Trial balance of XYZ Ltd. is as follows:
Trial Balance
For the year ended 30 June 2020
Debit (Tk.) Credit (Tk.)
Short term investment 4,300,000
Supplies (1/7/2019) 810,000
Prepaid insurance 1,200,000
Office Equipment 5,900,000
Accumulated depreciation- Equipment 2,000,000
Office building 7,000,000
Accumulated depreciation- Office building 3,060,000
Unearned professional fees 650,000
Share capital 5,000,000
Retained earnings 2,841,300
Professional fees 9,600,000
Salaries and allowances 2,917,300
Utilities expense 424,000
Rent 600,000
23,151,300 23,151,300
Other Information:
(i) Depreciation on the equipment and office building is Tk. 100,000 and Tk. 50,000 per month respectively.
(ii) Management designated the short term investment at Fair value through profit or loss at the time
of purchase. On December 30,2020, the securities have risen in value to Tk. 45,00,000.
(iii) Prepaid insurance paid for 2 years effective from July 1, 2019.
(iv) Customers paid in advance for the service of Tk. 650,000 beginning in May 2020. These
customers were serviced in June.
(v) The supplies account at June 30, 2020 showed that Tk. 315,500 of office supplies are in hand.
(vi) Provision for audit fees amounting to Tk. 5,00,000 has not been recognized yet.
Requirement: Prepare an adjusted Trial Balance for the year ended on 30 June 2020 12

9. The following balances were taken from Faiz Limited as on 30th June 2019:
Amount in Taka Amount in Taka
Debit Credit
Cash at bank 18,000 Accounts Payable 90,100
Accounts Receivable 92,800 10% Treasury Bond 150,000
Factory Supplies 1,100 Share Capital 100,000
Office Supplies 800 Sales 490,000
Plant and Machinery 205,000
Raw materials 274,000
Direct Labor 118,900
Selling expenses 36,500
Sales commission 24,000
Salaries 17,500
Interest on bond 11,250
Indirect labor 20,500
Repair and maintenance 5,000
Administrative expenses 4,750
830,100 830,100
th
Additional available information on 30 June 2019, are as follows:
(i) Inventories- Finished Goods Tk. 19,000, Work-in- progress Tk. 15,000, Factory Supplies Tk. 400,
Office supplies Tk. 300 and Raw Materials Tk. 20,000.
(ii) Allowance for Bad Debts 2% on Accounts Receivable.
(iii) Depreciation 10%, chargeable to manufacturing 70%, Selling 15% and Administration 15%.
(iv) Accrued expenses: Direct labor Tk. 2,500, Indirect labor Tk. 600 and Sales commission Tk.400.
(v) Bond interest payable on March 31 and September 30.
(vi) Finished goods inventory does not include goods damaged by fire amounting to Tk. 8,000 on June
10, 2019. The Insurance Company accepted a claim for Tk. 5,000.
Requirement: Prepare Statement of Comprehensive Income for the year ended 30 June 2019 and
Statement of Financial Position as on 30th June 2019. 20
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