- a FE Sa INLAND REVENUE Sk BA @3 5 MINATION 01 Ih CIPA FAILURES OF oa INCOME TAX LAW, PAPER-1 (WITH BOOKS) (45 & 43 CTPs) )ERAL PUBLIC SERVICE COMMISSION s NAL PASSING ‘TIME ALLOWED: THREE HOURS MAXIMUM MARKS = 150. NOTE: (i) Attempt FIVE questions in all, by ‘selecting TWO questions each from PART-I and PART-IT and ONE question form PART-II. ALL questions carry EQUAL marks. (ii) All the parts (if any) of each Question must be attempted at one place instead of at different places. (iit) Write Q. No. in the Answer Book in accordance with Q. No. in the Q Paper. {iv} No Page/Space be left blank between the answers. All the blank pages of Answer Book must be crossed. (¥) Extra attempt of any question or any part of the question will not be considered. (vi) Leave some blank space and draw two horizontal lines ( -=) at the end of each answer. (vii)_Use of Simple Calculator is allowed. PART Q.No.1. Explain in your owm words what is meant by “Liaison office” and what are the (30) implications of this definition? Q.No.2, Briefly describe the circumstances under which corporate taxpayers are taxed G0) otherwise than on net income basis and what are the alternate modes of taxation?” Q.No.3. What are the differences between foreign tax credits and foreign losses and their tax (30) tweatments? PART-II Q.No.4. Enumerate the withholding taxes which are collected on expenditure mace by @ person and identify the respective withholding Agents for each such tax. 0) Q.No.5. What are the adverse actions that can be taken against a withholding agent in case of (30) any default of legal obligations under the Income Tax ordinance 2001? Q.No.6. Which statement and information are to be _mandatorily filed by the Banking (30) Companies under the provisions of the Income Tax Ordinance, 2001 and what are the consequences of default? PART-II Q.No.7. Explain the differences between deductible allowances and tax credits and concisely describe various types of tax credits under the Income Tax Ordinance, 2001 0) Q.No.8 Explain the reasons for entering into agreements for the avoidance of double taxation (30) and prevention of fiscal evasion and describe the matters dealt with under these ouards to prevent abuse of these agreements,¥, FEDERAL PUBLIC SERVICE COMMISSION ; ©) INLAND REVENUE SERVICE PROI FINAL an PASSING OUT EXAMINATION 01 ND RE- : 8° EXAMINATION OF FAILURES OF EARLIER BATCHES-2020 INCOME TAX LAW. PAPER-II (WITH BOOKS) (46" CTP) TIME ALLOWED: THREE HOURS MAXIMUM MARKS = 150 NOTE: () Aviempi FIVE questions in all, by selecting TWO questions each from PART-T and PART-II and ONE question form PART-IL ALL questions cerry EQUAL marks. (i) All the pans (iFany) of each Question must be attempted at one plece instead of at different places. (ii) Write Q. No. in tne Answer Book in accordance wits Q. No. in the Q.Paper. (Ge) No Page/Space be left blank between the answers. Al fae blank pages of Answer Book must be crossed. (©). Extra atempt of any question or any pat cf the question will not be considered, (vi) Leave some blank space and draw two horizontal lines ( at the end oF each answer, (vil) Use of Simple Calculator is allowed. PART- Q.No. 1. Mr. A has provided the following information in respect of his income for the tax year (30) (Bis Catelate his taxable ineame and Uiilities 30,c00. Salaries, 50,C00. General expenses, 100,000 Travelling expenses 30,C00 Bad debts 20,C00 35,C00_ 20,00 40,600 3,070,000 3,070,000 ‘Tax depreciation is 20,000 and 15,000 yy Bank. Q.No.2. M/S ABC (Pvt,) Limited has declared following particulars. Compute its tax ability (30) including liability if any under (Tax year 2019). (i ir 5) 15,000,000 1,000,000 Q.No.3. Mr. X is an employee of a Limited company. Compute his taxable income and tax (30) liability. ut y Basic Salary = 200,000 Zr fer 27° He ce 500,000 TA/DA during the year 200,000 PART-II Q.No.4. Mr. ¥ derives income from business ancl has aequired following assets for his business. (50) Compute his ina alowanes and deci eduction for Tax year 2019. Factory building acquit 5,000,000 1,000,000 Vehicles acquit = 1,000,000 = 500,000 ‘Computers acquired on 30-12-2018 = 100,000 All the assets are new and used for the first time by Mr.Y.x INCOME TAX LAW, PAPER (WITH BOOKS) (46" CTP) Q.No. 5.) Mr. Tariq has Rs.3,500,000 from for the tax year 2019. He 1,000,000 to an NPO and paid as Life Insurance Q.No. 6. Q.No.7. Q.No. 8. premium during the year. ‘Compute the ‘admissible to him. During the tax year 2019 Khalid and company (Pvt) Ltd, Disppsed of the following assets: @ An was sold for Rs.40,000,000. The coat of the property was s.20,000,000 a tax depreciation of Rs.15,000,000 had allowed. di) rchased for Rs.1,000,000 on 30:9:2018 was sold on 305-2019 for il) A car purchased for Rs.3,000,000 in Tax ‘was sold for Rs.3,500,000. Tax depreciation for Tax year 2018 we ‘Compute the tax gain or loss on disposal of above assets. PART-II XYZ a Private Limited company made the following payments tq non-resident persons using the Tax year 2019 without deducting any tax. Compute its fiablity under section 161 (@® Annual salary of Rs.2,000,000 to an employee abroad, Gi) Rs3,000,000 fora TV commercial. Gi) Rs.1,300,000 to German engineers for repair and maintknance of plant and machinery. (i) Rs.1,000,000 as insurance premium. (¥)_ Rs.5,000,000 for a turnkey contract. Dr. Arshad deriving income from private medical practice filed rerum with tax payable amounting to Rs.150,000, was selected for audit (Tax year 2019) under section 177 and an additional tax liability of Rs.500,000 was determined under section 122 (1). He was found to have committed the following defaults. Compute the penalty leviable on him under various legal provisions (i) He did not issue invoices to his patients (ii) He did not produce the record and documents requited for audit under section 177 till he was issued the third notice for this purpose. (ii) Addition under section 111(1) (b) was made involving a tax of Rs.100,000. Buy G0) G0) 60) Pave 2 of 2incom Q.No. 5. Q. No. 6. Q.No.7. Q.No.8. J(WITH BOOKS) (45" & 43 "AX LAW. PAPI Ms Shaisia has derived taxable income fiom salary amounting to Rs.2,500,000 in the tax year 2018. She paid Health Insurance Premium of Rs!800,000 and purchased shares of a public Limited company traded on Stock Exchange|for Rs.400,000. Compute the admissible tax credit for 2018. ‘A business sold the following assets in Tax year 2018.iCompute the taxable gain or loss. (A car that was used equally for business and petsonal purposes was sold for Rs.2,000,000. The cost of the car was Rs.1,800,000 and depreciation of Rs,135,000 had been allowed upto tax year 2017. ' i) Machinery purchased for Rs.1,000,000 was sold for Rs.700,000. upto tax year 2017 depreciation of Rs.500,000 had been allowed. (iii) Generator which was purchased for Rs.250,000 ahd on which depreciation of Rs.100,000 was allowed up to Tax year 2017 was exchanged with a new Generator after additional payment of Rs.150,000. The FMV of the new Generator ‘was Rs,500,000. PART-II XYZ a Private Limited company was found to have committed the following violations of his legal obligations under the Income Tax Ordinance, 2001 for the Tax year 2018. Compute the penalty Isviable for each default. (@ The return with tax payable amounting to Rs.500,000 was filed late by 145 days. s.400,000 had already been paid as advance tax. (ii) Withholding tax statements required to be filed under section 165 for the months of October 2017, December 2017 and Merch 2018 were filled on 15" July 2018. Did not comply with three notices issued under section 176 calling for information about one of its suppliers. M/s ABC a Private Limited Company Running a Textile Mill did not withhold any tax on the following transactions with Non-filers during the Tax year 2018, Compute the liability of the company under Section 161. (@ Paid annual satary of Rs.1,500,000 to Mr. A (ii) Auctioned a vehicle and received Rs.750,000 from the successful bidder. Gili). sold its products to a retailer for Rs.175,000. (iv) Paid commission of Rs.250,000 to Mr. A. (¥) Acquired services from 2 consultant for Rs.300,000 Gv, Go G0) G0)e 2 FEDERAL PUBLIC SERVICE COMMISSION hy BLAH REVENUE senvicE PROBATIONERS FINAL PASSING Bolluner = OUT EXAMINATION OF 46" CIP AND RE-EXAMINATION OF way get FAILURES OF EARLIER BATCHES-2020 SALES TAX AND FEDERAL EXCISE LAWS (WITH BOOKS) (46™ CTP) | TIME ALLOWED: THREE HOURS MAXIMUM MARKS = 150 "NOTE: ()_Atiempi FIVE questions in all, by selecting TWO questions each from PART-T and PART-IT and ONE question form PART-II. ALL questions carry EQUAL marks. (il) All the parts (if any) of each Question must be attempted at one place instead of at different | places. | (iii) Write Q. No. in the Answer Book in accordance with Q. No. in the QPaper. | {iv) No Page/Space be left blank between the answers, All the blank pages of Answer Book must | be crossed (v) Extra attempt of any question or eny part of the question will not be considered. ) at the end of each answer. (vi) Leave some blank space and draw two horizontal lines ( PART-I Q.No.1. (a) MIS XYZ (Pvt) Limited, a manufacture of LED T.Vs has supplied 100 T:Vs to (20) Royal Corporation, a retail outlet. The supplier grants to reduce the amount of sales tax, Which has been inadvertently shown higher in tax invoice. What is the procedure to be followed by the supplier. (b) A has supplied 5000 packets of cigarettes to B. However, next day B returns the said (10) supply to A being unfit for human consumption as the Lab Test Report als> confirmed the same. What is the prescribed legal opticn available to A to deal witn these cigarettes? (a) Who is liable to pay sales tax in case of i) supply of goods and ii) goods imposted (10) into Pakistan. Who is competent to make a person receiving the supply liable to pay sales tax and how? Q.No. (b) Write a Note on Electronic filing of Sales Tax Return. (20) Q.No.3. Illustrate the following term (Geach) (30) (Active taxpayer (i) Association of persons Gif) Banking company (iv) Cottage Industry (v) Input tax PART Q.No.4. What is de-tegistration, blacklisting and Suspension of Registration. Explain the (30) procedure for suspension and blacklisting of a registered person. Q.No.5. An Assistant Commissioner of Inland Revenue, based on material evidence has reasons (30) to believe that m/s Tripple A, a public limited company, has committed tax fraud, How the said officer is required to proceed for prosecuting the sald company. Q.No.6 (a) In modem taxation system, the importance of persons who assist, tax collecting (15) authorities in identifying concealment or evasion of tax, tax fraud and corruption, cemnot be over emphasized. Does Sales Tax Law take care of such persons? If so, ‘what isthe prescribed mechanism? as) (b) What are the essential pre-requisites for claiming exemption from payment of sales tax because the same has not been levied or short -evied as a result of general practice? Page | of 2SALES TAX AND FEDERAL EXCISE LAWS (WITH BOOKS) (46"" CTP) Q.No.7. Q.No.8. PART-II (a) How the value of goods and services liable to excise duty, is determined for the purpose of assessment of duty. (b) How will you cause service of Show Cause Notice on a resident individual? °. What are the important features of tial of fe by Special Judge? When and where an Appeal is filed against the Orders of a Special Judge. 2 -) (20) (10) G0)FEDERAL PUBLIC SERVICE COMMISSION Fina INLAND REVENUE SERVICE PROBATIONERS FINAL PASSING || OUT EXAMINATION OF 46" CTP AND RE-EXAMINATION OF FAILURES OF EARLIER BATCHES-2020 PRINCIPLES OF ACCOUNTANCY. TIME ALLOWED: THREE HOURS MAXIMUM MARKS = 150 NOTE: (Attempt SIX questions in all, by selecting TWO questions each from PARTI, 1T and 117. ALL questions carry EQUAL marks. Gi) All the parts (if any) of each Question must be attempted at one place instead of at different places. (iii) Write Q.No. in the Answer Book in accordance with Q. No. in the Q.Paper. iv) No PagelSpace be left blank between the answers. Ail the alank pages of Answer Book must be crossed. (v) Extra attempt of any question or any part of the question will not be considered. (vi) Leave some blank space and draw twe horizontal lines (===) at the end of each answer. (vii)_Use of Simple Calculator is allowed. PART-1 (50 Marks) Q.No.1. Explain in detail the following Concepts:- (Geach) 25) (Modes of Business Organization (Gi) Substance over form {iv) Chart of account (ii) Fundamental accounting concey (vi Capital and revenue expenditure 1.2, J. F, Outz, M.D., organized Hearts Inc. three years ago to practice cardiology. es) During April 2013, Hearts Inc. completed the fo:Jowing transactions: Apr. 1. Paid office rent for April, $800. 3. Purchased equipment on account, $2,100. 5. Received cash on account from patients, $3,150. 8, Purchased X-ray film and other supplies on account, $245. 9. One of the items of equipment purchased on April 3 was defective, It was returned with the permission of the supplie:, who agreed to reduce the account for the amount charged for the item, $325. 12. Paid cash to creditors on account, $1,259.Apr. 12. Paid cash for renewal of six-month property insurance policy, $279. 20. Discovered that the balances of the cash account and the accounts payable ‘account as of April 1 were overstated by $200. A payment of that amount 10 a creditor in March had not been recorded, Journalize the $200 payment as of April 20. 24, Paid cash for laboratory analysis, $545. 21. Paid dividends, $1,250. 30. Recorded the cash received in payment of services (on a cesh basis) to patients during April, $1,720. 30. Paid salaries of receptionist and nurses, $1,725. 30. Paid various utility expenses, $360. 30. Recorded fees charged to patients on account for services performed in April, $5,145, 30. Paid miscellaneous expenses, $132. Hearts Inc.'s account titles and balances as of April 1 (all normal balances) are listed es follows: Cash, $4,123: Accounts Receivable, $6,725; Supplies, $290; Prepaid Insurance, S465; Equipment, $19,745: Accoun:s Payable, $765; Capital Stock, $10,000; Retained Eamings, $20,583, Dividends, $0; Professional Fees, $0; Salary Expense, SO; Rent Expense, $0; Laboratory Expense, $0; Utilities Expense, $0: Miscellaneous Expense, $0 Required: 1. Joumalize each transaction. 2. Post the journal to the ledger, first take their opening balances 3. Prepare an unadjusted trial balance as of April 30.QNo. 4. OF ACCOUNTANCY (FOR 46" CTP) ~ Pepper Company completed the following selected transactions and events during (25y"" ‘March of this year. (Terms of all credit sales for the company are 2y10, ny30.) Mar. 4 Sold merchandise on credit to Jennifer Nelson, Invoice No. 954, for $16,800 (cost is $12,200). 6 Purchased $1,220 of office supplies on credit from Mack Company. Invoice dated March 3, terms ny30. 6 Sold merchandise on credit to Dennie Hoskins, Invoice No, 955, for $10,200 (cost is $8,100). 11 Purchased $52,600 of merchandise, invoice dated March 6, terms 2y10, ay30, from Defore Industries. 12 Borrowed $26,000 cash by giving Commerce Bank a long-term promissory note payable. 14 Received cash payment from Jennifer Nelson for the March 4 sale less the discount (Invoice No. 954). 16 Received a $200 credit memorandum from Defore Industries for unsatisfactory merchandise Pepper purchased on March 11 and later returned, 16 Received cash payment from Dennie Hoskins for the March 6 sale less the discount (Invoice No. 955). 18. Purchased $22,850 of store equipment on credit from Schmidt Supply, invoice dated March 15, terms ny30. 20 Soid merchandise on credit to Marjorie Allen, Invoice No. 956, for $5,600 (cost is $3,800) 21 Sent Defore Industries Check No. 516 in payment of its March 6 dated invoice less the return and the discount. 22. Purchased $41,625 of merchandise, invoice dated March 18, terms 2y10, ny30, from Welch Company. 26 Issued a $600 credit memorendum to Marjorie Allen for defective merchandise Pepper sold on March 20 and Allen later returned. 31. Issued Check No. 517, payable to Payrol!, in payment of $15,900 sales salaries for the month, Cashed the check and paid the employees. 31 Cash sales for the month are $134,680 (cost is $67,340). Cash sales are recorded daily but are recorded only once here to reduce repetitive entries, Required: Enter the transactions using a sales journal, © purchases joumal, a cash receipts Journal, a cash disbursements journal, and a general journal. Pepper Co. uses the perpetual inventory system, PART-II (50 Marks) The following information is available for the Avisa Company for the month of @5) November: ‘a. On November 30, afterall transactions have been recorded, the balance in the company’s Cash account has a balance of $27,202. bb. The company's bank statement shows a balance on November 30 of $29,279. ©. Outstanding checks at November 30 include check #3030 in the amount of $1,525 and check #3556 in the amount of $1,459. 4. A credit memo included with the bank statement indicates that the bank collected ‘$780 on a noninterest-bearing note receivable for Avise. The bank deducted a $10 collection fee, and credited the remainder of $770 to Avisa's account. . A debit memo included with the bank statement shows a $67 NSF check from 2 customer, J. Brown, £.A deposit placed in the bank's night depository on November 30 totaled $1,675, and did not appear on the bank statement. g. Examination of the checks on the bank statement with the entries in the accounting records reveals that check #3445 for the payment of an account payable was correctly written for $2,450, but was recorded in the accounting records as $2,540. h, Included with the bank statement was a debit memorandum in the amount of $25 for bank service charges. It has not been recorded on the company’s books. Required:- Based on the above information. prepare the November bank reconciliation for the Avisa Company: Page 2 of 4PRINCIPLES OF ACCOUNTANCY (FOR 46™ CTP) (A)_ On September 30. Emerson Co, has $540,250 of accounts receivable. Emerson (12) uses the allowance method of accounting for bad debts and has an existing balance in the allowance for doubtful accounts of $13,750. 1. Prepare journal entries to record the following selected October transactions. The company uses the perpetual inventory system. 2. Show how Accounts Receivable and the Allowance for Doubtful ‘Accounts appear on its October 31 balance sheet. a, Sold $325,000 of merchandise (that cost $178,500) to customers on credit. b. Received $425,100 cash in payment of accounts receivable. ¢. Wrote off $16,700 of uncollectible accounts receivable. 4. In adjusting the accounts on October 31, its fiscal year-end, the company estimated that 3.0% of accounts receivable will be uncollectible. (B) A company uses the periodic inventory system, and the following information is (13) (25) available. All purchases and sales are on credit Unit Total Unit Units Cost Cost Prise 10/01 Inventory Balance. aa 30 S3_ S90 10/06 Purchase wrweveenomennns 704280 HOT Purchase ncenenenmn i 3 DS TONS Purchase 6 _300 Goods availabe. 95 102 Sale. 100 s10 10/20 Sale. nt Goods sold 10/31 Inventory Balance. 1. Prepare the general journal entries to record: The October 6 purchase. The October 12 sale. 2. Assuming the petiodic inventory system is used, determine both the cost of the ‘ending inventory and the cost of goods sold using the LIFO method for October. Q.No.6. (A) A machine costing $450,000 with a four-year life and an estimated $30,000 (12) salvage value is installed by Lux Company on January 1. The factory estimates the machine will produce 1,030,000 units of product during its life. It produces the following units for the first 2 years: year 1, 260,000; year 2, 275,000. Enter the depreciation amounts for years | and 2 in the table below for each depreciation method, Show ealeulation of amounts below the table. Units-of- Year Straight-Line Production Balance Year 1 Year 2 {B) On April 1 of the current year, a company traded an old machine that originally (13) (25) cost $32,000 and that had accumulated depreciation of $24,000 for a similar new ‘machine that had a cash price of $40,000. 1. Prepare the entry to record the exchange under the assumption that a $5,000 trade- in allowance was received and the balance of $35,000 was paid in cash. Assume the exchange transaction had commercial substance. ‘2, Prepare the entry to record the exchange under the assumption that instead of @ $5,000 trade-in allowance, a $12,500 trade-in allowance was received and the balance of $27,500 was paid in cash. Assume the exchange transac:ion lacked commercial substance. PART-II (50 Marks Q.No. 7." Brit, Frane, and Scot who share income and loss in a 2:2:1 ratio, plan to Fiquidate their @5) partnership. At liquidation, their balance sheet appears as follows. Prepare journal entries for (a) the sale of land and equipment sold as a package for $500,000, (b) the allocation of the gain or loss, (c) the payment of the liabilities, and (d) the distribution of cash to the individual partners. Page cf 4PRINCIPLES OF ACCOUNTANCY (FOR 46"" CTP) Q.No.8. Q.No.9. Brit, Franc, and Seot Balance Sheet January 31 Assets Linbilities and Equity Cash 150,000 ‘Accounts Payable $221,500 Equipment 200,000 Brit, Capital 210,000 Land 400,000 Franc, Copital 178,000 ‘Scot, Capital 140,500 Total assets $750, Total liabilities and equity $750,000, Bella Beauty Salon's unadjusted trial balance for the current year follows: es) Bella Beauty Salon Trial Balance December 31 Cash. 54,200 Prepaid insurance 1,480 Shop supplies .. 990 Shop equipment .. 3,860 Accumulated depreciation-shop equipment $770 Building. oe 57,500 Accumulated depresiation-building ... : 3,840 Land smnnmnnenenne — $5,000 Unearned rent 1,600 Long-term notes payable.. se 50,000 Bella Hanson, Capital nnn 49,860 Rent eared 2,400 23,400 3,200 690 600 Interest expense 4.350 Total 7 s31.870 SGL820 ‘Additional information: ‘An insurance policy examination showed $1,240 of expired insurance. ‘An inventory count showed $210 of unused shop supplies still available. Depreciation expense on shop equipment, $350. Depreciation expense on the building, $2,220 ‘A beautician is behind on space rental payments, and this $200 of accrued revenues was unrecorded at the time the trial balance was prepared. $800 of the Uneamed Rent account balance was eamed by year-end. g. The one employee, a receptionist, works a five-day workweek at $50 per day. The employee was paid last week but has worked four days this week for which she hhas not been paid. hh, Three month's property taxes, totalling $450, have aecrued, This additional amount of property taxes expense has not been recorded i. One month's interest on the note payable, $600. has accrued but is unreconted. Required: 1- Based on the above information. prepare the adjusting journal entries for Bella's Beauty Salon. 2. Prepare the adjusted trial balance for Bella's Beauty Salon. Write note on the followings:- es) (a) Define Non-Profit organizations with example (b) How parinership accounts are prepared? (©) Explain the process of Admission of partner ina partnership firm {@) Howto prepare income and expenditure account in case of Nonprofit organization Page 4 of 4FEDERAL PUBLIC SERVICE COMMISSION ener) a INLAND REVENUE SERVICE PROBATIONERS FINAL { “° PASSING OUT EXAMINATION OF 46"! CTP AND RE- EXAMINATION OF FAILURES OF EARLIER BATCHES-2020 APPLIED ACCOUNTANCY (46" CTP) [Time ALLowsp: THREE NOUS MAXIMUM MARKS = 100 { NOTE: (vii)_Use of Simple Calculator is allowed. (@ Aitempt SIX questions iv all, by selecting TWO questions each from PART-I, 1 and HHT. ALL ‘questions carry EQUAL marks. (ii) All the parts (if any) of each Question must be attempted at one place instead of at different | places, f) Write Q. No. in the Answer Book in accordance (iv) No Page/Space be left blank betweer. the answer: be crossed. (v) Extra attempt of any question or any part of the question will not be considered. (vi) Leave some blank space and draw two horizontal lines at the end of each answer. Q.No. in the Q.Paper. All the blank pages of Answer Book must PART-I (40 Marks) Q.No. 1. Explain in detail International Accounting Standard/International Financial Reporting (20) Standards (IAS/IFRS) Also the preparation of Fixed asset schedule with example Q.No.2. Waal are different types of dividend ws 240 & 241 of the companies Act 2017? Also (20) explain with example how different kinds of these dividends are Q.No.3. Write note on the followings:- (a0 each) @0 @ Classification of Companies as per Third(3rd) Schedule to the Companies Act, 2017 i) Financial statement & Contents thereof v/s 223 & 225 of the Companies Act, 2017 PART-II (30 Marks) Q.No.4. Alexandria Aluminum Company, a raanufacturer of recyclable soda cans, had the as; following inventory balances at the beginning and end of 20x! Inventory Classification January 1, 20x] December 31, 20x1 Raw material . $60,000 $70,000 Work in process enn 120,000 115,000 Finished goods se 150,000 165,000 Q.No.5. Classification of Costs as Variable During 20x1, the company purchased $250,000 of raw material and srent $400,000 on direct labor. Manufacturing overhead costs were as follows:lndirect material. $ 10,000, Indirect labor 25,000Depreciation on plant and equipment 100,000, Utilities 25,0C0, Other 30,000, Sales revenue was $1,105,000 for the year. Selling and administrative expenses for the year amounted to$110,000. The firm’s tax rate is 40 percent. Required: 1. Prepare a schedule of cost of goods manufactured. 2. Prepare a schedule of e0st of goods sold. xed and as Selling and Administrative or Product: (15) Below are listed various costs that are found in organizations. 1. Hamburger buns in a Wendy's outlet 2. Advertising by a dental office 3. Apples processed and canned by Del Monte. 4. Shipping canned apples from a Del Monte plant to customers. 5. Insuranee on a Bausch & Lomb factory producing contact lenses. 6. Insurance on IBM’s corporate headquarters. 7. Salary of a supervisor overseeing production cf printers at Hewlett-Packard. 8. Commissions paid to Encyclopedia Britannica salespersons. 9. Depreciation of factory lunchroom facilities at a General Electrie plant 10. Steering wheels installed in BMWs. Required: Classify each cost as being either variable ar fixed with respect to the number of units produced and sold, Also clessily each cost as either a selling and administrative cost of @ product cost. Prepare your answer sheet as shown below. Place an in the appropriate columns to show the proper classification of each cost, Cost Item | Cost Behavior __| Selling and Administrative cosi_[ Product Cost Variable | FixedQ.No.7. Q.No. 8. Q.No. 9. ‘The Devon Motor Company produces motorcycles. During April, the company purchased 8,000 batteries at @ cost of $10 per battery. Devon withdrew 7,600 batieries from the storeroom during the month. Of these, 100 were used to replace batteries in motorcycles used by the company’s travelling sales staff. The remaining 7,500 batteries withdrawn from the storeroom were placed in motorcycles being produced by the company. Of the motorcycles in production during April, 90%were completed and transferred from work in process to finished goods. Of the motoreycles completed during the month, 30% were unsold at April 30.There were no inventories of any type on April | Required: 1. Determine the cost of batteries that would appear in each of the following accounts at April 30; a, Raw Materials . Work in Process. «. Finished Goods. &.Cost of Goods Sold. _e, Selling Expense. 2, Specify whether each of the above accounts would appear on the balance sheet or on the income statement at April 30. PART-II] (30 Marks) Financial ratios are usually expressed as a percent or as times per period. What are the ‘major ratios which we calculate and used in decision making? ‘The following financial data were taken from the annwal financial statements of Smith Corporation: i 2007 72008 2009 tems Curent asses | $450,000 | $400,000 | $ 500,000 Current liabilities [390,000 [300,000 | 340,000 Sales 1,450,000 | 1,500,000__| 1,400,000, Cost of goods sold [1,180,000 | 1,020,000 [1,120,000 Tnventor 280,000 | 200,000 | 250,000 eee 120,000 | 110,000 103,000 receivable Required: a, Based on these data, calculaté the following for 2008 and 2009: » Working capital Current ratio Acid-test ratio ‘Accounts receivable turnover Merchandise inventory turover b. Evaluate the results of your computations regarding the short-term liquidity of the firm. Gor as) «as) What types of analysis we use to identify different Risk areas during audit of financial (15) statements? (Hint: use Financial rations). Pave ot? *FEDERAL PUBLIC SERVICE COMMISSION INLAND REVENUE SERVICE PROBATIONERS FINAL PASSING OUT EXAMINATION OF 46™ CTP AND RE-EXAMINATION OF FAILURES OF EARLIER BATCHES-2020 APPLIED ACCOUNTANCY FOR 45" CTP TIME ALLOWED: THREE HOURS MAXIMUM MARKS = 100 | NOTE: () Atempt SIX questions in all, by selecting TWO questions each from PART-I, HI and Ill. ALL | questions carry EQUAL marks. Gi) All the pans {if any) of each Question must be attempted at one place instead of at different | t p.aces, | Gii) Write Q. No. in the Answer Book in accordanee with Q. No. in the Q.Paper. | (iv) No Page/Space be lef blank between the answers. Allthe blank pages of Answer Book must | | | i Roll Number be crossed. (¥) Entra attempt of any question or any pari of the question will not be considered. (vi) Leave some blank space and draw two horizontal lines (== atthe end of each answer (vil)_Use of Simple Caleulator is allowed, PART-I (30 Marks) Q.No.1. Barton Corporation began operations on January 1, 2010. The following transactions (15) relating to stockholders’ equity occurred in the first two years of the company's operations, 2010 Jan. 1 Authorized the issuance of 2 million shares of $5 per value common stock and 100,000 shares of $100 par value, 10% cumulative, preferred stock. Jan. 2 Issued 200,000 shares of common stock for $12 cash per share. Jan. 3 issued 100,000 shares of common stock in exchange for a building valued at $ £820,000 and merchandise inventory valued at $380,000. Jan. 4 Paid $10,000 cash to the company’s founders for orgenization activities. Jan. 5 Issued 12,000 shares of preferred stock for $110 cash per share. 2011 ‘Tune 4 Tssued 100,006 shares of common stock for $15 cash per share. Required: 1. Prepare journal entries to record these transactions. 2. Prepare the stockholders’ equity section of the balance sheet as of December 31, 2010, and December 31, 2011, based on these transitions. Q.No.2. How we prepare statement of financial position (Balance Sheet) using principles, (15) disclosures and formats as per IAS-1 Q.No.3. Define the following: (6) ©) 5) (Concept and types of limited liabilities (i) Preparation of accounts of limited liebil PART-II (30 Marks) Q.No.4. On July 14, 2011, Tulsa Company pays $600,000 to acquire a fully equipped factory. The (15) purchase involves the following assets and information. ity company Assets Appraised Salvage Life Dep.Method Value Value Lang. jes $160,000 Not depreciated Land improvernents......- 80,000 $0 Hoyears Straightline Building... 320,000 100,000 10years.——-Double-declining-balance Machinery... 240,000 20,000 10,000 units Units-of-Produetions* * The machinery is used to produce 700 units in 2011 and 1,800 units in 2012, Required: 1. Allocate the total $600,000 purchase cost among the separate assets 2, Compute the 2011 (six months) and 2012 depreciation expense for each asset and compute the company’s total depreciation expense for both years, Page 1of2APPLIED ACCOUNTANCY (FOR 45" CTP) T Q.No.8. Discuss in deal Accounting of research and Development cost as per IAS 38 and implication of gection 26 of the Ordinance 2001 Q.No.6. Write note on the followings:- (a), Capital and revenue assets (b). Céncept of investment property and its accounting as per IAS-40 I PART-II] (40 Marks) Q.No.7. Discuss the conbept of taxable income in relation of section 9 and 10, recognition of revenue and indome as IAS 18, recognition of revenue in accrual and cash basis of accounting, Q.No.8 The following selected information was extracted from the 20x! accounting record of Lone Oak Prodicts: Raw material purchases $175,000, Direct labor 254,000, Indirect labor 109,000, Selling and administrative salaries 133,000, Building depreciation 80,000, Other selling and administrative expenses 195,000, Other factory costs 344,000, Sales revenue (S}'30 per unit) 1,495,000 * Seventy-five percent of the company’s building was devoted to production activities; the remaining 25 percent was used for selling and administrative functions. Inventory data: i January 1 December 31 Raw maferial. 315,800 $18,200 Work in|process 35,700 62,100 Finished|goods* iii, 100 97.500 * January 1 aad December 31 finished-goods inventory consisted of 1,350 units and 1,190 units, respectively. culate Lone Oak's cost of goods manufactured. ympute the company’s cost of goods sold. 1 Required: 1. C#loulate Lone Oak's manufacturing overhead forthe year. 3 5 Q.No.9. Current assets and current liabilities for companies R and Tare summarized as follows. ‘Company & Company T Current assets Current liabil [Working eapial $400,000 $800,000 ra 200.000 §60-000 i $400,000 So Required Evaluatd the relative solvency of companies R and (sy* OF (9).45) eo 20) (20)FEDERAL PUBLIC SERVICE COMMISSION INLAND REVENUE SERVICE PROBATIONERS FINAL PASSING OUT EXAMINATION OF 46"! CTP AND RE-EXAMINATION OF FAILURES OF EARLIER BATCHES-2020 INCOME TAX AUDIT (WITH BOOKS) 45H & 46" CTPs) TIME ALLOWED: THREE HOURS MAXIMUM MARKS = 100 NOTE: () Atiempi FIVE questions in all, by selecting ONE question from PART-I, TWO questions from PART-II and ALL questions form PART-II which is Compulsory. ALL questions carry EQUAL marks. (i) All the pants (if any) of each Question must be attempted at one place instead of at different places. (ili) Write Q. No. in the Answer Book in accordance with Q. No. in the Q.Paper. (iv) No Page/Space be left blank between the answers. All the blank pages of Answer Book must be crossed. (v) Extra attempt of any question or any part of the question will not be considered. (vi) Leave some blank space and draw two hotizontal lines (======) at the end of each answer: PART-I Q.No. 1. Income Tax Ordinance 2001 is based on the concept of Universal Self Assessment (20) Scheme under section 120. At the same time the law also places obligation on the texpayers/declarants to substantiate their declarations, when required by the department. Write @ note on the relevant provisions in the Ordinance and the Tex Rules ‘which necessitate keeping the record of transactions by the taxpayers/declarants. Q.No.2. What is your concept of selection of case for audit? Should it be a random or (20) parametric selection, through computer balloting by the Board or by the Commissioner fon case to case basis? Give reference of the relevant provisions of law and rules. PART-II Q.No.3. Income Tax law, like elsewhere in the world, is pivoted on the philosophy of trust on (20) the taxpayers/declarants, At the same time itis said that “Trust but Verify”. Legistature is cognizant of the need to safeguard the interests of revenue. Write @ note on the above statement with reference to the relevant legal provisions of the Income Tax law. Q.No.4. Me. X filed his retum of income for the tax year 2019 to declare income from business (20) ‘at Rs, 15,00,000/- . Besides business income he also declared income from property at Rs. $00,000/-. He duly paid tax as admitted liability. His case was selected under section 177 for audit. During the audit proceedings it wes revealed that the car, purchased during the year for a consideration of Rs.30,00,000/- for business purposes (Gepreciation was claimed as deduction) had also been used for personal purposes. It swas also found that he has credit entries in his bank account aggregated to the tune of rupee sixty million against the declared sales of rupee fifty million. While computing jacome from property he claimed Rs.200,000/- as deductions under various heads like repair allowance ete from the gross rental receipt of Rs.10,00,000/-, Perusal of his ‘wealth statement at on 30.06.2019 revealed that he has declared a cash gift of ten hundred thousand rupees while reconciling his net assets as on 30.06.2019. Draft a show cause notice under section 122(9) seeking explanation of the tax payer on the discrepancies noticed and by mentioning the tax implications in case of unsatisfactory reply. Q.1No.5. What are the prescribed records required to be maintained by doctors, distributors and (20) wholesalers having declared income exceeding Rs.500,000/- under the head income from business. Page 1 of 2INCOME TAX AUDIT (WITH BOOKS)(45™ & 46™ CTPs) Q.No. 6. Q.No.7, PART-II Presume that Mr.X declares following accounting results in his return of income for 10 the tax year to which the Income Tax Ordinance as on 1.7.2019 is applicable (which would be 2020): Sales 5,00,00,000/- Cost of Sales Initial depreciation 50,00,060 Regular depreciation 30,00,000 Wages 2,00,00,000 Fuel & Utilities 70,00,000 3,50,00,000/- Gross Profit 1,50,00,000/- ‘Admn & Distribution Expenses 50,00,000/- Taxable Income 1,00,00,000/- (i) The scrutiny of the final accounts reveals that during the year the taxpayer had acquired machinery worth of Rs.20million on cash. You are required to draft an order under section 122(5) of the ordinance after pointing out the inadmissible deductions/ expenditures after providing an opportunity of being hard through a draft show cause notice. (i) MrX sells this machinery next year for 80,00,000/-. How would the gain/loss 61 disposal of this asseUmachinery shall be determined and under which head of income it shall be categorized and taxed. Presume that Mr.A, a retired government servant, is employed in a private organization, He files return of income for the tax year to which the Income Tax Ordinance as on 1.7.2019 is applicable (which would be 2020): The tax payer derives income from salary and profit on debt. In his return he discloses following information: Salary Income (1,50,000 x 12) 18,00,000/- Profit on debt 10,00,000/- Pension from the government 600,000/- (exemption claimed) AAs the result of audit proceedings following further information is gathered by the department. (@), He purchased a plot for Rs.40,00,000/- on 24.4,2018 and sold for Rs.60,00,000/- on 26.9.2019. The gain on sale of plot was not offered for taxation. (b). While reconciling his wealth he declared receipt of cash gift of Rs. 10,00,000/- from a friend. (©). He paid tax on profit on debt from investment in Pensioners’ Benefit Account in National Savings Scheme @ 10% as a separate block of income. (d), His wife is found to be an owner of a car worth of Rs.20,00,000/- purchased during the year under question but not declared by the tax payer in his wealth statement. Owner of the car is a housewife and has no independent sources of income. In the light of above information you are required to draft a show cause notice confronting the taxpayer on the departmental findings and in case of unsatisfactory reply the tax implications as provided under the law with reference of the relevant laws and rules. Afier receipt of taxpayer's explanation drafi an order under section 122(1) of the ordinance. \feach) (20) (0)#2. FEDERAL PI E r2. UBLIC SERVICE COMMISSION Sina fe ,) INLAND REVENUE SERVICE PROBATIONERS FINAL passin | S*iSumést = OUT EXAMINATION OF 46" CTP AND RE-EXAMINATION OF : PAILURES OF EARLIER BATCHES-2020 SALES TAX AUDIT (WITH BOOKS) (46% & 45" CTPs) ‘TIME ALLOWED: THREE HOURS I MAXIMUM MARKS = 100 NOTE: () Attempt FIVE questions in all, by selecting ONE question from PART-I, TWO questions from PART-II and BOTH questions form PART-IIT which is Compulsory. ALL questions carry EQUAL marks. ‘All the pars (if any) of each Question must be attempted at one place instead of at different places. (iii) Write Q. No. in the Answer Book in accordance with Q. No. in the Q.Paper. (iv) No Page/Space be left blank between the answers. All the blank pages of Answer Book must be crossed, (¥) Extra attempt of any question or any part of the question will not be considered. (vi). Leave some blank space and draw two horizontal lines (=======) at the end of each answer. (i PAR’ Q.No. 1. Discuss the relevant provision of Sales Tax Act, 1990 which authorizes an officer of (20) Inland Revenue to conduct audit of record/documents maintained by a registered person. ‘Also highlight in brief the significance of each document for the purpose of audit Q.No.2. Audit is an effective and efficient tool to check accuracy and completeness of (20) declarations made by a registered person. Besides, it also helps detect tax evasion, tax fraud and educates tax payers for proper compliance of tax laws. Comment in detail. PART-IL Q.No.3. Under what circumstances, a Commissioner of Inland Revenue can authorize an officer (20) te conduct an inquiry on investigation against a registered person. Discuss the relevant provision pertaining to such inquiry on investigation. Q.No.4. Section 25 of Sales Tax Act, 1990 authorizes officers of Inland Revenue to undertake (20) audit of sales tax record maintained by a registered person. The officers of Auditor General of Pakistan also carry out audit of such record. On Such a situation, what is the need and significance of Special Audit? Also explain how a Special Audit Panel is constituted. Q.No.5. Draft Show Cause Notice for a public limited company, registered person who has (20) committed tax fraud which has been detected as a result of investigation under section 38 of Sales Tax Act, 1990. The relevant provision of law must be quoted correctly and specifically. PART-II Q.No.6. Draft an Order of Assessment keeping in view Sub Section (2) of Section 11 of the Sales (20) “Tax Act, 1990 in the light of an Audit Report which highlight non-payment of Sales Tax by an individual registered person for the tax period July, 2017 to December, 2017. The ‘order must determine the amount of tax due, default surcharge and also impose penalty. Q.No.7. Consequent upon Special Audit, it is defected that an association of persons, registered (20) person hes failed to deposit the amount of withheld tax in the national exchequer. Being an Assistant Commissioner of Inland Revenue, how will you determine the amount in default in taxing of Sub Section (4A) of Section 11 of Sales Tax Act, 1990FEDERAL PUBLIC SERVICE COMMISSION Pal kanas INLAND REVENUE SERVICE PROBATIONERS FINAL PASSING OUT EXAMINATION OF 46™ CTP AND RE-EXAMINATION OF FAILURES OF EARLIER BATCHES-2020 OFFICE PROCEDURE & OTHER LAWS (With boolss for whole paper except for Secretariat Instructions & Government Servants E& D Rules, 1973) TIME ALLOWED: THREE HOURS MAXIMUM MARKS = 100 NOTE: () Atiempi FIVE questions in all, by selecting THREE questions from PART-I and TWO questions form PART-II. ALL questions carry EQUAL marks. (i) All the parts (if any) of each Question must be attempted at one place instead of at different places, (iii) Write Q. No. in the Answer Book in accordance with Q. No. in the Q.Paper. (iv) No Page/Space be left blank between the answers, All the blank pages of Answer Book must be crossed, (v) Extra attempt of any question or any part of the question will not be considered. (vi) Leave some blank space and draw two horizontal lines (== at the end of each answer. PART-1 Q.No. 1, What are the duties of the Secretary of a Division regarding the delegation of power to the 20) officers working under him? Which cases shall be submitted to the Secretary of a Division under the provisions of the Secretariat Instructions, 2004? Q.No.2. Saleem Ahmad, a Stenographer in the Ministry of Interior, isthe only earning hand in his 20) family as all his sons and daughters are studying, It is reported that the wife of Saleem ‘Alimad has recently bought a bungalow worth 70 million rupees in Islamabad while she has no means of income. Upon enquiry Saleem Ahmad could not account for the property of his wife. What action, under what procedure can be taken against him under the provisions of the Government Servanis (Efficiency and Discipline) Rules, 19737 20) Q.No.3. A Section Officer, Who was accused of corruption and against whom an eng. going on, was sent on a compulsory leave for 6 months by the enquiry officer. Can the enquiry officer sent a government servant on compulsory leave? Is the action taken by the enquiry officer in this case not inconsistent with the rules of the provisions of the Government Servants (Efficiency and Discipline) Rules, 1973? Why or why not? Support your answer with argument by applying the relevant provisions of the Government Servants (Efficiency and Discipline) Rules, 1973 Q.No.4. Zing Zuwa Contractors (Private) Limited, a Chinese construction company duly registered 20) with the Security & Exchange Commission of Pakistan, has submited their tender for the construction of the building of a higher secondary school in Islamabad to the Capital Development Authority. They are sure that they will get the contract as, in their ‘estimation, their rate was the lowest. However, unfortunately they came to know that the Capital Development Authority has rejected their tender because they were foreigner ‘construction company. Can the Capital Development Authority do so? Why or why not? Support your answer with arguments by applying the relevant provisions of the Public Procurement Rules, 2004? Q.No.5. The Procurement Officer at the Pakistani High Commission at London contacted on (20) phone few local suppliers asking them to submit tenders for the supply of computers worth $00,000/- rupees for the Pakistani High Commission. When his deputy asked him to get the demand for tenders published in the newspaper, he replied that since they were ‘outside Pakistan, therefore they are not bound to get demand for tenders published in the newspaper. Is he right to say so? Why or why not? Support your answer with arguments by applying the relevant provisions of the Public Procurement Rules, 2004OEFICE PROCEDURE & OTHER LAWS Q.No. 6. QNo7 Q.No. 8, PART-II 7 The articles of ManduKhel Constructions Limited provided that disputes between the shareholders and the company would be resolved by arbitrations. Sabit Shah, a shareholder in ManduXhel Constructions Limited brought an action against the company in the courts regarding a dispute. Is the Company entitled to have the action stayed as the articles constituted a contract between Sajid and the Company? Why or why not? Support your answer with arguments by applying the relevant provisions of the Companies Act 2017. On 14 February 2020, the last day of the limitation period Shah Zaman was going to the Peshawar High Court to file an appeal against a decree awarded by the District Judge, Hangu against him. While on the way he received a call from one of his closest friend, Hikmat Khan, informing him about the wedding of his'son. Hikmat Khen insisted and compelled him to come down to his village and attend the wedding so he went there to attend the wedding. Next day wien he went to file the appeal he was told that his appeal is time barred. Has Shah Zaman lost the right to appeal? Why or why not? Support your answer with arguments by applying the relevant provisions of the Limitation Act 1908. Allah Dita, against whom a suit was filed, was ordered by the Civil Judge, Gujrat to appear in the court in person while Allah Dita has moved to Quetta an year go and. permanently lives there. He is in your chamber seeking your opinion whether the court of Civil Judge, Gujrat may order him to appear in the court in person. Can the court of Civil Judge, Guj:at may order Allah Dita to appear in the court in person? Why or why not? Support your answer with arguments by applying the relevant provisions of the Code of Civil Procedure 1908, Page 2 of 20) en (20)