Professional Documents
Culture Documents
3. Why it is easier to get financial information for internal user and harder for external user?
Ans: It is easier to get financial information for internal user because the internal users can just go along to the
accounts department and ask the staff there to prepare whatever accounting statements he /she needs.
But it is harder to get financial information for external users because they can not get the internal accounts
related information smoothly.
6. What qualitative characteristic are appropriate for each of the below cases?
a) undue delay in financial reporting
b) incomplete information or redundant information in the financial statement
c) error free, neutral information presented in the financial statement , prudence and economic substance used
d) information provided in the financial statements on a consistence basis
Ans:
a) Relevance;
b) Understandability;
c) Reliability;
d) Comparability.
2. Royalty expenses
4. Dividend
7. Purchase of new computer after replacing old machine within existing capacity
12. Suppose, list price in an invoice of sales was tk. 500 (VAT inclusive, at standard rate), trade discount
@10%, cash discount @ 5% (2/10, n/30), customer paid the amount on 21 st day. Determine the
invoice value. Determine GP ratio NP ratio and Administrative cost to sale if COGS was tk. 300 and
Admin cost was tk. 80.
Ans:
List price 500
Less: VAT @10 %( 500X15/115) 65
435
Less: trade discount @10 % 44
Net sales 391
Less: COGS 300
Gross profit 91
Less: admin cost 80
Net profit 11
15. State system note for credit sales process indicating basic documents required in each stage
Ans:
Sales order
Receive sales order
(Received from
from customer
customer)
17. State system note for purchase of fixed assets in credit indicating basic documents required in each
stage
Ans: System note for purchase of fixed assets in credit indicating basic documents required in each stage are given
below:
1. Purchase
2. Raising of purchase 3. Receipts of goods/ service
Requisition
order
19. What information are needed to draft invoice, credit notes, delivery challan and GRN
Ans:
In case of invoice:
Invoice number
Name and address of seller and purchaser
Sale date
Product/ service description
Quantity and unit price of what has been sold
Details of trade or bulk discount, if any
Total invoice amount including VAT details
The date by which payment is due and other term of sales
Tear off remittance advice for the customer to send to the business along with payment.
21. Draft a sales day book, purchase day book, cash book, petty cash book, payroll book (assignment)
Ans:
Cash Book
Cash Book (Receipts)
Total Receiv
Cash sales Others
Date Narrative receipts VAT (Tk.) ables
(Tk.) (Tk.)
(Tk.) (Tk.)
Payroll book
Payroll Book
Employer Total
Withholding Pension Net pay Gross pay
Particulars pension payroll cost
tax (Tk.) (Tk.) (Tk.) (Tk.)
(Tk.) (Tk.)
MAQ 550 150 2,300 3,000 200 3,200
OEI 500 135 2,115 2,750 180 2,930
MMR 460 125 1,915 2,500 165 2,665
Total 1,510 410 6,330 8,250 545 8,795
Road-50, Gulshan
Dhaka-1212
PO No:12453
Reference to your offer/quotation no. 46 dated 02.02.2010 you are requested to supply the following item(s) as per
the specification. Please submit your Invoice/Bill along with delivery Challan to the Accounts Office of the Club for
payment.
SI. Description of Specification Qty. Rate per Unit Total Taka Remarks
Suppliers/Service
1.
Tempered Glass N/A 10 30,000 300,000
Less CHARTERED
MOTIUR RAHMAN AHKC, : VAT @ 15%
ACCOUNTANTS 45,000
Taka in Word: Two lac and fifty five thousand taka only 255,000
Prepared by Approved by Countersigned Accepted
Ans:
Cash Book
Cash
Date Narrative Total receipts VAT Receivables Others
sales
Receipts:
2010 Balance B/D 900
Payments
2010
January 10
Payable (f) 120
Telephone bill (g) 376
Petty cash (h) 100
Furniture purchase (i) 1,500
Total payment 2,096
2,419
Balance C/D
(4515-2096)
Total 4,515
26. State few example for which petty cash book is used
Ans: petty cash book may be used for staff refreshment, postage stamps, taxi fares etc.
27. Difference between imprest system of petty cash book and normal petty cash book
29. State which books of original entry the following transactions would be entered into:
a. Payment to a supplier a cheque for Tk. 450
b. Send and invoice to customer for Tk. 650
c. Buy envelops for Tk. 12
d. Receive an invoice from a supplier for Tk. 300
e. Pay Tk 500 to customer through online transfer
f. Customer returns goods for tk. 250
g. Return goods to supplier for tk. 504
h. Customer pays you a cheque for tk. 500
Ans: The given transactions would be entered into the following books of original entry:
a. Cash book
b. Sales day book
c. Petty cash book
d. Purchase day book
e. Cash book
f. Sales day book
g. Purchase day book
h. Cash book
Md.
01 Manager 13821 6911 518 518 14339 1037 1000 1000 5 30 12298
Samiullah
1. An accounting record which analyses the 1. It is actually maintained for the backup of
financial records of a business. nominal ledger.
2. Nominal ledger represents the total 2. Subsidiary ledger represents any individuals
balance of a respective A/c head after net or a specific events balance.
off.
3. Amounts of nominal ledger came from 3. Subsidiary ledgers maintained for the
subsidiary ledger. breakup record of each transaction.
36. Identify the debit and credit entries in the following transactions (ignore VAT)
i. No entry needed.
37. Summit Power operates an imprest petty cash system. The imprest amount is Tk. 5000. at the end of the period the
totals of the four analysis columns in the petty cash book were as follows:
Column -1 tk. 23.12
Ans: Tk.71.26, This is the total amount of cash that has been used.
39. Soft Supplies Co. recently purchase from Hard Imports Co. 10 printers originally priced at tk. 200 each. A 10% trade
discount was negotiated together with a 5% cash discount if payment was made within 14 days. Calculate the
following.
a) The total of the trade discount
b) The total of the cash discount
Ans:
40. Define trade discount and cash discount with two examples
Trade discount: A reduction in the cost of goods, owing to the nature of the trading transaction. It is deducted from
the list price of goods sold, to arrive at a final sales figure.
Example: A customer is quoted a price of tk. 1 per unit for a particular item, but lower price of 95p per unit if the
item is bought in quantities of 100 units of more at a time.
Example: A supplier charges tk. 1,000 for goods, but offers a discount of 5% if the goods are paid for immediate in
cash.
Ans:
Income statement
46. A manufacturing company purchase raw materials at a cost of tk. 1,000 plus VAT at standard rate of
15%. From the raw materials the company makes finished products which it sales to a retail outlet, B
ltd. For tk. 1,600 plus VAT a\@ 15%. B Ltd. Sales the products to customers at a total price of tk. 2,000
plus VAT @15%. How much VAT is paid at each stage in the chain?
Ans:
Cost of raw materials (input VAT)1000@15%=150
Value added at finished product level 600@ 15%= 90
Sales the product to customer (output VAT) 400@ 15%= 60
49. If you are told that an amount includes VAT @ 15% (gross amount), calculate the VAT amount?
Ans:
Let, gross amount is Tk. 100
So, VAT amount will be=100x15/115=Tk.13
50. ABC is preparing financial statements for the year ended 31 December 2009. Included in its balance
sheet as at 31 December 2008 was a balance for VAT due from government of tk. 15,000. ABC’s
summary income statement for the year 31 December 2009 was as follows:
Taka
Expenses:
a) What is the balance for VAT in the balance sheet as at 31 December 2009 (assume VAT @ 15%)
Ans:
VAT
Taka Taka
Balance b/d 15,000 Output VAT (500000@ 15%) 75,000
Input Tax- purchase (120000@15%) 18,000 Cash received from govt. 12,000
Input Tax other expenses (70000@15%) 10,500
Cash paid to govt.( 5000+15000+20000) 40,000
Balance c/d 3,500
87,000 87,000
Balance b/d 3,500
51. When a credit customer pays an invoice for tk. 115 including VAT @ 15%. What will the credit entry in
the VAT ledger account?
Ans:
Account receivable Dr. Tk.115
Sales Cr. Tk.100
VAT payable Cr. Tk.15
52. Define input VAT and output VAT with example.
Ans:
Input VAT: VAT on purchases is debited to the VAT current account (it is due from Govt.) and credited to
payables as part of the posting from the purchases day book. The remaining debit is to the purchase or other
expense account. Example: VAT paid against import of raw materials.
Output VAT: VAT on sales is debited to receivable as part of the posting from the sales day book and credited
to the VAT current account (it is owed to the Govt.); the remaining credit is to the sales account.
Example: VAT paid in case of sales of goods.
55. What are the errors do not make a trial balance imbalance?
Ans: The error do not make a trial balance imbalance are as under:
Omission errors;
Commission errors;
Compensating errors;
Errors of principle.
56. Distinguish between errors that cause trial balance imbalance and those that do not.
Ans:
Transportation error
Errors of omission
Errors of principles
Errors of commission
Compensating errors
57. The total of the balance in a company’s receivables ledger is tk. 800 more than the debit balance on its
receivables control account. Which one of the following errors could by itself account for the
discrepancy?
a) The sales day book total column has been under cast by tk.800
b) Cash discounts totallling tk. 800 have been omitted form the nominal ledger
MOTIUR RAHMAN AHKC, CHARTERED ACCOUNTANTS
c) One receivables ledger account with a credit balance of tk. 800 has been treated as a debit balance in the list
of balances
d) The cash receipts book has been under cast by tk. 800
Ans: Cash is an asset (a debit balance) in the business ledger accounts. As far as the bank concerned it owes the
business money. Thus every item recorded as a debit in the business book-a positive bank balance and any receipts
of cash-will be shown as a credit on the bank statement.
When cash is a liability (a credit balance) in the business book, as far as the bank is concerned it is owed money.
Thus every credit entry in the business books-a negative bank balance and any payment of cash-will be shown as a
debit on the bank statement.
59. Mention the 5 common explanations for differences between cash book and bank statement
Ans: There are five common explanations for differences between ash book and bank statement. Which are
given below:
1. Error
2. Bank charges or bank interest
3. Automated payments and Receipts
4. Dishonor cheque
5. Timing differences
o Bank interest and bank charges not yet entered in the cash book.
o Dishonored cheque not yet entered in the cash book.
Error Type
A business receives an invoice from a supplier for tk. 250 and the transaction is missed
Errors of omission
from the books
Putting a debit entry or a credit entry in the wrong account Errors of commission
Admin expenses of tk. 2,822 are entered as tk. 2,282 in the administrative expenses Errors of compensating
ledger account. At the same time, income of tk. 8,931 is shown in te sales account as
tk. 8,391.
Owner of the business takes goods from inventories for his own personal use Business entity
concept
The directors do not intend to liquidate the entity or to cease trading in the Going concern
foreseeable future
The entity’s financial position financial performance and cash flow are presented fairly Fair presentation
and accounting
When computing profit, income earned must be matched against the expenditure Realization
incurred in earning it concept
The presentation and classification of items in the financial statements should stay the Consistency
same from one period to the next concept
Financial statements are produced within a time interval that enables users to make Fair presentation
relevant economic decision. and accounting
policies
64. A retailer commences business on 1 January 2009 and buys 20 washing machines, each costing tk.
100. During the year he sells 17 machines at tk. 150 each. How should the remaining machines be
valued at 31 December in the following circumstances?
a) He forced to close down his business at the end of the year and the remaining machines will realize only tk. 60
each in a forced sale.
b) He intends to continue his business into the next year.
Ans:
a. If the business is to be closed down, the remaining three machines must be valued at the amount they will
realize in a forced sale, i.e. 3 x CU60 = CU180.
b. If the business is regarded as a going concern, the machines unsold at 31 December will be valued as an
asset at cost, 3 x CU100 = CU3O0.