Ge , P SIR ALR, age eelte adore qe Prete wine Mie sacra fromet fem aie . fart JAIBB “4 Seer=Tal sateticna ry eee eeyioapre ET org | he VO ereny Previous Year Questions Solution |. =aiehe feczent Pierer ee ACCOUNTING FOR FINANCIAL SERVICES A (For JAIBB Examination) (ater eget eat fa-24, (Gri); aa, wa, (aren) fetter afer ore anes Faas Siren wie, arnvafem srt Os AML Alt Wea eMet == Aart on fi. (Romafrers); wiaBieca (cares >) & i), aa By, (Reareea) art ance Fins, Fi) BARE we wrens Bl Sars seer, Shey St MSTA (ae, Fa 2)| a ACCOUNTING FOR FINANCIAL SERVICES Full Marks-100 YODULE-A : Introduction and Environment Purpose, Nature, Uses and Users of Accounting Information, Functional and Operational Definition of Accounting, Accounting Principles, Standards and Regulations, Forms of Business Organizations and Accounting systems. MODULE-B : Analysis of Financial Statement > Objectives of Financial Statement Analysis, Financial Statement Analysis, Horizontal and Vertical Analysis, Comparative Financial Statements, Communize Statements, Financial Ration Analysis, Trend: Percentage, Specialized Analysis, Cach Forecasts, Analysis of Changes in Financial Position, Break-Even Analysis, Cash Flow Statement, Unadjusted Trial Balance and Adjtsiments. MODULE-C : Processing and Recording of Accounting Information > Transaction, Analysis of Transaction, Accounting Cycle, Recording of Transaction, Double | | | | i i J i | | | | Entry System, Golden Rule of Debit and Credit, Posting of Transaction to the Ledger, T |. _Formand Malti Column Ledger, Preparation of Cash Book, Single Column, Double Column [and Triple Column Cash Book, Preparation of Trial Balence, Suspense Account ee and Closing Entries Accrued and Deferred Revenue | MODULE-D : Financial Statements for Different Entities te Service, Merchandise and Manufacturing Operation : Income Statement, Cost of Goods I I I I | | 1 1 1 1 1 1 1 J Sold, Cash Flow Statement, Balance Sheet, Limitation of Balance Sheet. Partnership and Joint Stock Companies : Specific Characteristics of Financial Statements of Partnership-Capital Account, Current Account, Profit and Loss Adjustments Account: Distinguishing Characteristics of Financial Statements of Companies. Banke and Other Financial Institutions : Provisions of Rank Company Act, 1991 (with Amendments), Preparation of Profit and Loss Account and Balance Sheet of Banks. Provisions of Financial Institutions Act, 1993 (with Amendments), Preparation of Profit and Loss Account and Balance Sheet of Financial institutions. MODULE-E : Accounting for Assets = Current Assets : Inventory Valuation, Periodic and Perpetual Method for Ascertai 6 Closing Inventory, Average, Last in First Out (LIFO), First in First Out (FIFO), Account Receivable jepreciation Methods, Recording of Depreciation, Valuatin of Fixed Assets, Depreciation as a Cost Allocation, MODULE-F : Journal Rules for Journalizing Different Types of Journals, Sub-Division of Journals, Posting of Accounts, Ledger, Interpretation of Ledger Account, Writing of Different Types of Cash Book in Columnar Form, Imprest System of Petty Cash, Bank Reconciliation System, Journal Proper.Hates Fai Barely Sal SANE : D wert Pificas aiSda REE 6 fer waC ocaN RAI 3 TRfiey Het! B22 GSA 8 URS HA VY FN SS | Bo vista ite ue 9 fH Cat SCA ERA | D sere ores ya as an eaters Cale ores a Sort | D Tara sore aera yer aw Piftice toc Slee APPTAS | rat Psion Set Tens care afS ora Oraicaa aorR aes Se WL D werk Pires soem sees SecA CUATAT AM Sey, Sacred a sane sl SASH AAC ARITA | AAPA UPICHIN SHH: Odbdd-oGYOBERE Detaild Content DETAILED CONTENTS ENGLISH THEORY - Page INTRODUCTION & ENVIRONMENT ] 1. What is Accounting? r, Define Accounting, [BDE, June, 2014) 2. Describe the objectives of Accounting. 3. Discuss the features of Accounting. 4, Describe the advantages or usefulness of accounting. 5, What uses are made by the users of accounting information? (Or, Who are the users of accounting information? {BDE, June, 2014) (Or, What uses of financial accounting information are made by external users (i) inyesiors (if) creditors? {BDE, December, 2012} Or, Who ate the intemat users of accounting data? How docs accounting provide relevant data toa uses? [BDE, May, 2011) 6. What do you mean by Accounting assumption: Desetibe these. 7. Explain the constraints of accounting principles. [BDE, Nov. 2010) ‘Or, What do you mean by accounting constraints? Mention the constrains. 8, Discuss shortly the principles of accounting. ‘9, Explain the funetional and operational acitvities of Accounting. ial 10, Generally Accepted Accounting Principles? How does it influence the preparation of fin staternents? ‘Or, Explain generally accepted accounting principles (GAAP) and cost principle. [BDE, June, 20/3] 11, Differentiate between Book-keeping & Accounting. Explain the role of accountng in an organization. [BDE, June, 2010] 13, "Accounting is called the language of busiess"—Explain the statement, 14, Define assets, lability and owners’ equity. Which affects owners’ equity? /BDE. December, 2012) ‘Or, Define the terms : (i) Assets; (i) Liabilities; (il) Equity and (iv) Owrer's Equity.(BDE, NOV.,2010) 15, Briefly explain the relationship of other disiplines with accounting. [BDE, June, 2010) 16, What is Intemational accouing standard in accounting system? 117, What bodies provide authoritative support for GAAP? 18, What elements comprise the FASB's conceptual framework? 19, (a) What are the objectives of financial reporting? (b) Identify the qualitative characteristics of accounting information.Accounting For Financial Services Se 20, Jeff Gartner, the President of Verdez Company, is pleased, Verdez substantially increased its net Jncome in 2005 while keeping its unit inventory relatively the same. Jack Borke, Chief Accountant, cautions Gartner that since Verdez.changed from the LIFO to the FIFO method of inventory valuation, there is a consistency problem, It would he difficult to determine if Verdez is better off. Is Jack Borke correct? Why or why not? 21. What isthe di and consistency? 22. Why is it necessary for accountants to assume that an economic entity will remain a going concer? 23. When should revenue be recognized? Why has that date been chosen as the poi recognize the revenue resulting from the entire producing and selling process? 24, Distinguish between expired costs and un expired costs. jon between compara at which to 25. (a) Where does the accountant disclose information about an entity's financial position, operations sand cash flows? (b) What is the meaning of the full disclosure principle? 26. Mark Sherrick is the president of Mystery Books. He has no accounting background. Sherrick cannot understand why current cost is not used as the basis for accounting measurement and reporting. Explain what basis is used and why. 27. Describe the two constraints inherent in the presentation of accounting information. 28. Your roommate believes that International Accounting Standards (IAS) are uniform throughout the ‘world. Is your roommate correct? Explain. 29, What organization establishes International Accounting Standards? [SSEROCESSING AND RECORDING OF ACCOUNTING INFORMATION|] 30. What do you mean by transaction? 31, Discuss the nature or feature of transaction, 32, Show the classification of transaction. 33. What is event? If there is any difference between event and transaction, present it 34, Diseuss the Characteristics of a Monetary Event. 35, Discuss the Classification of Event. 36, Discuss the Nature of an Event. 37. Discuss the Accounting for event. 38, Which Event roquires Accounting? Discribe the Necessites/objects of Accountiigs for an Event. 39. Discuss the Features of Accounting for an Event. 40, Shortly Brief of Types of Accounts, 41. What is accounting cycle? [BDE, June, 2014] 42. What is double entry system of Accounting? Or, What do you mean by Double Entry System of Book Keeping? IBDE, June, 2014) 43. Discuss the characteristics or fundamental principles of double entry system4 Detaild Contents 44. What are the advantages & disadvantages of double'entry system? 445. What is account & accounting equation ? 446. What are the uses of accounting equation? 47. What is Ledger? Discuss its advantages. 48. Discuss the classification of Ledger. 49. Discuss the rules for preparing ledger account. 50. Discuss the difference between Journal and Ledger. 51, What is ledger posting? TRIAL BALANCE 52. What isa trial balance? '54, What are the objects of tral balance? 55, What are the limitations of trial balance? 56, Why do both Sides of tial balance agree? 57. Discuss the eauses of disagreement of trial balance. 58, Diseuss the procedure of rectifying an incorrect tral balance. '59, What is Rectification of Errors? How are errors rectified under different stages? Discuss. (60. What is Accrual Basis of Accounting? 61. What are the main disadvantages of accrual basis of accounting, 62. What is Cash Basis of Accounting? Show the main advantages & disadvantages of cash basis of accounting. (63. Show the accrual vs cash basis of accounting. [BDE, May, 2012] 64, What is adjusting entry? [BDE, May, 2012} 65. Why adjusting entry is necessary? [BDE, Nov. 2010; May, 2012] 66. Discuss the types of adjusting entries. (67. What is reversing entry? [BDE, Nov. 2010} 68, What is closing entries? (69, What is reveriues and expenses? FINANCIAL STATEMENT 70, What is financial statement? 71, What are the components of financial statements? 72. What are the importance of finaneial statements? 73, What are the limitations of financial statements? 74, What do you mean by income statement? 75. Discuss the objectives financial accounting. 76, Discuss the measurement of elements of financial statements.16 | ie Clg) led eign) ie Accounting For Financial Services P Enclsh Version | 77. Discuss the branches of ageounting. 3 : 78, Why is the statement of cash flows useful? 79. Show the limitations of income statement. ‘80. Omar Morena maintfins that the statement of eash flows is an optional financial statement. Do you agree? Explain, 81. What are the major sources (inflows) of'eash ina statement of cash flows? What are the major uses, (outflows) of cash? e 82. Why is itimportant to discldse certain non-cash transactions? How should they be disclosed? 83. George Bums and Gracie Alien were discussing the presentation format of the statement of cash flows of Classic Comedy Co. At the bottom of Classic Comedy's statement of cash flows was a separate section entitled "Non-cash investing and financing activities," Give three examples of significant non-cash transactions that would be reported inthis section. 84, Why is it necessary 10 use comparative balance sheets, a current income statement and certain transaction data in preparing a statement of cash flows? 85. Contrast the advantages and disadvantages of the direct and indirect methods. Are both methods acceptable? Which method is preferred by the FASB? Which method is more popular? 86, Describe the indirect method for determining met cash provided by operating activities ‘87. Why is it mecessary.to convert acerual-based net income to cash-basis income when preparing 2 ‘satemient of eash flows? 88. Define of balance sheet, Diseuss its objective. £89, Define of Current assets. Discuss its types. What is Fixed of long terms assets? |. What is Current liabilities? - What is Long term liabilities ? - What is Owner's equity? What do you mean by Inventory System? ‘Show the features perpetual inventory system Discuss its advantages and disadvantages. Show the Features periodical inventory system? Discuss its advantages and disadvantages, Describe the difference between a perpetual inventory versus periodical inventory system, * [BDE, May 2011, Describe the difference between debit memorandum & eredit memorandum. ‘CASH DISCOUNTS, ] ‘99. Distinction between cash discount and jrade discount. 100. What is journal? What are the functions of journal? 101. What are the characteristics of journal? 102 Discuss the objectives & advantages of journal. Besse8 SR 2 [|Ea Detaild Contents 103, Discuss the necessity of journal 104, Show the advantage of subsidiary ledger. 105, What is Special journal? Show the advantages of special journal. 106, What is sales journal? 107. What is cash receipts journal? 108. What is a ledger? What is a chart of accounts and why is it important? 109, What isa trial balance and what are us purposes? 110. Distinguish between the types of functional groupings of operating expenses. What problem is ereated by these groupings? 111. How does the single-step form of income statement differ from the multiple-step form? 112, Identity the accounts that re added to or deducted from purchases to determine the cost of goods purchased, For each account, indicate whether itis added or deducted 113. Discuss the Balance Sheet. 114, Discuss the classification of liabilities, 115. Distinction Difference between Trial Balance and Balance Sheet. 116, Discuss the Classification of Liabilities, 117. What is Capital? 118. Discuss the classification of capital. 119, Discuss the Reserve. 120. What is Depreciation Fund? 121. What are Reserve fund for replacement of wasting asset? 122. What is the statement of eash flows? 123. Why isthe statement of cash flows useful? 124, Distinguish among the three types of activities reported in the statement of cash Flows. 125. What are the major sourees (inflows) of cash in a statement of cash flows? What are the major uses (outflows) of cash? 126. Why is it important to disclose certain non-cash transactions? How should they be disclosed? 127. Why is it necessary to use comparative balance sheets, a current income statement and certain transaction data in preparing a statcment of cash flows? 128. Contrast the advantages and disadvantages of the direct and indirect methods, Are both methods acceptable? Which method is preferred by the FASB? Which method is more popalar? : 129, Describe the indirect method for determining net cash provided by operating activities. 130.Why is~it necessary to “convert accrual-based net income to cash-basis income ‘when preparing a statement of cash flows?wer 4. 2 13. 14, 15. Accounting For Financial Services ___— IA 7 7. QUESTIONE Page : 84-119 ‘What do external users use accounting information? (BED, Nov. 2011] Explain the periodicity assumption and economic entity assumptions. [BDE, June, 2014] Explain the monetary nit assumption and economic entity assumption, (BED, Nov. 2011} Accounting is ingrained in our society and it is vital © our economie system." Do you agree? Explain. [BED, Nov. 2011) ‘Adjusting entries are required by the matching principle of accountng." Do you agree? Explain, [BED, Nov. 2011] Perpetual inventory is better than periodic inventory. Do you agree? Explain. (BED, Nov. 2011] What do you mean by comparability and consistency in accounting? Distinguish between them, : (BED, May 2012] iffer from net operating income? [BED. May 2012] State’the monetary unit assumption and economic entity assumption. What would happen if “What is comprétensive income? How does it ‘economic entity assumption were not present? [BED, May 2012} What are the potential limitations of ratio analysis? State the differences between horizontal and vertical analysis? * ° {BED, May 2012} ‘Sanam, a beginning accounting student, believes debit balances are fayourable and credit balances are unfavourable, 1s Sanam correct? Explain, [BED, May 2012] What do you mean by In Co. Terms? Differentiate between FOB shipping point and FOB destination. [BED, May 2012} Discuss four Principles and four Assumptions of Accounting. (BED. May 2011] What is Going concem assumption? Explain a scenarig in which going concer assumption is not applied. [BED. May 2011] What is Forensic Accounting? Is it applicable in Bangladesh? (BED, May 2011] What is Accounting Equation? How can you apply this eaqution in making debit and credit? IBED. May 2011] What are the basic steps in the recording process? . [BED. May 2011] Many scholars consider accounting as control. do you agry? why? (BED, May 2011) Recently an international accounting standerd has prescribe some changes in incom statment and the balance sheet. What are these changes? {BED, May 2011] Balance sheet should show true and fair value of assets and liabilites, But we continue showing, fixed assets at historical cost even these are not true and fair. Explain why? BED, May 2011) What are the accounting principle related to adjusting entries? [BED, May 2011] What are the main differences between single stcp and multiple step income statement? Which ‘method is followed in banks? (BED, May 2012] “Accumulated depreciation isa valuation aecount"—Do you agree? Expalin. (BED, June, 2010)8 Detaild Contents 23, Differentiate between depreciation and amortization with example. (BED, June, 2010) 24. What arethe fetors influence in determining depreciation? (BED. June, 2010) 25, "Accumulated Depreciation is a contra asset account". — Explain. [BED, Now, 2010} 26, — What do you mean by 2/10, 1/30; FOB Shipping point and FOB Destination? [BED, Nov., 2010, May, 2012} 27, What are loan provision requirements for banks as pet BRPD circular? [BDE, June, 2013) Or, What are the loan provisioning requirements for Banks as per BRPD circular? (BED, Nov., 20/0} 28, What wscs of financial accounting information are made by extemal uses (i) investors (i) creditors? {[BED, Dec. 2012] 29. Cana business ener into a ransacion in which only the Ie side ofthe basic accounting equation is affected? Ifso, give an exampl (BED, Dec. 2012] 30, Define assets, lability and owners! equity. Which affects owners'equity? | [BED, Dec. 2012] 31, Identify the basic steps in the recording process. [BDE, June, 2013} Or, What are basic steps in recording process? Explain briefly. [BED, Dec. 2012] 32. Explain what posting is and how it helps in the recording process. [BDE, June, 2013] Or, What is posting? How does it help inthe recording process? [BED, Dec. 2012] 33. Accounting helps good govemance, How? [BED, Dec. 2012] 34, __ Adjusting entries are required by cost principle of accounting. Do you agree? Explsin.{BED. Dec. 2012] 35. Whatis closing entry? Which secounts are closed? [BED, Dec. 2012) 36, Distinguish between revenue expenditure and capital expenditures during useful life of an asset. SED, Dec. 2012] 37. How is gain or loss on the sale ofa plant asset computed? [BED, Dec. 2012] 38, What's depreciation? What factors affect the caleulation of depreciation? __ BED, Dec. 2012) 39, Perpetual Inventory is beter than periodie inventory. Do you agrve? Explain. BED, Dec. 2012] 40. What as sensitivity analysis for breakeven point? Explain with example. {BED, Dec. 2012) 41. Define Journalizing and General Journal. What are the uses of those? [BDE, June, 2014) 42, “Four major internal management decisions are taken from the information generated from the ‘managerial accounting”. Describe in short. [BDE, June, 2014), 43, Does managerial accounting information provide special information for the managers for intemal use? Explain. {BDE, Jie, 2014) 44, Differentiate between Accounting and Finance, (BDE, June, 2014] 45. _ Interms of provisions of Bank Company Act, 1991 (With subsequent amendments) all Financial Institutions are required to prepare financial statements. Besides Balance Sheet and Profit and Loss Stajements whatother statements are furnished? Why it is necessary to provide "Notes" to the financial statement? = [BDE, June, 2014) 46, “Annual Reports of Banks and NDFIs are important sources for leaming financial statements and very usefil materials for the practicing bankers". Explain in short, [BDE, June, 2014]8 49. 3. Accounting For Financial Services Rm 9 Wist are the costs involved while you are computing Inventory Cost and its associated risk? (BDE, June, 2054] Mention various types of inventories in there major forms in the industry during production. [BDE, June, 2014) “Inventory management has direct impact on production process and profitability." Explain, IBDE, June, 2014] ‘What ate the four broad groups of ratios? Define the following ratios in equation form. (i) Inventory umover ratio (ii) PE ratio (ii) Return on asset (iv) Debt-Equiy ratio. [BDE, June, 2014) While processing loan proposal in bank and NBFI you are required to prepare Financial Risks using (i) Leverage (ii) Liquidity (it) Profitability (iv) Coverage ratios. Explain these ratios in equation form and mention weight (%) they carry individually. [BDE, June, 2014) Explain sensitivity analysis determining BEP. (BED, Nov. 2011) What do you mean by CRG? What are the major Risks? Mention weight of Risk in percentage (4) attached to cach risk category where total weight is 100%. (BDE, June, 2014] Page : 119 ~ 144 1 IFRS BED, June, 2013; Dec., 2012; Nov, 2010] 2. CYP Analysis IBED, June, 2013; Nov. 2010, 2011; Dec. 2012, 2009: \day. 2011, 2012) 3, FIFO Vs. FIFO ‘[BED, Nov. 2010; Dee. 2009} 4. Periodic Vs, Perpetual Inventory [BED, Nov. 2010; May, 09, 08, 2012} 5. Cash Basis Vs. Accrual Basis (BED, Nov. 2010, May 2009, 202] 6. Off Balance Sheet tems (BED, June. 2014, May 2012; Nov.. 2010] 7, Basel Accord (BED, Dec., 2012; May, 2012) 8. Contribution Margin IBED, June, 2010} 9. Intangible Assets {BED, Nov. 2010, 2007} 10. Cantribution Margin (BED, June. 2010) 11 Brak-even point {BED, Nov., 2011, May, 2011, June, 2010} 12. Relevant cost ~ (BED, Dec., 2012; June, 2010) 13. Break-even Chart 14, Internal Audit [BED, Dec 2009] 14, Users of Accounting Information (BED, Dec, 2009; May 2003] 15. Weighted Average [BED, Dec, 2009} 16. Double Entry and Single Entry Bank Keeping : {BED, Nov. 2008} 17. Double Column Cash Book and Triple Column Cash Book [BED, Nov., 2008) 18. Main Ledger and Subsidiary Ledger [BED, Now. 2008) 19. Cash Flow Statement IBED, Now. 2007, 2006; May, 2006) 20. Generally Accepted Accounting Principle—GAAP (BED: Dec. 2012: Moy 07, 06} 21. Duble Entry System > BED, May 2007, Nov. 2006) 22. Suspense Accounts : {BED, May, 2006}Detaild Contents 23. Bank Reconciliation Statement. (BED, May, 2003: June, 2014) 24, Goodwill [BED, Nov. 2002] 25. Imprest System of Cash Book [BED, Nov, 2002] 26. Value added tax (VAT) 27. Deferred Revenue Expenditure [BED, Nov, 2011; May 2011] 28, Reversing Entries 29, Intemational Accounting Standard (BDE, May-December, 2012] 30, Ethics in Accounting 31. Forensic Accounting 32, Comparative Financial Statement Analysis 33, Accounting Cycle [BDE, June, 2018] 34, Irclevant Cost 35. Opportunity Cost 36, Angle of incidence 37. CLM.A 38. Deferred Revenve 39, Sunk costs [BED, Nov., 2011; June, 2013] 40. International accounting standards (TAS) [BED, Nov., 2011; Dec.; 12 May, 12] 41, Cooking the books [BED, Nov., 2011] 42. CAMEL ratings system {BED, June, 2013; Nov,, 2011; Dec, 2012] 43, Matching Principle [BED, Nov., 2011] [BED, Nov, 2011] 45. Operating. {BED, Nov., 2011] 46. Green Banking [BDE, June. 2014) 47. BAS and BRS {BDE, June, 2014] 48. Bangladesh Financial Reporting Standards (BFRS) (BDE, June, 2014] 49, Stress Testing [BDE, une, 2014) 50. Revenue Recognition Principle [BDE, June, 2014] St. EPS and NAV (BDE, June, 2014] Ethics in Accounting for Corporate Governance {BDE, June, 2014) 53, Fixed Cost’ & ‘Variable Cost [BDE, June, 2014] BRIEF QUESTION & EXERCIES Brief Problem & Solution 145-191 Work Sheet [3G #318 GA ¢ FATS) 192-200Accounting For Financial Services PROBLEM & SOLUTION MODULE: B Page :3~ 160 ANALYSIS OF FINANCIAL STATEMENT Ratio Analysis. i ‘Problem & Solution : 1 = 22 | ‘Year Question Solution : 23 =27 Du Point Example :1-2 Break Even Analysis Problem & Solution : 28 — 43 - ‘Year Question Solution : 44 — 46 i Accounting Equation Problem & Solution : 47 — 64 = a ‘Year Question Solution : 65 ~ 66 Cash Flow Statement Problem & Solution : 67-81 ‘Year Question Solution : $2 — 83, “Unadjusted Trial Balance And Adjustments Problem & Solution : 84 ~ 93 MODULE: C Page : 161 — 232 PROCESSING AND RECORDING OF ACCOUNTING INFORMATION Journal Entries Problem & Solution : 1 = 9 Year Question Solution : 10 — 17 Preparation Of Gash Book Problem & Solution: 18-21. Year Question Solution ; 22 a Preparation Of Trial Balance Problem & Solution ; 23-27 Rectification Of Errors Problem & Solutio Adjusting Entries "Problem & Solution : 35 — 39 MODULE: D Page : 233 ~ 312 FINANCIAL STATEMENTS FOR DIFFERENT ENTITIES Service Concern Problem & Solution : 1-4 Merchandise Concern 2 Problem & Solution :5-6 Year Question Solution : 7Manufacturing Entefprise Partnership And Joint Stock Companies Bank & Others Financial Institutions MODULE: ACCOUNTING FOR ASSETS Detaild Contents Problem & Solution: 10 Problem & Solution : 11-12 Problem & Solution : 13-21" Year Question Solution : 22 - 28 Page : 313 - 392 Merchandising Concern Problem & Solution : 1-12 ‘Year Question Solution : 13-19 Accounts Receivables Fixed Assets = [Depreciation] Problem & Solution : 20 ~ 25 + Year Question Solution : 26 ~ Problem & Solution : 27 ~38 ‘Year Question Solution : 39-43 _ Core Capital Problem & Solution : 44-51 L ead ‘Year Question Solution : 52 _ MODULE: F ; Page :393 - 440 JOURNAL RULES FOR JOURNALIZING Journal And Journalizing Problem & Solution : 1-13. | Petty Cash Book Sample: 1-4 Bank Reconciliation L >> YEAR QUESTION Problem & Solution : 14-42 ‘Year Question Solution = 43 = 49 Page : 441 — 455ENGLISH THEORY Introduction & Environment ‘1. What is Accounting? Or, Define Accounting IBDE, June, 2014) ‘Ans : Accounting is an information and measurement system that identifies, records, and sccsmunicates relevant, reliable, and comparable information about an organization's economic activities, It ‘eips people make better decisions including assessing opportunities, products, investments, and social and commiinily responsibilities, Opportunities abound and accounting opens our eyes to new and exciting possibilitcs. © According to Accounting Principles Board (APB), “Accounting is a se Sexction is to provide quantitative information, primarily financial in nature, about economic ei ‘scaded to be useful in making economic decisions, in making reasoned choices among alternative courses ef action” © According to Financial Accounting Standards Board (FASB), "Account service activity af financial recording and reporting.” © The American Institute of Certified Public Accountants (AICPA) defines accounting = “the art of recording, classifying, and summarizing in a significant manner and in terms of money, ‘Sscsactions and events which are, in part at least, of a financial character, and interpreting the results Serco” the a summary, accounting is the set of rules and methods by which financial and economic data are otieced, processed and summarized Into reports that can be used in making decisions. 2. Describe the objectives of Accounting. Ans : The main object of Accounting is to ascertain the results of, the financial transactions of Sessss concem, The main objects of Accounting are stated below : 1. Control over assets and liabilities : For running business successfully a businessman is t0 ssccuire various assets like land, building. machinery ete, He is to face various debts and liabilities like ecounts payable, notes payable, loan, bank overdraft etc. side by side withthe’ acquisition of assets. Actual ‘esston ofthese debts-labilities, property and assets can be ascertained through proper keeping of accounts. ‘& besinessman can take right steps for controlling quantity of assets decrease and liability increase. 2. Ascertainment of results : Every business coneem is interested to know its operating results ‘=e end of a particular period. The amount of profit or loss for a particular period of a business concem an be ascertained by preparing income statement with the help of ledger account balances of .reventic stare. Surplus or deficit of revenue for a particular period of a non trading concem can also be ascertained preparing, income and expenditure account oF statement.” 3. Ascertainment of financial affairs : Ascertainment of debts-liablities, property and assets {= total financial affairs of an organization at a particular date is another important object of Accounting. eszncial affairs of a concem at a particular date can be ascertained by preparing balance sheet. Balance sheet Ste statement of assets and liabilities of a concem at a particular date, 4. Keeping accounts of cash : Cash book is ~a prominent book of the books of accounts. Cash. seceipts and cash payments are accounted for in this book. The amount of daily cash receipts, payments, {Sec inthand and cash at bank can be knowin from this book. Fraud, forgery and misappropriation- of money see reduced by keeping cash book scientifically and accurately,4 eT “Accounting, For Financial Services §. Identification and recording of transactions : The primary object of accounting is to {identify the financial transactions and to record these systematically in the books of accounts. As result the true nature of each and every transuction is known without much exercise of memory. With this end in view the transactions are primarily recorded in general and in special journal and Jater on permanently various accounts are Kept inthe ledger. 6. Controlling money defaleation and cost : Prevention of money defaleation through fraud ‘and forgery and controlling of cost of a concern are also the main objects of Accounting. Prevention of money defalcation and cost control become easier ifuccounts are Kept scientifically. 7. Providing economle data : Another noble object of Accounting is to provide the concerned panties with all economic information preparing financial Statements and reports etc. in time. 8 Helping tax fixation : Accounts prepared on the basis of accepted accounting principles in considered reliable to the income tax and VAT authorities for easy determination and settlement of tax and VAT. 9, Determination and evaluation of policy : The object of Accoui ‘management in determining and evaluating the management policies in running the by supplying necessary information, interpreting and analysing the financial statements. 10, Testing arithmetical accuracy of accounts : One of the main objects of scientific methods of accounting i, to make sure that accounts have been kept in proper way. Arithmetical accuracy ‘of accounts kept in the ledger can be assured by preparing trial balance. Agreement ofa trial balinc isthe ‘proof of arithmetical accuracy of aécou 11, Advantage in taking loan : Due 0 insufficiency of capital, borrowing capital from ders is felt necessary to nun a business, Loan givers ate not willing to give loan without knowing the position of a basiness. Financial statement of a business concem reflects the solvency, or loan repayment capability of "that concer. 12, Following legal bindings and probibition = As all kinds of business organizations have to abide by some legal bindings and prohibitions, they are 1o maintain their accounts accurately, For ‘example, partnership law, income tax law and companies law etc. compel business organizations (0 ‘maintain their accounts in appropriate manner. 13, Creation of values and accountability : The object of accounts maintained in an acceptable way is to create higher values among individuals and organizations and thereby ereating awareness in preventing money defalcation, misappropriation of fund and cost control by ensuring ‘transparency and accountability. 14, Acceptability to others > Banks or financial institutions are intcrested to know the‘ accurate financial position of a business concern for Sanctioning loans. On the other, hand government or other ‘tthorities may als0 ask about the financial position of a business, concer for various reasons. In these cases the accounts msintained tsa disciplined way become easily acceptable to the inferested institutions or authorities. : ing is to help the iness successfully 4. Discuss the features of Accounting. ‘Ans + Accounting is a dynamic and applied subject. Through @ Jong pructice, and research accounting has reached its present stage and earned the status of profession. Like Agher social sciences accounting has also its own characteristics. By analysing the various definitions of accounting we can point out the following features. 4. Systeri, of keeping accounts of transactions : Accounting teaches us the methods or techniques of recording the finarcial transitions of an individual or an organization as permanent references for future use. Asa result one cat easily have a clear idea regarding the nature and result of every trnsaction ‘when needed without exercising memory too much,Accounting For Financial Services 2 Accounting as a social science : The tusk of accounting is to keep accounts of all economic ‘Sees of social human beings particularly financial transactions of trade and commerce in a correct and Ses way. In modem age the scope of secounting is not confined only to business organizations byt Se Septises the economic activities of all individuals and social organizations, It has got similarity with = al sciences like Economics, Management, Psychology. Computer te Accounting as an art and a science : With the help of accounting a businessman keeps = & Financial transactions of his business following a definkte way and method, Therefore, Sees Is an art. It takes a Jot of efforts and long experience to attain expertise . in accounting. Artis Sewer of ac ding and applying cofrect methods and techniques in the light of experience. For this reason i iscipi cular subject. With al rules are established. Its observed thal in case of accounting also, Se is wc formulated to determine and analyse the nature and result of economic activities of a person | = =setation. These rules dre formulated following scientific methods - observation, experience, Ses “ssication ete. For this reason accounting can be termed as a science. But accounting is not Ss Sience, it is asocial seienc: ‘& Transactions measurable In terms of money or money's worth : Events measurable = === of money or money's worth are the subject matters of accounting. It is necessary to keep the Ss of those transactions which can be measured in terms of money and-which affect the fina Pees of en organization, The feelings and emotions of human beings. such as pleasure, sorrow, laugh, > = Seok the subjects oF Accounting as these are riot measurable in terms of money. © Exhibiting financlal affairs : Accounting teaches us the systematic and correct meshods of Ss 208s ofall financial transactions, So one can have a clear idea about the financial postion of See Bese ic. debtors, creditors, liabilities, capita, asets and property. © Scope or field : Though accounting is very much important for business org SS for other organizations and individuals also cannot be ignored, In the present day world accounts SS == to be Kept in all types of concems whether itis business concern, social, organization, seii- = = Se oxgaization. So. the scope or field of accountiig is very much wide, > Tools of management : Accounting helps management in making and implementation of P= sesions, production, distribution, cost minimization etc, providing various - information and — & Deal aspect : Under double entry system of accounting every transaction has 1wo aspects e.g, SSS one is debit and the other is credit, For this reason, every fransaction classifying it into two eS rented for. © Seif-sufficiency + Accounts are maintained in a self-sufficient method. With the help of Se oc can know the nature and causes of every transaction as well 2s overall results of all the Ss at ay time, & Describe the advantages or usefulness of accounting, ‘Ses = The importance and necessity of Accounting are felt essential in trade and commerce. The Sof Accounting arises where financial transactions occur. Financial transactions occur in -all trading See ass concems and the accounts are to be kept in these organizations, So the necessity and Soe af accounting in these organizations are an unending fact. The necessity and importance of Sse = 101 limited to business organizations only but also to third parties related to trade and SSS Is the light of multi-purpose uses and utilities of Accounting its necessity and importance are smut below = ©) Te case of trade : Primarily, Accounting emerged for recording financial transactions of Bases Is soci age the reasons and advantages for which Accounting is felt necessary in trade and Seer a discussed below: ‘A evised Eavion ‘Accounting: For Financial Services 1 Comparative analysis + Compiative analysis of various information of a business Somer is very much needed to run the business successfully. It is possible to delennite tive financial position and Tees ar making profit from the past and present accounts ofa patcular business conossn if the accounts are maintained correctly. 2 Exhibiting financial condition:: A\ter every year ending the financis! posto of a business concn can be known with the help of Accounting. Te actual financial position of particular business sermon a paiular date can be known through balance sheet. The amount of ees ‘and liabilities of a coor gonecrn is shown ina Balance sheet in the Year end. In a word we can determine the financial postion ofa business concem expressing its sources of fund and ‘methods of application through balance sheet. 4, Finding out profit and lass : One of the main objects of trade and comme is We Et profit. [Accounis ar wo be Kept properly to know wheter the business concern has sae profit o loss during & particular pesiod. Ice posible to knovr profit and toss of a paticslat business concer for a particular period through preparation of income statement with the help of reconded transactions, ns Cost control: Is very much fieeded to maintain cost accounts (0 coatol the Prodets cost The sole of cost accounting is very important in cost determination and cost contol, 5. Decision making : Many people term ‘Accounting as information supply system. Because ‘accounting minly keeps accurate information of a business organization, For planning and making ‘aSsion by the management various information i needed. Accounting provides Ihe mansgeneht with the jnformation required for planning and decision making, 7 |. Control over cost + Minimization of expenses wndec different headiis the best 10 of development ofa business, A businessman can be aware of daly expen ‘of his business through dee antag system, fits dotecied that excess expenditure in a paicolar head () being incurted proper measures canbe adopted to control that expenditure, sy Prevention of teaud and forgery + Fraud and forgery can-be prevented if acciah Oe anaitained properly. Miintaning of scouts properly inluenees the marty of employces positively and this restricts the trend of fraud and forgery Finding out tax : Income tax is determined on the bass of ingome of « Dunes! concer, To pay income taxis a mandatory for all business concems So feible ineotte statement is to Be prepared may ving the ecienfie method of roording transactions the basis of which income i of a business cconcem fora particular period is fixed. 9, VAT fixaton : Tn the present day world VAT system fas been introduced in many countries including Bangladesh. It is necessary to keep aecounts of a business concer for a particular period to determine the amount of VAT that is to.be paid To, Loan talking : On many occasions the busines organization is vo take loan from banks or other inanfat institutions Yor runting business. Loan giving institutions want o say 1 financial statements ofa particular business concer to be sure of its debs repaying capability before sanctioning loan, (B) Im other fleds : The importance and necessity of Accounting ae not fimited only to business organizations but also to other insitues. Te oxher areas where ‘accounting is needed are sated below : A Necessity and importance to the owner of the organization : The owner” is benefited smost by keeping. accounts. The owner can know the results nd ni ‘and fair financial position of his Tasiness fora particular period from the financial statements By this We 6 take decision as regard expansion or curtailment of business where necessary. Ifthe return ‘of capital employed ratio is encouragins