June 2018

CAP I Paper 1: Fundamental of Accounting
CHARTERED ACCOUNTANCY PROFESSIONAL I

(CAP-I)
Suggested Answer
June 2018
The Institute of Chartered Accountants of Nepal
The Institute of Chartered Accountants of Nepal 1

Suggested Answer - June 2018
Paper 1: Fundamentals of Accounting

Roll No……………. Maximum Marks - 50

Total No. of Questions - 3 Total No. of Printed Pages -8
Time Allowed - 2 Hours
Marks
Attempt all questions. Working notes should form part of the answer.
1. From the following Trial Balance and additional information, prepare the
Trading, Profit and Loss Account and Balance Sheet of Kathmandu
Suppliers as at Ashadh end, 2074: 15
Particulars Debit Amount Credit Amount
(Rs.) (Rs.)
Capital 5,000,000
Property, Plant and Equipment (at cost) 2,000,000
Accumulated Depreciation (opening balance) 700,000
Interest 120,000 70,000
Bank Balance 1,400,000
Cash on Hand 25,000
Sales 2,300,000
Purchases 1,800,000
Return Outward 200,000
Return Inward 150,000
Carriage Outward 15,000
Carriage Inward 25,000
Accrued Interest 75,000
Royalty 150,000
Sundry Debtors 1,500,000
Bad Debt 200,000
Account Payable 50,000
Creditors 51,000
Loan from Bank 1,200,000
Investment 1,325,000
Employee Loan 200,000
Retained Earning 95,000
Opening Stock 260,000
Discount 50,000 75,000
Salaries & Wages 156,000
Administrative Expenses 180,000
Selling and Distribution Expenses 280,000
Advance 15,000
Suspense Account 115,000
Total 9,891,000 9,891,000
Additional Information
1. Property, Plant and Equipment consist of the following assets:
Cost Accumulated Depreciation
a. Land purchased on

Bhadra 15, 2073 500,000

b. Plant & Machinery 900,000 500,000 (15% Depreciation rate)
c. Office Equipment 500,000 150,000 (25% Depreciation rate)
d. Furniture & Fixture 100,000 50,000 (20% Depreciation rate)
Company is applying WDV method to charge depreciation.
2. Company has a policy to provide 20% provision for doubtful debt on more than a
year aged debtors and 50% provision on more than two years aged debtors. Aging
report of the company shows the following:
a. Less than a year Rs. 1,100,000
b. More than a year Rs. 300,000
c. More than two years Rs. 100,000
3. Closing stock as on Ashadh end 2074 was Rs. 225,000 (market price Rs. 210,000).
4. Bad debt amount shown in Trial Balance is net of bad debt recovered amount of Rs.
120,000.
5. This year it is found that sales was overcast by Rs. 115,000 in previous year and
required adjustment need to reflect in current year.
6. Administrative expenses include Rs. 20,000 for the rent of Director’s residence.
7. Salary of Mr. Ram for Bhadra 2074 amounting Rs. 20,000 was unpaid in Bhadra
2074.
8. Salary and wages include wage amount Rs. 50,000.
You are required to prepare Trading and Profit and Loss Account for the year ended on
Ashadh end 2074 and Balance Sheet as on that date.
Answers:
Kathmandu Suppliers
Trading & Profit and Loss Account
For the year ended Ashadh end 2074
Dr. Cr.
Particulars Amount Particulars Amount
(Rs.) (Rs.)
To, Opening Stock 260,000 By, Sales 2,300,000
To, Purchase 1,800,000 Less: Return Inwards (150,000) 2,150,000
Less: Return (200,000) 1,600,000 By, Closing stock 210,000
Outwards (Note 1)
To, Wages 50,000
To, Carriage Inward 25,000
To, Gross Profit c/d 425,000
2,360,000 2,360,000
To, Carriage 15,000 By, Gross Profit b/d 425,000
Outward
To, Bad debt 320,000 By, Royalty 150,000
To, Discount 50,000 By, Bad debt recovered 120,000
To, Salaries & 106,000 By, Discount received 75,000
Wages
To, Administrative 160,000 By, Interest Income 70,000
expenses (Note 4)
To, Selling and 280,000 By, Net Loss 478,500

Distribution
expenses
To, Provision for 110,000
doubtful debt (Note
2)
To, Depreciation 157,500
(Note 3)
To, Interest 120,000
1,318,500 1,318,500
Kathmandu Suppliers
Balance Sheet
As on Ashadh end 2074
Capital & Liabilities Amount Assets Amount
(Rs.) (Rs.)
Share Capital 5,000,000 Property, Plant and Equipment
Less: Drawing (20,000) 4,980,000 Gross 2,000,000
Retained Earnings 95,000 Less: Accumulated dep. (857,500) 1,142,500
Less: Net Loss (478,500) Accrued Interest 75,000
Less: Adjustment (Note 5) (115,000) (498,500) Book Debtors 1,500,000
Account Payable 50,000 Less: Provision for
1,390,000
doubtful debt (110,000)
Loan from Bank 1,200,000 Investment 1,325,000
Creditor 51,000 Inventory (Note 1) 210,000
Employee Loan 200,000
Advance 15,000
Bank Balance 1,400,000
Cash on Hand 25,000
Total 5,782,500 Total 5,782,500
Working Notes
1. Closing stock is valued at cost or Net realizable value which ever is lower;
a. Cost amount of stock 225,000
b. Net realizable value 210,000
Hence closing stock as on Ashadh end 2074 is value at NPR 210,000
2. Calculation of provision for doubtful debt;
Aging Debtor Rate Provision for doubtful debt
Less than a year 1,100,000 0% -
More than a year 300,000 20% 60,000
More than two years 100,000 50% 50,000
Total Provisioning for doubtful debt 110,000
3. Calculation of depreciation
Assets Cost Accumulated Written Rate of Depreciation
Depreciation Down Value Depreciation for the year
Land 500,000
Plant & Machinery 900,000 500,000 400,000 15% 60,000

Office Equipment 500,000 150,000 350,000 25% 87,500

Furniture & Fixture 100,000 50,000 50,000 20% 10,000
Total 157,500
4. Administrative Expenses
Administrative expenses 180,000
Drawing (20,000)
Net amount 160,000
5. Overcast of sales by 115,000 which was treated as suspense account should be
adjusted through retained earnings of the company.
2.
a) Sita, Tara and Rita were partners sharing profits and losses at the ratio
of 2:2:1. Rita wants to retire on Ashadh 31, 2074. Following are the
information of the firm:
Balance Sheet as on Ashadh 31, 2074

Liabilities Amount Rs. Assets Amount Rs.
Partners’ Capital Property, Plant & Equipment 300,000
Sita 240,000 Bills Receivable 40,000
Tara 160,000 Stock 100,000
Rita 120,000 Sundry Debtors 100,000
Reserve 20,000 Bank Balance 100,000
Sundry Creditors 100,000
Total 640,000 Total 640,000
i) Sita and Tara agree to share profit and losses at the ratio of 3:2 in future.
ii) Value of goodwill is taken to be Rs. 100,000 but Sita and Tara do not want to
show goodwill in their books of accounts.
iii) Fixed assets are revalued upward by Rs. 60,000 and stock by Rs. 20,000. Bills
receivable dishonored Rs. 10,000 on 31.03.2074 but not recorded in the books.
Dishonor of bills was due to insolvency of the customer.
iv) Sita and Tara agree to bring sufficient cash to discharge claim of Rita and to
make their capital proportionate with maintaining bank balance of Rs. 150,000.
b) You are required to prepare the Balance Sheet as on Ashadh 31, 2074 after
retirement of Rita and Partners’ Capital Account. 10
c) Mr. Gupta of Birgunj purchased 1,000 meters of cloth for Rs. 200,000. Out of total
purchase he sends 500 meters of cloth on consignment to Mr. Prakash of Pokhara at
the selling price of Rs. 300 per meter. Mr. Gupta paid Rs. 5,000 for freight and Rs.
500 as loading expenses. Mr. Prakash sold 400 meters of cloth at Rs. 400 per meter.
Mr. Prakash incurred Rs. 2,000 as selling expenses. Mr. Prakash is entitled to a
commission of 5% on total sale proceeds plus a further 20% on any surplus price
realized over Rs. 300 per meter. Owing to fall in the market price, the stock of cloth

in hand is to be reduced by 10%. You are required to prepare Consignment Account

in the Books of the Mr. Gupta and Mr. Gupta’s Account in the books of Mr. Prakash. 10
Answers:
a)
Balance Sheet after Rita's Retirement as at 31st Ashadh, 2074
Amount
Capital & Liabilities Rs. Assets Amount Rs.
Partners' Capital Property, Plant & Equipment 360,000
Sita's 396,000 Stocks 120,000
Tara's 264,000 Sudry Debtors 100,000
Sundry Creditors 100,000 Bills Receivable 30,000
Bank Balance 150,000
Total 760,000 Total 760,000
Working Notes:
Calculation of New capital and its
proportion
Total Capital
Property, Plant Equipment (Rs. 300,000+Rs. 60,000) 360,000
Stock (Rs. 100,000+ Rs.
20,000) 120,000
Debtors 100,000
Bills Receivabe (Rs. 40,000- Rs. 10,000) 30,000
Bank Balance 150,000
760,000
Less:
Sundry Creditors' (100,000)

Total Capital 660,000
Sita Portion of Capital (3/5 of total capital) 396,000
Tara's Portion of Capital (2/5 of total
capital) 264,000
Revaluation Account
Dr. Cr.
Amount
Particulars Rs. Particulars Amount Rs.
To Bills Receivable A/C 10,000 By Property, Plant & Equipment A/C 60,000
To Partner's Capital A/C By Stock 20,000
Sita 28,000
Tara 28,000
Rita 14,000
Total 80,000 Total 80,000

Bank Account
Dr. Cr.
Amount
Particulars Rs. Particulars Amount Rs.
To Balance b/d 100,000 By Rita's Capital A/C 158,000
To Sita's Capital A/C 140,000 By Balance c/d 150,000
To Tara's Capital A/C 68,000
Total 308,000 Total 308,000
On Rita's retirement, she is entitled for the share of goodwill of the firm equivalent to Rs. 20,000 (Rs.
100,000X 1/5)
It has to be borne by Sita only because she has gained in the profit sharing ratio on Rita's retirement
Partners' Capital Account
Dr. Cr.
Particulars Sita Tara Rita Total Particulars Sita Tara Rita Total
To Rita's
Capital By Balance
A/C 20,000 - - 20,000 b/d 240,000 160,000 120,000 520,000
By Reserve
A/C 8,000 8,000 4,000 20,000
By
Revaluation
A/C 28,000 28,000 14,000 70,000
To
Balance By Sita's
c/d 256,000 196,000 158,000 610,000 Capital A/C - - 20,000 20,000
276,000 196,000 158,000 630,000 276,000 196,000 158,000 630,000

To Bank By Balance
A/C - - 158,000 158,000 b/d 256,000 196,000 158,000 610,000
To
Balance By Bank
c/d 396,000 264,000 - 660,000 A/C 140,000 68,000 - 208,000
Total 396,000 264,000 158,000 818,000 Total 396,000 264,000 158,000 818,000
b)
In the Books of Mr. Gupta
Consignment to Pokhara Account
Dr. Cr.
Amount Amount
Particulars Rs. Particulars Rs.
To Goods sent on
consignment A/C By Prakash's A/C (Sales) 160,000

(500x Rs. 300) 150,000 (400x Rs.400)

To Cash A/C By Goods sent on
(Expenses) 5,500 consignment A/C
To Prakash's A/C
(Expenses) 2,000 (500x Rs. 100) 50,000
To Prakash's A/C
(Commission Expenses) 16,000 By Consignment Stock
To Profit & Loss A/C
(Profit on Consignment
A/C) 55,490 (100x Rs. 200) 20,000
Add: Proportionate
Expenses 1,100
(5000+500=5500x100/500)
Less: 10% (Owing to Fall in
price) (2,110) 18,990
Total 228,990 Total 228,990

In the Books of Mr. Prakash
Mr. Gupta's A/C
Dr. Cr.
Particulars Amount Rs. Particulars Amount Rs.
To Cash A/C (selling
Expenses) 2,000 By Cash A/C (Sales) 160,000
To Commission A/C 16,000
To Balance c/d 142,000
Total 160,000 Total 160,000

3.
a) From the following information, prepare Bank Reconciliation
Statement of XYZ Pvt. Ltd. for the year ended Ashadh 31, 2074: 7
i) Bank statement of the company shows overdrawn balance of Rs.
12,000.
ii) A cheque of Rs. 1,560 in favor of Mr. Ram has been issued in
Ashadh 27, 2074 but only encashed at bank on Shrawan 5, 2074.
iii) A cheque of Rs. 1,500 issued and cleared on Ashadh 24, 2074 to NEA for electricity
charges has been entered as Rs. 1,800 by the company.
iv) Interest amount has been credited by the bank of Rs. 2,500 on Ashadh 31, 2074 but no
advice received by the company.
v) The company has issued standing order to pay telephone expenses of Rs. 1,000 to
Telecom on Ashadh 15 every month but bank has not made any payment yet.
vi) A party paid amount directly to the bank on Ashadh 25 of Rs. 2,000 but the company
has received advice of credit on Shrawan 3, 2074.

vii) Bank has deducted monthly installment of loan amounting Rs. 27,000 from the account
on Ashadh 27, 2074 and advice was received from the bank on Ashadh 28, 2074;
however, no transaction is recorded by the company.
viii) A Cheque was sent for collection Rs. 15,000 on Ashadh 27, 2074, which was
dishonored and return back by bank with advice on Ashadh 29, 2074 and new cheque
was given by the customer on Shrawan 1, 2074 which was cleared on Shrawan 2, 2074
by the bank.
ix) Bank has charged Rs. 200 as annual fee but advice of charge was received on Shrawan
3, 2074.
x) Dividend of Rs. 1,500 directly deposited into bank Account on Ashadh 14, 2074 and
the company only knows about it after obtaining bank statement on Shrawan 7, 2074.
b) Answer the followings: (4×2=8)
i) What is recouping of shortworkings?
ii) What are the consideration determining capital and revenue
transactions?
Answers:
a)
Bank Reconciliation Statement of XYZ Pvt. Ltd.
As at Ashadh end 2074
S.N. Particulars Amount (Rs.) Total Amount
(Rs.)
1 Balance as per Bank Statement (Overdrawn) -12,000
Adjustments
Add: Repayment of loan not recorded by the company 27,000
Add: Bank Charge deducted by bank but not recorded by 200
the company
Sub-total 27,200 27,200
Less: Cheque issued but not presented in bank 1,560
Less: Over charged payment of Electricity expenses 300
Less: Amount directly deposited into bank account but 2,000
not accounted by the company
Less: Payment not made by the bank 1,000
Less: Dividend deposited into bank but not recorded by 1,500
the company
Less: Interest income not recorded by the company 2,500
Sub-total 8,860 -8,860
2 Balance as per Bank Ledger 6,340
b)
i) In simple, recoupment means adjustments. Usually in the first few years of the royalty
agreement, the work does not gather the required momentum because of the time taken
in the preparation for starting the production or pushing up the sales, so shortworkings
arising in the first few years may not be due to inefficiency of the lessee. Keeping this
in view, royalty agreements may contain a clause that shortworkings (i.e. excess
amount paid in earlier years) are recoverable by the lessee in subsequent years when
royalties are in excess of the minimum rent. The right of getting back the excess

payment made by the lessee in earlier years is called the right of recoupment of
shortworkings. A time is usually set upon the number of years for which such
shortworkings can be recouped. This time limit for recoupment of shortworkings may
be fixed or fluctuating. If the shortworkings (partly of wholly) cannot be recouped
within the specified time, they lapse and are charged to profit and loss account in the
period when such specified time limit for recoupment expires. Therefore,
shortworkings are the losses of the lessee, no in the year of their occurrence, but in the
year, they lapse.
ii) The basic consideration in distinction between capital and revenue expenditure are;
Nature of business: For a trader dealing in furniture, purchase of furniture is revenue
expenditure but for any other trader, the purchase of furniture should be treated as
capital expenditure and shown in the statement of financial position as an asset.
Therefore, the nature of business is a very important criterion in separating expenditure
between capital and revenue.
 Nature of expenditure: If the frequency of an expense is quite often in an accounting
year then it is said to be a revenue expenditure like; salary, rent etc. while non-recurring
expenditure is infrequent in nature and do not incur often in an accounting year like;
purchase of vehicle, computer etc.
 Purpose of expenditure: Expense for repairs of machine may be incurred in course of
normal maintenance of the asset. Such expenses are revenue in nature. On the other
hand expenditure incurred for major repair of the asset so as to increase its productive
capacity is capital in nature.
 Effect in revenue earning capacity: The expenses which help to generate revenue in the
current period are revenue in nature and should be matched against the revenue earned
in the current period. On the other hand, if expenditure helps to generate revenue over
more than one accounting period, it is generally called capital expenditure.
 Materiality of the amount involved: Nepal Accounting Standard on presentation of
financial statements defines the term material. It states that omission or misstatements
of item are material if they could, individually or collectively; influence the economic
decisions of users taken on the basis of financial statements. Materiality depends on the
size and nature of the omission or misstatement judged in the surrounding
circumstances. The size or nature of the item or a combination of both could be the
determining factor. So the relative proportion of the amount involved is another
important consideration in distinction between revenue and capital transaction. Even if
expenditure does not increase the productive capacity of an asset, it may be capitalized
because the amount is material or expenditure may increase the asset value or yet to be
expensed because the amount is material in value.

Specific Comments on the performance of the students

Batch: - JUNE 2018
Level: - CAP-I (New)
Subject: Fundamental of Accounting
Question No. 1
Lack of Conceptual knowledge and preparation is poor. Many students failed to effect the all
transaction method in trading PL and balance sheet. Student has satisfactory performance on it but
most of students could not do the effect of prior year adjustment. Almost all students have attempted
this question. Majority of the candidate scored at least 50% mark. Majority of the candidate treated
the previous year sales overcast wrongly. Overall Performance is good but students are confused
with calculation of depreciation adjustment of prior period error & other assets items. Candidates
need to do more practice on segregation of items of profit & loss and balance sheet. Maximum
students does not proper knowledge of provision for bad debts & its treatment due to lack of
conceptual knowledge & also for treatment of suspense a/c. Students did not possess specific
knowledge in treating capital and revenue transaction. They have committed mistakes in calculating
depreciation and doubtful debts.
Question No. 2
No conceptual clarity and lack of practice. In part (a) the capital requires from remaining rather is not
largely calculated. Most of the students have correct it. Some students have not done working
properly which is very essential. Most of the student attempted both part a & b of the question while
consignment a/c was correctly presented. Most of the student confused in preparing Mr. Gupta’s A/C
in the books of Mr. Prakash and done opposite in partnership A/C. Most of the student did not
prepare bank A/C and did mistake in bank balance. Only few students were able to derive the correct
answer and most of the answers were not supported by clear working. Calculation of goodwill and
adjustment is major mistake from the candidate. Candidate need to improve in final posting of
partnership A/C. Improvement needed in calculation of closing stock & stock reserve. Does not read
the question regarding closing stock calculation. Most of the students failed in computing total
capital of the firm and partner’s proportionate capital. Most of the students committed mistakes in
computing closing stock in consignment and preparing consignor’s a/c. Many students have
confused in taking balance of passbook. Some confused overdraft as balance.
Question No. 3
Little preparation, lack of conceptual knowledge and did not understand the question properly. It is
generally good. Theory writing shall be improved. Most of the student attempted Bank reconciliation
as well as theoretical part. While majority of student scored at least 5 out of 7 in BRS, they were
failed to reach the correct account balance. Majority of student lack the conceptual part in explaining
recouping of short working & consideration determining capital & revenue transactions. Few students
have wrongly done the reconciliation of overdrawn balance. No clear concept of capital & revenue
expenditure were found in few cases. Bank reconciliation concept is clear among all students but
calculation of total balance is mistake due to overdraft has been wrongly post. Student does not need
properly specially part 3 b ii question. Some students even lack some English language.

CAP I Paper 2: Mercantile Law and Fundamental of Economics
Paper 2:
Part A: Mercantile Law
Part B: Fundamentals of Economics

Part A: Mercantile Law

Maximum Marks - 25
Time Allowed - 1 Hour

Marks
Attempt all questions.
1. Answer the following questions:

a) How accounts are settled at the time of dissolution of Partnership firm? 5
b) Mention the criteria for the registration of a firm as per Partnership
Act, 2020. 5
Answers:
a) Settlement of accounts shall be carried out in following manner and
order:
 Debts of third party;
 Debt of the partner as distinguished from capital on proportionately basis;
 Capital of the Partner on proportionately basis;
 Residue, if any, divided between partners in the proportion of profit sharing ratio.
Assets of the partnership firm shall not be divided between/among partners without
paying the debt obligation of third party despite the partnership agreement states any
matter.
b) Criteria of the Firm Registration
Firm to be registered to the concerned department within 6 months from the entering
into the partnership deed. Partnership which is not registered to the concerned
department shall not get legal validity.
To register a partnership firm, an application shall be made along with partnership
agreement and prescribed fees and the following documents:
 Full Name of the Firm;
 Registered address of the business;
 Objectives of the firm including nature of goods/ services to be dealt;
 Name, surname and address of partners;
 Restrictions, if any on partners;
 Types of partnership and capital subscribed by each partner;
 Partners representing the firm;
 Mode of settlement of profit /loss of among partners and mode to calculate profit;
 Other matters, if any.
Firm registered under the Private Firm Registration Act, 2014 shall not be required to
register under partnership Act, 2020. However, certain documents may be asked by
concerned department.
Name of the firm shall not be:
 Which resembles the already registered firm

 Any limited company which has already registered under Companies Act.
Approval of Concerned department required to change the documents submitted along
with partnership deed
 Documents submitted along with application, and
 Partnership agreement
2. Answer the following questions:
a) State any five duties of Bailee in a contract of Bailment. 5
b) Differentiate between Contract of Indemnity and Contract of
Guarantee. 5
c) Who can perform the contract as per Contract Act, 2056? 5
Answers:
a)
a. Duty to take reasonable care.
b. Duty not to make any unauthorized use.
c. Duty not to mix or part with the goods.
d. Duty to return goods.
e. Duty to deliver increase or profit accrued from bailment.
b) The differences between Contract of Indemnity and Contract of
Guarantee are as follows:-
Contract of Indemnity Contract of Guarantee

It refers to a Contract by which one party
It refers to a Contract to perform the
promises to save the other from loss caused
promise or discharge the liability of a
by conduct of the promisor or another
third person in case of his default.
person.
In contract of guarantee, the primary
In contract of indemnity, the liability of the
liability is of principal debtor and the
promisor is primary.
liability of surety is secondary.
Contract between surety and principal
Contract between the indemnifier and the
debtor is implied and between creditor
indemnity holder is express and specific.
and principal debtor is express.
In contract of guarantee there are three
In contract of indemnity there are two parties
parties i.e. creditor, the principal debtor
indemnifier and the indemnity holder.
and surety.
In contract of guarantee there are three
In Contract of indemnity there is only one agreements i.e. agreement between the
agreement i.e. the agreement between creditor and principal debtor, the creditor
indemnifier and indemnity holder. and surety and surety and principal
debtor.
Contract of indemnity protects the promise Contract of guarantee is for the surety of

from loss. the creditor.

In contract of guarantee, the surety does
In Contract if indemnity, the promisor
not require any relinquishment for filing
cannot file the suit against third person until
of suit. The surety gets the right to file
and unless the promisee relinquishes his
suit against the principal debtor as and
right in favour of the promisor.
when the surety pays the debt.
c) By whom contract may be performed:
The promise under a contract may be performed, as the circumstances may permit, by
the promisor himself, or by his agent or his legal representative.
a. Promisor himself: If there is something in the contract to show that it was the
intention of the parties that the promise should be performed by the promisor
himself, such promise must be performed by the promisor. This means contracts
which involve the exercise of personal skill or diligence, or which are founded on
personal confidence between the parties must be performed by the promisor
himself.
b. Agent: Where personal consideration is not the foundation of a contract, the
promisor or his representative may employ a competent person to perform it.
c. Representatives: A contract which involves the use of personal skill or is founded
on personal consideration comes to an end on the death of the promisor. As
regards any other contract the legal representatives of the deceased promisor are
bound to perform it unless a contrary intention appears from the contract. (But
their liability under a contract is limited to the value of the property they inherit
from the deceased).
d. Third persons: When a promisee accepts performance of the promise from a third
person, he cannot afterwards enforce it against the promisor. That is, performance
by a stranger, accepted by the promisee, produces the result of discharging the
promisor, although the latter has neither authorized not ratified the act of the third
party.
e. Joint promisors: When two or more persons have made a joint promise, then
unless a contrary intention appears from the contract, all such persons must jointly
fulfill the promise. If any of them dies, his legal representatives must, jointly with
the surviving promisors, fulfill the promise. If all of them die, the legal
representatives of all of them must fulfill the promise jointly.

Part B: Fundamentals of Economics

Maximum Marks - 25
Time Allowed –1 Hour
Marks
1. Long Answer Questions:

a) Define monopolistic competition. Explain how price and output are
determined under it in the short-run with suitable diagrammatic
illustration. (1+4=5)
b) Explain the major problems of agriculture sector development in Nepal. 5
Answers:
a) Monopolistic competition is a blend of monopoly and perfect competition. It is a
market structure characterized by large number of sellers (firms) selling differentiated
products which are close substitutes to each other, and there is free entry and exit of
firms.
The price and output determination under monopolistic competition in the short run
can be presented below:
In the short run equilibrium, there arises three cases:
a. Abnormal profit (AR > AC)
b. Normal profit (AR = AC)
c. Losses (AR < AC)
The fact that a firm is in (short–run) equilibrium does not necessarily mean that it
makes abnormal (excess) profits. Whether a firm makes abnormal profit or losses
depends on the level of AC in the short-run equilibrium. Thus, it is important to
analyze the above mentioned 3 cases as per the level of AC.
Graphical Analysis

C,R,P C,R,P C,R,P

MC MC
AC
AC
B
MC C
Pe A
A
A Pe
Pe AC
B e
C e
e
AR (=D) AR (=D)
AR (=D)
MR MR MR
O Qe Output O Qe Output O Qe Output
Abnormal Profit Loss Normal Profit
(AR>AC) (AR<AC) (AR=AC)
1.
In the given figures, we have drawn downward sloping AR (=D) and MR curves. At
e, the firm is in equilibrium as the two conditions for equilibrium are met. In case of
abnormal profits, Average Cost (AC) curve lies below AR curve at A so that AR >
AC, and the shaded region PeABC is abnormal profit enjoyed by the firm which is
shown by the first figure. In case of losses, AC curve lies above the AR curve at A so
that AR < AC, and the shaded region PeABC is the loss faced by the firm shown by
the second figure. In case of normal profit, average cost curve (AC) is tangent to AR
curve at A so that AR = AC. It is shown by the third figure. Thus we can conclude
that it is the level of AC that forces a firm to bear losses or enjoy abnormal profit or
just stay with normal profits at equilibrium. In this way, a firm is in equilibrium with
price Pe and output Qe as shown by the figures.
b) Agriculture sector is the dominant sector of Nepal since it contributes the majority of
the gross domestic product of the economy. Even though, more than 60 percent of the
population of Nepal are involved in agricultural sector but the contribution of this
sector in national income is not satisfactory because agriculture sector of Nepal is
facing many problems.
The main problems of Nepalese agriculture sector can be explained as following:
1. lack of industrial farming:
Nepalese agricultural system is following subsistence farming system. Farmers
produce crops for their self-consumption rather than sale and generate income.
Due to which they are producing all those commodities whether their productivity
is satisfactory or not.
2. lack of agriculture research:
It is one of the main problems of Nepalese agriculture sector. Due to lack of
research on agricultural productivity and fitness, the productivity of the
agricultural is very low. The farmers don’t know about the product which is best
fit in their soil and environment.
3. lack of technical education:

Even though Nepal is called as agro-based economy, but the technical education
agriculture sector is not supporting it. The farmers have no knowledge about the
modern technologies and process of farming.
4. lack of appropriate policy:
Since, government of Nepal had adopted agriculture policy to support and develop
agricultural sector, but the policy itself is not being able to produce the result as
desired. It is because the policy is not consistent with the current features,
problems and their measures to solve those problems.
5. Lack of agricultural subsidy:
Lack of agricultural finance is one of the major hurdles of Nepalese agriculture
sector. Most of the Nepalese farmers are poor, they can’t invest money in
fertilizers and modern agricultural equipment. Therefore the government should
provide subsidy to the farmers in such activities.
If those problems of Nepalese agriculture sector are solved, it surely increases the
productivity of the sector which in turn increases the contribution in the national
income and employment generation in the economy along with increases in export of
agricultural goods.
2. Short Answer Questions (Any Five):
a) Explain the concept of short run and long run production functions. 3
b) Define average and marginal costs. Illustrate their relationship. 3
c) What is supply? Explain the extension in supply with the help of
appropriate example. (1+2=3)
d) Microeconomics concerns about the optimum allocation of resources
rather than full employment and growth of resources. Justify the statement
with proper example. 3
e) Define BOP. Explain any four items of current account of BOP 3
f) "Utility derived from consumption of additional unit of a commodity
diminishes at every additional unit of consumption of the commodity."
Elaborate by using numerical table. 3
Answers:
a) There are generally two types of production function: Short-run and Long-run
production functions.
i. Short-run Production Function
A production function in which some factors are fixed and some factors are variable
is known as short-run production function. A short-run production function can be
expressed as:
—
Q = f( K , L)
Where,

—
K = Fixed factor capital
L = Variable factor labour
The ‘Law of variable proportions' deals with the nature of short-run production
function.
ii. Long-run Production Function
Long run production function implies a production function with all factors variable,
i.e.
Q = f(K, L)
Where,
K and L both are variable inputs
The ‘Law of returns to scale' deals with the nature of long-run production function.
The distinction between short-run and long-run production functions is related to the
capacity of the firm to change inputs. It is not related to the calendar date.
b) Average Cost (AC) is defined as the total cost divided by level of output,
i.e.,
TC
AC = Q
Marginal cost (MC) is defined as the change in TC due to change in level of output,
i.e.
TC
MC =
Q
We can present both AC and MC in the following figure.
AC, MC
MC AC
a

Minimum
 point of AC
b
O Q
With the help of the figure above, we can derive the following relationships between
AC and MC:
a. Both AC and MC are derived from same sources Total Cost (TC) and level of
output (Q) with the difference that MC needs change in TC and Q.
b. Both are U-shaped due to law of variable proportions.

c. When AC falls, MC also falls but rapidly. Thus to the left of minimum point of
AC, AC > MC.
d. When AC increases, MC also increases but rapidly. To the right of minimum
point of AC, AC < MC.
e. MC always cuts AC at its minimum point. At minimum point of AC i.e. at a, AC
= MC.
c) Supply can be defined as the quantity of a commodity which the seller is ready to sell
and buyer are also ready to purchase at given price and given period of time. In fact,
supply is a part of stock with given price and time. As we know, there exists direct
relationship between price and quantity supplied of a commodity. It means when
price of the commodity increases, quantity supplied of the commodity also increases.
Due to which, suppliers equilibrium point will move upwards within the same supply
curve. It is called as extension in supply. It can be explained with the help of
following example.
Let us suppose the price of apple, initially the price of apple was Rs. 150 per Kg. at
which the supply was 5 Kg which is described by point A in the following diagram.
When price of the commodity increases to Rs. 160 per Kg. quantity supplied of apple
increases to 8 Kg which is described by point B on the diagram. Here with increase in
price of apple by Rs. 10 Per Kg. the equilibrium point move upward within the same
supply curve which is extension in supply.
Point Price (Per Kg) Quantity Supplied (Kg)
A 150 2 Kg
B 160 4 Kg
Price (Rs)
160 B
150 Extension in supply
A
O
Quantity Supplied (kg)

1
d) Microeconomics is a branch of economics which deals with the relationship between

the small or individual variables such as individual consumer, household, firm,
industry etc. it also helps in making decisions on the allocation of available limited
resources. Microeconomics can also be defined as the worm’s eye view analysis of
microeconomic variables.
One of the goals of microeconomics is to analyze market mechanisms that
establish relative prices amongst goods and services and allocation of limited

resources amongst many alternative uses. Microeconomics analyzes market failure,

where markets fail to produce efficient results, and describes the theoretical
conditions needed for perfect competition.
The main objective of microeconomics is to study principles, problems and policies
related to optimal allocation of resources. Microeconomics don’t deal with the growth
of resources rather allocates the available limited resources to its best use. As for
example, when the consumer has limited budget to spend on various goods and
maximize the utility in such case microeconomics can be the useful tool to solve that
problem. Similarly, if the producer has limited cost to employ inputs used in the
production process microeconomics teaches in optimal employment of inputs as well.
e) Balance of payment (BOP) is a summary statement of systematic record of all
economic transactions between one country and the rest of the world. It includes all
transactions, visible as well as invisible items. A balance of payments statement
consists of two components: (a) current account and (b) capital account.
Current Account
The current account of the balance of payments statement relates to real and short
term transactions which are concerned with actual transfer of goods and services. It
contains receipts and payments on account of exports of visible and invisible items.
The current account of the balance of payments includes the following items:
(Consider any four)
1. Merchandise. Exports and imports of goods from the visible account have a
dominant position in the current account of balance of payments. Exports are
entered in the credit side and imports are entered in debit side.
2. Travel. Travel is an invisible item in the balance of payments. Travel may be for
reasons of business, education, health, international conventions or pleasures.
Expenditure by the foreign tourists in our country forms the credit item and the
expenditure by our tourists abroad constitutes the debit item in our balance of
payments.
3. Transportation. International transportation of goods is another invisible
transaction. It includes warehousing (while in transit) and other transit expenses.
Use of domestic transport services by the foreigners is the credit item and the use
of foreign transport services by domestic traders is the debit item.
4. Insurance. Insurance premium and payments of claims is also an invisible
transaction in a country's balance of payments account. Insurance policies sold to
foreigners are a credit item and the insurance policies purchased by domestic users
from the foreigners purchased are a debit item.
5. Investment Income. Another invisible item in the current account of the balance of
payment is the investment income which includes interest, capital, dividends and
profits.
6. Government Transactions. Government transactions refer to the expenditure
incurred by a government for the upkeep of its organizations abroad (e.g., payment
of salaries to the ambassadors, high commissioners, etc.). Such amounts received
by a government from abroad constitute the credit item and made to the foreign
governments form the debt item.

7. Donations and Gifts. Donations, gifts, etc. received by a country from abroad are
the credit item and sent to the foreign countries are the debit item in the balance of
payments account. Donations and gifts are 'unilateral transfers' or 'unrequited
payments' because nothing is given in return for them.
8. Miscellaneous. Miscellaneous invisible items include expenditure incurred on
services like advertisement, commissions, film rental, patent fees, royalties,
subscriptions to the periodicals, membership fees, etc. Such payments received by
a country from abroad are a credit item and made by a country to foreign countries
are a debt item.
f) Other things remaining the same when a consumer consumes additional unit of a
commodity, utility obtained from every additional unit of commodity decreases. In
other words, if consumer consumes more and more unit of same commodity marginal
utility obtained from that commodity decreases. This law of consumer's behaviour is
known as law of diminishing marginal utility.
When consumer consumes more units of a commodity at the same time consumer
reaches to the point of satisfaction. In this situation, marginal utility obtained from
that commodity is zero. If the consumer consumes more unit of a commodity than
this level, consumer obtains negative marginal utility. This is explained with the help
of following table:
Units of a commodity Total utility Marginal utility

1 10 10
2 18 8
3 24 6
4 28 4
5 30 2
6 30 0
7 28 -2
When a consumer consumes 1st unit of a commodity, he obtains 10 of total and

marginal utility. Again if he consumes 2nd unit, he gets 18 total utility but marginal
utility decreases to 8. Similarly, if he consumes successive unit up to 5th unit, total
utility increases continuously but marginal utility decreases. Total utility becomes
maximum when the consumer consumes 6th unit of the commodity but marginal
utility at this unit is zero. When a consumer consumes 7th unit he gets negative
marginal utility and total utility decreases to 28.


Batch: - JUNE 2018
Subject: Mercantile laws
Question No. 1
I think some candidates are confused on question. Average performance in both questions.
Conceptual and meanings are found clear in generally question No. 1 (a) & (b). Some extend
difficult to find the answer sheet as per the standard of suggested answer. Frequently asked
question. Adequate knowledge. Students are confused for dissolution partnership rather settlement
of account at the time of dissolution of partnership.
Question No. 2
Nothing and in Q no. 2 (c) most of the candidates are failed to give answer correctly. Average
performance in (a) & (b) questions but more than 95% students did not understand the question
and hence provided wrong answers. The students could not give proper answer in 2 (c) of
incompetent party of the contract. Q no. 2 c has not been properly understand by student so could
not answer appropriately. Confusion about parties of contract. No specific answer by most of the
students. 2 (b) Understand however all points of difference not concerned. Did not covered all
elements to be covered. Confused performance of contract.
Subject: Fundamentals of Economics
Question No. 1
Most of the students have made mistakes in diagrammatic illustration for part (a) and they were
confused with monopoly market. Satisfactory. Most of the students are unable to answer the
question as it is slightly twisted question. Students have done well in this question. Problems in
constructing correct figure and unable to write logical answer. Problem in finding equilibrium and
limiting answer.
Question No. 2
Students were confused in solving the relationship between AC and MC. Answers of question no.
2 d & 2 e are not satisfactory. In this question 2 (e) has not explained properly by the students rest
is ok. Lack of conceptual knowledge and confidence. Too long answer of theoretical questions
and less apply of mathematical tools.

CAP I Paper 3: Fundamental of Management and Commercial Mathematics & Statistic
Paper 3:
Part A: Fundamentals of Management
Part B: Commercial Mathematics &

Statistics

Part A: Fundamentals of Management

Maximum Marks - 25
Time Allowed –1 Hour
Marks
2. Long Answer Questions: (2×5=10)

a) Define management. Describe four management functions.
b) What is organization? What are the resources mobilized by an organization to achieve
the pre-determined goals?
Answer:
a)
Meaning of Management
Management is the science and art of getting things done properly through the mobilization
of human and other physical resources in the pursuit of certain common goals. Managers
have to plan, to organize, to lead and to control the resources for optimum results. It takes
business functions and management functions as the means to reach its goals, missions and
objectives.
Management is a conscious effort to mobilize men, materials, machines, methods, etc.
through planning, organizing, leading and controlling processes to attain organizational
objectives efficiently and effectively satisfying all its constituents.
Functions of Management
Planning
Planning sets missions, goals, objectives, strategies and the programmes, schedules,
standards and budgets to achieve the objectives. Every manager in organizations have to plan
on what to do, how to do, when to do, who is to do and what resources to use and from where
to get these resources
Organizing
Organizing is the differentiation and integration of work activities to be performed to reach
the objectives. It involves work division, setting hierarchy, and departmentalization,
delegation of power and work, and provision of committed and competent human resources
for various jobs being set.
Leading
Leading consists of different work activities such as supervising, directing, influencing,
communicating, motivating and coordinating the activities of the subordinates. Under
leading, subordinates are made to work as planned, programmed, schedule and standards set.
Controlling
Controlling is about monitoring work activities and compares with standards to find if there
appears any deviation between these two. It aims to get the things done properly and yield

desired results. It also checks if any deviation exists. If there is any gap, necessary corrective
steps are taken.
b) The term organization represents the company, firm, concern, corporation, group, agency
association etc. that combined people, technology and structure to achieve predetermined
goals.
It is social unit of people that is structured and managed to meet a need or to pursue
collective goals. All organizations have a management structure that determines relationships
between the different activities and the members, and subdivides and assigns roles,
responsibilities, and authority to carry out different tasks. Organizations are open systems--
they affect and are affected by their environment.
All organizations, regarding of whether they are large or small, profit making or not for
profit, domestic or multinational, use some resources to achieve their goals. The basic four
resources that organization used are:
i) Human resources
ii) Financial resources
iii) Physical resources, and
iv) Information resources.
Human resource is the combination of skills, efforts, abilities and knowledge of a
company’s workforce/employee. It is also called human capital. They have the capabilities to
transform raw materials into valuable products, or knowledge and skills into services. The
human capital controls day-to-day operations, including managerial decisions and customer
service, knowledge or business know-how gained from research and development or
innovation and therefore the growth of any business.
Physical resources are the tangible resource used to operate the organization, such as Land,
building, production machinery, supplies for final product, transportation, and overhead such
as Internet and electricity.
Financial resources encompass any source of revenue a company has including sales, loans,
and investments.
Information resources wealth of informational and educational resources that helps to make
right decision at right time for the achievement of organizational goals.
2. Short Answer Questions (Any Five): (5×3=15)

a) Contingency theory of management.
b) Importance of planning.
c) Define the term Hiring and Firing.
d) Importance of motivation.

e) Define leadership and list out the qualities that must be possess in a successful leader.
f) Motivation-hygiene theory.
Answer:
a) The Contingency Theory
This theory is the result of efforts by Lawrence, Lorch, Thompson, Cast and Rosenberg.
This theory explains the situations quite changeable and managerial behaviours must be
influenced by unique elements in the situation. They must apply situation-specific
solutions to issues. A solution to same problem in the past may be unsuitable if the
elements in the environment have changed. So ‘if…… then….”strategy is suitable. Here,
if…. describes problem-related situation and then…. suggests applicable solution. This
theory has explained decision making as the major job for managers.
According to this approach, managers should be clear on which in a particular case and
time will be suitable to the attainment of organizational goals.
b) Importance of planning
Planning is looking ahead in a systematic way. It is important because it reduces
uncertainty and encourages creativity. Forecasting and environmental scanning help
anticipate future uncertainties. It forces managers to think ahead, anticipate change,
consider the impact of change and develop appropriate responses.
Planning helps managers to focus on goals. It defines goals and determines courses of
action to achieve them. Planning facilitates better mobilization, allocation and
coordination of resources. Planning identifies environmental opportunities and threats.
Planning ensures commitment of managers and employees to goals and courses of
actions. Actual performance is compared with planned targets to find deviations and
make corrections. Control is only possible through planning.
c) Define the term Hiring and Firing

Hiring refers to recruitment of personnel. It includes the overall process of attracting,
selecting and appointing suitable candidates for job within an organization, either
permanent or temporary. Recruitment can also refer to processes involved in choosing
individuals for unpaid positions, such as voluntary roles or training programs.
Dismissal of employee from the job refers firing. It means termination of employment by
an employer against the will of the employee. Such kind of decision can be made by an
employer for a variety of reasons, ranging from an economic downturn to performance
related problems on the part of employee.
d) Importance of Motivation
Motivation is the human resource management policy and practice to generate employees’
internal willingness & readiness to contribute and accomplish. Its importance is explained
under the following points:

Understand employee behavior: Motivation analyzes how and why employees behave,
what attracts and makes them happy or unhappy. Then management can find suitable way
out to change their behaviours.
Productivity improvement: Motivated employees are more productive and creative. Their
performance rating is comparatively high. Management can make better utilization of their
competence.
Work Quality: Motivation increases quality consciousness in the employees. They explore
better work methods. Scrap, rejects, and defects can be minimized.
Employees’ tenure: Motivated employees love the organization and their present work.
They do not think about changing their employer. Long service supports strategic HR
planning.
Innovativeness: Motivated employees always are conscious about how to accomplish fast
without any flaws at work. They may develop new ideas and methods for doing things.
Commitment: Employees are committed as a result of motivation in various forms: low
employee turnover, reduced absenteeism, reduced accident rates, improved discipline,
reduction in grievances, and higher employees’ loyalty and morale, etc.
e) Leadership is the art of influencing and inspiring the behavior of others in accordance with
requirement. It is the ability to influence and motivate a group towards achievement of
objectives. In fact organizational performance totally depends up on the ability of the
leader of organization. Generally leadership qualities includes;
a) Personal qualities
* Physical fitness
*Self confidence
*Intelligence
*Vision and foresight
*Sense of Personality etc.
b) Managerial qualities
*Technical knowledge
*Organizing ability
*Motivation and communication skill
*Wider perspective etc.
f) Motivation- hygiene theory is also known as Herzberg’s two-factor theory. Fredrick

Herzberg made the proposition that two separate sets of factors are relevant in any
motivational setting.
One set of factors is called satisfiers or motivation factors. Satisfiers consist of interesting
job, opportunities for growth, recognition, advancement and obligation. Maximizing
motivation factors can increase motivation.
The second set of factors is called hygiene factors or maintenance factors. Hygiene factors
include working condition, job security, salary, warm interpersonal relations, status and
fairness of organizational policies. These factors are necessary to avoid dissatisfaction.
Herzberg has suggested two steps application of this theory. The first step is to avoid
stumbling blocks for motivation. Supervisor should eliminate hygiene factors that cause

dissatisfaction. The second step is to enrich the jobs for motivation. Supervise should
maximize motivating factors.

Part B: Commercial Mathematics & Statistics

Roll No........................ Maximum Marks - 25

Time Allowed – 1 Hour Marks
1.
a) An enquiry into the budget of the middle class families in a
certain city gave the following information.
Expenses on Food Rent Clothing Fuel Misc.
35 % 15 % 20 % 10 % 20 %
Price in 2015 150 50 100 20 60
Price in 2016 174 60 125 25 90
What changes in the cost of living figures of 2016 have
taken place as compared to 2015? 4
b) The price of a certain commodity in 90 different days are
given below:
Price ( in Rs.) 10 12 15 18 20 23 25
No. of days 8 11 22 20 15 9 5
Find the Percentile coefficient of kurtosis and comment on
the normality of the distribution. (3+1=4)
c) From the data given below, calculate the trend values and
estimate the production for the year 2019. What is the
monthly increase in the production? (3+0.5+0.5=4)
Year: 2010 2011 2012 2013 2014 2015 2016 2017
Production
(000 tons): 15 18 17 20 22 25 24 28
d) A company, which is making 200 mobile phones each week,
plans to increase its production.
The number of mobile phones produced is to be increased by
20 each week from 200 in week 1 to 220 in week 2, to 240 in
week 3 and so on, until it is producing 600 in week N. (2+2=4)
i) Find the value of N.
The company then plans to continue to make 600 mobile
phones each week.
ii) Find the total number of mobile phones that will be made
in the first 52 weeks starting from and including week 1.
Answer:
a) Calculation of cost of living index number.
Items Po ( 2015 ) P1 ( 2016 ) W P= P.W

Food 150 174 35 116 4060

Rent 50 60 15 120 1800
Cloth 100 125 20 125 2500
Fuel 20 25 10 125 1250
Misc. 60 90 20 150 3000
100 12610
Cost of Living Index = P0 1 = = = 126.10 %
Hence , Reqd. Change = (126.10 – 100 ) = 26.10 %
b)
Price( in Rs) No of days(f) C.f.
10 8 8
12 11 19
15 22 41
18 20 61
20 15 76
23 9 85
25 5 90
N=∑f=90
For Q1, 1 ( N  1)  1  (90  1)  22.75 Hence c.f. just greater than
4 4
22.75 is 41 and corresponding price is 15.  Q1 = 15.
For Q3, 3 ( N  1)  3  (90  1)  68.25 Hence c.f. just greater than
4 4
68.25 is 76 and corresponding price is 20.  Q3 = 20.
For P10, 10 ( N  1)  10  (90  1)  9.1 Hence c.f. just greater than
100 100
9.1 is 19 and corresponding price is 12.  P10 = 12.
For P90, 90 ( N  1)  90  (90  1)  81.9 Hence c.f. just greater than
100 100
81.9 is 85 and corresponding price is 23.  P90 = 23.
Percentile coefficient of kurtosis is given by

Q3  Q1
K  20  15  5  0.227
2P90  P10  223  12 22
Since the value of K is less than 0.263, the given distribution is platy-
kurtic.
c) Let Year = t, Production ( 000 tones) = Y and X = (t-

2013.5)×2

Trend
t X Y XY X2 values
2010 -7 15 -105 49 15
2011 -5 18 -90 25 16.75
2012 -3 17 -51 9 18.5
2013 -1 20 -20 1 20.25
2014 1 22 22 1 22
2015 3 25 75 9 23.75
2016 5 24 120 25 25.5
2017 7 28 196 49 27.25
Total 0 169 147 168 169
Here ∑X = 0,
Therefore, b 
 XY  147  0.875 and a  Y  Y  169  21.125
X 2
168 N 8
Trend line is Yˆ = a + b X i. e Yˆ = 21.125 + 0.875 X
Trend values are
Yˆ (2010) = 21.125+0.875×(-7) = 15
Yˆ (2011) = 21.125+0.875×(-5) = 16.75 and so on.
Estimated production for the year 2019 (i.e. X=11) = 21.125+0.875×(11) = 30.75
Here b is 1/2 yearly increment
Monthly increment = 1/2 Yearly increment /6 = b/6 = 0.875/6 =
0.1458 thousand = 145.83 Tons
d) i) 200, 220, 240,……….,600

1 2 3 N
We know that
( )
( )( )
N= 21
ii) We have to calculate total production till 21is week plus 22nd week to 52nd week
Total = [21+31=52 weeks]
We know that ( )+600(31)

= ( )
= 27000
2. (3×3=9)
a) In how many ways can the letters of the word
‘MARKETING ‘ be arrange
i) if three letters are taken at a time?
ii) if all of them are taken at a time?

b) Find the amount of Rs. 50,000 after 10 years if invested at

6% p.a. compounded semiannually for the first three years,
at 8% p.a. compounded quarterly for the next 5 years and at
7% p.a. compounded annually thereafter.
c) In two factories A and B engaged in the same industry in an
area, the average weekly wages in Rs. and the standard
deviations are as follows:
Factory Average weekly wages S.D. No. of wage earners
A 34.5 5 476
B 28.5 4.5 524
What is the average wages of all the workers in two factories taken together?
Answer:
a) In the word ‘MARKETING’ , no. of letters , n = 9
(i) Here , r = 3
Reqd. No. of ways = = = ( )

= = = 504
ways.
(ii) Here , n = 9 , r = 9
Reqd. no. of ways = = ( )

= 362880 ways.
b) Here P=Rs. 50,000

R1= 6% m1= 2 n1= 3
R2= 8% m2= 4 n2= 5
R3= 7% n3 = 2
Now compound amount after 10 years (A)
mn m n n
 R1  1 1  R2  2 2  R3  3
= P 1   1   1  
 100m1   100m2   100 
2 3 4 5 2
= 50000 1  6   1  8   1  7 
 100  2   100  4   100 
= 50000(1+6/200) × (1+8/400) × (1+7/100)2
6 20
= 50000(1+0.03)6 × (1+0.02)20 × (1+0.07)2

= 50000(1.03)6 × (1.02)20 × (1.07)2
= 50000×1.194×1.486×1.145
= Rs. 101,578
c) The average wage of all the workers in the two factories is
n1 x1  n2 x2 476 x34.5  524 x28.5

x   31.36
n1  n2 476  524


Batch: - JUNE 2018
Subject: Fundamentals of management
Question No. 1
Most of the students did not answer sub parts of the question proportionately emphasis was only
on a part. Students are trying to give long answer question but preparation are too low. They could
not prefer to the time division of the questions.
a) The Students have average performance. Overall answer is satisfactory.
b) Students have lack of conceptual knowledge on sub parts of the question. The students are
confused to answer. Having good concept about organization but some confusion about its
resources.
Question No. 2
Students given answer is not fully clear about the concept that is lack of concepts of the contexts.
Students preparation are not satisfactory they are attempting the examination without given prior
to this subject.
a) They lack clear understanding of the topic. Not clear about concept.
b) Answers are found too sketchy. Adequate.
c) Unsatisfactory preparation and performance. Confused about hiring and firing as well as very
sketchy answer.
d) Below average performance
e) Quality is ignored, function of leadership is focused
f) Almost 50% of the students are not clear about the topic
Subject: Commercial Mathematics and Statistics
Question No. 1
Preparation is not adequate, lack of knowledge about the subject matter of questions. Many
students did not write unit % in answer. Unsatisfactory though questions are easy 1 (a,b&d)
a) Many Students do not use P=p1/p0×100 which makes the Q no. 1 (a) wrong. This question is
not suitable to maintain standard of level.
b) Ok. Satisfactory. Some of the students do not calculate exactly.
c) Most of the students left to calculate the annual increment and many have incomplete. This
question is suitable.
d) 2nd part question has left by many students and are confused.
Question No. 2
Questions are not understand properly, practice not sufficient.
Many students did not understand question.
a) Instead of permutation some of the students have used "combination". Not perform well.
b) Confusion to multiply by quarterly & half yearly period in formula.
c) This question is very easy to understand and calculate.

The End

June 2018

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June 2018

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CAP I Paper 1: Fundamental of Accounting

CHARTERED ACCOUNTANCY PROFESSIONAL I

The Institute of Chartered Accountants of Nepal

The Institute of Chartered Accountants of Nepal 1

Paper 1: Fundamentals of Accounting

The Institute of Chartered Accountants of Nepal 2

Roll No……………. Maximum Marks - 50

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Bhadra 15, 2073 500,000

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The Institute of Chartered Accountants of Nepal 5

Office Equipment 500,000 150,000 350,000 25% 87,500

Balance Sheet as on Ashadh 31, 2074

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in hand is to be reduced by 10%. You are required to prepare Consignment Account

Sundry Creditors' (100,000)

Total 80,000 Total 80,000

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276,000 196,000 158,000 630,000 276,000 196,000 158,000 630,000

The Institute of Chartered Accountants of Nepal 8

(500x Rs. 300) 150,000 (400x Rs.400)

Total 228,990 Total 228,990

Total 160,000 Total 160,000

The Institute of Chartered Accountants of Nepal 9

The Institute of Chartered Accountants of Nepal 10

The Institute of Chartered Accountants of Nepal 11

Specific Comments on the performance of the students

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Part A: Mercantile Law

Part B: Fundamentals of Economics

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Part A: Mercantile Law

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Total No. of Questions - 2 Total No. of Printed Pages -3

Time Allowed - 1 Hour

Attempt all questions.

1. Answer the following questions:

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Contract of Indemnity Contract of Guarantee

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from loss. the creditor.

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Part B: Fundamentals of Economics

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Total No. of Questions - 2 Total No. of Printed Pages -6

Time Allowed –1 Hour

1. Long Answer Questions:

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C,R,P C,R,P C,R,P

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The Institute of Chartered Accountants of Nepal 21

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Quantity Supplied (kg)

d) Microeconomics is a branch of economics which deals with the relationship between

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resources amongst many alternative uses. Microeconomics analyzes market failure,

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Units of a commodity Total utility Marginal utility

When a consumer consumes 1st unit of a commodity, he obtains 10 of total and

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Specific Comments on the performance of the students

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Part A: Fundamentals of Management