icma questions aug 2012

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THE INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF BANGLADESH CMA AUGUST 2012 EXAMINATION

FOUNDATION LEVEL SUBJECT: 001. PRINCIPLES OF ACCOUNTING

Time: Three hours Full Marks: 100 All questions are to be attempted. Show computations, where necessary. Answer must be brief, relevant, neat and clean. Start answering each question from a fresh sheet.

Q. No. 1. (a) Why do accrual basis financial statements provide more useful information than cash basis financial

statements? (b) The trial balance of GLOBE ENTERPRISES contained the following accounts at November 30,

2011, the end of the companys fiscal year.

GLOBE ENTERPRISES Trial Balance

November 30, 2011

Debit (Tk.) Credit(Tk.) Cash 83,500 Accounts Receivable 1,68,500 Merchandise Inventory 1,90,000 Store Supplies 27,500 Store Equipment 4,25,000 Accumulated Depreciation Store Equipment 90,000 Delivery Equipment 2,40,000 Accumulated Depreciation Delivery Equipment 30,000 Notes Payable 2,55,000 Accounts Payable 2,42,500 Mannan Capital 5,50,000 Mannan Drawing 60,000 Sales 37,33,000 Sales Returns and Allowances 21,000 Purchases 25,18,000 Purchase Returns and Allowances 34,500 Purchase Discounts 18,500 Freight in 54,000 Salaries Expenses 7,00,000 Advertising Expenses 1,32,000 Utilities Expenses 70,000 Repair Expenses 60,500 Delivery Expenses 83,500 Rent Expenses 1,20,000 Total 49,53,500

========= 49,53,500

=========

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CMA AUGUST 2012 EXAMINATION FOUNDATION LEVEL SUBJECT: 001. PRINCIPLES OF ACCOUNTING

Q. No. 1. (contd)

Adjustment data: 1. Store supplies on hand totaled Tk.17,500 . 2. Depreciation is Tk.45,000 on the store equipment and Tk.35,000 on delivery equipment . 3. Interest of Tk.55,000 is accrued on notes payable at November,30, 2011. 4. Merchandise inventory on hand at November 30,2011 is Tk.2,25,000. 5. Salaries expenses is 70% selling and 30% administrative. 6. Rent expenses and utilities expenses are 80% selling and 20% administrative. 7. Tk.1,50,000 of notes payable are due for payment next year . 8. Repair expenses is 100% administrative.

Required: (i) Enter the trial balances on a work sheet and complete the work sheet. (ii) Prepare a multiple step income statement and owners equity statement for the year and a

classified balance sheet as of November 30, 2011. (iii) Journalize the adjusting entries.

[Marks: (10+10+5) = 25] Q. No. 2. Zobayer Siraj, a former professional tennis star operates his own tennis shop, ZS Tennis Shop. At the beginning of the current season his business holds the following inventory balances.

No. of units

Cost price per unit

Selling price per unit

Racquets 10 Tk. 400 Tk. 850 Tennis shoes 20 250 600 Shirts and Shorts 35 300 750

The following transactions were completed during June:

June 04: Purchase 30 racquets from Reeve Co. @ Tk. 450 each; FOB destination, terms 1/10, n/60. The appropriate party paid the freight cost of Tk. 200.

06: Received credit of Tk. 450 from Reeve Co. for a damaged racquet that was returned. 08: Sold tennis shoes of 5 units to members; FOB shipping point, terms 2/10, n/30. The

appropriate party paid the freight cost of Tk. 100.

12: Purchase Shirts and Shorts from Lee Enterprise Tk. 2,400; FOB shipping point, terms 3/15, n/25. The appropriate party paid the freight cost of Tk. 150.

15: Paid Reeve Co. in full. 16: Sold racquets of 15 units to DD Enterprise for cash; FOB Destination. The appropriate

party paid the freight cost of Tk. 300. 17: Receive cash payment from members for the merchandise sold on June 8. 20: Purchase supplies on account Tk. 500 from Lesner Supply Co. 22: Made refund of Tk. 1,700 to DD Enterprise for merchandise returned by them. 25: Paid Lee enterprise in full.

Required: Journalize the June transactions using a perpetual inventory system. ZS Tennis Shop applies FIFO method to value inventories.

[Marks: 20]

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CMA AUGUST 2012 EXAMINATION FOUNDATION LEVEL SUBJECT: 001. PRINCIPLES OF ACCOUNTING Q. No. 3.

Mr. Omayer has received his bank statement for the month ended 31st October 2011. At the date, his balance as per bank statement is Tk. 14,130 whereas his own cash book showed a balance of Tk. 47,330. His accountant investigated the matter, and discovered the following discrepancies:

(a) Bank charges of Tk. 60 had not been entered in the cash book.

(b) Checks drawn by Omayer totaling Tk. 450 had not yet been presented to the bank.

(c) Omayer had not entered receipts from a customer of Tk. 530 in his cash book.

(d) The bank had not credited Omayer with receipts of Tk. 1,970 paid into the bank on 31st October 2011.

(e) Standing order payments against a loan amounting to Tk. 1,240 had not been entered in the cash book.

(f) Omayer had entered a payment to suppliers of Tk. 560 in his cash book as Tk. 650.

(g) A check received for Tk. 300 from a debtor had been returned by the bank marked refer to drawer, but this had not been written back in the cash book.

(h) Omayer had brought down his opening cash book balance of Tk. 6,585 as a debit balance instead of as a credit balance.

(i) An old check payment amounting to Tk. 880 had been written back in the cash book, but the bank had already honoured it.

(j) Some of Omayers customers had paid to settle their debts by direct debit. Unfortunately, the bank had credited some direct debits amounting to Tk. 16,650 to another customers account.

Required:

(i) Prepare a statement showing Omayers adjusted cash book balance as at 31stOctober 2011.

(ii) Prepare a bank reconciliation statement as at 31st October 2011. (iii) Journalize the errors to rectify bank balance.

[Marks:(6+7+7) = 20]

Q. No. 4.

(a) Goodwill has been defined as the value of all favorable attributes that relate to a business enterprise. What type of attributes could result in goodwill?

(b) In the fourth year of an assets 5-years useful life, the company decides that the asset will have a 6-years service life. How should the revision of depreciation be recorded?

(c) Plant and machinery costing Tk. 50,000, was purchased on 1 April 2009. This was depreciated for two years at 20 per cent using the reducing balance method. On 1 April 2011 the machinery (original cost Tk. 25,000) was sold for Tk. 12,000. Replacement machines were acquired on the same date for Tk. 34,000. What was the net book value of plant and machinery at 1 April 2012?

[Marks: (3+4+8) = 15] Q. No. 5

(a) The key to successful business operations is effective inventory management- Do you agree? Explain.

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CMA AUGUST 2012 EXAMINATION FOUNDATION LEVEL SUBJECT: 001. PRINCIPLES OF ACCOUNTING

Q. No. 5. (contd) (b) The management of ROBINSON CORPORATION is revaluating the appropriateness of using its

present inventory cost flow method, which is average cost. They request your help in determining the results of operations for 2011 if either the FIFO method or the LIFO method had been used. For 2011, the accounting records show the following data:

Inventories Purchase and Sales -------------------------------------------------- --------------------------------------------------------- Beginning (75,000 units) Tk.1,70,000 Total net Sales (11,25,000 units) Tk. 43,25,000 Ending (1,00,000 units) Total cost of goods purchased 28,92,500 (11,50,000 units) Purchases were made quarterly as follows :

Quarter Units Unit cost (Tk.) Total cost (Tk.)

1 3,00,000 2.30 6,90,000 2 2,50,000 2.50 6,25,000 3 2,50,000 2.60 6,50,000 4 3,50,000 2.65 9,27,500 11,50,000 28,92,500

Operating expenses were Tk.7,35,000 and the companys income tax is 30% . Required: (i) Prepare comparative condensed income statement for 2011 under FIFO and LIFO (Show computations of ending inventory). (ii) Answer the following question for management:

(a) Which cost flow method (FIFO or LIFO) produces the more meaningful inventory amount for the balance sheet? Why?

(b) Which cost flow method (FIFO or LIFO) produces the more meaningful net income? Why? (c) Which cost flow method (FIFO or LIFO) produces the more likely to approximate actual

physical flow of goods? Why? (d) How much additional cash will be available for management under LIFO than under FIFO?

Why? (e) Will gross profit under this average cost method be higher or lower than (a) FIFO and (b)

LIFO? (It is not necessary to quantify your answer)

[Marks: {5+ (10+5)} = 20]

= THE END =

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THE INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF BANGLADESH CMA AUGUST, 2012 EXAMINATION

FOUNDATION LEVEL SUBJECT: 002. BUSINESS COMMUNICATION AND OFFICE MANAGEMENT

Time: Three hours Full marks: 100 Answer THREE questions from each part, where Q. No. 4 and Q. No. 8 are compulsory. Answer must be brief, relevant, neat and clean. Use a fresh sheet for answering each question. All questions must be answered in English.

PART-A: BUSINESS COMMUNICATION

Q. No. 1. (a) Briefly discuss the role and importance of communication in management. (b) Show the distinction between internal and external communication with examples from the

business world. (c) List and explain three important barriers in interpersonal communication.

[Marks: (5+4+6) = 15] Q. No. 2. (a) Reports are lengthy and boring. Why write them? Discuss (b) What are the main factors to be considered while drafting a report? (c) Your HR Manager is planning to hire a new Chief Accountant for the company. You are required to

draft a suitably worded advertisement to be published in a local newspaper. [Marks: (4+4+7) = 15]

Q. No. 3. (a) List and discuss six types of Non Verbal Communication. (b) A speaker must read the reaction of his audience correctly. Discuss this statement giving

examples of different types of audience cues. (c) A well written business letter should not only be a medium of communication , but also a way to

create goodwill between the two parties. Discuss. [Marks: (6+5+4) = 15]

Q. No. 4. (a) Recently your company has received some defective goods from a supplier. You are required to

draft a letter to the supplier informing him about the matter and seeking compensation. (b) Discuss the importance of e-communication in todays business. (c) What are the different styles used in writing a letter. Highlight & discuss the style you prefer. (d) Your office is planning to hold a picnic in Gazipur. You are required to draft an Office Notice

informing all employees about this. You are requested to use your imagination with regard to the details.

[Marks: (5+5+5+5) = 20]

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CMA AUGUST, 2012 EXAMINATION FOUNDATION LEVEL SUBJECT: 002. BUSINESS COMMUNICATION AND OFFICE MANAGEMENT

PART-B: OFFICE MANAGEMENT Q. No. 5 (a) Managing an office is all about ensuring that the work gets done. Do you agree? Discuss. (b) Ethical standards play a vital role in any organization. Discuss this statement explaining how you

can design a set of ethics in an Organization. (c) We need to have manuals for each activity in an office. Discuss this statement.

[Marks: (5+5+5) = 15] Q. No. 6. (a) Motivating employees costs money. So, why do it. Do you agree? Discuss the statement

highlighting the importance of employee motivation. (b) List and discuss the comparative merits and demerits of centralized & decentralized record

management system. (c) Discuss the factors to be considered in selecting an office building site.

[Marks: (5+5+5) = 15] Q. No. 7. (a) Good Office environment promotes harmony between employer & employees. Discuss. (b) A companys salary structure must be fair & equitable to all. Do you agree? Highlight in your

answer the major factors to be considered when setting salaries & fringe benefits in an organization.

(c) The system of filing used must ensure easy accessibility of the files. Discuss this statement; highlighting the different methods of filing used.

[Marks: (5+5+5) = 15] Q. No. 8. Write short notes of any Five of the following: (a) Job specification. (b) Office automation. (c) Organization chart. (d) Corporate Governance. (e) Records Management. (f) Management Information System (MIS). (g) E-Commerce. (h) Curriculum Vitae.

[Marks: (5x4) = 20]

==THE END==

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FOUNDATION LEVEL SUBJECT: 003. QUANTITATIVE TECHNIQUES

Time: Three hours Full marks: 100 Answer any TEN questions, FIVE from each part. All questions carry equal marks. Answer must be brief, relevant, neat and clean. Start answering each question from a fresh sheet.

PART-A: BUSINESS MATHEMATICS

Q. No. 1.

(a) For any Three sets A, B, C prove that

(i) A )( CB = )( BA )( CA

(ii) A )( CB = )( BA )( CA

(b) Mr. Rahman can purchase a machine by Paying Tk. 40,000 in cash at now. He can also purchase the machine by 8 equal yearly installments to be paid at the beginning of each year. If the interest rate is 12%, what should be amount of each installment?

[Marks: (5+5) = 10]

Q. No. 2.

(a) Find the equation of the line which passes through the origin O(o,o) and the point of intersection of the lines 5x +y+4 = 0 and 2x + 3y 1 = 0.

(b) The total cost y for x units of a certain product consists of fixed cost and the variable cost. It is known that the total cost is Tk. 1200 for 100 units and Tk. 2700 for 400 units. Assume that y is a linear function of x.

Required:

(i) Find the linear relationship between x and y.

(ii) Find the slope of the line. What does it indicate?

(iii) Find the cost of producing 200 units of the product.

(iv) If the selling price is Tk. 7 per unit, find the number of units that must be product for break-even.

[Marks: (4+6) =10]

Q. No. 3.

(a) A farmer has 2000 yards of fence to enclose a rectangular field. What are the dimensions of the rectangle that encloses the most area?

(b) Show that sin (1+tan) + cos (1+ cot) = sec + cosec

[Marks: (5+5) = 10]

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CMA AUGUST, 2012 EXAMINATION

FOUNDATION LEVEL

SUBJECT: 003. QUANTITATIVE TECHNIQUES

Q. No. 4.

(a) Differentiate the following with respect to x

(i) y = x

e4

+ log ( )xsin (ii) Log (x cosx)

(b) If y = 2x + 4/x ; Prove that x2 2

2

dx

yd + x dx

dy - y = 0

[Marks: (5+5) = 10]

Q. No. 5.

(a) Compute the inverse of the following Matrix:

=A

1

2

3

2

4

1

4

2

3

(b) The unit demand function is x = 3

1 (25 2p), where x is the number of units and p is the price.

Let average cost per unit be Tk. 40. Find the following:

(i) The Revenue function R in terms of price P.

(ii) The cost function C.

(iii) The profit function P.

(iv) The price per unit that maximizes the profit function. and

(v) The maximum profit. [Marks: (5+5) = 10]

Q. No. 6.

(a) Evaluate the following: (i) +

1

021 x

xdx ; (ii)

( )

+

1

0

2

23

1

1

tan

x

xdx

(b) How many different words can be formed from the word ARRANGEMENT taken 3 at a time?

[Marks: (5+5) = 10] Q. No. 7.

(a) Evaluate the following: (i)

+

2

1

2

43

xxebx dx

(ii) ( )

+2

0

cossin 2 d .

(b) Find the area of the region between the curve y = F(x) = x (x-1) and the x axis bounded by the lines x = 0 and x = 1

[Marks: (6+4) = 10]

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FOUNDATION LEVEL


PART B : BUSINESS STATISTICS

Q. No. 1.

(a) What do you mean by measures of central tendency? What are their measures? Among all measures of central tendency which one is the best and why?

(b) Pepsi company is forecasting regional sales for next year. The Atlantic branch, with current yearly sales of $ 194.3 million, is expected to achieve a sales growth of 7.65%; the Midwest branch, with current sales of $ 79.5 million, is expected to grow by 8.35% and the Pacific branch, with sales of $ 59.4 million, is expected to increase sales by 9.15%. What is the average rate of sales growth forecasted for next year?

[Marks: (5+5) = 10]

Q. No. 2.

(a) Define mean deviation, standard deviation and coefficient of variation with some of their uses.

(b) For the following values calculate mean deviation and coefficient of variation.

17.5 13.3 19.6 23.9 14.7 18.5 22.1 15.7 19.6 17.8

[Marks: (6+4) = 10] Q. No. 3.

(a) What do you mean by the terms skewness and kurtosis? Point out their role in analyzing a frequency distribution.

(b) The following data show the life of some electric bulbs (in hours) of two different companies:

Life of bulbs (in hours) 500-550 550-600 600-650 650-700 700-750

Philips 50 47 30 18 26

Crown 62 34 22 20 12

(i) Which companys bulbs have higher average life?

(ii) Which companys bulbs are more uniform/stable in their life?

[Marks: (5+5) = 10] Q. No. 4.

(a) Explain with examples the following concepts: (i) Correlation (ii) Regression (iii) Co-efficient of Determination (iv) Regression Co-efficients.

(b) Following data relates to the advertisement expenditure and sales of a firm:

Ad. Exp. (Lakh Taka)

29 41 48 53 58 50 57

Sales (Crores) 7 8 10 12 13 18 15

Required:

(i) Fit regression equation of Ad. Exp. on Sales.

(ii) Estimate sales for Ad. Exp. of Tk. 65.00 lakhs.

(iii) Comment on the reliability of the estimates.

(iv) Compute the 95% confidence interval of the estimate.

[Marks: (4+6) = 10]

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FOUNDATION LEVEL


Q. No. 5.

(a) In a recent study, 80 percent of the homes in the United States were found to have large screen TVs. In a sample of nine homes, what is the probability that:

(i) All nine homes have large-screen TVs?

(ii) Less than two have large-screen TVs?

(iii) More than two have large-screen TVs?

(b) A recent study of the hourly wages of maintenance crew members for major airlines showed that the mean hourly salary was $ 16.50, with a standard deviation of $3.50. If we select a crew member at random, what is the probability the crew member earns:

(i) Between $ 16.50 and $20.00 per hour?

(ii) At least $ 20.00 per hour?

(iii) At most $15.00 per hour?

[Marks: (5+5) = 10]

Q. No. 6.

(a) Explain with examples the following concepts: (i) Mutually exclusive events (ii) Sample space (iii) Classical definition of probability (iv) Subjective probability.

(b) 220 workers employed in a firm in the garment sector of Bangladesh classified according to gender and skills are presented as follows:

Skill

Gender

Skilled

S1

Semi Skilled

S2

Unskilled

S3

Total

Male (M) 38 17 5 60

Female (F) 103 37 20 160

Total 141 54 25 220

If one worker is selected at random compute the followings: (i) Marginal probabilities (ii) Joint probabilities (iii) Conditional probabilities (iv) Union probabilities.

[Marks: (4+6) = 10]

Q. No. 7.

(a) What is sampling? Discuss the different types of sampling with example.

(b) Distinguish between the followings:

(i) Statistic & Parameter (ii) Null and Alternative hypotheses (iii) Type-I & Type-II errors.

[Marks: (5+5) = 10]

= THE END =

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FOUNDATION LEVEL SUBJECT: 004. BUSINESS ECONOMICS AND INTERNATIONAL BUSINESS

Time: Three hours Full Marks: 100 Answer FIVE questions, taking at least TWO from each Group A and B. Show computations, where necessary. Answer must be brief, relevant, neat and clean. Start answering each question from a fresh sheet.

GROUP-A: BUSINESS ECONOMICS

Q. No. 1. (a) Explain the following terms under the Theory of Demand and Supply:-

(i) Utility and Law of Demand and Supply (ii) Time and Supply (iii) Purchasing Power (iv) Equilibrium Price and Quantity

(b) Explain factors that determine how much Cone Ice-cream a firm will produce? (c) When and how do Supply and Demand together set the price of a good and the quantity sold?

Explain. (d) Calculate the equilibrium quantity of the goods when demand and supply functions of a goods are

given as Qd = 19,000 300P and Qs = 17,000 + 100P respectively. (e) The demand function for Marker pen is estimated as QR = 20,000 2,500PR + 5Y + 100PC

Where QR = Quantity of Marker pen demanded PR = Price of Marker pen PC = Price of Competitors product Y = Per capita income of the consumer If the current price of each Marker pen is Tk. 4, the price of the competitors product is Tk. 10 and per capita income is Tk. 4,000, what will be the income elasticity of demand?

[Marks: (6+4+4+3+3) = 20] Q. No. 2. (a) Study of Business Economics and International Business is of tremendous help to Management

Accountants in their professional work. Discuss this statement, giving appropriate examples. (b) Distinguish between:-

(i) Fixed Cost and Variable Cost. (ii) Marginal Cost and Average Cost.

(c) Corporate Social Responsibility expenditures add up to costs and do not add anything to revenues. Do you agree? Discuss this statement.

[Marks: (6+6+8) = 20] Q. No. 3. (a) Define Price Discrimination and state its required conditions under monopoly. (b) Compare between Monopoly and Perfect Competition. (c) Distinguish between Economics of scope and Economics of scale. (d) When 10 units of output are produced, the average cost of production (AC) is Tk. 30. If average

cost of production (AC) increases to Tk. 40 with an increase in output by one unit, what is the marginal cost of producing the 11th unit?

(e) The total cost function for Astra Ltd. is given as TC = 500 + 4Q + 2Q2. The firm is a perfectly competitive firm and is selling the product at Tk. 150 per unit. If the output produced and sold by the firm is 10 units, what is the profit (loss) earned by the firm?

[Marks: (5+5+4+3+3) = 20]

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FOUNDATION LEVEL

SUBJECT: 004. BUSINESS ECONOMICS AND INTERNATIONAL BUSINESS

Q. No. 4. (a) How is equilibrium price determined in the market? (b) (i) Differentiate between demand pull and cost push inflation. (ii) Discuss the various measures of credit control taken by the Central Bank to control inflation. (c) Explain the ways in which public expenditure can play an important role in tackling rural poverty.

[Marks: {5+(4+5)+6} = 20] Q. No. 5. (a) Explain Super Profits in firms. (b) What do you understand by movement along the demand curve? Explain with examples. (c) Discuss the factors that determine elasticity of demand. (d) Calculate price elasticity, income elasticity and cross elasticity from the following figures of a firm

selling product X: Years Sales in Quantity of

X (No. of units) Price per unit of X

in Taka Price per unit of Y

in Taka Per capita Income

in taka 2000 30,000 30 10 10,000 2010 60,000 20 15 20,000

[Marks: (4+5+4+7) = 20]

GROUP B : INTERNATIONAL BUSINESS Q. No. 6. (a) International Trade is vital for a Countrys overall development. Discuss this statement, giving

examples as appropriate. (b) Bangladesh has not been very successful in attracting FDIs. Explain the reason(s) behind this

situation. (c) Discuss the determinants of demand for readymade garments of Bangladesh in the world market.

[Marks: (6+7+7) = 20] Q. No. 7. Write short notes on any five of the following: (i) Anti-dumping. (ii) GATT. (iii) Global Network Strategy. (iv) Technology Transfer. (v) Product Life Cycle. (vi) Market Segmentation. (vii) Balance of Trade and Balance of Payment.

[Marks: (5 x 4) = 20] Q. No. 8. (a) Trade must always promote a win-win situation for both parties. Is that a realistic assumption?

Discuss, giving examples as appropriate. (b) Write short notes on:

(i) Back to back letter of credit. (ii) Mode(s) of Export financing in Bangladesh.

(c) Most developing countries have certain Infant Industry arguments? Discuss these in the context of the development of Bangladesh. Give examples as relevant.

[Marks: (6+6+8) = 20]

= THE END =

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THE INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF BANGLADESH CMA AUGUST-2012 EXAMINATION

PROFESSIONAL LEVEL-I SUBJECT: 101.INTERMEDIATE FINANCIAL ACCOUNTING.

Time: Three hours Full Marks: 100

All questions are to be attempted. Show computations, where necessary. Answer must be brief, relevant, neat and clean. Start answering each question from a fresh sheet.

Q. No. 1.

The following trail balance was extracted from the books of Friends International Ltd., a manufacturing company, as at December 2011.

Taka Taka Purchase 2,678,000 - Prepayments 2,000 - Selling and distribution expenses 175,000 - Inventories at 1 January 2011 107,000 - Land and buildings at cost 840,000 - Plant and machinery at cost 714,000 - Accumulated depreciation on buildings at 1 January 2011 - 166,000 Accumulated depreciation on plant and machinery at 1 January - 368,000 Accounts payable - 80,000 Warranty provision - 19,000 Loan interest 8,000 - Mortgage - 90,000 Mortgage interest 14,000 - Administrative expense 153,000 - Accounts receivables 105,000 - Other payables - 4,000 Retained earnings at 1 January 2011 - 138,000 General reserve - 21,000 Ordinary share capital of Tk. 10 each - 382,000 Bank loan - 58,000 Interest income - 5,000 Share premium account - 199,000 Bank deposit 4,000 - Bank current account 20,000 - Revenue - 3,290,000 4,820,000 4,820,000

You also obtain the following information.

(i) Depreciation is to be provided on the straight-line method on buildings at 2% per annum and on plant and machinery at 20% per annum. The cost of the buildings at 31 December was Tk. 650,000.

(ii) Inventories at 31 December 2011 comprised raw materials Tk. 113,000, work in process Tk. 12,000 and finished goods Tk. 54,000.

(iii) The original mortgage of Tk. 225,000 was taken out on 1 January 2002 for a term of 15 years, repayable in equal monthly installments on the 25th day of each month.

(iv) The bank loan was granted on 1 September 2008 for a fixed term of ten years.

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CMA AUGUST -2012 EXAMINATION PROFESSIONAL LEVEL-I SUBJECT: 101.INTERMEDIATE FINANCIAL ACCOUNTING.

Q. No. 1. (Contd)

(v) Provision is to be made for income tax @ 37.5%, based on the results of the year.

(vi) A transfer of Tk. 21,000 was made to the general reserve during the year.

Required:

Prepare Friends International Ltd.s Statement of Comprehensive Income for the year ended 31 December 2011 and Statement of Financial Position at that date in accordance with the requirements of BAS 1.

[Marks: 20]

Q. No. 2

(a) You are a partly qualified CMA and working as a Deputy Credit Controller of a Company named Monyem Limited. The management wants a total Debtors Account from the following data: Transactions for the month of June-2012 Amount (Tk.) i Sales (includes cash sales of Tk. 7,000) 68,000 ii Collections from debtors (cash) 57,000 iii Return inward 700 iv Discount allowed 2,000 v Bad debts written off 1,500 vi Cheques received 10,000 vii Cheques dishonored 2,000 viii Bad debts written off now recovered 500 ix Provision for doubtful debts 1,200 x Balance outstanding on 31.05.2012 (Receivables) 20,000

Required: Prepare a Debtors Account for the month of June-2012.

(b) The following information relates to the debt securities investments of KK & Co.

(i) On February 1, the company purchased 12% bonds of PQS & Co. having a par value of Tk. 500,000 at 100 plus accrued interest. Interest is payable on April 1 and October 1.

(ii) On April 1, semiannual interest is received.

(iii) On July 1, 9% bonds of XYZ & Co. were purchased. These bonds with a par value of Tk. 200,000 were purchased at 100 plus accrued interest. Interest dates are June 1 and December 1.

(iv) On September 1, bonds with a par value of Tk. 100,000, purchased on February 1, are sold at 99 plus accrued interest.

(v) On October 1, semiannual interest is received.

(vi) On December 1, semiannual interest is received.

(vii) On December 31, the fair value of the bonds purchased February 1 and July 1 are 95 and 95, respectively

Required:

(1) Prepare all journal entries you consider necessary, including year-end entries (December 31) assuming these are available-for-sale securities.

(2) If KK & Co. classified these as held-to-maturity securities, explain how the journal entries would differ from those in part(1).

[Marks: 7 + 13 = 20]

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CMA AUGUST -2012 EXAMINATION PROFESSIONAL LEVEL-I SUBJECT: 101.INTERMEDIATE FINANCIAL ACCOUNTING. Q. No. 3.

(a) As per Para 6 of IAS-2, inventories include assets held for sale in the ordinary course of business (finished goods), assets in the production process for sale in the ordinary course of business (work in process), and materials and supplies that are consumed in production (raw materials). In the Para 16 and 18 of IAS-2 where mentioned that inventory cost should not include few items.

Can you write the name of the items?

(b) Pathan Furniture Ltd. is a retailer of Italian furniture and has five major products: Sofas, Dining Tables, Beds, Office Tables and Chairs. At June 30, 2012, quantity on hand, cost per unit, and net realizable value (NRV) per unit of the product lines are as follows:

Products

Descriptions

Sofas

Dining Tables

Beds Office Tables

Chairs

Quantity on hand 100 200 300 400 500 Cost per unit Tk. 1,00,000 Tk. 50,000 Tk. 1,50,000 Tk. 75,000 Tk. 25,000 NRV per unit Tk. 1,02,000 Tk. 45,000 Tk. 1,60,00 Tk. 77,000 Tk. 20,000

Required: Compute the valuation of the inventory of Pathan Furniture Ltd. at June 30, 2012, under IAS-2 using the Lower of Cost and NRV principle.

(c) On 1st April, 2011, Farhana has 50,000 ordinary shares of M3 Ltd. at a book value of Tk.15 per share (face value Tk.10 each). She provides you the further information: (1) On 20th June, 2011, she purchased another 10,000 shares of M3 Ltd. at Tk.16 per share. (2) On 1st August, 2011, M3 Ltd. issued one equity bonus share for every 6 shares held by the

shareholders. (3) On 31st October, 2011, the directors of M3 Ltd. announced a right issue which entitle the

holders to subscribe 3 shares for every 7 shares at Tk.15 per share. Shareholders can transfer their rights in full or in part.

Farhana sold 1/3rd of entitlement to Yeasmine for a consideration of Tk.2 per share and subscribe the rest on 5th November, 2011. Required: Prepare Investment A/c in the books of Farhana for the year ending 31st March, 2012 (accounting year April March).

[Marks: 4 + 7 +9 = 20] Q. No. 4. (a) An accountant must be familiar with the concepts involved in determining earnings of a business

entity. The amount of earnings reported for a business entity is depended on the proper recognition, in general, of revenue and expenses for a given time period. In some situations, costs are recognized as expenses at the time of product sale. In other situations, guidelines have been developed for recognizing costs as expenses or losses by other criteria. Required: (i) Explain the rationale for recognizing costs as expenses at the time of product sale. (ii) What is the rationale underlying the appropriateness of treating costs as expenses of a period

instead of assigning the costs to an asset? Explain. (iii) Identify the conditions under which it would be appropriate to treat a cost as a loss.

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Q. No. 4. (Contd)

(b) In April 2012 your client, Dilara Pharmaceuticals Ltd. a private company, decided to undertake a major restructuring of its manufacturing activities. The client had two factories in different towns that produce the same products. Management decided that production would be moved to one of the factories (Z). Management has also decided to incur additional costs to upgrade the facilities in order to increase production significantly. The remaining factory (X) was closed. The company has incurred the following costs:

(i) Cost of closing factory X, including the cost of terminating some existing contracts and redundancy payments for staff

Tk. 1,000,000

(ii) Cost of feasibility study carried out by the Company to determine the best system for factory Z

Tk. 90,000

(iii) Cost of relocating key staff to the town where factory Z is located. The staff are not contracted to remain with the company.

Tk. 50,000

(iv) Cost of implementing the new system in factory Z:

(a) Consulting fees Tk. 550,000

(b) Allocation of time spent by internal employees Tk. 150,000

(c) training for new staff Tk. 40,000

(v) Efficiency losses in early production stages Tk. 30,000

(vi) Campaign specifically to advertise the new technology being used Tk. 20,000

Required:

How should each of the above costs be accounted for: capitalized or expensed? Support your answer with reference of relevant accounting standards (if any).

[Marks: (12+8) = 20] Q. No. 5.

General Motors Ltd. has prepared the balance sheets as set out below:

Balance sheets as at 31 March

ASSETS

20111(Tk. 000))

2010 (Tk.) 000)

None-current assets Property, plant and equipment 30,946 25,141 Investments 7,100 - 38,046 25,141 Current assets Inventories 16,487 15,892 Trade and other receivables 12,347 8,104 Cash and cash equivalents 863 724 29,697 24720 Total assets 67,743 49,861

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Q. No. 5. (Contd) EQUITY AND LIABILITIES

Capital and reserves Ordinary share capital (Tk. 1 per ordinary

share) 13,000 10,000

Share premium 12,500 5,000 Revaluation reserve 7,450 2,650 Retained earnings 24,776 22,856 57,726 40,506 Non-current liabilities 3,250 4,250 Current liabilities Trade payables 2,771 2,632 Accruals 1,200 1,235 Tax liability 2,796 1,238 6,767 5,105 Total equity and liabilities 67,743 49,861 The following notes are relevant:

(i) Profit before tax was Tk. 5,404,000 for the year ended 31 March 2011.

(ii) Provision for tax was Tk. 2,634,000 for the year ended 31 March 2011. Taxation provided at 31 March 2010 was settled at a figure lower than the amount provided.

(iii) Analysis of property, plant and equipment 2011(Tk. 000) 2010 (Tk. 000)

Freehold buildings 25,100 19,780 Fixtures and fittings 5,846 5,361

30,946 25,141

(iv) Depreciation has not been provided on freehold buildings. During the year a professional revaluation of buildings taking account of additions during the year has been incorporated into the books of account. There were no disposals during the year.

(v) Additions to fixtures and fittings during the year totaled Tk. 1,365,000 at cost. There were no disposals.

(vi) During the year the company made a right issue of shares on the basis of three new shares for every ten shares held at a price of Tk. 3.5 per share. Pending the purchase of new plant part of the proceeds of the issue has been invested in shares in other listed companies.

Required:

From the above information, prepare a cash flow statement using the indirect method in accordance with BAS 7 Cash Flow Statements for the year ended 31 March 2011.

[Marks: 20]

= THE END =

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PROFESSIONAL LEVEL-I SUBJECT: 102.COST ACCOUNTING.

Time: Three hours Full Marks: 100 All questions are to be attempted. Show computations, where necessary. Answer must be brief, relevant, neat and clean. Start answering each question from a fresh sheet.

Q. NO. 1. (a) Traditional costing charges high volume product high Do you believe the statement? Why or

why not? (b) Jonson Company manufactures two products, Product A and Product B those varies significantly in

terms of resource consumption. Unit costs for materials and labor are: Product A Product B Direct Material Tk. 8 Tk. 10 Direct Labor 4 6

One unit of Product A requires two machine hours, Product B requires three machine hours for completion. The company has only fixed machine hours and runs at capacity. Estimated indirect manufacturing costs (factory overhead) are Tk. 825,000 to produce 22,000 units of Product A and 60,000 units of Product B. Required: a. Compute the predetermined overhead application rate. b. What is the cost to manufacture one unit of each product under traditional costing? c. There are some complains from the customers regarding product cots. Tom Harrison, the

President, feels that there may be product cost cross-subsidization. He called upon Miss Kelly, the cost accountant recently joined the team, and asked her to apply ABC with the following information:

Activity Traceable Costs Total Activity Product A Product B Machine Setups Tk. 450,000 4,200 1,200 3,000 Purchase Orders 220,000 400 290 110 Material Receipts 155,000 10,300 3,000 7,300

i. Compute activity rates. ii. Compute overhead cost per unit of Product A and B. iii. Compute total cost per unit of Product A and B under ABC. iv. Do you believe that the President was right? Justify your answer.

[Marks: {5+(5+5+5)} = 20] Q. No. 2. (a) There are 5 Rs in material Management. What these 5Rs stand for? No elaboration is required. (b) A company requires 48,000 components per year which will be used as a constant rate. Carrying

costs are Tk. 6.00 per unit. Per annum the cost per reorder Tk.1000 irrespective of order size. Purchased orders are placed on the assumption that delivery will be received when stock component falls to zero. Required: i. Calculate the cost per annum of pursuing purchase order policies where the order size may be

from 2000 to 6000 components in multiplies of 1000 components and hence state the purchase order quantity which will minimize cost.

ii. Use the economic order quantity formula to calculate the purchase order quantity that will minimize cost.

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CMA AUGUST -2012 EXAMINATION PROFESSIONAL LEVEL-I SUBJECT: 102.COST ACCOUNTING. Q. No. 2.(Contd.)

iii. Use the economic order quantity formula to calculate the EOQ where annual demand has risen to 96,000 components.

(c) ABC company has obtained the following costs and other data pertaining to one of its materials:

Working days per year 250 Normal use per day 500 units Maximum use per day 600 units Minimum use per day 100 units Lead time 5 days Variable cost of placing one order Tk. 36 Variable carrying cost per unit per year Tk. 4 Required: compute the following: 1. Economic order quantity. 2. Safety stock (maximum) 3. Order point 4. Normal maximum inventory 5. Absolute maximum inventory

[Marks: {3+( 3+2+2) +10) = 20] Q. No. 3.

Mr. Sajeeb is a student of management accounting, recently joined in Complete Clothes Care (CCC) a RMG company and usually produce western branded clothes. The company follows integrated accounting system. Due to several macro environmental factors like world economic meltdown, adverse weather for cotton plantation, interest rate hike and high inflation in operating country, every firm of RMG industry facing tough competition firstly from world competitors then from domestic competitors. In this circumstance, to retain effective rate of return management of CCC has decided to ensure efficient, effective and economic use of resources at all sphere of activities through practice of management accounting techniques. Management apprehending that in coming summer North American countries will procure good number of budgeted casual summer wear and lowest CM and desired quality will be a key factor for awarding orders.

Considering above scenario CFO of CCC asked Mr. Sajeeb to collect historical and prospective information in both type i.e. quantitative and qualitative regarding casual summer cloths and submit report to the management.

Mr. Sajeeb found that in the year 2011 the company supplied three types of branded casual summer cloths and relevant information regarding three jobs as follows: Particulars Job # 501_2011 Job # 502_2011 Job # 503_2011 Type Gents wear Women wear Kids wear Quantity (Pcs) 1,00,000 1,50,000 2,50,000 Labor hour rquired per pcs 0.50 0.75 1 Machine hour required per pcs 0.50 0.50 0.25 CM per pcs revenue (BDT) 170 250 275 Cost of fabrics per pcs (BDT) 70 75 50 Cost of accessories per pcs (BDT) 10 20 25 Cost of Special fabrics per pcs (BDT) - 10 15 Labor cost per hour (BDT) 100 100 100

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CMA AUGUST -2012 EXAMINATION PROFESSIONAL LEVEL-I SUBJECT: 102.COST ACCOUNTING. Q. No. 3.(Contd.)

Factory overhead total BDT 12,50,000 and 60% of which varied with the machine hour and remaining 40% is capacity related cost.

Administrative staffs salary BDT 100,000.

The company spends BDT 50,000 for CSR activities.

Due to critical design 5% of women wear and 10% of kids wear rejected and billing money were not received and it is revealed that with a proper skilled labor such quality issues can be solved which will increase labor cost for women wear by 10% and for kids wear by 20%.

In connection with above job the company purchased a wrong machine costing BDT 10,000. The machine has no resale value and do not wear out through use.

Instead of running the factory, the company could rent its factory space for BDT 50,000.

As per tradition in the year 2011 the company produced only branded items and operated at 70% capacity. It had an option to carry non-branded item but it did not carry non-branded order.

Required:

(a) Mention prerequisite for job order costing.

(b) Prepare a cost sheet for all jobs and for overall company.

(c) Calculate marginal cost for the order to be placed for each category of job in the year 2012. Assuming that all materials cost and labor cost will increase by 5% & 10% respectively and skilled labor will engage for women wear and kids wear.

(d) With compare to branded item, non-branded items material cost 20% lesser, labor cost 30% lesser. After meeting the branded item order, if the company has spare capacity, suggest how much minimum per pcs CM is required to carry non-branded item order in the year 2012?

[Marks: (2+10+5+3) = 20]

Q. No. 4.

Zenith Pharmaceuticals of Congo produces a unique syrup using cane sugar and local herbs. The syrup is sold in small bottles and is praised as a flavoring for drinks and for use in desserts. The bottles are sold for Tk. 25 each. The first stage in the production process is carried out in the Mixing Department, which removes foreign matter from the raw materials and mixes them in the proper proportions in large vats. The company uses the weighted average method in its process costing system. Materials in the department needs to be introduced in several stages, 30% of the total materials are introduced when production has been started, 50% of the total materials are introduced when production has been completed by 50% and the rest 20% of the total material should be introduced at 90% process level. Labor will be paid when work has been done by 30% and overhead costs are incurred uniformly throughout the process. The company uses weighted average method of costing.

The following activity was recorded in the Mixing Department during July: Units DM DL MOH Work in Process 7/1/10 (25% completed) 20,000 Tk. 12,500 -- Tk. 15,500 Units started in production 110,000 - - - Costs for July Tk. 250,000 Tk. 247,000 Tk.344,500 Work in Process 7/31/00 (60% completed) 25,000 - - -

Required: Prepare a production report for the Mixing Department for the month. [Marks: 20]

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CMA AUGUST -2012 EXAMINATION PROFESSIONAL LEVEL-I SUBJECT: 102.COST ACCOUNTING. Q. No. 5.

(a) What do you mean by Labor Turnover? From the following data provided to you find out the labor turnover rate by applying:

(i) Separation rate method;

(ii) Net labor T.O rate (or) Replacement method;

(iii) Flux rate method

No. of workers on the payroll-

At the beginning of the month 900

At the end of the month 1,100

During the month, 10 workers left, 40 persons were discharged and 150 workers were recruited. Of there, 25 workers were recruited in the vacancies of those leaving, while the rest were engaged for an expansion scheme.

(b) Particulars for a worker X are given below:-

Hourly rate = Tk. 10/-

Agreed rate of production = 100 units per hour

Hours worked = 8 hours

Units produced = 1200

Required: Total earnings for the day under Rowan plan.

(c) A companys new process will be carried out in one department. The production process has an expected learning curve of 80%. The cost subject to the learning effect for the first batch produced by the process was Tk. 20,000.

Required: Compute the cumulative average cost per batch subject to the learning effect after the 16th batch has been produced.

Marks: (7+7+6) = 20]

= THE END =

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PROFESSIONAL LEVEL-I SUBJECT: 103. MANAGEMENT AND MARKETING MANAGEMENT

Time: Three hours Full marks: 100 Answer any THREE questions from each part. Answer must be brief, relevant, neat and clean. Start answering each question from a fresh sheet.

PART A : MANAGEMENT (TOTAL MARKS-50) *

Q. No. 1. (a) What are the four basic activities that comprise the management process? How they are related

to one another? (b) Define efficiency and effectiveness in Management with examples. (c) Identify and discuss contemporary management issues and challenges.

[Marks: (6+4+6) = 16] Q. No. 2. (a) Differentiate between diversity and multiculturalism in organizations. (b) Briefly describe the effects of diversity and multiculturalism in organizations.

[Marks: (6+10) = 16] Q. No. 3. (a) Discuss the concepts of operational, financial and strategic control. (b) How can we ensure control over quality, cost and productivity.

[Marks: (8+8) = 16] Q. No. 4. (a) Identify and describe how the environment affects organizations and how organizations response

to their environment. (b) Discuss the determinants of an organizations culture and how the culture can be changed and

managed? (c) What are the characteristics of multicultural organization?

[Marks: (6+4+6) = 16] Q. No. 5. Write short notes on the following: (a) Corporate Social Responsibility; (b) TQM; (c) Leadership; (d) Committee.

[Marks: (4 x 4) = 16]

* Two marks are reserved for neatness and relevance.

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CMA AUGUST, 2012 EXAMINATION PROFESSIONAL LEVEL-I SUBJECT: 103. MANAGEMENT AND MARKETING MANAGEMENT

PART B : MARKETING MANAGEMENT (TOTAL MARKS-50) *

Q. No. 6. (a) Define Market, Marketer, Prospect and Marketing. (b) What is Holistic Marketing concept? Draw a schematic overview of four broad components

characterizing Holistic Marketing. (c) As a Cost Management expert why do you need to understand marketing?

[Marks: (4+8+4) = 16] Q. No. 7. (a) Describe the stages of the product life cycle. (b) How marketing strategies change during the product life cycle.

[Marks: (8+8) = 16] Q. No. 8. (a) What is a brand? When spending money on brands becomes profitable? (b) How we can brand Bangladesh? (c) How we can brand CMA profession?

[Marks: (6+5+5) = 16] Q. No. 9. (a) Describe the importance of marketing channels in the value delivery process. (b) What are the factors you should consider for developing a strong marketing channel? (c) Compare between trade promotion and consumer promotion.

[Marks: (6+6+4) = 16] Q. No. 10. (a) What is strategic marketing planning? (b) Explain the Boston Consulting Group (BCG) Matrix. When we should use this matrix?

[Marks: (6+10) = 16]

* Two marks are reserved for neatness and relevance.

= THE END =

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PROFESSIONAL LEVEL-I SUBJECT: 104. INFORMATION TECHNOLOGY

Time: 2 hours 30 minutes Full Marks: 80

Answer any four of the following questions. Answer must be brief, relevant, neat and clean. Start answering each question from a fresh sheet.

Q. No. 1. a) Define Information Systems. Describe the key components of Information Systems. b) What is MIS? "Only a computerized MIS can cope up with the dynamics of changing management

requirements"-Explain. c) Discuss points that are important while designing an MIS for a business organization. d) What are the differences between MIS and DSS?

[Marks: (4X5) = 20] Q. No. 2. (a) In keeping the organizational information in a file processing system, what are the major

disadvantages and how database management systems can reduce the aforesaid problems? (b) Explain with example the difference between the following terms with reference to a Database:

* Data and Information * Field and Record

(c) What do you understand by the term memory? What is a primary memory? What are the distinguishing characteristics of a primary memory?

(d) Distinguish between a batch processing system and an online processing system. [Marks: (4X5) = 20]

Q. No. 3. (a) What are the differences between system software and application software package? Mention two

examples each. (b) Discuss input and output devices with some examples each. (c) What is Data Flow Diagram (DFD)? Describe the rules of constructing a DFD with figure?

[Marks: (7+6+7) = 20] Q. No. 4. (a) Compare and contrast Internet, Intranet and Extranet. (b) What does the e' stand for in e-commerce? How do you differentiate between commerce' and

e-commerce'? (c) What do you mean by security control? Why it is needed in an Organization? (d) What do you understand by the life cycle of a system? "Designing is considered the most important

stage in SDLC. Do you agree with this statement? [Marks: (4X5) = 20]

Q. No. 5. (a) Discuss about prevention of computer related waste and mistakes. (b) What is security? How to develop a disaster recovery plan? (c) Define computer crimes. Critically explain the procedures of auditing information systems to

control computer crimes. [Marks: (4+6+10) = 20]

Q. No. 6. Write short notes on: (a) Outsourcing; (b) Artificial Intelligence; (c) Knowledge Management; (d) Compiler and Interpreter; (e) Database Administrator

[Marks: (5X4) = 20]

=THE END=

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THE INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF BANGLADESH CMA AUGUST -2012 EXAMINATION

PROFESSIONAL LEVEL-II SUBJECT: 201.ADVANCED FINANCIAL ACCOUNTING-I.



Q. No. 1.

(a) The substance rather than the legal form of the lease contract is indicative of the classification of lease as finance or operating. Do you agree? Why?

(b) SMX Leasing Company agrees to lease machinery to PMX Corporation on January 1, 2010. The following information relates to the lease agreement.

1. The term of the lease is 7 years with no renewal option, and the machinery has an estimated economic life of 9 years.

2. The cost of the machinery is Tk.420,000, and the fair value of the asset on January 1, 2010, is Tk.560,000.

3. At the end of the lease term the asset reverts to the lessor. At the end to the lease term the asset is expected to have a guaranteed residual value of Tk.80,000. PMX depreciates all of its equipment on a straight-line basis.

4. The lease agreement requires equal annual rental payments, beginning on January 1, 2010. 5. The collectability of the lease payments is reasonably predictable, and there are no important

uncertainties surrounding the amounts of costs yet to be incurred by the lessor. 6. SMX desires a 10% rate of return on its investments. PMXs incremental borrowing rate is

11%. Present value of Tk.1 at 10% for 7 years is 0.51316 and 11% for 7 years is 0.48166 Present value of an annuity due at 10% for 7 years is 5.35526 and 11% for 7years is

5.23054.

Instructions:

(a) Discuss the nature of this lease for both the lessee and the lessor, according to IAS-17 Leases.

(b) Calculate the amount of the annual rental payment required.

(c) Compute the present value of the minimum lease payments.

(d) Prepare the journal entries PMX would make in 2010 and 2011 related to the lease arrangement.

[Marks: {5+(4+3+3+5)} = 20] Q. No. 2. (a) How can you classify an asset as a current asset or non-current? Briefly describe as per IAS-1.

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CMA AUGUST -2012 EXAMINATION PROFESSIONAL LEVEL-II SUBJECT: 201.ADVANCED FINANCIAL ACCOUNTING-I.

Q. No. 2.(Contd.)

(b) The R & Co. had the following balance sheet on April 30, 2012 at which the company is contemplating filing a petition for liquidation.

R & Company Balance sheet April 30, 2012

Assets Taka Liabilities & stock holders equity Taka Cash Notes Receivables Accounts Receivables (Net) Inventories Finished goods Work in Process Raw materials Prepaid Insurance Investment in Grameen Phone Land Buildings (Net) Machinery & Equipments(net)

8,200 24,000 47,000

56,000 24,000 39,000

1,200

26,500

42,000 1,98,000 93,000

Bank Notes Payable Accounts Payables Accrued Salaries & Wages Accrued Interest On Bank Notes On Mortgage Mortgage Note Payables Capital Stock Retained Earnings (deficit)

32,000 1,95,000

13,500

1,100 8,500

2,00,000 2,50,000

(1,41,200)

Total Assets 5,58,900 Total Liabilities & stock holders equity 5,58,900

Additional Information:

1. The notes receivable are expected to be fully realized and they have been pledged as collateral on Bangladesh Development Bank note in the principal amount of BDT. 20,000.00 plus accrued interest of BDT. 600.00

2. Accounts receivable have been an estimated collectible value of BDT. 28,000.00

3. Finished goods inventory can be sold at a markup of 20% over cost, with selling expenses estimated at 10% of selling price. Work in process has no value unless finished. The estimated cost to complete totals BDT. 12,000.00, of which 5,000.00 represent the cost of Raw Materials. The estimated selling price of the work in process inventory when finished is 25,000.00. The remaining raw materials inventory has an estimated selling price 70% of its cost.

4. The recovery value of prepaid Insurance is 6,00.00

5. The Grameen phone stock is pledged as collateral on a Bank note payable in the principal amount of 12,000.00 plus accrued interest of 500.00.

6. Land & Building have appraised values of BDT. 40,000.00 and BDT. 1,00,000.00 respectively, and serve as collateral on the mortgage note payable.

7. The machinery and equipments have an estimated disposal value of 38,000.00

Prepare the statement of affairs for R & Company along with a Deficiency Account summarizing estimated gains & losses on the realization of assets.

[Marks: (5+15) = 20]

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CMA AUGUST -2012 EXAMINATION PROFESSIONAL LEVEL-II SUBJECT: 201.ADVANCED FINANCIAL ACCOUNTING-I. Q. No.3.

(a) What is the nature of a sale on consignment? When is revenue recognized from a consignment sale?

(b) OMX Inc. started a four-year contract to build a dam. Activities commenced on February 1, 2010. The total contract price amounted to Tk.12,000,000, and it was estimated that the work would be completed at a total cost of Tk.9,500,000. In the construction agreement the customer agreed to accept increases in wage tariffs additional to the contract price.

The following information refers to contract activities for the financial year ending December 31, 2010: 1. Costs for the year:

Items Taka Material 1,400,000 Labor 800,000 Operating overhead 150,000 Subcontractors 180,000

2. Current estimate of total contract costs indicates the following: Materials will be Tk.180,000 higher than expected. Total labor costs will be Tk.300,000 higher than expected. Of this amount, only Tk.240,000

will be the result of increased wage tariffs. The remainder will be caused by inefficiencies. A savings of Tk.30,000 is expected on operating overhead. 3. During the current financial year the customer requested a variation to the original contract,

and it was agreed that the contract price would be increased by Tk.900,000. The total estimated cost of this extra work is Tk.750,000.

4. By the end of 2010, certificates issued by quantity surveyors indicated a 25% stage of completion.

Required: Determine the profit to date, based on: Option 1- contract costs in proportion to estimated contract costs. Option2- Percentage of the work certified

[Marks: (5+15) = 20]

Q .No.4.

(a) What do you mean by Impairment of reinsurance assets as per IFRS 4.

(b) The account balance in the general fund of the Dhaka City Corporation - South on June 30, 2012 are as follows: Taka ('000)

Cash in Hand ............................................................................................................... 500 Bank balances: Sonali bank STD ....................................................................................................... 60,000 Janata Bank STD ...................................................................................................... 50,000 Agrani Bank Current A/C ........................................................................................ 25,000 Dutch Bangla Bank Current A/c .............................................................................. 35,500

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Q. No. 4.(Contd.) FDR at BKB ......................................................................................................... 1,00,000 Holding Tax Receivable........................................................................................ 1,89,500 Notes Payable........................................................................................................ 33,500 Wages Payable..................................................................................................... 21,500 Reserve for Encumbrances............................................................................... 9,400 Estimated Revenues.................................................................................... 28,12,000 Revenues ...................................................................................................... 28,30,100 Appropriations ........................................................................................... .. 27,90,000 Expenditures................................................................................................... 27,94,600 Encumbrances ................................................................................................ 9,400 The balances of the Revenue ledger are as follows: Drs. Crs. Taka ('000) Taka ('000) Holding Taxes ........................................................................ 21,50,000 21,67,000 City Corporation Taxes ......................................................... 5,10,000 5,01,500 Motor Vehicles Licenses ...................................................... 95,000 97,000 Interest on bank Accounts .................................................... 22,000 23,100 Miscellaneous ...................................................................... 35,000 41,500 Data from the expenditure ledgers are as follows: Expenditure Budget Appropriation Taka ('000) Taka ('000) General Government .................................................... 9,36,400 9,25,000 Police department .......................................................... 5,50,000 5,55,000 Fire Department ............................................................ 4,28,900 4,40,000 Streets & Roads ............................................................ 4,15,000 4,00,000 Sanitation ..................................................................... 2,94,300 2,95,000 Public Welfare ............................................................ 1,70,000 1,75,000 The Encumbrances balances in the expenditure ledger are as follows: Taka ('000) General government.................................................. 3,600 Fire Department .................................................... 2,100 Sanitation.................................................................... 3,700

Required:

i) Prepare a statement of Revenues and Expenditures - Budget & Actual

ii) Prepare a Statement of Changes in Fund Balance assuming the balance of fund at the beginning of the year was Tk. 37,00,00,000

iii) Prepare a Balance Sheet. [Marks: (5+15) = 20]

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Q .No.5.

(a) What do you mean by changes in accounting estimates as per IFRS?

(b) Multi Ltd commenced trading three years ago, on 1 January 20X5. Its draft balance sheet at 31 December 20X7 and its final balance sheets for the two previous years are as follows:

20X7 CUm

20X6 CUm

20X5 CUm

Non-current assets Property, plant and equipment Other Assets

231 169

230 120

180 120

400 350 300 Current assets 800 800 800 Total Assets 1200 1200 1200 Capital Reserves

100 450

100 400

100 350

Non-current liabilities Current liabilities

550 200 450

500 200 450

450 200 450

Total Liabilities 1200 1150 1100

Additional information is available as follows: 1. The profit for each of the three years was CU 50m. 2. The movements on property, plant and equipment were as follows:

20X7 CUm

20X6 CUm

20X5 CUm

Brought forward Direct cost of additions Interest capitalized

230 80 10

180 90 10

0 180 20

Depreciation

320 (89)

280 (50)

200 (20)

Carried forward 231 230 180 3. Property, plant and equipment is depreciated at the rate of 10% of cost per annum. The directors now believe that more relevant information would be provided if interest was not capitalized, so the decision has been made to change the accounting policy and to recognize all interest as an expense in the year in which it is incurred. Prepare the revised balance sheets at 31 December 20X7 and 20X6, together with extracts from the statement of changes in equity for each of the two years then ended.

[Marks: (5+15) = 20]

= THE END =

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PROFESSIONAL LEVEL-II SUBJECT: 202.MANAGEMENT ACCOUNTING



Q. No. 1. SG Company is a long-established food manufacturer which produces semi-processed foods for fast-food outlets. While for a number of years it has recognized the need to produce good quality products for its customers, it does not have a formalized quality management program. A director of the company has recently returned from a conference, where one of the speakers introduced the concept of Total Quality Management (TQM) and the need to recognize and classify quality costs. Required: (a) Explain what is meant by TQM and use examples to show how it may be introduced into different

areas of SG Companys food production business. (b) Explain why the adoption of TQM is particularly important within a JIT production environment. (c) What roles do management accountants play in TQM? (d) Explain four quality cost classifications, using examples relevant to the businesses of SG Company.

[Marks: (5+5+4+6) = 20] Q. No. 2. Laws Stores Ltd. owns a large out-of-town store selling sports equipment. For reporting and control purposes it splits the business into four product groups: Ball sports, Racquet sports, Water sports and Outdoor activities. The board of directors is dominated by the Laws family who has heard a rumor that one of the large quoted sports goods retailers is seeking planning permission to build a new store nearby. The board of Laws Stores Ltd. feels that to compete they may have to decrease the prices of their products. For the forthcoming year, before any price changes and implemented, budgeted information is as follows:

Ball sports Racquet sports Water sports Outdoor activities. (Tk.) (Tk.) (Tk.) (Tk.) Sales 800,000 400,000 250,000 150,000 Variable costs 500,000 260,000 190,000 126,000

Fixed costs of operating the store are budgeted to be Tk. 400,000. Price decreases are being contemplated as follows:

Average price decrease (%) Ball sports 10 Racquet sports 5 Water sports 6 Outdoor activities 4

Although these price decreases are expected to be needed to defend sales volume from the threat posed by new competition, the directors believe that sales volume for Water sports and Outdoor activities might even increase as a result of the lower prices being proposed. In fact, the sales volume changes as a result of the decrease in prices are expected to be as follows:

Ball sports Unchanged if prices are decreased by 10% Racquet sports Unchanged if prices are decreased by 5% Water sports Increase of 15% if prices are decreased by 6% Outdoor activities Increase of 10% if prices are decreased by 4%

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CMA AUGUST-2012 EXAMINATION PROFESSIONAL LEVEL-II SUBJECT: 202.MANAGEMENT ACCOUNTING Q. No. 2.(Contd.) Required: (i) Calculate the C/S ratio and breakeven sales revenue for the store before any changes to product

selling prices. (ii) Calculate the effect upon profit of the proposed price changes and suggest whether they should be

implemented. (iii) Discuss the other factors that should be considered before implementing the proposed changes to

product prices. [Marks: (6+8+6) = 20]

Q. No. 3.

(a) Rightlight Ltd. is an advertising company and has been asked to tender for a contract to increase public awareness of global environmental issues as part of the governments commitment to improving the countrys eco-footprint. Rightlight Ltd. believes that the campaign work will take a period of six months.

Five advertising specialists would need to be recruited on an annual salary of Tk. 45,000. A project manager would be needed to coordinate the campaign. An existing project manager would be used whose annual salary is currently Tk. 55,000. He would be expected to devote 30% of his time on the new contract.

The new employees would have to go through an Environmental Awareness training program in order to get approval to work on government contracts. This would cost Tk. 3,000 per employee, but it is anticipated that a grant of 20% towards this cost will be available.

Alternatively, Rightlight Ltd. could subcontract the work (with the governments agreement) to another company that it sometimes uses for joint venture projects. It is anticipated that the subcontract firm would demand a fee of Tk. 135,000 to undertake the work.

Required:

(i) What is relevant cost? Are variable costs always relevant costs? Explain.

(ii) What would be the relevant cost of labor for this contract?

(b) Right-Tyres Ltd. has three depots selling car tyres. The depots are based in N, L and M cities. The average selling price per tyre is Tk. 25.

Budgets have been produced for the forthcoming period as follows (Tk.): N L M Sales 2,000,000 1,500,000 2,500,000 Costs:

Purchase price of tyres 1,200,000 900,000 See below Wages and salaries 250,000 220,000 358,000 Overheads 450,000 430,000 600,000 Total cost 1,900,000 1,550,000 See below

The average purchase price per tyre charged by suppliers is the same for both the N and L depots. However, due to higher volume of tyres purchased by the M depot, the M depot benefits from a 20% discount compared to the price charged to the N and L depots.

The management of Right-Tyres Ltd. believes that some of the overheads included in the above budgets would not be incurred if the decision was taken to close any of the depots.

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CMA AUGUST-2012 EXAMINATION PROFESSIONAL LEVEL-II SUBJECT: 202.MANAGEMENT ACCOUNTING Q. No. 3.(Contd.)

At a recent board meeting, doubt was cast over the future of the L depot given its budgeted loss of Tk. 50,000.

The percentages of overheads which are variable costs and would not be incurred if a depot were to be closed differs with each depot and are as follows:

Depot % N 25 L 15 M 20

If a depot were to be closed it is not expected that there would be any major consequences upon the sales volumes achieved at the remaining depots due to the geographical distances between the depots. Required: (i) Discuss whether the L depot should be closed purely on the basis of financial considerations. (ii) Assuming that 80% of wages and salaries at each depot are variable costs, calculate the

number of tyres that must be sold by the whole company in order to break-even. (For this requirement, assume that the L depot will be kept open and that sales will be made at the depots in the ratio used in the original budget.)

(iii) Discuss the key non-financial factors that should be considered when making a decision to close part of a business such as the L depot.

[Marks: (4+4+2+6+4) = 20] Q. No. 4.

(a) Eastern University is considering adding 100 more undergraduate students, 25 in each entering class for the next four years. The University Vice Chancellor argues that since there is excess capacity in existing classes, no additional faculty will be hired. Thus the teaching cost of these 100 additional students is zero. Comment on the statement made by University Vice Chancellor.

(b) Staly Company has two wholly owned Bangladesh-based subsidiaries. One of these subsidiaries, B Ltd. manufactures plastic toys which it sells to toy retailers. B Ltd. is about to launch a new product but is unsure what price to charge. A firm of consultants has estimated the level of demand at several different prices. This information is as follows: Price (Tk.) 5 10 15 20 25 30 35 40 Level of demand (000 of units) 200 180 160 135 120 100 75 50

The cost of manufacturing the new toy has been estimated as follows: Particulars of cost Taka per unit Direct Materials 2.00 Direct Labor 1.50 Variable overheads 2.50

Fixed costs associated with manufacturing the new toy are expected to be Tk. 400,000 per annum. However, if production and sales exceed 150,000 units fixed costs are expected to increase by Tk. 50,000.

The second subsidiary, E Ltd. Assembles desktop computers using components sourced from suppliers of keyboards, microchips, monitors, speakers and so on. It sells these computers under its own brand name through 150 of its own outlets in major shopping centers throughout Dhaka. It is to commence selling a new computer aimed at students. The management of E Ltd. believes that the price and marginal revenue equations are as follows:

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CMA AUGUST-2012 EXAMINATION PROFESSIONAL LEVEL-II SUBJECT: 202.MANAGEMENT ACCOUNTING Q. No. 4.(Contd.)

Price equation: P = 20,000 0.01Q, where P is selling price per computer and Q is sales quantity in units Marginal revenue (MR) equation: MR = 20,000 0.2Q

The cost of manufacture is expected to be: Particulars of cost Taka per unit Direct materials (bought-in components) 4,000 Direct labor (assemble) 1,500 Variable overheads 500 Fixed overhead (apportioned) 2,000

Required: (i) For B Ltd. determine the price that should be set for the new toy in order to maximize profit. (ii) For E Ltd. determine the price that should be set for the new computer under two

circumstances. (1) To maximize profit for E Ltd. (2) To maximize revenue for E Ltd.

(iii) Briefly explain what is meant by market skimming, penetration pricing and market segmentation in the context of product pricing.

(iv) Briefly discuss the typical issues that a company should consider when setting selling prices for a new product about to be launched.

[Marks: {4+(4+6+3+3)} = 20] Q. No. 5.

(a) Salespeople at a particular firm forecast what they expect to sell next period. Their supervisors then review the forecasts and make revisions. Those forecasts are used to set production and purchasing plans. In addition, salespeople receive a fixed bonus of 20 percent of their salary if they exceed their forecasts. Required:

Discuss the incentives of the salespeople to forecast next-period sales accurately. Discuss the trade-off between using the budget for decision making versus using it as a control device.

(b) Urban Bank is a new small commercial bank operating in Dhaka, Bangladesh. The bank limits interest rate risk by matching the maturity of its assets to the maturity of its liabilities. By maintaining a spread between interest rates charged and interest rates paid, the bank plans to earn a small income. Management establishes a flexible budget based on interest rate for each department. The car loan department offers five-year loans. It matches certificates of deposits against car loans. Given all the uncertainty about government fiscal policy, management believes that five-year savings interest rates could vary between 2 percent and 16 percent for the coming year. The savings rate is the rate paid on CD savings account. The loan rate is the rate charged on auto loans. The following table shows the expected new demand for fixed-rate, five-year loans and new supply of fixed-rate, five-year savings accounts at various interest rates. There are no loans from previous years. Note that the department maintains a 4 percent spread between loan and savings rates to cover processing, loan default, and overhead.

Loan rate (%) Savings rate (%) Loan demand Savings supply 6 2 Tk. 12,100,000 Tk. 4,700,000 7 3 Tk. 10,000,000 Tk. 5,420,000 8 4 Tk. 8,070,000 Tk. 8,630,000 9 5 Tk. 6,030,000 Tk. 9,830,000 10 6 Tk. 4,420,000 Tk. 11,800,000

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CMA AUGUST-2012 EXAMINATION PROFESSIONAL LEVEL-II SUBJECT: 202.MANAGEMENT ACCOUNTING

Q. No. 5.(Contd.)

The amount of new loans granted is always the lesser of the loan demand and loan supply. For simplicity, this bank may lend 100 percent of deposits. Although rates are set nationally, the bank may pay or charge slightly different rates to limit demand or boost supply as needed in its local market.

The car loan department incurs processing, loan default, and overhead expenses related to these accounts. The first two expenses vary, depending on the taka amount of the accounts. The processing expense is budgeted to be 1.5% of the loan accounts. Default expense is budgeted at 1% of the amount loaned. Again, loans and savings would ideally be the same. Overhead expenses are estimated to be Tk. 30,000 for the year, regardless of the amount loaned.

The following table shows an actual income statement for the Car loan department. Included are the actual loans and savings for the same period.

Interest Income Tk. 645,766 Interest expense 314,360 Net interest income 331,406 Fixed overhead 30,200 Processing expense 130,522 Default expense 77,800 Net Income Tk. 92,884 Loans Tk. 8,062,000 Deposits Tk. 8,123,000

Required:

(i) Calculate the processing, loan default, and overhead expenses for each possible interest rate.

(ii) Create a budgeted income statement for five-year loans and deposits for the Car loan department given a savings interest rate of 4 percent. Remember to match supply and demand.

(iii) Calculate the variances and provide a possible explanation. [Marks: {5+ (4+3+8)} = 20]

= THE END =

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THE INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF BANGLADESH CMA AUGUST-2012, EXAMINATION

PROFESSIONAL LEVEL-II SUBJECT: 203-COMMERCIAL AND INDUSTRIAL LAWS

Time: Three hours Marks: 100

Answer any FIVE questions taking at least TWO from each Group A and B Answer must be brief, relevant, neat and clean. Start answering each question from a fresh sheet.

PART-A : COMMERCIAL LAWS

Q. No. 1. (a) All agreements are not contracts but all contracts are agreements. Explain. (b) Differentiate between the terms Misrepresentation and Fraud. (c) What are the rules of a valid offer? (d) Mr. Sumon started self service system in his shop. Ms. Suborna entered the shop, took a basket

and after taking articles of her choice into the basket reached the cashier for payments. The cashier refuses to accept the price. Can Mr. Sumon be compelled to sell the said articles to Ms Suborna?

[Marks: (4 x 5) = 20] Q. No. 2. (a) Discuss Caveat Emptor with its exceptions. (b) Risk Prima Facie passes with property- Discuss with at least two examples. (c) Differentiate between Right of Lien and Right of stoppage in transit.

[Marks: (8+6+6) = 20] Q. No. 3. (a) What are the essential characteristics of a cheque. (b) Discuss the proposes, meaning and types of crossing a cheque. (c) Distinguish between negotiation and assignment.

[Marks: (8+6+6) = 20] Q. No. 4. Who is the holder and who is the holder in due course of a cheque? Discuss the various privileges of a holder in due course.

[Marks: 20] Q. No. 5. (a) What matters can and cannot be referred to arbitration? (b) Whats the difference between a general crossing and a special crossing of a cheque? (c) Whats the difference between Actual breach of contract and Anticipatory breach of contract?

[Marks: (8+6+6) = 20]

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CMA AUGUST-2012, EXAMINATION PROFESSIONAL LEVEL-II SUBJECT: 203-COMMERCIAL AND INDUSTRIAL LAWS

PART-B : INDUSTRIAL LAWS Q. No. 6. (a) What do you mean by Public Utility Service? How it differs from Commercial establishment. (b) Is it compulsory to maintain service book for the workers. What are the contents of a service

book? (c) In what circumstances the employer may resort to stop of work and what are its procedures.

[Marks: (7+7+6) = 20] Q. No. 7. (a) How the relationship of an employer and an employee can be determined as pet BLA-2006? (b) Can a probationer be reverted to his former post? (c) Define Industrial Dispute. What are the ingredients of an Industrial Dispute?

[Marks: (7+3+10) = 20] Q. No. 8. (a) What are the provisions for Maternity Benefits, under the Bangladesh Labor Act, 2006. What will

be the impact in the Garment Factory for enhancement of Maternity Leave. (b) What are the precautions to be taken in case of fire and precautions to be taken against

dangerous fumes in a factory? [Marks: (10+10) = 20]

Q. No. 9. State the provisions of welfare of workers as described in the Bangladesh Labour Act 2006.

[Marks: 20] Q. No. 10. (a) Discuss the provision of closure of shops with exceptions a

icma questions aug 2012

Documents

delivery expenses

repair expenses

utilities expenses

salaries expenses

rent expenses

advertising expenses

store supplies

accounts payable