THE INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF BANGLADESH
CMA JUNE, 2016 EXAMINATION
FOUNDATION LEVEL
SUBJECT : 001. PRINCIPLES OF ACCOUNTING.
Time: Three hours

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.
Full Marks: 100
Q. No. 1.
The bank portion of the bank reconciliation for backhaus Company at November 30, 2008 was
as follows:
Backhaus Company
Bank Reconciliation
November 30, 2008
Taka
14,367.90
2,530.20
16,898.10
Cash Balance as per Bank
Add: Deposits in Transit
Less: Outstanding Checks:
Check Number
Check Amount (Taka)
3451
2,260.40
3470
720.10
3471
844.50
3472
1,426.80
3474
1,050.00
6,301.80
Adjusted cash Balance per bank
10,596.30
The adjusted Cash Balance per Bank agreed with the cash balance per books at November
30:
The December bank statement showed the following checks and Deposits:
Bank Statement
Checks
Date
Number
1-Dec
3451
2-Dec
3471
7-Dec
3472
4-Dec
3475
8-Dec
3476
10-Dec
3477
15-Dec
3479
27-Dec
3480
30-Dec
3482
29-Dec
31-Dec
3483
3485
Total
Deposits
Amount (Taka)
2,260.40
844.50
1,426.80
1,640.70
1,300.00
2,130.00
3,080.00
600.00
475.50
Date
1-Dec
4-Dec
8-Dec
16-Dec
21-Dec
26-Dec
29-Dec
30-Dec
Total
1,140.00
540.80
15,438.70
Page 1 of 4
Amount (Taka)
2,530.20
1,211.60
2,365.10
2,672.70
2,945.00
2,567.30
2,836.00
1,025.00
18,152.90
CMA JUNE, 2016 EXAMINATION
FOUNDATION LEVEL
SUBJECT : 001. PRINCIPLES OF ACCOUNTING.
Q. No. 1. (cont’d……..)
The Cash records per books for December showed following:
Cash Payments Journal
Cash receipts Journal
Date
Number
Amount
Date
Amount
1-Dec
3475
1,640.70
3-Dec
1,211.60
2-Dec
3476
1,300.00
7-Dec
2,365.10
2-Dec
3477
2,130.00
15-Dec
2,672.70
4-Dec
3478
621.30
20-Dec
2,954.00
8-Dec
3479
3,080.00
25-Dec
2,567.30
10-Dec
3480
600.00
28-Dec
2,836.00
17-Dec
3481
807.40
30-Dec
1,025.00
20-Dec
3482
475.50
31-Dec
1,690.40
17,322.10
22-Dec
3483
1,140.00
Total
23-Dec
3484
798.00
24-Dec
3485
450.80
30-Dec
3486
1,889.50
14,933.20
Total
The bank statement contained two bank memoranda.
(1) A credit of Taka 4,145 for the collection of a Taka 4,000 note for Backhaus Company plus
interest of Taka 160 and less a collection fee of Taka 15. Backhaus Company has not
accounted for the collection.
(2) A debit of Taka 572.80 for NSF check written by D. Chagnon, a customer. At December
31, the check had not been redeposited in the bank.
At December 31, the cash balance per books was Taka 12,485.20 and the cash balance per
the bank statement was Taka 20,154.30. The bank did not make any errors, but two errors
were made by Backhaus company.
Required:
(a)
(b)
Prepare a Bank reconciliation at December 31.
Prepare the adjusting entries based on the reconciliation.
[Marks: 20]
Q. No. 2.
(a)
Jamuna Trading Company uses a perpetual inventory system. The Company has the
opening inventory, purchases and sales data for the month of March 2014 as under:
Inventory
Purchases:
March 01
200 units @ Tk. 4.00
March 10
500 units @ Tk. 4.50
March 20
400 units @ Tk. 4.75
March 30
300 units @ Tk. 5.00
Sales
March 15
500 units
March 25
400 units
The physical inventory count on March 31 shows 500 units on hand.
Required:
Determine the cost of inventory on hand at March 31 and the cost of goods sold for
March under the (i) FIFO, (ii) LIFO and ( iii) average cost method.
(b) "The key to successful business operations is effective inventory management".
Do you agree? Explain.
[Marks: (15+5) = 20]
Page 2 of 4
CMA JUNE, 2016 EXAMINATION
FOUNDATION LEVEL
SUBJECT : 001. PRINCIPLES OF ACCOUNTING.
Q. No. 3.
Mr. XYZ closed its books of Accounts as on 31.12.2015. The followings balances are taken
from the ledger of Mr. XYZ:
Mr. XYZ
Trial Balance
As at December 31, 2015
Accounts Titles
Cash
Accounts Receivable
Allowance for doubtful Accounts
Office Supplies Inventory
Prepaid Rent
Prepaid Advertising
Unexpired Insurance
Office Equipments
Accumulated Depreciation - Office Equipments
Furniture and Fixture
Accumulates Depreciation - Furniture and Fixture
Accounts Payable
Notes Payable (01/12/2014)
Capital
Drawings
Service Revenue
Salaries Expenses
Utilities Expenses
Delivery Expenses
Miscellaneous Expenses
Total
Debit (Tk.)
55,000
60,000
Credit (Tk.)
2,500
5,000
15,000
10,000
6,500
55,000
6,000
40,000
4,000
30,000
20,000
100,000
20,000
200,000
60,000
10,000
5,000
21,000
362,500
362,500
Additional Information are given below:
(a) Office supplies on hand at December 31, 2015 Tk. 2,000.
(b) Rent Expenses for 2015 Tk. 12,000.
(c) Advertising Expenses for 2015 Tk. 8,000.
(d) Insurance Expenses for 2015 Tk. 4,500.
(e) Allowance for doubtful accounts increased up to Taka 4,000.
(f) Depreciation on fixed Assets @ 10% per year.
(g) Accrued Interest on notes payable 10% per year.
(h) Salaries payable of Tk. 8,000.
Required :
(i) A 10 column worksheet.
(ii) Adjusting Entries
[Marks: (20+5) = 25]
Page 3 of 4
CMA JUNE, 2016 EXAMINATION
FOUNDATION LEVEL
SUBJECT : 001. PRINCIPLES OF ACCOUNTING.
Q. No. 4.
On January 1, 2008 Frybendall Company had Accounts Receivable Tk.56,900 and Allowances
for Doubtful Accounts Tk.4,700. Frybendall Company prepares financial statements annually.
During the year the following selected transactions occurred.
Jan. 5 Sold Tk. 6,300 of merchandise to Klosterman Company, terms n/30.
Feb. 2 Accepted a Tk. 6,300, 4-month, 10% promissory note from Klosterman Company
for the balance due.
12 Sold Tk.7,800 of merchandise to Menard Company, and accepted Menard's
Tk.7,800, 2-month, 10% note for the balance due.
26 Sold Tk.4,000 of merchandise to Louk Co., terms n/10.
Apr. 5 Accepted a Tk.4,000, 3-month, 8% note from Louk Co. for the balance due.
12 Collected Menard Company note in full.
June 2 Collected Klosterman Company note in full.
July 5 Louk Co. dishonors its note of April 5. It is expected that Louk will eventually pay
the amount owed.
15 Sold Tk.7,000 of merchandise to Peck Co. and accepted King's Tk.7,000, 3month, 12% note for the amount due.
Oct. 15 Peck Co.'s note was dishonored. Peck Co. is bankrupt, and there is no hope of
future settlement.
Required:
Journalize the transactions.
[Marks: 20]
Q. No. 5.
(i)
How can a company have a profit but not have cash?
(ii)
How does the average cost method of inventory costing differ between a perpetual
inventory system and a periodic inventory system?
(iii)
What does debit memo mean on a bank statement?
(iv)
Distinguish between FOB shipping point and FOB destination. Identify the freight terms
that will result in a debit to Merchandise Inventory by the purchaser and a debit to Freightout by the seller.
(v)
Explain the meaning of the credit term 2/10, n/30.
(vi)
What is net realizable value?
[Marks: (2.5 x 6) = 15]
= THE END =
Page 4 of 4
THE INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF BANGLADESH
CMA DECEMBER, 2016 EXAMINATION
FOUNDATION LEVEL
SUBJECT: 001. PRINCIPLES OF ACCOUNTING
Time: Three hours

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.
Full Marks: 100
Q. No. 1.
Mr. J. Abedin of ABC River Resort opened the business on June 1 with eight air-conditioned
units. Its trial balance before adjustment on August 31 is as follows:
ABC RIVER RESORT
Trial Balance
31st August 2010
Taka
19,600
3,300
6,000
25,000
125,000
26,000
6,500
7,400
80,000
100,000
5,000
80,000
3,600
51,000
9,400
Cash
Supplies
Prepaid Insurance
Land
Cottages
Furniture
Accounts Payable
Unearned Rent Revenue
Mortgage Payable
J. Abedin, Capital
J. Abedin, Drawing
Rent Revenue
Repair Expenses
Salaries Expenses
Utilities Expenses
Other data:
(1) Insurance expires at the rate of Tk. 400 per month.
(2) A count on August 31 shows Tk. 600 of supplies on hand.
(3) Annual depreciation is Tk. 6,000 on cottages and Tk. 2,400 on furniture.
(4) Unearned rent revenue of Tk. 4,100 was earned prior to August 31.
(5) Salaries of Tk. 400 were unpaid at August 31.
(6) Rentals of Tk. 1,000 were due from tenants at August 31, (Use Accounts Receivable)
(7) The mortgage interest rate is 9% per year. (The mortgage was taken out on August 1)
Required:
(i)
Journalize the adjusting entries on August 31 for the 3-month period June 01 – August 31.
(ii) Prepare an adjusted trial balance on August 31.
(iii) Prepare an income statement and an owner’s equity statement for the 3 months ending
August 31 and a balance sheet as of August 31.
[Marks: (10+10+10) = 30]
Q. No. 2.
On January 1, 2010. Pele Company purchased the following two machines for use in its
production process.
Page 1 of 3
CMA DECEMBER, 2016 EXAMINATION
FOUNDATION LEVEL
SUBJECT: 001. PRINCIPLES OF ACCOUNTING
Q. No. 2. (cont’d……..)
Machine A: The cash price of this machine was Tk. 38,000. Related expenditures included:
Sales tax Tk. 1,700, shipping costs Tk. 150, insurance during shipping Tk. 80., installation and
testing costs Tk. 70, and Tk. 100 of oil and lubricants to be used with the machinery during it
first year of operations. Pele estimates that the useful life of the machine is 5 years with a Tk.
5,000 salvage value remaining at the end of that time period. Assume that the straight-line
method of depreciation is used.
Machine B: The recorded cost of this machine was Tk. 160,000. Pele estimates that the useful
life of the machine is 4 years with a Tk. 10,000 salvage value remaining at the end of that time
period.
Required:
(a)
Prepare the following for Machine A.
(i) The journal entry to record its purchase on January 1, 2010.
(ii) The journal entry to record annual depreciation at December 31, 2010.
(b)
Calculate the amount of depreciation expense that Pele should record for machine B
each year of its useful life under the following assumptions.
(i)
Pele uses the straight-line method of depreciation.
(ii) Pele uses the declining-balance method. The rate used is twice the straight-line
rate.
(iii) Pele uses the units-of-activity method and estimates that the useful life of the
machine is 125,000 units. Actual usage is as follows: 2010, 45,000 units; 2011,
35,000 units; 2012, 25,000 units; 2013, 20,000 units.
(c)
Which method used to calculate depreciation on machine B reports the highest amount
of depreciation expense in year 1 (2010)? The highest amount in year 4 (2013)? The
highest total amount over the 4-year period?
[Marks: (5+5+5) = 15]
Q. No. 3.
The following represents selected information taken from a company’s aging schedule to
estimate uncollectable accounts receivable at year end.
Particulars
Number of days Outstanding
Total
0-30
31-60
61-90
91-120
Over-120
Tk.
Tk.
Tk.
Tk.
Tk.
Tk.
Accounts receivable
375,000
220,000
90,000
40,000
10,000
15,000
Uncollectible %
1%
4%
5%
8%
10%
Required:
(i)
Calculate the total estimated bad debts based on the above information.
(ii) Prepare the year end adjusting journal entry to record the bad debts using the aged
uncollectible accounts receivable determined in (i). Assume the current balance in the
allowance for doubtful accounts is Tk. 8,000 in addition to above calculated amount, that
has not been accounted for.
(iii) On the above account, Tk. 5,000 is determined to be specifically uncollectible. Prepare
the Journal entry to write off the uncollectable account.
(iv) The company collects Tk. 5,000 subsequently on a specific account that had previously
been determined to be uncollectable in (iii). Prepare the journal entries necessary to
restore the account and record the cash collection.
(v) Comments on how your answers to (i)-(iv) would change if the Company used 3% of total
accounts receivable, rather than aging the accounts receivable. What are the advantages
to the company of aging the accounts receivable rather than applying a percentage to
total accounts receivable?
[Marks: 15]
Page 2 of 3
CMA DECEMBER, 2016 EXAMINATION
FOUNDATION LEVEL
SUBJECT: 001. PRINCIPLES OF ACCOUNTING
Q. No. 4.
O’Reilly Company lost all of its inventory in a fire on December 26, 2010. The accounting
records showed the following gross profit data for November and December.
November Taka
December (to 12/26) Taka
Net sales
600,000
700,000
Beginning inventory
32,000
36,000
Purchases
377,000
424,000
Purchase return and allowances
13,300
14,900
Purchase discounts
8,500
9,500
Freight-in
8,800
9,900
Ending inventory
36,000
O’Reilly is fully insured for fire losses but must prepare a report for the insurance company.
Required:
(i)
Compute the gross profit rate for November.
(ii)
Using the gross profit rate for November, determine the estimated cost of the inventory
lost in the fire.
[Marks: (7+8) = 15]
Q. No. 5.
(a)(1) Presented below are transactions related to Wheeler Company:
-
On December 3, Wheeler Company sold Tk.500,000 of merchandise to Hashmi Co.,
terms 2/10, n/30, FOB shipping point. The cost of the merchandise sold was
Tk.350,000.
-
On December 8, Hashmi Co. was granted an allowance of Tk. 27,000 for merchandise
purchased on December 3 from Wheeler Company.
-
On December 13, Wheeler Company received the balance due from Hashmi Co.
Prepare the journal entries to record these transactions on the books of Wheeler
Company using a perpetual inventory system.
(2)
(b)
Assume that Wheeler Company received the balance due from Hashmi Co. on January
2 of the following year instead of December 13. Prepare the journal entry to record the
receipt of payment on January 2.
Distinguish between:
(i)
Capital and Revenue expenditure;
(ii)
Accrual and Cash basis of Accounting;
(iii)
Single step and Multiple step form of Income Statement;
(iv)
Preferred Stock and Common Stock;
(v)
Depreciation, Amortization & Depletion.
[Marks: (10+15) = 25]
= THE END =
Page 3 of 3
THE INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF BANGLADESH
CMA JUNE, 2017 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
The account balances taken from the ledger of United Motors Ltd. On December 31, 2016 are
given below:
Accounts Receivable
431,000
Capital – Unique Motors Ltd.
975,500
Notes Receivable
122,000
Accounts Payable
210,240
Cash
710,500
Notes Payable
112,000
Inventory
55,000
Sales
178,750
Unexpired Insurance
800
Interest Income
3,000
Purchase
110,350
Foreign Loan
40,860
Freight in
3,400
Allowance for bad debt
1,500
Delivery expenses
3,400
Accumulate depre-Computer
8,200
Sales salaries
18,000
Accumulate depre-Equipment
7,800
Rent
3,600
Computer
42,000
Interest expenses
2,000
Equipment
15,800
Office expenses
20,000
Adjustments:
(a) Inventory on December 31, 2016 was taka75,000
(b) The Allowance for bad debts are to be increased to taka 2,000
(c) Accrued delivery expenses amounted to taka 500
(d) Sales salaries accrued amounted to taka 2,500
(e) Office supplies on hand taka 5,520
(f) Depreciation – Computer – 8%, Equipment – 10% p.a.
(g) Taka 3,000 is reported as interest income from which taka 1,200 is unearned
(h) Taka 2,000 is reported as interest expenses of which taka 500 represents a payment for
the year 2017
Required:
(i)
Prepare a ten column work sheet.
(ii) Show necessary adjustment entries.
[Marks: (15+5) = 20]
Q. No. 2
(a) “Anticipate no profit, provide for all possible losses” – Explain.
(b) On January 1, 2016, Kloppenberg Company had Accounts Receivable TK. 39,000, Notes
Receivable Tk.25,000, and Allowance for Doubtful Accounts Tk.13,200.The note
receivable is from Sara Rogers Company. It is a 4-month, 12% note dated December 31,
2015. Kloppenberg Company prepares financial statements annually. During the year the
following selected transactions occurred.
Jan. 05.
Jan. 20.
Feb. 18
Apr. 20
Sold Tk.20,000 of merchandise to Dedonder Company, terms n/15.
Accepted Dedonder Company’s Tk.20,000, 3-month, 9% note for balance due.
Sold Tk.8,000 of merchandise to Ludwig Company and accepted Ludwig’s
Tk.8,000, 6-month, 9% note for the amount due.
Collected Dedonder Company note in full.
Page 1 of 3
CMA JUNE, 2017 EXAMINATION
FOUNDATION LEVEL
SUBJECT: 001. PRINCIPLES OF ACCOUNTING
Q. No. 2 (cont’d………)
Apr. 30
May 25.
Aug. 18
Aug. 25
Sept. 01
Received payment in full from Sara Rogers Company on the amount due.
Accepted Jenks Inc.’s Tk.4,000, 3-month, 7% note in settlement of a past-due
balance on account.
Received payment in full from Ludwig Company on note due.
The Jenks Inc. note was dishonored. Jenks Inc. is not bankrupt; future payment is
anticipated.
Sold Tk.12,000 of merchandise to Lena Torme Company and accepted a
Tk.12,000, 6-month, 10% note for the amount due.
Required:
Journalize the transactions.
[Marks: (5+15) = 20]
Q. No. 3
(a) Jamuna Trading Company uses a perpetual inventory system. The Company has the
opening inventory, purchases and sales data for the month of March 2016 as under:
Inventory
Purchases:
Sales
March 01
March 10
March 20
March 30
March 15
March 25
200 units @ Tk. 4.00
500 units @ Tk. 4.50
400 units @ Tk. 4.75
300 units @ Tk. 5.00
500 units
400 units
Tk.
800.00
2,250.00
1,900.00
1,500.00
The physical inventory count on March 31 shows 500 units on hand.
Required:
Determine the cost of inventory on hand at March 31 and the cost of goods sold for March
under the (1) FIFO, (2) LIFO and '( 3) average cost method.
(b)
"The key to successful business operations is effective inventory management". Do you
agree? Explain.
[Marks: (15+5) = 20]
Q. No.4.
(a) What are different methods that may be employed in reconciling the bank and the cash
balances? Which method would you recommend? Why?
(b) The cash account of United Motors Ltd. disclosed a balance of Tk. 17,056 on June 30,
2016. The bank statement as of June 30, showed a balance of Tk. 21,209. Upon
comparing the bank statement with the cash records the following facts were developed:
(i)
United Motor’s account has been charged for a customer’s uncollectible cheque
amounting to Tk. 1,143 on June 30.
(ii) A customer’s cheque for Tk. 725 had been entered as Tk. 625 both by the depositor
and the bank but was later corrected by the bank.
(iii) A two month 9% Tk. 3,000 customer’s note dated April 28 discounted on June 5 had
been protested on June 29 and the bank had charged United Motor for tk. 3,050
which included a protest fee of Tk. 5.
(iv) Cheque No. 0151 for Tk. 1,242 had been entered in the cash book as Tk. 1,224 and
cheque No. 0159 for Tk. 629 had been entered as Tk. 926. The company uses the
voucher system.
(v) There were bank service charges for June Tk. 41 not yet recorded on the books.
Page 2 of 3
CMA JUNE, 2017 EXAMINATION
FOUNDATION LEVEL
SUBJECT: 001. PRINCIPLES OF ACCOUNTING
Q. No. 4 (cont’d………)
(vi)
A bank memo statement stated that notes receivable for Tk. 2,500 and interest of
Tk. 75 had been collected on June 28 and the bank had made a charge of Tk. 25.
(No entry had been made on the books when sent to the bank for collection)
(vii) Cheques outstanding on June 30 were Tk. 12,308.
(viii) Receipts of June 30 for Tk. 6,850 were deposited July 02.
Required:
(i)
Prepare a bank reconciliation statement using the form where both bank and book
balance is brought to corrected cash balance.
(ii) Give necessary journal entries in United Motor’s book.
[Marks: 5+(10+5) = 20]
Q. No. 5
(a) What is Intangible Asset and Wasting Asset? Explain.
(b) United Motors Ltd. reported the following as plant assets on December 31, 2015:
Land
Building
Less: Accumulated Depreciation
Tk. 1,32,50,000
Tk. 60,50,000
Tk. 60,00,000
Tk. 72,00,000
Equipment
Less: Accumulated Depreciation
Tk. 2,00,00,000
Tk. 25,00,000
Tk. 1,75,00,000
Total assets
Tk. 3,07,00,000
During 2016 the following selected cash transactions occurred.
April 01, Purchased Land for Tk. 44, 00,000
May 01, Sold Equipment that cost Tk. 300,000 which was purchased on January 01,
2012. The Equipment was sold for Tk. 175,000.
June 01, Sold Land purchased on June 01, 2008 for Tk. 36,00,000. The Land was
purchased for Tk. 10,00,000.
July 01, Purchased Equipment for Tk. 600,000.
December 31, Retired Equipment that cost Tk. 250,000 which was purchased on
December 31, 2005.
Required:
(i)
(ii)
(iii)
Journalize the above transactions. United Motors Ltd uses straight line depreciation for
Building and Equipment. The Building is estimated to have a 40 years life and no salvage
value, the Equipment to have a 10 years useful life and no salvage value. Update
depreciation on assets disposed off at the time of sale or retirement.
Record the adjusting entries for depreciation for 2016.
Prepare the Plant assets section of United Motors Ltd balance sheet at December 31,
2016.
[Marks: 5+ (8+3+4) = 20]
= THE END =
Page 3 of 3
THE INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF BANGLADESH
CMA JUNE, 2017 EXAMINATION
KNOWLEDGE LEVEL
SUBJECT: IE 01. PRINCIPLES OF ACCOUNTING
Time: Three hours
❖
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.
Full Marks: 100
Q. No. 1
Mr. Faridul Alam started the Alam’s Repair Shop (ARS) on 1st May, 2015 introducing Tk. 35,000
capital. At the end of first month’s operation ARS has prepared the following trial balance and
has also identified following given additional information that might require adjustment.
Alam’s Repair Shop
Trial Balance
As on 31st May, 2015
Sl. No.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
Accounts Title
Cash Account
Equipment Account
Alam’s Capital Account
Rent Expense Account
12% Notes Payable Account
Prepaid Insurance Account
Advertisement Expense Account
Accounts Payable Account
Accounts Receivable Account
Service Revenue Account
Unearned Revenue Account
Debit(Tk.)
20,660
27,000
1,000
1,200
600
1,440
51,900
Credit(Tk.)
35,000
7,200
200
6,000
3,500
51,900
Additional information:
(a) 12% notes payable is a six-month note on which interest has to be recognized for the
month.
(b) ARS has already provided one fourth of the services to their clients from whom they have
received cash Tk. 3,500 on May 15.
(c) One twelfth of the prepayment for accidental insurance has been expired at the end of the
month.
(d) Annual depreciation on equipment is estimated to be Tk. 4,800.
(e) On the last day of May, ARS has provided services to their clients for Tk. 500 for which bill
has not been generated and such collection has not been made.
Required:
Prepare a ten column worksheet for the month.
[Marks: 20]
Q. No. 2
(a) List and describe the major steps in the accounting cycle.
(b) Briefly explain to your friend, who has no knowledge of accounting, the purpose of a
journal entry.
(c) Which financial statements can be prepared from information contained in a trial balance?
(d) Why adjusting entries are normally made at the end of the accounting period?
(e) Because computers now take care of all of the routine accounting functions, there is no
need to know anything about debits, credits, journals, posting. T accounts, and trial
balances. Comment.
[Marks: (5x4) = 20]
Page 1 of 3
CMA JUNE, 2017 EXAMINATION
KNOWLEDGE LEVEL
SUBJECT: IE 01. PRINCIPLES OF ACCOUNTING.
Q. No. 3
The debit and credit totals of the following trial balance are unequal as a result of the following
errors.
Cash
Accounts Receivable
Prepaid Insurance
Office Supplies
Accounts Payable
Notes Payable
Capital Stock
Retained Earnings
Dividends
Fees Earned
Wages Expense
Rent Expense
Advertising Expense
Automobile Expense
Miscellaneous Expense
Totals
Tk. 26,500
37,775
800
960
Tk. 11,410
6,000
7,500
25,340
2000
126,500
84,100
5,500
3,900
275
1,550
Tk. 161,360
Tk. 178,750
Errors noted:
(a) The balance of cash was understated by Tk. 750.
(b) A cash receipt of Tk. 2,100 was posted as a debit to Cash of Tk. 1,200.
(c) A debit of Tk. 3,000 for a cash dividend was posted as a credit to Retained Earnings.
(d) The balance of Tk. 2,750 in Automobile Expense was entered in the trial balance as Tk. 275.
(e) A debit of Tk. 975 to Accounts Receivable was not posted.
(f)
A return of Tk. 125 of defective supplies was erroneously posted as a Tk. 215 credit to
Supplies.
(g) An insurance policy acquired at a cost of Tk. 150 was posted as a credit to Prepaid
Insurance.
(h) A debit of Tk. 900 in Accounts Payable was overlooked when determining the balance of
the account.
(i)
The balance of Notes Payable was overstated by Tk. 5,000.
Required:
Prepare a corrected trial balance as of June 30 of the current year.
[Marks: 20]
Q. No. 4
Bob Sample opened the Campus Laundromat on September 1, 2016. During the first month of
operations the following transactions occurred.
Sept. 1 Invested Taka 20,000 cash in the business.
2
Paid Taka 1,000 cash for store rent for the month of September.
3
Purchased washers and dryers for Taka 25,000, paying Taka 10,000 in cash and
signing a Taka 15,000, 6-month, 12% note payable.
4
Paid Taka 1,200 for one year accident insurance policy.
10
Received bill from the Daily News for advertising the opening of the Laundromat Taka 200.
20
Withdraw Taka 700 cash for personal use.
30
Determined that cash receipts for laundry services for the month were Taka 6,200.
Instructions:
Journalize the September transaction.
[Marks: 20]
Page 2 of 3
CMA JUNE, 2017 EXAMINATION
KNOWLEDGE LEVEL
SUBJECT: IE 01. PRINCIPLES OF ACCOUNTING
Q. No. 5
(a) Define opportunity cost and sunk cost with appropriate example.
(b) Selected account balances for the year ended December 31 are provided below for ABC
Company:
Particulars
Salesman and Administrative salary
Utilities, Factory
Sales commission
Insurance, factory
Advertising expense
Maintenance, factory
Purchase of raw materials
Direct labor
Indirect material
Indirect labor
Cleaning supplies, factory
Rent, factory building
Amount (Taka)
91,000
38,000
57,000
6,500
88,000
23,000
311,000
74,533
47,000
18,000
7,300
122,667
Inventories at the beginning and end of the year were as follows:
Inventories
Raw materials
Work in process
Finished goods
Beg. Inv.
Tk. 39,000
???
Tk. 57,000
End. Inv.
???
28,000
???
The total manufacturing costs for the year were Tk. 675,000; the cost of goods available for
sale totaled Tk. 752,000 and the cost of goods sold totaled Tk. 666,000.
Required:
(i)
Prepare a schedule of Cost of Goods Manufactured, and
(ii)
The cost of goods sold section of the company’s income statement of the year.
[Marks: (5+15) = 20]
= THE END =
Page 3 of 3
THE INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF BANGLADESH
CMA DECEMBER, 2017 EXAMINATION
FOUNDATION LEVEL
SUBJECT: 001. PRINCIPLES OF ACCOUNTING
Time: Three hours

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.
Full Marks: 100
Q. No.1.
The trial balance of PQR Company contained the following accounts at December 31, the end of
the company’s fiscal year.
PQR Company
Trial Balance
December 31, 2015
(Figures in Taka)
Debit
Credit
25,400
37,600
90,000
92,000
1,97,000
54,000
83,500
42,400
50,000
39,000
2,57,800
6,100
9,04,100
7,09,900
69,800
19,400
5,900
7,200
3,500
1,347,300
1,347,300
Cash
Accounts Receivable
Merchandise Inventory
Land
Building
Accumulated Depreciation – Building
Equipment
Accumulated Depreciation – Equipment
Notes Payable
Accounts Payable
Capital
Sales Discount
Sales
Cost of Goods Sold
Salaries Expenses
Utilities Expenses
Repair Expenses
Gas and Oil Expenses
Insurance Expenses
Totals
Adjustment Data:
(i)
(ii)
Depreciation is Tk. 10,000 on Building and Tk. 9,000 on Equipment (Both are administrative
expenses).
Interest of Tk. 5,000 is due and unpaid on notes payable at December 31.
(iii) Merchandise inventory actually on hand is Tk. 88,900.
Other Data:
(i)
Salaries are 80% selling and 20% administrative.
(ii)
Utilities expenses, repair expenses, and insurance expenses are 100% administrative.
(iii)
Tk. 10,000 of the notes payable is payable to next year.
(iv)
Gas and oil expenses are selling expenses.
Required:
Prepare a multiple-step income statement and a classified balance sheet for the period concerned.
[Marks: (10+10) = 20]
Page 1 of 3
CMA DECEMBER, 2017 EXAMINATION
FOUNDATION LEVEL
SUBJECT: 001. PRINCIPLES OF ACCOUNTING
Q. No. 2
(a)
(b)
PQR Ltd. uses perpetual Inventory system and follows FIFO method to determine the cost of
ending inventory. Why?
PQR Ltd. made the following transactions.
March 01 : Sold goods for Tk. 20,000 to AB Co. Ltd on terms 2/12, n30;
11 : Received the payment from AB Co. Ltd of March 01.
12 : Accepted M CO’s Tk. 20,000, 6 months 12% note.
13 : Made sales through credit card for Tk. 13,200.
15 : Made sales through American Express card for Tk. 6,700; 5% service charge is
applicable.
30 : Received full payment of American Express Card sales of March 15.
April 11 : Sold Accounts Receivable of Tk. 8000 to X factory; 2% service charge is
applicable.
13 : Record collections of Tk. 8,200 of credit card sales of March 13.
May 10 : Write of an uncollectable of Tk. 16,000 of Accounts Receivable.
June 30 : One of the Accounts Receivable written off in May 10 paid Tk. 4,000.
Required: Record the above transactions in the books of the PQR Ltd.
(c)
Explain the rule of ‘Lower of cost or Market (LCM)’ in line with IAS-2. Give an example.
[Marks: (5+10+5) = 20]
Q. No. 3
(a)
Which of the following qualities of an asset are characteristic of plant assets?
(i)
(ii)
(iii)
(iv)
(v)
(b)
Capable of repeated use in operations of the business.
Tangible.
Held for sale in normal course of business.
Long lived.
Intangible.
Why the accelerated depreciation method is frequently used for income tax purpose?
ABC Company Ltd. acquired and put into use a machine on January 1, 2015, at a
total cost of Tk. 45,000.00. The machine was estimated to have a useful life of 10
years and a salvage value of Tk. 5,000.00. It was also estimated that the machine
would produce one million units of product during its life. The machine produced
90,000 units in 2015 and 125,000 units in 2016.
Required:
Compute the amounts of Depreciation to be recorded in 2015 and 2016 under each of the
following method:
(i) Straight -line method.
(ii) Units-of-production method.
(iii) Sum-of-the-years-digits method.
(iv) Double-declining balance method.
(v) Assume 30,000 units were produced in the 1st quarter of 2015, Compute
depreciation for this quarter under each of the four methods.
(c)
[Marks: 3+2+(2+2+3+3+5) = 20]
Page 2 of 3
CMA DECEMBER, 2017 EXAMINATION
FOUNDATION LEVEL
SUBJECT: 001. PRINCIPLES OF ACCOUNTING
Q. No. 4
A Tk. 15,000, 90-day, 12% note dated June 15, 2014, was received by ABC
Company from the XYZ Company in payment of its account.
Required:
Prepare the Journals entries in the book of ABC Company in following cases:
(i) The ABC Company received the note on June 15, 2014
(ii) The ABC Company discounted the note on July 15, 2014 at 10% at the National Bank.
(iii) The XYZ Company paid the note at maturity
(iv) Assume that the XYZ Company did not pay the note at maturity. The National Bank
charged the note to the ABC Company. The ABC Company decided that the note
was uncollectible.
(b) Selected data on merchandise inventory purchase and sales for ABC Trading
Company are presented below:
Cost (Tk.)
Retail (Tk.)
Merchandise inventory , March 1,
415,000
595,000
Transactions during the monthPurchases
125,000
215,000
Purchases discount
1,200
Transportation-in
3,900
Sales during the month
575,500
Sales return and allowances
3,500
Required:
Determine the estimated cost of merchandise inventory of ABC Trading Company on
March 31, by retail method, presenting details of the computations.
(a)
[Marks: 10+10 = 20]
Q. No. 5
(a)
(b)
Explain measurement principle as per revised FASB Framework.
The Cash at Bank account in the ledger of ABC Company Ltd. at 31st December
2016 indicated a balance of Tk. 486,006.00. The Bank Statement indicated a balance
of Tk. 640,748.00 on the same date. A comparison of the bank statement and the
Cash book disclosed the following reconciling items:
(1) Cheques issued but not presented Tk. 202,687.00
(2) A deposit of Tk. 89,017.00 on 31st December did not appear on the Bank
Statement of December.
(3) A cheque of Tk. 20,000.00 drawn by ABC Traders Ltd. had been wrongly
charged by the Bank to the Account of ABC Company Ltd.
(4) The Bank had collected for ABC Company Ltd. Tk. 51,000.00 on account of notes
Receivable sent for collection. The face value of the note was Tk. 50,000.00.
(5) Bank service charges for December 2016 amounted to Tk. 675.00 debited on
the statement.
(6) Interest credited by the Bank for Tk. 10,000.00.
(7) A customer’s cheque for Tk. 900.00 had been entered as Tk. 90.00 by the depositor.
(8) A cheque issued for Tk. 392.00 had been entered in the cash book as Tk. 329.00.
Required:
(i) A bank reconciliation statement using the form where both cash book and bank
statement balances are brought to corrected balance.
(ii) Journal entries to rectify the cash book balance.
[Marks: 5+(10+5) = 20]
= THE END =
Page 3 of 3
THE INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF BANGLADESH
CMA DECEMBER, 2017 EXAMINATION
KNOWLEDGE LEVEL
SUBJECT: IE 01. PRINCIPLES OF ACCOUNTING.
Time: Three hours
❖
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.
Full Marks: 100
Q. No. 1
The unadjusted trial balance of Omega Services were as follows for the year ended December
31, 2015:
Trial Balance
December 31, 2015
Accounts Title
Cash
Notes Receivable
Supplies
Prepaid Insurance
Equipment
Accumulated Depreciation- Equipment
Buildings
Accumulated Depreciation- Buildings
Land
Accounts payable
Unearned Service Revenue
Notes payable
Omega’s Capital
Drawings
Service Revenue
Salaries expenses
Utilities expenses
Advertising expenses
Total
Debit (Tk.)
43,350
51,700
2,800
8,950
1,37,050
Credit(Tk.)
7,400
269,500
1,72,800
93,500
73,650
44,000
93,500
1,71,450
19,000
84,850
10,850
5,650
5,300
6,47,650
6,47,650
Adjusting data:
i)
Unearned service revenue has been earned Tk. 21,000.
ii)
Accrued interest revenue Tk. 900.
iii)
Supplies on hand Tk. 2,150.
iv)
Accrued salary Tk. 2,000.
v)
Insurance expired Tk. 1,850.
vi)
Depreciation expenses: Equipment Tk. 2,300,
vii)
The Building has an expected life of 20 years and a residual value of Tk.19,500.
viii) Unpaid interest Tk.1,200.
ix) Unpaid advertising expenses Tk. 400.
Required:
Prepare a ten column worksheet.
[Marks: 20]
Page 1 of 3
CMA DECEMBER, 2017 EXAMINATION
KNOWLEDGE LEVEL
SUBJECT: IE 01. PRINCIPLES OF ACCOUNTING.
Q. No. 2.
(a)
Define the concept of “Debit” and “Credit”. Explain the golden rule of accounting.
(b)
What is chart of accounts? Why it is necessary for the entity? Is it similar or different to all
of the entity? Why?
(c)
Debu started her own consulting firm on July 1, 2016. The following transactions occurred
during the month of July.
July
1. Debu invested Tk.250,000 cash in the business.
5. Paid Tk.6,000 for employee salaries.
7. Provide a consultancy service to a client on account of Tk.18,000.
8. Miscellaneous expenses paid in cash, Tk.3000.
15. Cash collected from clients Tk.15,000.
29. Purchased Tk.50,000 of office equipment on account.
31. Withdrew Tk.10,000 cash for personal use.
Required:
(i)
Prepare journal entries to record each of the January transactions.
(ii)
Prepare a trial balance as of July 31, 2016.
[Marks: (3+3+14) = 20]
Q. No. 3.
(a)
“The key to successful business operations is effective inventory management.” Do you
agree? Explain.
(b)
GDE Company has the following inventory, purchases, and sales data for the month of
March.
Inventory:
Purchases:
March 1
200 units @ Tk.4.00
Tk.800
March 10
March 20
March 30
500 units @ Tk.4.50
400 units @ Tk.4.75
300 units @ Tk.5.00
2,250
1,900
1,500
March 15
March 25
500 units
400 units
Sales:
The physical inventory count on March 31 shows 500 units on hand.
Instructions:
Under a periodic inventory system, determine the cost of inventory on hand at March 31 and
the cost of goods sold for March under (a) FIFO, (b) LIFO, and (c) Average-cost.
[Marks: (5+15) = 20]
Q. No. 4.
(a)
Define the concept of “cost”, “expenses” and “Loss” with practical examples.
(b)
Differentiate between financial accounting and management accounting.
(c)
DOEL, a manufacturing firm, produces plastic swimming pool. The following information
has been taken from the company’s production, sales and cost records for the just
completed month.
Page 2 of 3
CMA DECEMBER, 2017 EXAMINATION
KNOWLEDGE LEVEL
SUBJECT: IE 01. PRINCIPLES OF ACCOUNTING.
Q. No. 4. (cont’d……….)
Cost data for the month:
Purchases of raw material
Direct Labor
Indirect Material
Royalty for production patent
Advertisement
Rent
Utility, factory
Salary, office
Depreciation
Maintenance, factory
Inventories:
Raw Material
Work in process
Finished Goods
: 7,000 pounds@ 10 per pound
: ?
: Tk. 4,200
: Tk. 2,500
: Tk. 5,400
: Tk. 6,000
: Tk. 4,500
: Tk. 10,000
: Tk. 4,000
: Tk. 8,750
Beginning
Tk. 5,000
Tk. 600
Tk. Nil
Ending
Tk. 8,500
Tk. 6,000
Tk. 7,020
Other data:
Sales for the month Tk.1,44,300; Rent 60% and depreciation 80% is for factory; prime cost for
the month Tk.79,800.
Required:
(i)
Prepare a schedule of goods manufactured for the month.
(ii) Prepare a schedule of Cost of Goods Sold for the month.
[Marks: (2.5+2.5+15) = 20]
Q. No. 5.
(a)
Differentiate between double entry and single system
(b)
List and describe the major steps in the accounting cycle.
(c)
Briefly explain to your friend, who has no knowledge of accounting, the purpose of a
journal entry.
(e)
Because computers now take care of all of the routine accounting functions, there is no
need to know anything about debits, credits, journals, posting, T accounts, and trial
balances. Comment
[Marks: (4 x 5) = 20]
= THE END =
Page 3 of 3
THE INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF BANGLADESH
CMA JUNE, 2018 EXAMINATION
FOUNDATION LEVEL
SUBJECT: 001. PRINCIPLES OF ACCOUNTING
Time: Three hours

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.
Full Marks: 100
Q. No. 1
ABC Company Limited closed its books of accounts as on 30.06.2017. The followings are the
balances taken from the ledger of the Company:
Taka
Cash and Bank
240,000
Accounts Receivable
672,000
Inventory 01 July, 2016
648,000
Store Supplies
16,000
Office Supplies
5,800
Prepaid Insurance
25,000
Store Equipment
170,000
Accumulated Depreciation (Store Equipment)
45,000
Office Equipment
52,000
Accumulated Depreciation (Office Equipment)
16,000
Accounts Payable
360,000
Mortgage Notes Payable (due 2022)
600,000
Capital
528,000
Sales
2,460,000
Sales Discount
54,000
Sales Return
33,600
Purchase
1,384,800
Purchase Return
78,000
Purchase Discount
31,600
Sales Salaries
246,000
Delivery Expenses
68,000
Rent Expenses
48,000
Freight-in
36,000
Office Salaries
136,000
Office Expenses
15,000
Misc. General Expenses
13,600
Gain on disposal of Assets
7,200
Interest Expenses
30,000
Land
232,000
Page 1 of 4
CMA JUNE, 2018 EXAMINATION
FOUNDATION LEVEL
SUBJECT: 001. PRINCIPLES OF ACCOUNTING
Q. No. 1(cont’d…)
Other relevant information on June 30, 2017 are as follows:
(a) The Inventory on hand
507,200
(b) Supplies on hand :
Office Supplies
2,200
Store Supplies
9,000
(c) Insurance Expired during the year:
Allocable to selling expenses
9,700
Allocable to general expenses
2,600
(d) Equipments are depreciated at the rate of 10% per annum.
(e) Accrued sales salaries
4,600
(f) Accrued office salaries
2,100
(g) Accrued interest on the mortgage notes payable
4,800
(h) Income tax is estimated at 45% of the income.
Required: Prepare (a)
(b)
Statement of Financial Performance for the year ended June 30, 2017 and
Statement of Financial Position as at June 30, 2017.
[Marks: 20]
Q. No. 2.
(a)
(b)
Explain the concept of Business entity and going concern.
On January 31, 2016 Orion Company Limited had a cash balance per books of Tk.
6,781.50.The bank statement from Bank Asia on that data showed a balance of Tk.
6,404.60. A comparison of the statement with the cash account revealed the following
facts:
(i)
The statement included a debit memo of Tk. 40 for the printing of company cheques.
(ii) Cash sales of Tk. 836.15 on January 12 were deposited in the bank. The cash
receipts journal entry and the deposit slip were incorrectly made for Tk. 886.15. The
bank credited Orion Company for the correct amount.
(iii) Outstanding cheques at January 31 totaled of Tk. 576.25. Deposits in transit were
Tk. 1,916.15.
(iv) On January 18, the company issued cheque no. 1181 for the Tk. 685 to Star
Limited, on account. The cheque, which cleared the bank in January, was incorrectly
journalized and posted by Orion Company Limited for Tk. 658.
(v) A note receivable of Tk. 2,500 was collected by the bank for Orion Company Limited
on January 31 plus Tk. 80 interest. The bank charged a collection fee of Tk. 20. No
interest has been accrued on the note in the book of the company.
(vi) Included with the cancelled cheques was a cheque issued by Lalmai Company
Limited to Pharma Limited for Tk. 800 that was incorrectly charged to Orion
Company Limited by the bank.
(vii) On January 31 , the bank statement showed a NSF charge of Tk. 680 for a cheque
issued by Alom, a customer, to Orion Company Limited on account.
Required:
(i)
Prepare the bank reconciliation statement on January 31, 2016.
(ii) Prepare the necessary adjusting entries for Orion Company Limited at January 31, 2016.
Marks: (5+10+5) =20]
Page 2 of 4
CMA JUNE, 2018 EXAMINATION
FOUNDATION LEVEL
SUBJECT: 001. PRINCIPLES OF ACCOUNTING
Q. No. 3.
(a) Differentiate between stock split and reverse stock split. Explain the impact of such split
on stockholder’s Equity section of Balance sheet.
(b) On January 01, 2016 Halim Motors Ltd. had the following stockholders’ equity account:
Common stock (Tk.10 per share value, 520,000 issued and Outstanding)
Paid up capital in excess of par value
Retained earnings
Tk. 52,00,000
Tk. 30,00,000
Tk. 6,40,000
During the year the following transactions took place:
April
May
August
August
December
December
01 Declared 15% cash dividend to stock holders which is payable on May 01.
01 Paid the dividend declared on April 01.
01 Declared 10% stock dividend to stock holders which will be credited on
August 31. Market value of Halim’s stock was Tk. 15 on August 1.
31 Issued the stocks for the stock dividend declared before.
01 Declared 15% cash dividend to stock holders which is payable on January
05, 2017.
31 Determined that net income for the year was Tk. 12,00,000.
Required:
Journalize the transactions and the closing entry for the net income.
[Marks: (8+12) = 20]
Q. No. 4
(a) Critically analyze the application of depreciation methods from accounting and income tax
perspectives with reference to relevant standards and laws.
(b) The following selected transactions are related to Falcetto Company:
March
April
01
11
12
13
15
11
13
May
10
June
30
July
16
Sold Tk. 20,000 of Merchandise to Potter Company, terms 2/10, n/30.
Received payment in full from Potter Company for balance due.
Accepted Juno Company’s Tk. 20, 000, 6-month, 12% note for balance due.
Made credit card sales for Tk. 13,200.
Made Visa credit sales totaling Tk. 6,700, a 3% service fee is charged by Visa.
Sold accounts receivable of Tk. 8,000 to Harcot Factor. Harcot Factor assesses
a service charge of 2% of the amount of receivables sold.
Receive collection of Tk. 8,200 on Falcetto company credit card sales and added
finance charges of 1.5% of the remaining balance.
Wrote off as uncollectible Tk. 16,000 of accounts receivable. Falcetto uses the
percentage of sales basis to estimate bad debts.
Credit sales recorded during the first 6 months total Tk. 2,000,000.The bad debt
percentage is 1% of credit sales. At June 30, the balance in the allowance
account is Tk. 3,500.
One of the account receivable written off in May was from J. Simon, who pays
the amount due, Tk. 4,000, in full.
Required:
Prepare the Journal entries for the above transaction.
[Marks: (5+15) = 20]
Page 3 of 4
CMA JUNE, 2018 EXAMINATION
FOUNDATION LEVEL
SUBJECT: 001. PRINCIPLES OF ACCOUNTING
Q. No. 5.
(a) Explain prepaid expenses and unearned revenues with reference to relevant accounting
principles.
(b) There are 500 employees of United Motor Ltd. on the payroll register for the month of
January 2017. Employees are working in different departments as follows:
Production department
– 300 Nos.
Service department
– 175 Nos.
Admin & Finance department
– 25 Nos.
Summary of payroll data for the employees of January 2017 is given below:
(i)
Basic wages and salaries Tk. 24,00,000.
(ii) House rent allowance: 10% of basic wages and salaries.
(iii) Medical allowance: Tk. 200 per employee per month.
(iv) Dearness allowance: 10% basic wages and salaries.
(iv) Conveyance allowance: Tk. 250 per employee per month.
(v) 10% of basic wages salaries deducted from each employee as contribution to Provident
fund and company contributes equivalent amount to the provident fund.
(vi) Union subscription is deducted Tk. 25 per month from each employee of all departments.
(vii) Incentive production bonus is given to the employees 25% of basic wages and salaries for
extra production.
Required:
(1) Prepare a payroll register for the month of January, 2017.
(2) Prepare necessary journal entries to record the pay roll.
[Marks: 5+ (10+5) = 20]
= THE END =
Page 4 of 4
CMA DECEMBER, 2018 EXAMINATION
FOUNDATION LEVEL
SUBJECT: 001. PRINCIPLES OF ACCOUNTING
Time: Three hours

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.
Full Marks: 100
Q. No. 1
(a)
“Every debit must have an equal and corresponding credit” – Explain.
(b)
The following ledger balances and adjustments are taken from the Books of Al – Tawaf Ltd.
Al – Tawaf Ltd.
Trial Balance
As on December 31, 2016
Taka
Cash
1,20,000
Furniture & Fixtures
95,000
Accumulated Depreciation – Furniture & Fixtures
15,000
Accounts Receivable
1,10,000
Allowance for Bad debts
2,000
Inventory (01.01.2016)
65,000
Unexpired Insurance
15,000
Supplies on hand
7,000
Accounts Payable
64,000
Common Stock
1,70,000
Retained Earning
50,000
Sales
2,90,000
Sales Return & Allowances
12,000
Purchase
1,20,000
Transportation in
10,000
Operating Expenses
43,000
Interest Revenue
11,000
Interest Expenses
5,000
Adjustments:
(1)
Office Salaries accrued Tk. 3,000.
(2)
Estimated Bad Debts, 1% on net sales.
(3)
Depreciation on Furniture & Fixtures, 5% per annum.
(4)
Insurance expired Tk. 10,000.
(5)
Supplies used Tk. 5,000.
Required:
(i)
Prepare a Ten column worksheet as at December 31, 2016.
(ii)
Pass the necessary adjustment entries.
[Marks: (5+15) = 20]
Page 1 of 3
CMA DECEMBER, 2018 EXAMINATION
FOUNDATION LEVEL
SUBJECT: 001. PRINCIPLES OF ACCOUNTING
Q. No. 2
The bank statement of Al- Tacwa Ltd. having account with AB Bank shows:Tk.
Tk.
Balance on June 30, 2017
1,40,000
Deposit during July, 2017
50,000
1,90,000
Less: Cheque cleared
60,000
Service charge for July, 2017
100
1,29,900
(a)
(b)
Balance per ledger account as of July 31, Tk. 1,24,084.
A Credit memorandum included with the Cancelled cheques returned indicates the collection
of a note by the bank for the Al – Tacwa Ltd. Tk. 2,000.
(c) An NSF cheque for the amount of Tk. 920 is returned by the bank and included in the total of
cheques deducted / cleared on the bank statement.
(d) Deposit in transit as of July 31, Tk. 5,000 and as of June 30, Tk. 2,400.
(e) Cheques outstanding as of June 30, all of which cleared by the bank in July Tk. 3,400.
Cheques outstanding as of July 31, Tk. 8,200.
(f) Deposit of Al - Tawaf Ltd. credited to Al – Tacwa Ltd. account by the bank Tk. 2,000.
(g) Cheques of Al – Tawaf Ltd. charged against Al – Tacwa Ltd. account by the bank Tk. 400.
(h) Deposit of July 21, recorded by the company as Tk. 1,637 and by the bank at actual amount
of Tk. 1,673. The receipts for the day were from collection on account.
Required:
(i)
Prepared a Bank Reconciliation Statement as of July 31, 2017 for Al – Tacwa Ltd.
(ii) Prepare necessary adjusting entries needed on July 31, 2017.
[Marks: (15+5) = 20]
Q. No. 3
(a) “Depreciation” and “amortization” hold same objective but with a significant difference – explain.
(b) Many of financial record of Alliance Manufacturing Company were recently destroyed by
flood. Management has hired you to create as much financial information as possible for the
month of December. You are able to find out that the company uses a weighted average
inventory costing system. You also learn that Alliance makes a physical count at the end of
each month is order to determine month ending inventory values. By examining various
documents you are able to gather the following information:
Ending inventory at December 31
Gross margin on sales for December
Total cost of units available for sale in December
Cost of goods sold during December
Cost of beginning inventory, December 01
50,000 units
Tk. 1,01,000
Tk. 1,18,800
Tk. 99,000
Tk. 0.35 per unit
December purchases:
Date
December 04
December 11
December 15
December 16
Units
60,000
50,000
40,000
50,000
Unit cost
Tk. 0.40
Tk. 0.41
Tk. 0.42
Tk. 0.45
You are asked to provide the following information:
(i)
Number of units on hand, December 01.
(ii) Units sold during December.
(iii) Cost per unit of inventory at December 31.
(iv) Value of inventory at December 31.
[Marks: (5+15) = 20]
Page 2 of 3
CMA DECEMBER, 2018 EXAMINATION
FOUNDATION LEVEL
SUBJECT: 001. PRINCIPLES OF ACCOUNTING
Q. No. 4
(a)
(b)
What is stock repurchase? Describe advantages and disadvantages of stock repurchase.
The stock holders equity account of Beximco Ltd. at January 1, 2017 are as follows:
Taka
Preferred stock 6% Tk. 50 par
6,00,000
Common stock Tk. 20 par value 60,000 shares 12,00,000
Paid in capital in excess of par
2,00,000
Retained earnings
6,00,000
During the year the following transactions occurred:
Feb
1
Discovered Tk. 25,000 understatement of 2016 depreciation. Ignore income tax
March 1
Announced a 2 for I stock split. Prior to the split, the market price per share was Tk. 32.
May 30 Declared a 10% stock dividend to stockholders of record on July 15, distributable on
July 31. On May 30, the market price of stock was Tk. 13 per share.
July 31 Issued the share for stock dividend.
Aug 15 2000 shares of treasury stock were repurchased at Tk. 18 per share.
Sep
5 800 shares of treasury stock repurchased above were reissued at Tk. 14 par share.
Oct
10 500 shares of treasury stock repurchased above were reissued at Tk. 20 par share.
Required: Journalize the above transactions.
[Marks: (6+14) = 20]
Q. NO 5.
(a) Pacific Inc. purchased equipment on January 1, 2016 for Tk. 1,30,000. It is estimated that the
equipment will have a Tk. 4,000 salvage value at the end of its service life. Its service life is
estimated at 7 years. Total working hours are estimated at 42,000 and its total production is
estimated at 5,25,000 units. During 2016 the machine was operated 6,000 hours and
produced 55,000 units. During 2017, the machine was operated 5,500 hours and produced
48,000 units.
Required:
Compute depreciation expense for year ending on December 31, 2016 and the year ending on
December 31, 2017 using the following methods:
(i) Straight line; (ii) Units of output;
(iii) Working hour; (iv) Sum of the years digits;
(v) Declining balance (twice the straight line rate)
(b)
Opera Co. organized in 2015, has set up a single account for all intangible assets. The
following summary discloses the debit entries that have been recorded during 2015 and
2016.
Tk.
01/07/2015
8 year franchise
84,000
01/10/2015
Advance payment on laboratory space for 2 year lease
56,000
31/12/2015
Net loss for 2015 including state incorporation fees Tk. 1,000, and
16,000
related legal fees of organizing, Tk. 5,000 (all fees incurred in 2015)
02/01/2016
Purchase of patent (10 years life)
74,000
01/03/2016
Cost of developing a secret formula (indefinite life)
25,000
01/04/2016
Goodwill purchased (indefinite life)
2,78,400
01/06/2016
Legal fee for successful defense of patent purchase above
12,650
01/09/2016
Research and development costs
80,000
Required:
Prepare the necessary entries to clear the intangible assets account and to set up separate
accounts for distinct types of intangibles. Make adjusting entries on December 31, 2016.
[Marks: (15+5) = 20]
= THE END =
Page 3 of 3
CMA APRIL, 2019 SPECIAL EXAMINATION
FOUNDATION LEVEL
SUBJECT: 001. PRINCIPLES OF ACCOUNTING
Time: Three hours

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.
Full Marks: 100
Q. No. 1
The account balances taken from the ledger of Al – Tawaf & Co. on December 31, 2017 are Debit
Taka
Credit
Accounts Receivable
53,000 Share Capital
Cash
210,500 Accounts Payable
Merchandise Inventory
55,000 Sales
Unexpired Insurance
800 Accrued property taxes
Sales discount
1,250 Purchase discount
Purchase
112,000 Interest income
Freight in
3,400 Foreign Loan
Advertising expenses
1,100 Allowance for bad debt
Delivery expenses
2,300 Allowance for dep. on store equipment
Sales salaries
18,000
Rent
3,600
Interest expenses
2,000
Store Equipment
57,800
Office supplies
20,000
Total
540,750 Total
Adjustments:
(i)
The merchandise inventory on December 31, amounts to Tk. 75,000.
(ii)
The Allowance for bad debts are to be increased to Tk. 2,000.
(iii)
(iv)
Sales salaries accrued amounting to Tk. 3,000.
Office supplies on hand Tk. 5,520.
(v)
Depreciation– 10% p.a.
(vi)
Tk. 3,000 is reported as interest income from which Tk. 1,200 is unearned.
Taka
275,500
21,800
180,000
440
1,650
3,000
40,860
1,500
16,000
540,750
(vii) Tk. 2,000 is reported as interest expense of which Tk. 500 represents a payment for the year 2018.
Required:
Prepare a multiple step Income Statement and Classified Balance Sheet for the period concerned.
[Marks: (10+10) = 20]
Q. No. 2
(a)
What is aging of Accounts Receivable? Explain the need for estimating uncollectible
Accounts receivable.
(b)
The Bonton Company closes its books monthly. On June 30 selected ledger account
balances are:
Notes Receivable……………………………………………………Tk. 19,800.00
Interest receivable……………………………………………………Tk. 132.80
Notes receivable include the following:
Date
May – 21
May – 25
June - 30
Maker
Alder Inc.
Dorn Co.
MJH Corp.
Face Value
Tk. 6,000
Tk. 4,800
Tk. 9,000
Page 1 of 3
Terms
60 days
60 days
06 months
Interest Rate
12%
11%
09%
CMA APRIL, 2019 EXAMINATION
FOUNDATION LEVEL
SUBJECT: 001. PRINCIPLES OF ACCOUNTING
Q. No. 2 (cont’d...)
During July, the following transactions were completed:
July – 05
: Made sale of Tk. 6,200 on Bonton Credit Cards.
July – 14
: Made sale of Tk. 700 on VISA Card Credit. The credit card service charge is 3%.
July – 16
: Added Tk. 415 to Bonton charge customers balance for finance charge on unpaid balance.
July – 20
July – 25
: Received payment in full from Alder Inc. on the amount due.
: Received notice that Dorn notes has been dishonored. (Assume that Dorn is
expected to pay in the future).
Instructions:
(i)
Journalize the July transactions and the July 31 adjusting entry for accrued interest
receivable (Interest is computed using 360 days).
(ii) Enter the balance at July 1 in the receivable account and post the entries to all of the
receivable accounts.
[Marks: 4+(8+8) = 20]
Q. No. 3
The Bank Balance as per books of M/s. Dhaka Trading Ltd. showed a balance of Tk. 3,78,085 on
30.6.2018. The Bank Statement as on that date showed a balance of Tk. 4,99,720. While
compared the difference in Cash book and Bank Statement, the following facts were discovered:
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
(viii)
(ix)
A Customer cheque No. 600312 amounting to Tk. 15,000 deposited in the Bank on
26.06.18 dishonored by the Customers Bank due to insufficient balance in the account.
An amount of Tk. 3,500 credited by the Bank on Account of interest for the period.
Cheque No. 1864 and 5038 for total of Tk.8,900 entered in the cash book on 28.06.18
given to the office bearer to deposit in the Bank but erroneously kept in his pocket up to
02.07.18.
Bank Account debited by an amount of Tk. 365 for bank charges on collection of
cheques and remittances.
An amount of Tk. 95,000 transferred by a Customer on 29.06.18 from Dhaka in
settlement of invoice No. 2006 dated 25.05.18. The intimation has not been reached to
the cashier as yet.
The following cheques were issued by the Company not yet presented to the Bank for
payment.
Cheque No. 300113 Tk. 25,600
Cheque No. 300115 Tk. 7,900
Cheque No. 300117 Tk. 18,200
Cheque No. 300128 Tk. 3,000
Cheque No. 300130 issued to M/s. Jamuna Ltd. A/C Payee only for an amount of Tk.
25,000 on 28.06.18 reported to be lost by an employee of M/s. Jamuna Ltd., This has
been informed to the Bank by a written Statement which was finally caught by the Bank
on 07.07.18 and reported to the police. However the depositor of the stolen cheque not
be traced yet. The case is under investigation.
An amount of Tk. 9,600 deposited to the Bank on 30.06.18 which was credited in the
Bank account correctly but the cashier Mr. Rahim debited the cash book erroneously for
Tk. 6,900.
As per standing order bank is paying Tk. 35,000 to Mr. Rahman on the last working day
of every month which has not been recorded by the Cashier.
Required:
(a) Prepare a Bank Reconciliation Statement showing the corrected Bank balance as on
30.06.2018.
(b) Make Journal entries in order to bring the Cash book in agreement with the Bank Balance.
[Marks: (14+6) = 20]
Page 2 of 3
CMA APRIL, 2019 EXAMINATION
FOUNDATION LEVEL
SUBJECT: 001. PRINCIPLES OF ACCOUNTING
Q. No. 4
(a) Ulfat Enterprise received a Tk. 24,000, 60-days, 10% note dated December 1 from Alfaz
Enterprise. Ulfat’s accounting period ends on December 31 every year. Answer the following
required questions for Ulfat Enterprise.
Required:
(i)
Journalize the adjusting entry for accrued interest on December 31.
(ii) Journalize if the note is honored on the maturity date.
(b)
You are provided with the following information for CRIPSON Inc. for the month ended June
30, 2012. CRIPSON uses the periodic method for inventory.
Date
June 01
04
10
11
18
18
25
28
Description
Beginning Inventory
Purchases
Sales
Sales return
Purchases
Purchase return
Sales
Purchase
Quantity
25
85
70
10
35
5
50
20
Unit Cost or Selling Price (Tk.)
30.00
32.00
45.00
45.00
34.00
34.00
42.50
36.00
Required:
Calculate (1) ending inventory and (2) Cost of goods sold under each of the following
methods: (i) LIFO (ii) FIFO (iii) Average Cost.
[Marks: (5+15) = 20]
Q. No. 5
(a) ABC Company Ltd. acquired and put into use a machine on January 1, 2017, at a total cost
of Tk. 45,000.00. The machine was estimated to have a useful life of 10 years and a salvage
value of Tk. 5,000.00. It was also estimated that the machine would produce one million units
of product during its life. The machine produced 90,000 units in 2017 and 125,000 units in
2018.
Required:
Compute the amounts of Depreciation to be recorded in 2017 and 2018 under each of the
following method:
(i)
Straight -line method.
(ii) Units-of-production method.
(iii) Sum-of-the-years-digits method.
(iv) Double-declining balance method.
(b)
ABC Company Ltd., acquire an office equipment on 1st January, 2014 at a cost of Tk.
11,000 with an estimated life of 10 years and a scrap value of Tk. 1000 at the end of life. The
equipment was sold out on 1st July, 2018 at a price of Tk. 5000 received in cash.
Required:
Pass journal entry to record the sale and profit /loss on the sale. Show all computations.
(c)
ABC Company Ltd., purchase a machine at a price of Tk. 36,000 on 1st January, 2001. The
machine was depreciated straight line on the basis of a life of 12 years having no salvage value.
On 1st January, 2010 the machine was exchanged for a new one with a list price of Tk.
40,000. The trade -in value agreed for the old machine was Tk.10,000 and the balance was
paid in cash.
Required:
Pass journal entry to record the receipt of cash and the profit/loss on the exchange. Show
necessary computations.
[Marks: (10+5+5) = 20]
= THE END =
Page 3 of 3
CMA JUNE, 2019 EXAMINATION
FOUNDATION LEVEL
SUBJECT: 001. PRINCIPLES OF ACCOUNTING
Time: Three hours

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.
Full Marks: 100
Q. No. 1
The following balances are taken from the books of accounts of DHAKA TRADING CO. Ltd. On
30th June 2018:
Accounts Receivable
Building
Furniture
Cash
Freight in
Interest Expenses
Salaries and Allowances
Inventories
Purchase
Rent, Rates and Taxes
Salesmen, salaries
Bad Debts
Dividends paid
Allowance for Doubtful accounts
Capital
Retained Earnings
Sales
Interest Income
Accumulated Depreciation -Furniture
Accumulated Depreciation -Building
Bonds Payable
Taka
29,000.00
140,000.00
10,000.00
2,000.00
7,000.00
4,000.00
20,000.00
6,000.00
81,000.00
6,000.00
2,000.00
6,000.00
15,000.00
16,000.00
60,000.00
7,000.00
200,000.00
1,000.00
4,000.00
30,000.00
10,000.00
Adjustments on June 30, 2018 are required as follows:
(a) The Inventory on hand is Tk. 10,000.00
(b) Depreciation on Furniture is to be 10% on original cost.
(c) Building is depreciated @ 5% per annum.
(d) The allowance for doubtful accounts are to be increased to a balance of Tk. 19,000.00
(e) Accrued salaries Tk. 2,000.00
(f) Accrued interest on Bonds Tk. 1,000.00
(g) Accrued selling expenses Tk. 1,500.00
(h) Income tax are estimated to be 35% of the net income before taxes.
Required:
(a) Prepare a Multiple Step Income Statement and Retained Earnings Statement for the year
ended June 30, 2018.
(b) Prepare a Balance sheet as on June 30, 2018.
[Marks: (12+8) = 20]
Page 1 of 3
CMA JUNE, 2019 EXAMINATION
FOUNDATION LEVEL
SUBJECT: 001. PRINCIPLES OF ACCOUNTING
Q. No. 2
(a)
Identify the different types of receivables and explain how companies recognize accounts receivable.
(b)
The following represents selected information taken from a company's aging schedule to
estimate uncollectable accounts receivable at year end.
Particulars
Accounts receivable
Uncollectible %
Total
Tk.
375,000
Number of days Outstanding
0-30
31-60
61-90
Tk.
Tk.
Tk.
220,000
90,000
40,000
1%
4%
5%
91-120
Tk.
10,000
8%
Over-120
Tk.
15,000
10%
Required:
(i)
(ii)
Calculate the total estimated bad debts based on the above information.
Prepare the year end adjusting journal entry to record the bad debts using the aged
uncollectible accounts receivable determined in (a). Assume the current balance in the
allowance for doubtful accounts in a Tk. 8000 debit.
(iii)
On the above account, Tk.5000 is determined to be specifically uncollectible. Prepare the
Journal entry to write off the uncollectable account.
(iv)
The Company collects Tk.5000 subsequently on a specific account that had previously been
determined to be uncollectable in (iii). Prepare the journal entries necessary to restore the
account and record the cash collection.
(v)
Comments on how your answers to (i)-(iv) would change if the Company used 3% of total
accounts receivable, rather than aging the accounts receivable. What are the advantages to
the Company of aging the accounts receivable rather than applying a percentage to total
accounts receivable?
[Marks: (5+15) = 20]
Q. No. 3
(a) Selected data on merchandise inventory purchase and sales for ABC Trading Company are
presented below:
Cost(Tk.)
Retail(Tk.)
Merchandise inventory , March 1
415,000
595,000
Transactions during the monthPurchases
125,000
215,000
Purchases discount
1,200
Transportation-in
3,900
Sales during the month
575,500
Sales return and allowances
3,500
Required:
Determine the estimated cost of merchandise inventory of ABC Trading Company on March 31, by
retail method, presenting details of the computations.
(b)
X- Textiles Co. uses a perpetual inventory system. The company has same inventory,
purchase and sales data for the month of June 2017 as shown below:
Inventory:
Purchase:
Purchase
Sales:
Sales:
Sales:
June 01 – 300 units @ tk. 17.50
June 10 – 900 units @ tk. 18.00
June 20 – 1200 units @ tk. 18.25
June08 – 150 units
June 18 – 600 units
June 26 – 1000 units
Required: Determine the cost of inventory on hand at June 30, 2017 under
(i) FIFO method, (ii) LIFO method and (iii) Average method (Moving average).
[Marks: (10+10) = 20]
Page 2 of 3
CMA JUNE, 2019 EXAMINATION
FOUNDATION LEVEL
SUBJECT: 001. PRINCIPLES OF ACCOUNTING
Q. No. 4
(a)
Explain the concept of Business entity and going concern.
(b)
A partial adjusted trial balance of X- Textiles Co. at January 31, 2017 shows following:
Adjusted Trial Balance
Debit (Tk.)
800
2,400
950
400
1,800
-
Supplies
Prepaid Insurance
Unearned fees
Salaries Payable
Supplies expenses
Insurance expenses
Salaries expenses
Fees earned
Credit (Tk.)
700
750
2,500
Required:
Assuming the year begins on January 01.
(i)
If the amount of supplies expense in January is Tk. 950 and Tk. 1,050 of supplies was
purchased in January, what was the balance of supplies on January 01?
(ii) If the amount of insurance expense in January is Tk. 400 and the original insurance premium
was for one year, what was the total premium and when the policy purchased?
(iii) If Tk. 2,500 of salaries was paid in January, what was the balance in salaries payable at
December 31, 2016?
(iv) If Tk. 1,700 of fees was received in January for service performed in January, what was the
balance in unearned fees at December 31, 2016?
[Marks: 4+ (4x4) = 20]
Q. No. 5
(a)
(b)
Differentiate between Intangible Assets and Wasting Assets;
X- Textiles Co. began doing business with Eastern Bank Ltd. on July 01. On that date the
correct cash balance was Tk. 400,000. All cash transactions are cleared through the bank
account. Subsequent transactions during July and August relating to the records of XTextiles Co. and Eastern Bank Ltd. are summarized below:
July deposits
July cheques
July Service charges
July 31, balance
August deposits
August cheques
August Service charges
Notes collected by (includes Tk. 1,500 interest)
July service charge
August 31, balance
X- Textiles Co.
7,36,000
6,29, 000
5,07,000
8,22,000
9,41,000
1,000
3,87,000
Eastern Bank Ltd.
7,11,000
6,13,000
1,000
4,97,000
8,28,000
9,22,000
1,500
1,01,500
5,03,000
Instructions:
(i)
(ii)
On the basis of the foregoing data prepare a reconciliation of receipt and disbursement and
bank balance for August.
Pass the necessary entries if required.
[Marks: 5+(10+5) = 20]
= THE END =
Page 3 of 3
CMA DECEMBER, 2019 EXAMINATION
FOUNDATION LEVEL
SUBJECT: 001. PRINCIPLES OF ACCOUNTING
Time: Three hours

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.
Full Marks: 100
Q. No. 1
The following balances are taken from the ledger of ABC Co. Ltd. as on 31st December, 2018.
Taka
4,545,000
145,000
550,000
32,500
110,000
2,617,500
185,000
187,000
127,000
2,258,440
2,955,000
788,000
7,955,460
237,900
418,300
114,000
225,400
7,500
1,817,500
65,000
57,500
10,000,000
751,500
50,000
10,058,900
38,600
620,000
Accounts Receivable
Advertisement
Building
Building Maintenance
Furniture
Cash
Freight in
Insurance
Interest Expenses
Inventory 01.01.2018
Land
Office Expenses
Purchase
Sales Return
Selling Expenses
Supplies Expenses
Rent, Rates and Taxes
Loss on Sale of Furniture
Accounts Payable
Allowance for Depreciation of Building
Allowance for Doubtful accounts
Share Capital
Retained Earnings
Purchase Discount
Sales
Interest Income
Rental Income
Adjustment as on 31st December 2018 are required as follows:
(a)
(b)
(c)
(d)
(e)
The Inventory on hand
The allowance for Doubtful account is to be increased to a
balance of Tk. 128,300.
Building are depreciated @ 3.50% per annum.
Accrued selling expenses are Tk.
There are supplies of Tk. 7,800 on hand.
Page 1 of 3
2,618,700
128,300
42,000
CMA DECEMBER, 2019 EXAMINATION
FOUNDATION LEVEL
SUBJECT: 001. PRINCIPLES OF ACCOUNTING
Q. No. 1(cont’d...)
(f)
(g)
(h)
(i)
Accrued rent, rate and Taxes is Taka
Accrued rental Income Taka
Interest Received in advance Taka
Write off the following accounts receivable:
(i) Quality Feeds Ltd. Tk. 4,000.00
(ii) Alam & Associates Tk. 1,500.00
25,000
45,000
700
Requirements:
(i)
An eight column work sheet
(ii)
Income Statement and Balance Sheet
[Marks: (15+10+5) = 30]
Q. No. 2
(a)
(b)
What are the benefits of using the perpetual inventory system as compared with periodic
system?
The following data pertain to Orbit Company:
(1) Balance per bank statement, dated March 31, 2018 is Tk. 4,450.
(2) Balance of Cash Account on the Company’s book as of March 31, 2018 is Tk. 4,459.
(3) The Tk. 1,300 deposit of March 31 was not on the Bank Statement.
(4) Of the Cheques, recorded as cash disbursements in March, some cheques totaling Tk.
1.050 have not yet been cleared by the bank.
(5) Service and collection charge for the month were Tk. 10.
(6) The bank erroneously charged the Orbit Company Account for Tk. 200 cheque of
another company. The cheque was included with the cancelled cheques returned with
the Bank Statement.
(7) The bank credited the Company’s Account with the Tk. 1,000 proceeds of a non –
interest bearing note that it collected for the company.
(8) A customer’s Tk. 75 cheque marked NSF was returned with the bank statement.
(9) As directed the bank paid and charged to the Company’s Account a Tk. 507.50 noninterest-bearing note of Orbit Company. This payment has not been recorded by the
company.
(10) An examination of the cash receipts and the deposit tickets revealed that the book
keeper erroneously recorded a customer’s cheque of Tk. 148.50 as Tk. 135.
(11) The bank credited the company’s checking Account for Tk. 20 interest earned.
Requirements:
(i)
Prepare a bank reconciliation as of March 31, 2018.
(ii)
Prepare the necessary Journal entry or entries to adjust the Cash Account.
[Marks: 10+(10+5) = 25]
Q. No. 3
(a)
Which of the following qualities of an asset are characteristic of plant assets?
(i)
Capable of repeated use in operations of the business.
(ii) Tangible.
(iii) Held for sale in normal course of business.
(iv) Long lived.
(v) Intangible.
Page 2 of 3
CMA DECEMBER, 2019 EXAMINATION
FOUNDATION LEVEL
SUBJECT: 001. PRINCIPLES OF ACCOUNTING
Q. No. 3(cont’d...)
(b)
Why the accelerated depreciation method is frequently used for income tax purpose?
(c)
A plant asset acquired at the beginning of the fiscal year at a cost of Tk. 28,20,000 has an
estimated trade – in value/ salvage value of Tk. 3,00,000 and an estimated useful life of 8
years. Determine the following:
(i)
The amount of annual depreciation by the straight line method.
(ii)
The amount of depreciation for the second year computed by the double declining
balance method.
(iii)
The amount of depreciation for the second year computed by the sum – of – the year –
digits method and what is the book value of the end of the year.
[Marks: 5+4+(3+4+4) = 20]
Q. No. 4
(a)
On January 1, 2006, a company purchased a machinery at an acquisition cost of Tk. 84,000.
The machinery has been depreciated by the straight line method using a 4 year service life
and a Tk. 12,000 salvage value. The company’s fiscal year ends on December 31.
Requirements:
Prepare the journal entries to record the disposal of the machinery that it was:
(b)
(i)
Retired and scrapped with no salvage value on January 1, 2010.
(ii)
Sold for Tk. 15,000 on July 1, 2009.
(iii)
Traded in on a new machinery on January 1, 2009. The fair market value of the old
machinery was Tk. 34,000 and Tk. 6,000 was paid in cash.
A Ltd. Company depreciates its machinery at 10% on diminishing balance method, had on 1st
January 2010 Tk. 175,000 to the debit of machinery account. A part of machinery purchased
on 1st January, 2008 for Tk. 30,000 was sold for Tk. 15,000 on July 01, 2010. A new
machinery at of cost of Tk. 35,000 was purchased and installed on the same date installation
charge being Tk. 2,500. The company wanted to change its method of depreciation from
diminishing balance method to straight line method with effect from 1st January, 2010. The
rate of depreciation is remained the same.
Requirements:
(i)
Pass Journal entries to record the sale of the machinery.
(ii)
Calculate the depreciation expense of the existing machinery to be recorded in the
books for 2010.
[Marks: (10+10) = 20]
5 marks are reserved for:
(i)
Good presentation
-
2
(ii)
Fairness of answer
-
2
(iii)
Good hand writing
-
1
= THE END =
Page 3 of 3
CMA JUNE, 2020 EXAMINATION
FOUNDATION LEVEL
SUBJECT: 001. PRINCIPLES OF ACCOUNTING
Time: Three hours
 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.
Full Marks: 100
Q. No.1.
(a)
Why it is necessary to prepare formal financial statements when all of data are in the
statement columns of the Work Sheet?
(b)
The following ledger Balances and adjustments are taken from the Books of MAXIS
Co. Ltd.
MAXIS Co. Ltd.
Trial Balance
As on December 31, 2019
Cash
Furniture & Fixtures
Accumulated Depreciation – Furniture & Fixtures
Accounts Receivable
Allowance for Bad debts
Inventory (01.01.2019)
Unexpired Insurance
Supplies on hand
Accounts Payable
Common Stock
Retained Earning
Sales
Sales Return & Allowances
Purchase
Transportation in
Operating Expenses
Interest Revenue
Interest Expenses
Adjustments:
a.
Office Salaries accrued Tk. 3,000.
b.
Estimated Bad Debts, 1% on net sales.
c.
Depreciation on Furniture & Fixtures, 5% per annum
d.
Insurance expired Tk. 10,000.
e.
Supplies used Tk. 5,000.
Required:
i)
Ten column worksheet as at December 31, 2019.
ii)
Pass the necessary adjustment entries.
Taka
90,000
75,000
15,000
1,30,000
2,000
80,000
15,000
12,000
64,000
1,90,000
50,000
3,90,000
12,000
2,20,000
20,000
43,000
11,000
25,000
[Marks: 5+(15+5) = 25]
Page 1 of 3
CMA JUNE, 2020 EXAMINATION
FOUNDATION LEVEL
SUBJECT: 001. PRINCIPLES OF ACCOUNTING
Q. No. 2
The following information are available for MAXIS CO. Ltd. as of December 31, 2019.
a)
Cash on the books as of December 31, amounted to Tk. 113,675. Cash on Bank
Statement on the same date was Tk. 114,717.
b)
A deposit of Tk. 14,250 representing cash receipts of December 31, did not appear on
the Bank Statement.
c)
Outstanding cheque totaled Tk. 7,294.
d)
A cheque for Tk. 2,420 returned with the statement was recorded incorrectly in the
cash payments journal as Tk. 2,024. The cheque was for advertisement.
e)
The Bank service charges for December amounted to Tk. 26.
f)
The bank collected Tk. 36,400 for MAXIS CO. Ltd. On a note. The face value of the
note was Tk. 36,000.
g)
A NSF cheque for Tk. 1,140 from a customer returned with the statement.
h)
The bank mistakenly deducted a cheque for tk. 800 drawn by MAXCON CO. Ltd.
i)
The bank reported that it had credited the amount for Tk. 960 for interest on the
average balance.
Required:
i)
Prepare Bank Reconciliation Statement as of December 31, 2019.
ii)
Pass the necessary journal entries to adjust the cash account.
[Marks: (15+5) = 20]
Q. No. 3
(a)
How inventory of a manufacturing company is different from a merchandising
company?
(b)
Winner Distribution Ltd. had the inventory of 2000 ball pen at the beginning of July with
a unit cost of Tk. 7. During July, Winner made the following purchases of ball pen.
July 3
July 9
July 19
July 25
2,500 @ Tk. 8
3,000 @ Tk. 9
3,500 @ Tk. 10
4,000 @ Tk. 11
During July 10,900 ball pen were sold. Winner uses a periodic inventory system.
Required:
(i)
Determine the cost of goods available for sale.
(ii)
Determine the ending inventory and the cost of goods sold under FIFO and LIFO
cost flow methods. Prove the accuracy of the cost of goods sold under the FIFO
and LIFO methods.
(iii)
Which cost flow method results in (1) the highest inventory amount for the
balance sheet and (2) the highest cost of goods sold for the income statement?
[Marks: 4+(4+10+2) = 20]
Page 2 of 3
CMA JUNE, 2020 EXAMINATION
FOUNDATION LEVEL
SUBJECT: 001. PRINCIPLES OF ACCOUNTING
Q. No. 4
You have been given the following information from the records of MAXIX Co. Ltd. for worker
“A” and “B”.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
Worker A
8
6
50
Tk. 840
Tk. 120
Tk. 60/ week
Worker B
8
6
24
2 days
1 day
Tk. 1,320
Tk. 120
Tk. 60/week
Available working hours per day
Working days in a week
Hours actually worked
Leave sanctioned with pay
Leave sanctioned without pay
Basic wages per week
Medical allowance (Fixed)
Conveyance allowance (Based on attendance)
Overtime pay – double the normal wags (basic plus D.A)
House rent allowance 50% of Basic wages (Irrespective of attendance)
10% D.A (Minimum Tk. 120 for full attendance)
Contribution to provident fund – 10% of basic including leave wages.
Union dues per worker
Tk. 16/ week Tk. 16/week
Deduction of Eid advance per worker
Tk. 20/week Tk. 20/week
Instructions:
(i)
Computation of weekly wages of worker “A” and “B”.
Pass the appropriate journal entries in the books of accounts of worker “A” and “B”. It is
assumed that all the payments have been made in due course.
[Marks: (10+5) = 15]
Q. No. 5
(ii)
(a)
What are Matching Principles and Revenue Recognition ?
(b)
Explain the difference of Accrual basis and Cash basis accounting system.
(c)
What do you mean by Earning per share and how it is calculated?
(d)
Distinguish between Depreciation, Amortization and Depletion.
[Marks: 4x5 = 20]
= THE END =
Page 3 of 3
CMA JUNE, 2020 EXAMINATION
KNOWLEDGE LEVEL
SUBJECT: IE 01. PRINCIPLES OF ACCOUNTING
Time Allocated: Three hours
Total Marks: 100
Instructions to Candidates
You are required to answer ALL questions.
Answers should be properly structured, relevant and computations need to be shown.
You are strongly advised to carefully read ALL the question requirements before
attempting the question concerned (that is all parts and/or sub-questions).
ALL answers must be written in the answer book. Answers written on the question paper
will not be submitted for marking.
Start answering each question from a fresh sheet. Your answers should be clearly
numbered with the sub-question number then ruled off, so that the markers know which
sub-question you are answering.
No of questions
No of sub-questions
Marks allocation
8
Maximum 03
Question 1- 6 = 10 marks each
Question 7- 8 = 20 marks each
TURN OVER
Page 1 of 5
You are advised to spend 18 minutes on Question 1- 6 (10 marks per question) and 36 minutes
on Question 7- 8 (20 marks per question).
QUESTION 1
(a)
What do you know about formation of ICMAB?
(b)
Explain in brief the role of ICMAB in developing the practice of Cost and Management
Accounting in Bangladesh.
[Marks: (5+5) = 10]
QUESTION 2
You have been asked to prepare the final accounts for Mr. Emdad, a sole trader, for the year
ended 30 June 2020. Mr. Emdad has forwarded to you all books of prime entry and ledgers,
and in addition has given you the following information:
(i)
Mr. Emdad had taken BDT 2,000 out of the business bank account to take his wife on
holiday.
(ii)
Up to last year the machinery and vehicle used in the business had been depreciated
using the reducing balance method. Mr. Emdad thinks that they should now be
depreciated using the straight line method.
(iii)
Goods costing 1000 is sold by Mr. Emdad at sales price BDT 1500. He is to first
determine the BDT 1500 is reasonably certain to be realized. Then he match cost of
goods sold with the revenue as resulting he earn as an income BDT 500 derived from
the sale BDT 1500.
(iv)
On June 30, 2019 Mr. Emdad had purchased for BDT 9000 an insurance policy for
providing two years of protection. The amounting BDT 9000 appear as an asset on the
balance sheet June 30, 2019. In 2019 Mr. Emdad’s Accountant charges half of the
insurance policy amount as an expense.
(v)
Mr. Emdad’s accountant informed him that he has recorded in accounts for the year 2020
an electricity bill for BDT 900 for the month April 2020 which was not paid till July 2020.
But Mr. Emdad decline this record because it was unpaid bill and ask his accountant that
why he doing this.
Required
Identify and explain the accounting concepts applied in each cases.
[Marks: 10]
QUESTION 3
(a)
A company values its inventory using the FIFO method. At 1 May 2019 the company had
700 engines in inventory, valued at Tk. 190/- each. During the year ended 30 April 2020
the following transactions took place:
2019
1 July
1 November
Purchased 500 engines at TK 220/- each
Sold 400 engines for TK 160,000/-
2020
1 February
15 April
Purchased 300 engines at TK 230/- each
Sold 250 engines for 125,000/-
You are required to calculate the company’s closing inventory of engines at 30 April 2020.
TURN OVER
Page 2 of 5
(b)
A trader prepares his accounts on 31st March, each year. Due to pandemic (covid-19 )
Situation, no inventory taking could be possible till 15th April, 2020 on which date the
total cost of goods in his go down came to TK 5,00,000. The following facts were
established between 31st March and 15th April, 2020.
(i)
(ii)
(iii)
Sales Tk. 410,000
(including cash sales TK 100,000)
Purchases Tk. 50,340
(including cash purchases TK 19,900)
Sales Return Tk. 10,000. Goods are sold by the trader at a profit of 20% on sales.
You are required to ascertain the value of inventory as on 31st March, 2020.
[Marks: (5+5) = 10]
QUESTION 4
(a)
What is Golden law of accounting?
(b)
What is a Contra Entry?
(c)
What is Work In process inventory? How it defer from finished goods inventory?
(d)
Fresh Colors work shop paints a large building in 2019. In 2019, it incurs and pays
total expenses (salaries and paint costs) of TK 50,000. It bills the customer TK 80,000, not
receive payment until 2020. What is the impact in accrual and cash basis accounting in
aspect of revenue and expenses recognition in 2019 and 2020?
[Marks: (2+1+3+4) = 10]
QUESTION 5
Mehrab Pramanik bid for and won a concession to rent bicycles in the local park during the
summer. During the month of June, Pramanik completed the following transactions for his
bicycle rental business:
June 2 Began business by placing Tk. 7,200 in a business checking account in the name of the
company.
3
Purchased supplies on account for Tk. 150.
4
10
Purchased 10 bicycles for Tk. 2,500, paying Tk. 1,200 down and agreeing to pay the
rest in 30 days.
Paid Tk. 2,900 in cash for a small shed to store the bicycles and to use for other
operations.
Paid Tk. 400 in cash for shipping and installation costs (considered an addition to the
cost of the shed) to place the shed at the park entrance.
Paid a maintenance person Tk. 75 to clean the grounds.
13
Received Tk. 970 in cash for rentals.
17
Paid Tk. 150 for the supplies purchased on June 3.
18
23
Paid a Tk. 55 repair bill on bicycles.
Billed a company Tk. 110 for bicycle rentals for an employee outing.
5
8
Required:
Prepare journal entries to record the June transactions.
[Marks: (10 x 1) = 10]
TURN OVER
Page 3 of 5
QUESTION 6
(a) Selected transactions for Dianne Burke Company during its first month in business are
presented below.
Sept. 1 Invested Tk. 10,000 cash in the business.
5
Purchased equipment for Tk. 12,000 paying Tk. 4,000 in cash and the balance
on account.
25
Paid Tk. 3,000 cash on balance owned for equipment.
30
Withdrew Tk. 700 cash for personal use.
Required: Post the transactions using the standard account form.
(b)
Enayet Wahid, D.D.S., opened a dental practice on January 1, 2020. During the first
month of operations, the following transactions occurred.
(1) Wahid performed services for patients totaling Tk. 2,400. These services have not
yet been recorded.
(2) Utility expenses incurred but not paid prior to January 31 totaled Tk. 400.
(3) Purchased dental equipment on January 1 for Tk. 80,000, paying Tk. 20,000 in cash
and signing a Tk. 60,000, 3-year note payable. Interest is Tk. 600 per month.
(4) Purchased a one-year malpractice insurance policy on January 1 for Tk. 12,000.
(5) Purchased Tk. 2,600 of dental supplies. On January 31, determined that Tk. 900 of
supplies were on hand.
Required: Prepare the adjusting entries on January 31.
[Marks: (5+5) = 10]
QUESTION No. 7
Nita Ltd. is a manufacturer of various types of dyes for industrial use. Following is the
unadjusted trial balance as on 30 June, 2020:
Sl No. Account Title
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
Debit (TK)
DBBL STD Accounts
Cash
Debtors
Opening Inventory
Prepaid insurance
IT Equipment
Allowance for depreciation – IT Equipment
Creditors
Capital
Drawings
Revenue
Suspense
Discount given to customers
Purchases
Return and allowances
Carriage-in
Advertising expense
Payroll expense
Page 4 of 5
Credit
(TK)
33000
15000
48,000
40,000
16,000
200,000
40,000
32,000
209,200
24,000
287000
5000
16,000
160,000
20,000
23,200
34,000
40,000
621,200
621,200
TURN OVER
Additional information for adjustments:
1.
Provide allowance for depreciation on IT Equipment BDT 8,000.
2.
Provide allowance for bad debts @ 10 % of ending balance of debtors.
3.
Insurance expired BDT 10,000.
4.
Prepaid advertising BDT 4,800.
5.
Outstanding payroll BDT 8,000.
6.
Closing inventory on 30 June, 2020 BDT 60,000.
7.
A raw material purchase of BDT 3500 had been recorded in the cash book as BDT 8500,
but the purchase account was correctly written-up.
8.
A sale of goods for BDT 1,00,000 through Cross cheuqe (account payee cheque) has
been omitted from the both ledger book.
9.
Bank charge of BDT 150 was not recorded in the books.
10. Provision for tax amounting to BDT 37, 500 on the income of the year ended 30 June
2020 is required to be provided.
Required:
You are required to prepare 10 column work sheet as at 30 June 2020.
[Marks = 20]
QUESTION 8
(a) What are the advantages of having separate departments for financial accounting and
management accounting?
(b) The Choice Candy Company’s factories produces 50-poundblocks of dark chocolate and
that it needs to prepare a year-end balance sheet and income statement, as well as a
statement of cost of goods manufactured. During the year, the factory purchased Tk.
361,920 of direct materials. The factory’s direct labor costs for the year were Tk. 99,085
(10,430 hours at Tk. 9.50 per hour); its indirect labor costs totaled Tk. 126,750 (20,280
hours at Tk. 6.25 per hour). Account balances for the year were as follows:
Account
Balance
Plant Supervision
Tk. 42,500
Factory Insurance
8,100
Utilities, Factory
29,220
Depreciation, Factory Building
46,200
Depreciation, Factory Equipment
62,800
Factory Security
9,460
Factory Repair and Maintenance
4,980
Selling and Administrative Expenses
76,480
Materials Inventory, beginning
26,490
Work in Process Inventory, beginning
101,640
Finished Goods Inventory, beginning
148,290
Materials Inventory, ending
24,910
Work in Process Inventory, ending
100,400
Finished Goods Inventory, ending
141,100
Required:
(i)
Compute the cost of materials used during the year.
(ii) Given the cost of materials used, compute the total manufacturing costs for the year.
(iii) Given the total manufacturing costs for the year, compute the cost of goods
manufactured during the year.
(iv) If 13,397 units (1 unit = 50-pound block of dark chocolate) were manufactured
during the year, what was the actual product unit cost? (Round your answer to two
decimal places.)
[Marks: 6+(3+5+4+2) = 20]
*END OF QUESTION PAPER*
Page 5 of 5
CMA DECEMBER, 2020 EXAMINATION
KNOWLEDGE LEVEL
SUBJECT: IE 01. PRINCIPLES OF ACCOUNTING
Time Allocated: Three hours
Total Marks: 100
Instructions to Candidates
You are required to answer ALL questions.
Answers should be properly structured, relevant and computations need to be shown.
You are strongly advised to carefully read ALL the question requirements before
attempting the question concerned (that is all parts and/or sub-questions).
ALL answers must be written in the answer book. Answers written on the question paper
will not be submitted for marking.
Start answering each question from a fresh sheet. Your answers should be clearly
numbered with the sub-question number then ruled off, so that the markers know which
sub-question you are answering.
No of questions
No of sub-questions
Marks allocation
8
Maximum 03
Question 1- 6 = 10 marks each
Question 7- 8 = 20 marks each
TURN OVER
Page 1 of 5
You are advised to spend 18 minutes on Question 1- 6 (10 marks per question) and 36
minutes on Question 7- 8 (20 marks per question).
QUESTION No. 1
Write a short note on the following points:
(i) ICMAB, (ii) ICAB, (iii) FRC, (iv) BSEC (v) DSE, (vi) Bangladesh Bank, (vii) IFAC, (viii)
SAFA, (ix) IASB and (x) FASB.
[Marks: (10 x 1) = 10]
QUESTION No. 2
Mr. Lalon is a professional accountant. He started a new consultancy firm on December 1,
2020. During the first month of operations the following transactions occurred:
Dec.
1
5
Owner invested BDT 10,000 cash to start a business.
Purchased BDT 500 supplies on account.
12
Paid BDT 1,000 rent expense on a building.
15
Purchased BDT 15,000 of equipment paying $2,000 down and signing a note for
the remainder
18
20
Rendered services for cash of BDT 2,500.
Rendered services billing customers for BDT 5,000.
25
Paid BDT 250 advertising expense
26
28
Paid BDT 850 wages expense
Received a bill of BDT 275 for utilities but will not pay the bill until the following
month.
Owner takes a draw of BDT 1,000.
31
Required:
Prepare a tabular analysis of the December transactions on the accounting equation
[Marks: 10]
QUESTION 3
(a)
What is Chart of accounts? Do you think that Chart of accounts is the foundation of
financial reporting?
(b)
What is code of professional ethics? What are the fundamental principals that should
have a Cost and Management accountant?
(c)
Which of the following errors would cause a trial balance to have unequal totals?
Explain your answers.
(i)
A payment to a creditor was recorded as a debit to Accounts Payable for Tk. 129
and as a credit to Cash for Tk. 102.
(ii)
A payment of Tk. 150 to a creditor for an account payable was debited to
Accounts Receivable and credited to Cash.
(iii)
A purchase of office supplies of Tk. 420 was recorded as a debit to Office
Supplies for Tk. 42 and as a credit to Cash for Tk. 42.
(iv)
A purchase of equipment for Tk. 450 was recorded as a debit to Supplies for Tk.
450 and as a credit to Cash for Tk. 450.
[Marks: (3+3+4) = 10]
TURN OVER
Page 2 of 5
QUESTION 4
(a) Briefly describe the assumptions in financial reporting.
(b) Mr. Chowdhury has prepared the following list of statements about the time period
assumption.
(i)
Adjusting entries would not be necessary if a company’s life were not divided into
artificial time periods.
(ii) Accountants divide the economic life of a business into artificial time periods, but
each transaction affects only one of these periods.
(iii) Accounting time periods are generally a month, a quarter, or a year.
(iv) A time period lasting one year is called an interim period.
(v) All fiscal years are calendar years, but not all calendar years are fiscal years.
Required:
Identify each statement as true or false. If false, indicate how to correct the statement.
[Marks: (5+5) = 10]
QUESTION 5
In July, the following transactions were completed in LR Company. All purchases and sales
were on account. The cost of all merchandise sold was 70% of the sales price.
July 1
Purchased merchandise from Eby Company Tk. 8,000.
2
Received freight bill from Shaw Shipping on Eby purchase Tk. 400.
3
Made sales to Fort Company Tk. 1,300 and to Hefner Bros. Tk. 1,500.
5
Purchased merchandise from Getz Company Tk. 3,200.
8
Received credit on merchandise returned to Getz Company Tk. 300.
13 Purchased store supplies from Dayne Supply Tk. 720.
15 Purchased merchandise from Eby Company Tk. 3,600 and from Bosco Company
Tk. 4,300.
16 Made sales to Aybar Company Tk. 3,450 and to Hefner Bros. Tk. 1,870.
18 Received bill for advertising from Welton Advertisements Tk. 600.
21 Sales were made to Fort Company Tk. 310 and to Duncan Company Tk. 2,800.
22 Granted allowance to Fort Company for merchandise damaged in shipment Tk.
40.
24 Purchased merchandise from Getz Company Tk. 3,000.
26 Purchased equipment from Dayne Supply Tk. 900.
28 Received freight bill from Shaw Shipping on Getz purchase of July 24, Tk. 380.
30 Sales were made to Aybar Company Tk. 5,600.
Required:
Journalize the appropriate transactions above in a purchases journal.
[Marks: 10]
QUESTION 6
(a) Affleck Company accumulates the following adjustment data at December 31.
1.
Services provided but not recorded total Tk.750.
2.
Store supplies of Tk.300 have been used.
3.
Utility expenses of Tk.225 are unpaid.
4.
Unearned revenue of Tk.260 has been earned.
5.
Salaries of Tk.900 are unpaid.
6.
Prepaid insurance totaling Tk.350 has expired.
TURN OVER
Page 3 of 5
Required:
For each of the above items indicate the following.
(i)
The type of adjustment (prepaid expense, unearned revenue, accrued revenue,
or accrued expense).
(ii) The status of accounts before adjustment (overstatement or understatement).
(b)
The income statement of Benning Co. for the month of July shows net income of
Tk.1,400 based on Service Revenue Tk.5,500,Wages Expense Tk.2,300, Supplies
Expense Tk.1,200, and Utilities Expense Tk.600. In reviewing the statement, you
discover the following.
1.
Insurance expired during July of Tk.400 was omitted.
2.
Supplies expense includes Tk.200 of supplies that are still on hand at July 31.
3.
Depreciation on equipment of Tk.150 was omitted.
4.
Accrued but unpaid wages at July 31 of Tk.300 were not included.
5.
Services provided but unrecorded totaled Tk.500.
Required:
Prepare a correct income statement for July 2020.
[Marks: (6+4) = 10]
QUESTION 7
(a) Define the following terms with example: (i) Accumulated depreciation, and (ii) Contra
asset account.
(b) At the end of its first month of operations, Pampered Pet Service has the following
unadjusted trial balance.
Pampered Pet Service
Trial Balance
August 31, 2019
Account Title
Debit (Tk.)
Credit (Tk.)
Cash
5,400
Accounts Receivable
2,800
Supplies
1,300
Prepaid Insurance
2,400
Equipment
60,000
Notes Payable
40,000
Accounts Payable
2,400
Owner’s Capital
30,000
Owner’s Drawings
1,000
Service Revenue
4,900
Salaries and Wages Expense
3,200
Utilities Expense
800
Advertising Expense
400
Total
Tk. 77,300
Tk. 77,300
Other Data:
i.
Insurance expires at the rate of Tk. 200 per month.
ii.
Tk. 1,000 of supplies is on hand at August 31.
iii.
Monthly depreciation on the equipment is Tk. 900.
iv.
Interest of Tk. 500 on the notes payable has accrued during August.
Required:
(i)
Prepare a worksheet.
(ii) Prepare a classified balance sheet assuming Tk. 35,000 of the notes payable is
long-term.
(iii) Journalize the closing entries.
[Marks: 2+(10+4+4) = 20]
TURN OVER
Page 4 of 5
QUESTION 8
(a)
Nehal Sarker is confused about the differences between a product cost and a period
cost. Explain the differences to Nehal.
(b)
In 20A, the Nipunika Tex Ltd had sales of BDT 19,95,000 with BDT 11,57,100 variable
and 7,62,300 fixed cost. 20B sales are expected to decrease 15% and the cost
relationship is expected to remain constant (the fixed costs will not charge)
Required:
Determine Nipunika Tex Ltd Company expected operating income or loss for the 20B
(c)
Titas Company is a manufacturer of computers. Its controller resigned in October 2020.
An inexperienced assistant accountant has prepared the following income statement
for the month of October 2020.
TITAS COMPANY
Income Statement
For the Month Ended October 31, 2020
Sales (net)
Less: Operating expenses
Raw materials purchases
Direct labor cost
Advertising expense
Selling and administrative salaries
Rent on factory facilities
Depreciation on sales equipment
Depreciation on factory equipment
Indirect labor cost
Utilities expense
Insurance expense
Net loss
Tk.780,000
Tk.264,000
190,000
90,000
75,000
60,000
45,000
31,000
28,000
12,000
8,000
803,000
Tk. (23,000)
Prior to October 2020 the company had been profitable every month. The company’s
president is concerned about the accuracy of the income statement. As her friend, you have
been asked to review the income statement and make necessary corrections. After
examining other manufacturing cost data, you have acquired additional information as
follows.
1.Inventory balances at the beginning and end of October were:
October 1
October 31
Raw materials
Tk.18,000
Tk.34,000
Work in process
16,000
14,000
Finished goods
30,000
48,000
2.Only 70% of the utilities expense and 60% of the insurance expense apply to factory
operations. The remaining amounts should be charged to selling and administrative
activities.
Required:
(i)
Prepare a schedule of cost of goods manufactured for October 2020.
(ii)
Prepare a correct income statement for October 2020.
[Marks: 2+4+(8+6) = 20]
*END OF QUESTION PAPER*
Page 5 of 5
CMA DECEMBER, 2020 EXAMINATION
FOUNDATION LEVEL
SUBJECT: 001. PRINCIPLES OF ACCOUNTING
Time: Three hours

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.
Full Marks: 100
Q. No. 1
The trial balance of Universal Company contained the following accounts on June 30, 2020 the
end of the company’s fiscal year.
Universal Company
Trial Balance
June 30, 2020
(Figures in Taka)
Debit
Credit
Cash
1,25,400
Accounts Receivable
1,37,600
Merchandise Inventory
2,90,000
Land
1,92,000
Building
9,97,000
Accumulated Depreciation – Building
1,54,000
Equipment
2,83,500
Accumulated Depreciation – Equipment
1,42,400
Notes Payable
70,000
Accounts Payable
1,39,000
Capital
10,57,800
Sales Discount
6,100
Sales
19,04,100
Cost of Goods Sold
11,09,900
Salaries Expenses
1,69,800
Utilities Expenses
1,19,400
Repair Expenses
15,900
Gas and Oil Expenses
7,200
Insurance Expenses
13,500
Totals
34,67,300
34,67,300
Adjustment Data:
(a)
(b)
Depreciation is Tk. 20,000 on Building and Tk. 9,000 on Equipment (Both are administrative
expenses).
Interest of Tk. 5,000 is due and unpaid on notes payable on June 30.
(c) Merchandise inventory actually on hand is Tk. 1,38,900.
Other Data:
(a)
Salaries are 80% selling and 20% administrative.
(b)
Utilities expenses, repair expenses, and insurance expenses are 100% administrative.
(c)
(d)
Tk. 10,000 of the notes payable is payable to next year.
Gas and oil expenses are selling expenses.
Required:
Prepare a multiple-step income statement and a classified balance sheet on June 30, 2020.
[Marks: (10+10) = 20]
Page 1 of 3
CMA DECEMBER, 2020 EXAMINATION
FOUNDATION LEVEL
SUBJECT: 001. PRINCIPLES OF ACCOUNTING
Q. No. 2
(a)
Explain Prepaid expenses and Unearned revenues.
(b)
The bank statement of Universal Company having account with AB Bank shows: Tk.
Balance on June 30, 2019
Deposit during July, 2019
Less: Cheque cleared
Service charge for July, 2019
Tk.
1,40,000
50,000
1,90,000
60,000
100
1,29,900
(1)
(2)
Balance per ledger account as of July 31, Tk. 1,24,084.
A Credit memorandum included with the Cancelled cheques returned indicates the collection
of a note by the bank for the Universal Company Tk. 2,000.
(3) An NSF cheque for the amount of Tk. 920 is returned by the bank and included in the total of
cheques deducted / cleared on the bank statement.
(4) Deposit in transit as of July 31, Tk. 5,000 and as of June 30, Tk. 2,400.
(5) Cheques outstanding as of June 30, all of which cleared by the bank in July Tk. 3,400.
Cheques outstanding as of July 31, Tk. 8,200.
(6) Deposit of Universe Company credited to Universal Company account by the bank Tk. 2,000.
(7) Cheque of Universe Company charged against Universal Company account by the bank Tk.
400.
(8) Deposit of July 21, recorded by the company as Tk. 1,637 but actual amount was Tk. 1,673.
The receipts for the day were from collection on account.
Required:
(i)
Prepared a Bank Reconciliation Statement as of July 31, 2019 for the Universal Company.
(ii)
Prepare adjusting Journals needed in July 31, 2019.
[Marks: (5+10+5) = 20]
Q. No. 3
(a) What do you mean by Earning per share and how it is calculated?
(b)
(c)
Differentiate between stock split and reverse stock split. Explain.
On January 01, 2019Universal Company had the following stock holder’s equity section.
Taka
Common stock (Tk. 10 per share value)
52,00,000
Retained earnings
6,40,000
During the year the following transactions took places.
April 01, 2019.......... declared 15% cash dividend to stockholders which records on April 15,
payable in May 01.
May 01, 2019.......... paid the dividend declared in April 01.
August 01, 2019...... declared 10% stock dividend to stock holders which record on August
15, credits on August 31.
August 31, 2019...... Issued the stocks for the stock dividend.
December 01, 2019.. declared 15% cash dividend to stockholders which records on
December 31, payable on January 05, 2020.
December 31, 2019.. determined that Net Income for the year was Tk. 12,00,000.
Required:
Journalize the transactions and the closing entry for the new income.
[Marks: (5+5+10) = 20]
Page 2 of 3
CMA DECEMBER, 2020 EXAMINATION
FOUNDATION LEVEL
SUBJECT: 001. PRINCIPLES OF ACCOUNTING
Q. No. 4
The management of Sunshine Group is reevaluating the appropriateness of using its pres ent
inventory cost flow method. They request your help in determining the results of operations for
2020 if either the FIFO method or the average cost method had been used. For 2020, the
accounting records show these data:
Inventories
Beginning (10,000 units)
Ending (15,000 units)
Purchase and Sales
Tk. 22,800 Total net sales (2,25,000 units)
Total cost of goods purchased
(2,30,000 units)
Tk.8,65,000
5,78,500
Purchases were made quarterly as follows.
Quarter
1
2
3
4
Units
60,000
50,000
50,000
70,000
2,30,000
Unit Cost
Tk. 2.30
2.50
2.60
2.65
Total Cost
Tk. 138,000
125,000
130,000
185,000
Tk. 5,78,500
Operating expenses were Tk. 147,000, and the company’s income tax rate is 40%.
Required:
(a)
Prepare comparative condensed income statements for 2020 under FIFO and average-cost
(Show Computations of ending inventory)
(b)
Answer the following questions for management.
(i)
Which cost flow method (FIFO or average-cost) produces the) produces the more
meaningful inventory amount for the statement of financial position? Why?
(ii)
Which cost flow method (FIFO or average-cost) is more likely to approximate actual
physical flow of the goods? Why?
(iii)
How much additional cash will be available for management under average-cost than
under FIFO? Why?
[Marks: {(6+6)+(2.5+2.5+3)} = 20]
Q. No. 5
Differentiate between:
(a)
Accrual vs. Cash Basis of Accounting.
(b)
Natural Resources vs. Intangible assets.
(c)
Closing entries vs. Reversing entries.
(d)
Straight-Line method vs. Declining-Balance method.
[Marks: (4 x 5) = 20]
= THE END =
Page 3 of 3
CMA JUNE-2019 EXAMINATION
KNOWLEDGE LEVEL
SUBJECT: IE 01. PRINCIPLES OF ACCOUNTING
Time Allocated: Three hours
Total Marks: 100
Instructions to Candidates
You are required to answer ALL questions.
Answers should be properly structured, relevant and computations need to be shown.
You are strongly advised to carefully read ALL the question requirements before
attempting the question concerned (that is all parts and/or sub-questions).
ALL answers must be written in the answer book. Answers written on the question paper
will not be submitted for marking.
Start answering each question from a fresh sheet. Your answers should be clearly
numbered with the sub-question number then ruled off, so that the markers know which
sub-question you are answering.
No of questions
No of sub-questions
Marks allocation
8
Maximum 03
Question 1- 6 = 10 marks each
Question 7- 8 = 20 marks each
TURN OVER
Page 1 of 5
You are advised to spend 18 minutes on Question 1- 6 (10 marks per question) and 36
minutes on Question 7- 8 (20 marks per question).
QUESTION No. 1
(a)
(b)
Define accounting. Who are the users of accounting information? Explain briefly.
Distinguish between accrual basis and cash basis of accounting. Which basis is worldwide recognized? Why?
(c) What are the basic steps of recording process?
[Marks: (4+3+3) = 10]
QUESTION No. 2
(a)
The assets and liabilities of Kalatia Company at the beginning of the year were Tk.
120,000 and Tk. 70,000, respectively. During the year, assets increased by Tk. 30,000
and liabilities reduced to Tk. 50,000. Determine the ending balance of equity.
(b)
On October 1, Mr. Nehan started his own consulting firm, Nehan’s Consulting. The
following transactions occurred during the month:
1. Invested cash Tk. 800,000 in the business.
2. Purchased equipment for Tk. 300,000 cash.
3. Paid Tk. 20,000 cash for October office rent.
4. Purchased office supplies for Tk. 5,000 on account.
5. Performed services worth Tk. 200,000; Tk. 50,000 cash is received from
customers, and the balance of Tk. 150,000 is billed to customers on account.
6. Withdrew Tk. 15,000 cash for personal use.
7. Paid employees’ salaries Tk. 30,000.
8. Borrowed Tk. 100,000 from the bank on a note payable.
Required:
Prepare a tabular analysis of the above transactions.
[Marks: (2+8) = 10]
QUESTION No. 3
Sabikun Nahar is a licensed dentist. During the first month of the operation of her business,
the following transactions occurred:
May 1 Invested Tk. 500,000 cash in her business.
,,
5 Purchased dental supplies on account for Tk. 50,000.
,, 12 Performed dental services and billed the customers Tk. 40,000.
,, 20 Paid Tk. 30,000 to the supplier of dental supplies purchased on May 5.
,, 27 Collected cash from the customers Tk. 25,000.
Required:
Journalize the transactions and post to the ledger accounts.
[Marks: (5+5) = 10]
QUESTION No. 4
(a)
“If a trial balance balances, it guarantees that there are no errors in the recording
process.” Do you agree? Justify your position.
(b)
Distinguish between general ledger and subsidiary ledgers.
(c)
Why is an income statement dated differently from a balance sheet?
[Marks: (5+3+2) = 10]
TURN OVER
Page 2 of 5
QUESTION No. 5
The Dhaka Rentals opened for business on January 1, 2018. Its trial balance before
adjustment on December 31 is as follows:
Dhaka Rentals
Trial Balance as on December 31, 2018
Sl. No.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
Account Title
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Land
Buildings
Equipment
Accounts Payable
Unearned Rent Revenue
Mortgage Payable
Owner’s Capital
Owner’s Drawings
Rent Revenue
Advertising Expense
Salaries & Wages Expense
Utilities Expense
Debit (Tk.)
20,000
50,000
10,000
30,000
500,000
400,000
600,000
Credit (Tk.)
80,000
120,000
300,000
800,000
20,000
400,000
20,000
40,000
10,000
Total
1,700,000
1,700,000
Other data:
1.
2.
3.
4.
5.
6.
Prepaid insurance is a one-year policy starting June 1, 2018.
A count of supplies shows that Tk. 7,000 of supplies has been used during the year.
Annual depreciation is Tk. 20,000 on the buildings and Tk. 30,000 on the equipment.
The mortgage interest rate is 12%. The mortgage was taken out on July 1.
Two-thirds of the unearned rent revenue has been earned.
Salaries of Tk. 20,000 are accrued and unpaid at December 31.
Required:
Prepare the adjusting entries that are necessary and prepare an adjusted trial balance.
[Marks: (6+4) = 10]
Q. No. 6
(a)
Distinguish between periodic and perpetual inventory system with examples.
(b)
Jononi Enterprise deals in doors business. It extends its credit terms to all of its
customers, 2/10, n/30. Following are the transactions that occurred during April 2019:
April 1
Purchased doors from Otobi Ltd Tk. 50,000, 3/10, n/45, FOB Destination.
The appropriate party also paid the freight of Tk. 1,000.
April 3
Sold doors to Partex Ltd Tk. 60,000. The cost of doors sold was Tk.
40,000.
April 8
Received credit from Otobi Ltd Tk. 2,000 for doors purchased.
TURN OVER
Page 3 of 5
April 11
April 18
April 20
Paid Otobi Ltd in full.
Purchased doors from Standard Furnishers Tk. 70,000, 2/10, n/30, FOB
Shipping Point. The appropriate party also paid the freight of Tk. 1,500.
Sold doors to Tania Decors Tk. 80,000. The cost of doors sold was Tk.
50,000.
Received from Partex Ltd in full.
Paid Standard Furnishers in full.
April 25
April 30
Required:
Record the above transactions in the books of Jononi Enterprise using perpetual inventory
systems.
[Marks: (2+8) = 10]
Q. No. 7
The Taranagar Enterprise opened for business few years ago. Its trial balance on June 30,
2018 is as follows:
Taranagar Enterprise
Trial Balance as on June 30, 2018
Sl No.
Account Title
Debit (Tk.)
Credit (Tk.)
1.
Cash
150,000
2.
Accounts Receivable
100,000
3.
Inventory (01.07.2017)
80,000
4.
Supplies
30,000
5.
Prepaid Insurance
45,000
6.
Land
500,000
7.
Buildings
800,000
8.
Accumulated Depreciation – Buildings
440,000
9.
Equipment
600,000
10. Accumulated Depreciation – Equipment
330,000
11. Accounts Payable
70,000
12. Notes Payable
80,000
13. 10% Bank Loan (long-term)
300,000
14. Owner’s Capital
800,000
15. Owner’s Drawings
80,000
16. Sales Revenue
950,000
17. Investment Income
30,000
18. Purchases
500,000
19. Advertising Expense
30,000
20. Salaries & Wages Expense
80,000
21. Utilities Expense
5,000
Total
3,000,000
3,000,000
Other information:
(i)
Ending inventory was valued at Tk. 60,000.
(ii) Prepaid insurance of Tk. 10,000 has been expired during the year.
(iii) Supplies of Tk. 20,000 were used during the year.
(iv) Depreciation on buildings and equipment is charged @5% on cost per year.
(v) 5% of accounts receivable is to be made an allowance for doubtful debt.
(vi) Salaries of Tk. 20,000 were still unpaid.
Required:
Prepare a multiple-step income statement, an owner’s equity statement for the year ended
30 June 2018, and a classified balance sheet as at 30 June 2018.
[Marks: (8+4+8) = 20]
TURN OVER
Page 4 of 5
Q. No. 8
(a)
Explain the role of management accounting in decision making.
(b)
Three of your friends of non-accounting discipline are discussing the nature of cost.
The first friend says that a variable cost is one that varies per unit and a fixed cost is
one that remains fixed per unit. The second friend says that a variable cost is one that
varies in total but a fixed cost is one that remains fixed per unit. The third friend says
that a variable cost is one that varies both per unit and in total but a fixed cost is one
that remains fixed in total. They cannot agree to a point. They come to you. Who of
them is correct? As a student of accounting discipline, discuss clearly to them the
nature of variable cost and fixed cost with an appropriate example of each.
(c)
Following are the particulars taken from the books of KG Manufacturing Company for
the year ended 31 December 2018:
Inventories
Raw Materials
Work-In-Process
Finished Goods
Raw Materials Purchased (net)
Sales Revenue
Sales Returns
Labor (80% direct)
Depreciation (70% factory)
Sales Commission
Factory Rent
Factory Insurance
Marketing Expenses
Factory Utilities
Supervisor’s Salary
Office Supplies
01 January 31 December
Tk. 80,000
Tk. 70,000
40,000
50,000
60,000
80,000
Tk. 150,000
560,000
20,000
150,000
50,000
40,000
30,000
20,000
20,000
10,000
30,000
10,000
Required:
Prepare a Cost of Goods Sold Statement and an Income Statement for the year ended 31
December 2018.
[Marks: 3+4+(7+6) = 20]
*END OF QUESTION PAPER*
Page 5 of 5
CMA DECEMBER, 2019 EXAMINATION
KNOWLEDGE LEVEL
SUBJECT: IE 01. PRINCIPLES OF ACCOUNTING
Time Allocated: Three hours
Total Marks: 100
Instructions to Candidates
You are required to answer ALL questions.
Answers should be properly structured, relevant and computations need to be shown.
You are strongly advised to carefully read ALL the question requirements before
attempting the question concerned (that is all parts and/or sub-questions).
ALL answers must be written in the answer book. Answers written on the question paper
will not be submitted for marking.
Start answering each question from a fresh sheet. Your answers should be clearly
numbered with the sub-question number then ruled off, so that the markers know which
sub-question you are answering.
No of questions
No of sub-questions
Marks allocation
8
Maximum 03
Question 1- 6 = 10 marks each
Question 7- 8 = 20 marks each
TURN OVER
Page 1 of 5
You are advised to spend 18 minutes on Question 1- 6 (10 marks per question) and 36
minutes on Question 7- 8 (20 marks per question).
QUESTION 1
(a) “Accounting is an information system that measures, processes, and communicates
financial information about an economic entity”. Explain.
(b) Who are internal users of accounting data? How does accounting provide relevant data
to these users?
(c) Briefly discuss the basic financial statements.
[Marks: (3+3+4) = 10]
QUESTION 2
On June 1, 2019, Babor Lotus opened Lotu Repair Service. During the month, he completed
the following transactions for the company:
June
1
1
1
2
5
8
15
21
30
30
Invest Tk. 20,000 cash in the business.
Paid the rent for the store for current month, Tk. 1,700.
Paid the premium on a one-year insurance policy, Tk. 1,920.
Purchased repair equipment from Bilbao Company, Tk. 16,800. Terms were
Tk. 2,400 down and Tk. 1,200 per month for one year. First payment is due
July 1.
Purchased repair supplies from Rusin Company on credit, Tk. 1,872.
Paid cash for an advertisement in a local newspaper, Tk. 240.
Received cash repair revenue for the first half of the month, Tk. 1,600.
Paid Rusin Company on account, Tk. 900.
Received cash repair revenue for the last half of June, Tk. 3,900.
Made a withdrawal, Tk. 1,200.
Requirements:
Prepare journal entries to record the June transactions.
[Marks: 10]
QUESTION 3
(a) `Mukta Drinking Water Company started its operations during the month of
December,2018 which are as follows:
Dec.01 Financed Tk.8,00,000 cash in the business to start the operation.
“ 09 Purchased water purified equipment for Tk.5,00,000 paying Tk.4,00,000 cash
and the balance on account.
“ 15 Hire a personnel to monitor the operation at a monthly salary of Tk.50,000.
“ 31 A bill is received from Dhaka WASA amounted Tk.3,000.
Requirements:
Post the transactions using the standard account form (Show the necessary workings).
(b)
“Adjusting entries are required by revenue and expenses recognition principle of
accounting.” Do you agree with statement? Why or Why not? Justify your argument
with relevant example.
[Marks: (7+3) = 10]
TURN OVER
Page 2 of 5
QUESTION 4
(a) Briefly describe the qualitative characteristics of accounting information.
(b) The following situations involve accounting principles and assumptions:
(i)
Tisinai Company owns buildings that are worth substantially more than they
originally cost. In an effort to provide more relevant information, Tisinai reports
the buildings at fair value in its accounting reports.
(ii) Kingston Company includes in its accounting records only transaction data that
can be expressed in terms of money.
(iii) Rainbow Company has investment in securities that are worth substantially less
than original cost of investment. Rainbow reports the securities at fair value in its
accounting reports.
(iv) Roger H., owner of Roger’s photography, records his personal living costs as
expenses of the business.
Requirements:
For each of the four situations, say if the accounting method used is correct or
incorrect. If correct, identify which principle or assumption supports the method used. If
incorrect, identify which principle or assumption has been violated.
[Marks: (4+6) = 10]
QUESTION 5
Casey Hartwing reviewed the record and found the following errors:
(i)
Cash received from a customer on account was recorded as Tk. 950 instead of Tk. 590.
(ii) A payment of Tk. 75 for advertising expense was entered as a debit to miscellaneous
expense Tk. 75 and a credit to cash Tk. 75.
(iii) The first salary payment this month (April) was for Tk. 1,900, which included Tk. 700 of
salaries payable on March 31. The payment was recorded as a debit to salaries and
wages expense Tk. 1,900 and a credit to cash Tk. 1,900.
(iv) The purchase on account of a printer costing Tk. 310 was recorded as a debit to
supplies and accredit to accounts payable for Tk. 310.
(v) A cash payment of repair expense on equipment for Tk. 96 was recorded as a debit to
equipment Tk. 69 and accredit to cash Tk. 69.
Requirements:
Journalize the correcting entries on April 30.
[Marks: 10]
QUESTION 6
Kern's Book Warehouse distributes hardcover books to retail stores and extend credit terms
of 2/10, n/30 to all of its customers. At the end of May, Kern's inventory consisted of books
purchased for Tk. 1,800. During June, the following merchandising transactions occurred.
June
1 Purchased books on account for Tk. 1,600 from Binsfield Publishers, FOB
destination, terms 2/10, n/30. The appropriate party also made a cash
payment of Tk. 50 for the freight on this date.
3 Sold books on account to Reading Rainbow for Tk. 2,500. The cost of the
books sold was Tk. 1,440.
6 Received Tk. 100 credit for books returned to Binsfield Publishers.
9 Paid Binsfield Publishers in full, less discount.
15 Received payment in full from Reading Rainbow.
TURN OVER
Page 3 of 5
17 Sold books on account to Rapp Books for Tk. 1,800. The cost of the books
sold was Tk. 1,080.
20 Purchased books on account for Tk. 1,800 from McGinn Publishers, FOB
destination, terms 2/15, n/30. The appropriate party also made a cash
payment of Tk. 60 for the freight on this date.
24 Received payment in full from Rapp Books.
26 Paid McGinn Publishers in full, less discount.
28 Sold books on account to Baeton Bookstore for Tk. 1,600. The cost of the
books sold was Tk. 970.
Requirements:
Journalize the transactions for the month of June for Kern's Book Warehouse using a
perpetual inventory system.
[Marks: 10]
QUESTION 7
The following is the trial balance of Nitol Trading Company as on June 30, 2017
Nitol Trading Company
Trial Balance
June 30, 2017
Particulars
Debit (Tk.)
Credit (Tk.)
Sales
9,87,800
Return Inward
6,800
Return outward
5,000
Wages
1,04,800
Cash in hand
5,400
Cash at Bank
26,300
Purchase
4,06,750
Fuel
47,300
Carriage on Sales
32,000
Carriage on Purchase
20,400
Opening stock (01-07-2016)
57,600
Building
3,00,000
Land
1,00,000
Machinery
2,00,000
Patent
75,000
Salaries
1,50,000
General expenses
30,000
Insurance
6,000
Drawings
52,450
Capital
7,10,000
Accounts Receivable
1,45,000
Accounts Payable
63,000
Total
17,65,800
17,65,800
The following adjustments are to be accounted for:
(a) Salaries for the month of June 2017 in the amount of Tk.15,000 is unpaid.
(b) Wages include to a sum of Tk.20,000 to erect a cycle shed for employees.
(c) Insurance includes premiums of Tk.1,700 on a policy to expire on 31st December, 2017.
(d) Depreciation on Machinery is to be provided for @ 10% per annum.
(e) Make an allowance for bad & doubtful debts at the rate of 5% on accounts receivable.
(f) Stock on hand on June 30, 2017, amounted Tk.68,000
TURN OVER
Page 4 of 5
Requirements:
Prepare a multiple step income statement, Owner’s equity statement for the year
ended June 30, 2017 and Classified Balance sheet as on that date.
[Marks: (8+4+8) = 20]
QUESTION 8
(a)
(b)
(c)
Define the following terms with an example:
(i)
Variable cost & fixed cost;
(ii)
Product cost & period cost.
Classify each of the following as a variable or fixed cost with respect to a unit of
product that is sold:
(i)
Commissions paid to sales personnel.
(ii)
(iii)
Advertising expenses.
Salary of the chief executive officer.
(iv)
Depreciation of a shipping truck.
(v)
Protective packaging for each unit of product.
(vi)
Insurance for corporate headquarters.
Hakkani Shop, Inc., is a large retailer of surfboards. The company assembled the
information shown below for the quarter ended May 31:
Amount
Total sales revenue . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tk. 800,000
Selling price per surfboard . . . . . . . . . . . . . . . . . . . . . .
Tk. 400
Variable selling expense per surfboard . . . . . . . . . . . .
Tk. 50
Variable administrative expense per surfboard . . . . . .
Tk. 20
Total fixed selling expense . . . . . . . . . . . . . . . . . . . . . .
Tk. 150,000
Total fixed administrative expense . . . . . . . . . . . . . . . .
Tk. 120,000
Merchandise inventory, beginning balance . . . . . . . . .
Tk. 80,000
Merchandise inventory, ending balance . . . . . . . . . . . .
Tk. 100,000
Merchandise purchases . . . . . . . . . . . . . . . . . . . . . . . . . Tk. 320,000
Requirements:
(i)
Prepare a traditional income statement for the quarter ended May 31.
(ii)
Prepare a contribution format income statement for the quarter ended May 31.
(iii)
What was the contribution toward fixed expenses and profits for each surfboard sold
during the quarter? (State this figure in a single amount Taka per surfboard.)
[Marks: 4+3+(5+5+3) = 20]
*END OF QUESTION PAPER*
Page 5 of 5
CMA JUNE-2021 EXAMINATION
KNOWLEDGE LEVEL
SUBJECT: IE 01. PRINCIPLES OF ACCOUNTING
Time Allocated: Three hours
Total Marks: 100
Instructions to Candidates
You are required to answer ALL questions.
Answers should be properly structured, relevant and computations need to be shown.
You are strongly advised to carefully read ALL the question requirements before
attempting the question concerned (that is all parts and/or sub-questions).
ALL answers must be written in the answer book. Answers written on the question paper
will not be submitted for marking.
Start answering each question from a fresh sheet. Your answers should be clearly
numbered with the sub-question number then ruled off, so that the markers know which
sub-question you are answering.
No of questions
No of sub-questions
Marks allocation
8
Maximum 03
Question 1- 6 = 10 marks each
Question 7- 8 = 20 marks each
TURN OVER
Page 1 of 6
You are advised to spend 18 minutes on Question 1- 6 (10 marks per question) and 36
minutes on Question 7- 8 (20 marks per question).
QUESTION 1
(a) Briefly define assets, liabilities, and owner’s equity with examples.
(b) What are the two key organizations in the development of international accounting
standards? Explain their role.
(c) How can a company have a profit but not have cash?
[Marks: (3+4+3) = 10]
QUESTION 2
(a)
Tasmim, a beginning accounting student, believes debit balances are favorable and
credit balances are unfavorable. Is Tasmim correct? Discuss.
(b)
Which of the following errors would cause a trial balance to have unequal totals?
Explain your answers.
(i)
A payment to a creditor was recorded as a debit to Accounts Payable for Tk. 129
and as a credit to Cash for Tk. 102.
(ii) A payment of Tk. 150 to a creditor for an account payable was debited to
Accounts Receivable and credited to Cash.
(iii) A purchase of office supplies of Tk. 420 was recorded as a debit to Office
Supplies for Tk. 42 and as a credit to Cash for Tk. 42.
(iv) A purchase of equipment for Tk. 450 was recorded as a debit to Supplies for Tk.
450 and as a credit to Cash for Tk. 450.
(c)
The following situations involve accounting principles and assumptions.
(i)
Mr. Monir, president of a company, has instructed Mr. Rahel, the head of the
accounting department for the company, to report the company’s recently
acquired land in the company’s accounting reports at its fair value of Tk. 170,000
instead of its cost of Tk. 100,000. Monir says, “I think we got a real deal on the
purchase. It is probably worth Tk. 170,000. Showing the land at Tk. 170,000 will
make our company look like a better investment when we try to attract new
investors next month.”
(ii) TSN Company owns buildings that are worth substantially more than they
originally cost. In an effort to provide more relevant information, TSN reports the
buildings at fair value in its accounting reports
[Marks: (3+4+3) = 10]
QUESTION 3
The Joy Theater, owned by Joy Sarker, will begin operations in March. The Joy will be
unique in that it will show only triple features of sequential theme movies. As of March 1, the
ledger of Joy showed: No. 101 Cash Tk.9,000, No. 140 Land Tk.24,000, No. 145 Buildings
(concession stand, projection room, ticket booth, and screen) Tk.10,000, No. 157 Equipment
Tk.10,000, No. 201 Accounts Payable Tk.7,000, and No. 301 J. Sarker, Capital Tk.46,000.
During the month of March the following events and transactions occurred.
March 2
Rented the three Indiana Jones movies to be shown for the first 3 weeks of
March. The film rental was Tk.3,500; Tk.1,500 was paid in cash and Tk.2,000
will be paid on March 10.
3
Ordered the Lord of the Rings movies to be shown the last 10 days of March.
It will cost Tk.200 per night.
9
Received Tk.4,000 cash from admissions.
TURN OVER
Page 2 of 6
10
Paid balance due on Indiana Jones movies rental and Tk.2,100 on March 1
accounts payable.
11
Joy Theater contracted with Rupam Rahman to operate the concession
stand.
12
Rupam is to pay 15% of gross concession receipts (payable monthly) for the
right to operate the concession stand.
Paid advertising expenses Tk.450.
20
Received Tk.5,000 cash from customers for admissions.
21
31
Received the Lord of Rings movies and paid the rental fee of Tk.2,000.
Paid salaries of Tk.2,500.
31
Received statement from Rupam Rahman showing gross receipts from
concessions of Tk.6,000 and the balance due to Joy Theater of Tk.900
(Tk.6,000*15%) for March. Rupam paid one-half the balance due and will
remit the remainder on April 5.
Required:
Prepare journal entries to record the March transactions.
[Marks: 10]
QUESTION 4
Lilith Corporation (Pvt.) Ltd. is a manufacturer of various types of dyes for industrial use.
Following is the trial balance as on 30 June, 2021:
LILITH CORPORATION (PVT) LTD.
Trial balance
As on 31st march, 2020
Particular
Debit
Credit
Cash
4,000
Accounts Receivable
12,000
Inventory
20,000
Motor Vehicle
40,000
Furniture
80,000
Accumulated Depreciation
Accounts Payable
Allowance for bad debts
5% Preferred Stock
10000
Capital Accounts
Sales Revenue
Cost of Goods Sold
120,000
Operating Expenses
30,000
Selling Expenses
5,000
Interest Expense
3,000
Income Tax Expense
13,000
Bad debts
1000
Bond payable
Total
338000
15,000
7,000
40,000
66000
200,000
10000
338000
TURN OVER
Page 3 of 6
Adjusting data:
(i)
(ii)
Closing Stock was end of the quarter valued at 8,000/- .
Depreciation on Motor Vehicle and Office Furniture at 5 % and 10% per annum
(iii)
Create 5 % Reserve for Doubtful Debts and Debtors.
(iv)
Total Amount of Goods costing 2000/- was taken for personal use by owners and it as
included in Debtors.
(v)
The total sales day book for 31st 2020 had been overstated by Tk10600.
(vi)
Payment by cheque to a creditor for TK. 14,450 had been entered in the bank book Tk.
4,450.
(vii) Interest exp has been overstated by TK 600.
Required:
Pass the necessary adjusting entries for the above information and prepare a working
sheet of adjusting trial balance (i.e. 6 column work sheet).
[Marks: 10]
QUESTION 5
(a)
Why do accrual-basis financial statements provide more useful information than cashbasis statements?
(b)
On December 31, 2020, Yates Company prepared a statement of comprehensive
income and statement of financial position and failed to take into account four adjusting
entries. The statement of comprehensive income, prepared on this incorrect basis,
reflected pretax income of Tk. 60,000. The statement of financial position (before the
effect of income taxes) reflected total assets, Tk. 170,000; total liabilities, Tk. 80,000;
and stockholders’ equity, Tk. 90,000. The data for the four adjusting entries follow:
(i)
Wages amounting to Tk. 39,000 for the last three days of December 2020 were
not paid and not recorded (the next payroll will be on January 10, 2021).
(ii)
Depreciation of Tk. 17,000 for the year on equipment that cost Tk. 170,000 was
not recorded.
(iii)
Rent revenue of Tk. 9,600 was collected on December 1, 2020, for office space
for the period December 1, 2020, to February 28, 2021. The Tk. 9,600 was
credited in full to Unearned Rent Revenue when collected.
(iv) Income taxes were not recorded. The income tax rate for the company is 30
percent.
Required:
Complete the following tabulation to correct the financial statements
the four errors (indicate deductions with parentheses):
Items
Net
Total Assets Total
Income
Liabilities
Balances reported
Tk. 60,000 Tk. 170,000
Tk. 80,000
Additional adjustments:
i. Wages
ii. Depreciation
iii. Rent revenue
Adjusted balances
iv.
Income taxes
Correct balances
for the effects of
Stockholders’
Equity
Tk. 90,000
[Marks: (4+6) = 10]
TURN OVER
Page 4 of 6
QUESTION 6
(a)
(b)
On September 1, Rashed Office Supply had an inventory of 30 calculators at a cost of
Tk. 22 each. The company uses a perpetual inventory system. During September, the
following transactions occurred.
Sept. 6
Purchased 90 calculators at Tk. 20 each from Harun Co., terms 2/10, n/30.
9 Paid freight of Tk. 180 on calculators purchased from Harun Co.
10 Returned 3 calculators to Harun Co. for Tk. 66 credit (including freight)
because they did not meet specifications.
12 Sold 26 calculators costing Tk. 22 (including freight) for Tk. 33 each to
Village Book Store, terms n/30.
14 Granted credit of Tk. 33 to Village Book Store for the return of one
calculator that was not ordered.
20 Sold 40 calculators costing Tk. 22 for Tk. 32 each to Holiday Card Shop,
terms n/30.
Required:
Journalize the September transactions.
Describe the Balance sheet effect and tax effect of FIFO Method.
[Marks: (6+4) = 10]
QUESTION 7
Maine Department Store is located near the Village Shopping Mall. At the end of the company’s
calendar year on December 31, 2020, the following accounts appeared in two of its trial balances.
Account Titles
Accounts Payable
Accounts Receivable
Accumulated Depreciation—Building
Accumulated Depreciation—Equipment
Building
Cash
B. Maine, Capital
Cost of Goods Sold
Depreciation Expense—Building
Depreciation Expense—Equipment
B. Maine, Drawing
Equipment
Insurance Expense
Interest Expense
Interest Payable
Interest Revenue
Merchandise Inventory
Mortgage Payable
Office Salaries Expense
Prepaid Insurance
Property Tax Expense
Property Taxes Payable
Sales Salaries Expense
Sales
Sales Commissions Expense
Sales Commissions Payable
Sales Returns and Allowances
Utilities Expense
Utilities Expense Payable
Unadjusted
Tk. 79,300
50,300
42,100
29,600
190,000
23,800
176,600
412,700
28,000
110,000
3,000
4,000
75,000
80,000
32,000
9,600
76,000
628,000
10,200
8,000
11,000
Page 5 of 6
Adjusted
Tk. 79,300
50,300
52,500
42,900
190,000
23,800
176,600
412,700
10,400
13,300
28,000
110,000
7,200
11,000
8,000
4,000
75,000
80,000
32,000
2,400
4,800
4,800
76,000
628,000
14,500
4,300
8,000
12,000
1,000
TURN OVER
Required:
(i)
Prepare a multiple-step income statement, an owner’s equity statement, and a
classified balance sheet. Tk. 20,000 of the mortgage payable is due for payment next
year.
(ii)
Journalize the adjusting entries that were made.
[Marks: (6+2+7)+5 = 20]
QUESTION 8
(a)
(b)
(c)
‘Different methods of costing for different industries depend upon the production
activities and the nature of business. For these, costing methods can be grouped into
two broad categories’- Describe those two categories.
Classified the cost on the basis of (i) Function (ii) Controllability and Decision Making.
Following is the summarized version of trading and profit and loss accounts of Rabib
Continental Enterprise Ltd for the year ended December 31, 2021.
Particular
Materials
Wages
work Expenses
Gross profit
Administrative
Expenses
Selling Expenses
Net profit
Amount
48000
36000
24000
Particular
Sales
Closing stock of finished Goods
WIP:
Materials
3000
Wages
1800
18400 Work Exp.
1200
126400
Gross Profit
6000
4000
8400
18400
Amount
100000
20400
6000
126400
18400
18400
During the year 6000 units were manufactured and 4800 of them were sold. The
closing record show that works overheads have to be absorbed @50% of direct
wages, administration overhead at BDT.1.50 per units produced and selling overheads
@ BDT.1 per unit sold. Financial and cost account books show different profit.
Required:
(i)
(ii)
Calculate profit as per cost accounts Books.
Prepare statement reconciling two profits.
[Marks: (4+4+12) = 20]
*END OF QUESTION PAPER*
Page 6 of 6
CMA SPECIAL EXAMINATION-2021(NOVEMBER)
FOUNDATION LEVEL
SUBJECT: 001. PRINCIPLES OF ACCOUNTING
Time: Three hours

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.
Full Marks: 100
Q. No. 1
(a) What are the reasons for changing the name of the financial statements according to IAS 1?
(b) What are the major changes recently incorporated in the conceptual framework? Explain.
(c) Mark Mille started his own delivery services, Miller Deliveries, on June 1, 2013. The following
transactions occurred during the month of June.
June 1: Mark invested Tk. 10,000 cash in the business
June 2: Purchased a used van for deliveries for Tk. 12,000. Mark paid Tk. 2,000 cash and
signed a note payable for the remaining balance.
June 3: Paid Tk. 500 for office rent for the month.
June 5: Performed Tk. 4,000 of service on account.
June 9: Withdrew Tk. 200 cash for personal use.
June 12: Purchased supplies for Tk. 150 on account.
June 15: Received a Cash payment of Tk.1,250 for services provided on June 5
June 17: Purchased gasoline for Tk.100 on account
June 20: Received a cash payment of Tk.1,500 for services provided
June 23: made a cash payment of Tk.500 on the notes payable
June 26: Paid Tk.250 for utilities
June 29: Paid for the gasoline purchased on account on June 17
June 30: Paid Tk.1,000 for employees salaries
Instructions:
Show the effects of the previous transactions on the accounting equation using the following format.
Date
Assets
=
Liabilities
+ Owner’s
Equity
Cash
Accounts
Supplies Delivery
Notes
Accounts
M. Miller
Receivable
Van
Payable Payable
Capital
[Marks: (5+5+10) = 20]
Q. No. 2
(a) Suppose a company has three items of inventories on hand at the year-end. Their costs and
NRVs are as follows:
Item
Cost(Tk.) NRV(Tk.)
1
36
40
2
28
24
3
46
48
Total
110
112
Required: Calculate the closing value of inventory at the year-end?
(b) On 1st June 2020 a company held 400 units of finished goods valued at Tk. 22 each. During
June, the following transactions took place.
Date
Units Purchased
Cost per Unit
10/06/20
300
Tk. 23
20/06/20
400
Tk.24
25/06/20
500
Tk.25
Page 1 of 4
CMA SPECIAL EXAMINATION-2021(NOVEMBER)
FOUNDATION LEVEL
SUBJECT: 001. PRINCIPLES OF ACCOUNTING
Q. No. 2(cont’d...)
Goods sold out of inventories during December were as follows:
Date
14/06/20
21/06/20
28/06/20
Units Sold
600
400
100
Sales Price per Unit
Tk.30
Tk.31
Tk.32
Required: Calculate value of inventories using FIFO Method
(c)
Adjusted Trial balance of a service organization is as follows:
Accounts title
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Equipment
Salaries expense
Accounts Payable
Capital
Drawings
Service revenue
Rent Expense
Utilities expense
Miscellaneous Expense
Supplies Expense
Depreciation Expense
Accumulated Depreciation
Interest expense
Interest payable
Insurance expense
Total
Unadjusted trial
balance
Dr.
Cr.
114,000
56200
10500
24000
300,000
100,000
123,500
200,000
6000
136,200
22000
25000
2000
Adjusted trial
balance
Dr.
Cr.
114,000
63,700
7500
6000
300,000
100,000
123,500
200,000
6000
143,700
22000
25000
2000
3000
20000
20000
3000
3000
18000
559,700
590,200
559,700
590,200
Required:
(i)
Journalize the adjusting entries and closing entries
(ii)
Prepare a post-closing trial balance
[Marks: (3+4)+ (8+5) = 20]
Q. No. 3
(a) Following are the selected transactions of Nuhia’s Enterprise relating to inventory during 2020:
Date
Particulars
Units
Unit Cost/Price
January 1
Beginning inventory
50
Tk. 10
March 1
Purchase
30
15
April 1
Sales
60
30
April 3
Sales returns
5
30
May 1
Purchase
50
20
May 2
Purchase returns
10
20
December 31
Sales
30
60
Required:
Calculate the ending inventory, cost of goods sold, and gross profit under weighted-average
method.
Page 2 of 4
CMA SPECIAL EXAMINATION-2021(NOVEMBER)
FOUNDATION LEVEL
SUBJECT: 001. PRINCIPLES OF ACCOUNTING
Q. No. 3(cont’d...)
(b) The trial balance of the TBH Company shown below does not balance.
TBH COMPANY
Trial Balance
May 31, 2020
Accounts Title
Debit
Credit
Cash
Tk. 5,850
Accounts receivable
Tk. 2,750
Prepaid insurance
700
Equipments
8,000
Accounts payable
4,500
Property taxes payable
560
Capital
11,700
Service revenue
6,690
Salaries expense
4,200
Advertising expense
1,100
Property tax expense
800
Total
Tk. 26,800 Tk. 20,050
Your review of the ledger reveals that each account has a normal balance. You also discover
the following errors:
(i)
The totals of the debit sides of Prepaid Insurance, and Property Tax Expense were each
understated Tk.100.
(ii) Based on postings made, the correct balances of accounts receivable and service
revenue were Tk. 2,570 and Tk. 6,960, respectively.
(iii) A debit posting to Salaries Expense of Tk. 300 was omitted.
(iv) A Tk. 1,000 cash drawing by the owner was debited to M. Sterling, Capital for Tk. 1,000
and credited to Cash for tk. 1,000.
(v) A Tk. 520 purchase of supplies on account was debited to Equipment for Tk. 520 and
credited to cash for Tk.520.
(vi) A cash payment of Tk. 450 for advertising was debited to Advertising Expense for Tk. 45
and credited to Cash for Tk. 45.
(vii) A collection from a customer for Tk. 210 was debited to Cash for Tk. 210 and credited to
Accounts Payable for Tk. 210.
Required: Prepare a correct trial balance.
[Marks: (10+10) = 20]
Q. No. 4
Tony Cruse started his own consulting firm, Cruse Company, on June 1, 2020. The trial balance at
June 30 is shown below:
Cruse Company
Trial Balance June 30, 2020
Accounts
Debit (Tk.) Credit (Tk.)
Cash……………………………
8000
Accounts Receivable……….
6000
Supplies…………………….
2000
Prepaid Insurance…………….
3000
Equipment…………………….
15000
Accounts Payable…………….
4500
Unearned Service Revenue…..
4000
Owner’s Capital……………….
22600
Service Revenue………………
7900
Salaries and Wages Expense….
4000
Rent Expense……………..
1000
Total
39000
39000
Page 3 of 4
CMA SPECIAL EXAMINATION-2021(NOVEMBER)
FOUNDATION LEVEL
SUBJECT: 001. PRINCIPLES OF ACCOUNTING
Q. No. 4(cont’d...)
In addition to those accounts listed on the trial balance, the chart of accounts for Cruse Company also
contains the following accounts and account: Accumulated Depreciation—Equipment, Salaries and
Wages Payable, Supplies Expense, Depreciation Expense, Insurance Expense, and Utilities Expense
Other data:
(i)
Supplies on hand at June 30 are Tk.750.
(ii) A utility bill for Tk. 150 has not been recorded and will not be paid until next month.
(iii) The insurance policy is for a year.
(iv) Tk. 2,800 of unearned service revenue has been earned at the end of the month.
(v) Salaries of Tk. 1,900 are accrued at June 30.
(vi) The equipment has a 5-year life with no salvage value. It is being depreciated at Tk. 250 per
month for 60 months.
(vii) Invoices representing Tk. 1,200 of services performed during the month have not been recorded
as of June 30.
Required:
(i)
Prepare the adjusting entries for the month of June.
(ii) Prepare an adjusted trial balance at June 30, 2020
(iii) Prepare a classified balance sheet as at June 30, 2020.
[Marks: (7+6+7) = 20]
Q. No. 5
(a) Briefly discuss the differences between permanent and temporary accounts.
(b) The Pan Pacific Keraniganj opened for business on January 1, 2020. Its trial balance before
adjustment on December 31 is as follows:
Pan Pacific Keraniganj
Trial Balance
December 31, 2020
Sl. No.
Account Title
Debit (Tk.)
Credit (Tk.)
1
Cash
20,000
2
Accounts Receivable
50,000
3
Supplies
10,000
4
Prepaid Insurance
45,000
5
Land
500,000
6
Buildings
400,000
7
Equipment
600,000
8
Accounts Payable
80,000
9
Unearned Rent Revenue
120,000
10
Mortgage Payable
315,000
11
Owner’s Capital
800,000
12
Owner’s Drawings
20,000
13
Rent Revenue
400,000
14
Advertising Expense
20,000
15
Salaries & Wages Expense
40,000
16
Utilities Expense
10,000
1,715,000
1,715,000
Total
Other data:
1.
Prepaid insurance is 15 months starting from January 1, 2020.
2.
A count of supplies shows that Tk. 7,000 of supplies is on hand.
3.
Monthly depreciation is Tk. 2000.
4.
The mortgage interest rate is 12%. (The mortgage was taken out on June 1.)
5.
Two-thirds of the unearned rent revenue is still unearned at year end.
6.
Salaries of Tk. 20,000 are accrued and unpaid at December 31.
Required: Prepare a 10 columns work sheet of Pan Pacific Keraniganj as at 31 December 2020.
[Marks: (5+15) = 20]
= THE END =
Page 4 of 4
CMA JANUARY-2022 EXAMINATION
KNOWLEDGE LEVEL
SUBJECT: IE 01. PRINCIPLES OF ACCOUNTING
Time Allocated: Three hours
Total Marks: 100
Instructions to Candidates
You are required to answer ALL questions.
Answers should be properly structured, relevant and computations need to be shown.
You are strongly advised to carefully read ALL the question requirements before
attempting the question concerned (that is all parts and/or sub-questions).
ALL answers must be written in the answer book. Answers written on the question paper
will not be submitted for marking.
Start answering each question from a fresh sheet. Your answers should be clearly
numbered with the sub-question number then ruled off, so that the markers know which
sub-question you are answering.
No of questions
No of sub-questions
Marks allocation
8
Maximum 03
Question 1- 6 = 10 marks each
Question 7- 8 = 20 marks each
TURN OVER
Page 1 of 6
You are advised to spend 18 minutes on Question 1- 6 (10 marks per question) and 36
minutes on Question 7- 8 (20 marks per question).
QUESTION 1
(a)
Some individuals have indicated that the IASB must be cognizant of the economic
consequences of its pronouncements. What is meant by “economic consequences”?
What dangers exist if politics play too much of a role in the development of IFRS?
(b)
Some argue that having various organizations establish accounting principles is
wasteful and inefficient. Rather than mandating accounting rules, each company could
voluntarily disclose the type of information it considered important. In addition, if an
investor wants additional information, the investor could contact the company and pay
to receive the additional information desired. Comment on the appropriateness of this
viewpoint.
(c)
Rank from most authoritative to least authoritative the following three items:
Conceptual Framework for Financial Reporting, International Financial Reporting
Standards, and International Financial Reporting Standards Interpretations.
[Marks: (4+4+2) = 10]
QUESTION 2
(a)
Tasmim is confused about how accounting information flows through the accounting
system. She believes the flow of information is as follows.
(i)
(ii)
Debits and credits posted to the ledger.
Business transaction occurs.
(iii)
Information entered in the journal.
(iv)
Financial statements are prepared.
(v) Trial balance is prepared.
Is Tasmim correct? If not, indicate to Tasmim the proper flow of the information.
(b)
What accounting assumption, principle, or constraint would Marks and Spencer plc
(M&S) (GBR) use in each of the situations below?
(i)
M&S records expenses when incurred, rather than when cash is paid.
(ii)
M&S was involved in litigation over the last year. This litigation is disclosed in the
financial statements.
(iii)
(c)
M&S allocates the cost of its depreciable assets over the life it expects to receive
revenue from these assets.
(iv) M&S records the purchase of a new Lenovo (CHN) PC at its cash equivalent
price.
Selected transactions for TSN, an interior decorating firm, in its first month of business,
are shown below.
Jan. 2 Invested Tk. 1,500,000 cash in the business in exchange for ordinary shares.
3 Purchased used car for Tk. 700,000 cash for use in the business.
9 Purchased supplies on account for Tk. 5,000.
11 Billed customers Tk. 180,000 for services performed.
16 Paid Tk. 20,000 cash for advertising.
20 Received Tk. 70,000 cash from customers billed on January 11.
23 Paid creditor Tk. 30,000 cash on balance owed.
28 Declared and paid a Tk. 50,000 cash dividend.
TURN OVER
Page 2 of 6
Instructions:
For each transaction indicate the following.
(a) The basic type of account debited and credited (asset, liability, equity).
(b) The specific account debited and credited (cash, rent expense, service revenue,
etc.).
(c) Whether the specific account is increased or decreased.
(d) The normal balance of the specific account.
Use the following format, in which the January 2 transaction is given as an example.
Date
Jan. 2
(a)
Basic
Type
Asset
Account Debited
(b)
(c)
(d)
Specific
Effect
Normal
Account
Balance
Cash
Increase
Debit
(a)
Basic
Type
Equity
Account Credited
(b)
(c)
(d)
Specific
Effect
Normal
Account
Balance
Share
Increase Credit
Capital
[Marks: 2.5+2.5+5 = 10]
QUESTION 3
(a)
Should business transaction debits and credits be recorded directly in the ledger
accounts? What are the advantages of first recording transactions in the journal and
then posting to the ledger?
(b)
TSN Services was formed on May 1, 2020. The following transactions took place
during the first month.
Transactions on May 1:
1.
Shareholders invested Tk. 500,000 cash in exchange for ordinary shares.
2.
Hired two employees to work in the warehouse. They will each be paid a salary of
Tk. 28,000 per month.
3.
Signed a 2-year rental agreement on a warehouse; paid Tk. 240,000 cash in
advance for the first year.
4.
Purchased furniture and equipment costing Tk. 300,000. A cash payment of Tk.
80,000 was made immediately; the remainder will be paid in 6 months.
5.
Paid Tk. 18,000 cash for a one-year insurance policy on the furniture and
equipment.
Transactions during the remainder of the month:
6.
Purchased basic office supplies for Tk. 7,500 cash.
7.
Purchased more office supplies for Tk. 1,300 on account.
8.
Total revenues earned were Tk. 200,000—Tk. 80,000 cash and Tk. 120,000 on
account.
9.
10.
Paid Tk. 400 to suppliers for accounts payable due.
Received Tk. 30,000 from customers in payment of accounts receivable.
11.
Received utility bills in the amount of Tk. 2600, to be paid next month.
12.
Paid the monthly salaries of the two employees, totaling Tk. 56,000.
Required: Prepare journal entries to record each of the events listed.
[Marks: (3+7) = 10]
TURN OVER
Page 3 of 6
QUESTION 4
(a)
For accounting purposes, what is an account? Explain why accounts are used in an
accounting system.
(b)
The bookkeeper for a company made a number of errors in journalizing and posting, as
described below.
1.
2.
A credit posting of Tk. 400 to Accounts Receivable was omitted.
A debit posting of Tk. 750 for Prepaid Insurance was debited to Insurance
Expense.
3.
A collection from a customer of Tk. 100 in payment of its account owed was
journalized and posted as a debit to Cash Tk. 100 and a credit to Service
Revenue Tk. 100.
4.
A credit posting of Tk. 300 to Property Taxes Payable was made twice.
5.
A cash purchase of supplies for Tk. 250 was journalized and posted as a debit to
Supplies Tk. 25 and a credit to Cash Tk. 25.
6.
A debit of Tk. 495 to Advertising Expense was posted as Tk. 459.
Required:
For each error:
(i)
Indicate whether the trial balance will balance.
(ii)
If the trial balance will not balance, indicate the amount of the difference.
(iii) Indicate the trial balance column that will have the larger total.
Consider each error separately. Use the following form, in which error (1) is given as
an example.
(i)
(ii)
(iii)
Error
In Balance
Difference
Larger Column
(1)
No
Tk. 400
debit
[Marks: (2+4+4) = 10]
QUESTION 5
(a)
Why is the normal operating cycle for a merchandising company likely to be longer
than for a service company?
(b)
Explain why the Inventory account usually requires adjustment at year-end.
(c)
On September 1, Rashed Office Supply had an inventory of 30 calculators at a cost of
Tk. 22 each. The company uses a perpetual inventory system. During September, the
following transactions occurred.
Sept. 6 Purchased 90 calculators at Tk. 20 each from Harun Co., terms 2/10, n/30.
9 Paid freight of Tk. 180 on calculators purchased from Harun Co.
10 Returned 3 calculators to Harun Co. for Tk. 66 credit (including freight)
because they did not meet specifications.
12 Sold 26 calculators costing Tk. 22 (including freight) for Tk. 33 each to Village
Book Store, terms n/30.
14 Granted credit of Tk. 33 to Village Book Store for the return of one calculator
that was not ordered.
20 Sold 40 calculators costing Tk. 22 for Tk. 32 each to Holiday Card Shop,
terms n/30.
Required:
Journalize the September transactions.
[Marks: 2+2+6 = 10]
TURN OVER
Page 4 of 6
QUESTION 6
ME Inc. is a retailer of Italian furniture and has five major product lines: (a) Sofas (b)
Dining Tables (c) Beds (d) Closets and (e) Lounge Chairs. At December 31, 2021,
quantity on hand, cost per unit, and net realizable value (NRV) per unit of the product
lines are as follows:
Product Line
(a) Sofas
(b) Dining Tables
(c) Beds
(d) Closets
(e) Lounge Chairs
Quantity on
hand
100
200
300
400
500
Cost per unit
(Taka)
1,000
500
1,500
750
250
NRV per unit
(Taka)
1,020
450
1,600
770
200
Required:
Compute the value of the inventory of ME Inc. at December 31, 2021, under IAS 2 using the
“lower of cost and NRV” principle.
[Marks: 10]
QUESTION 7
(a)
What Is an Adjusting Journal Entry? What is the purpose of adjusting journal entries?
(b)
What are the types of adjusting journal entries?
(c)
From the following, prepare an adjusted Trial Balance after passing the necessary
adjustment entries:
KKK
Trial Balance
August 31, 2019
Debit (Taka) Account Title
Credit (Taka)
Account Title
Purchase
75,000 Sales
105,000
Wages
6,000 Bills payable
5,800
Salaries
10,000 Accounts Payable
35,000
Carriage Inward
1,000 Plant & Machinery
10,000
Insurance
1,500 Building
25,000
Interest paid
1,000 Furniture
3,000
Cash at Bank
20,000 Bills Receivables
10,000
Cash in hand
1,500 Accounts Receivables
40,000
Capital
86,000 Sundry Expenses
5,000
Rent, Rates & Taxes
1,800 Opening stock
21,000
Additional Information:
(i)
Salaries and Wages due Taka 2,000 and Taka 1,000 respectively.
(ii)
(iii)
Personal nature expenses include sundry expenses Taka 2,000.
Proprietor taken goods Taka 500 and Taka 1,000 which included in sales and nor
recorded respectively.
(iv)
(v)
Prepaid insurance Taka 300.
Bad debts Taka 500 and provision 5%.
(vi)
Depreciation: Plant & Machinery 10%; Building 5% and Furniture 10%.
(vii) Closing stock Taka 2,000.
[Marks: (4+2+14) = 20]
TURN OVER
Page 5 of 6
QUESTION 8
(a)
What are the Tools or Techniques of Management Accounting?
(b)
Core difference between financial accounting, cost accounting and management
accounting.
From the following particulars, prepare a statement in such a form as you consider
most suitable for showing clearly all elements of cost:
(c)
Opening stock of raw materials
Purchase of raw materials
Raw materials return to suppliers
Closing stock of raw materials
Wages paid to – Productive workers
Wages paid to – Non-productive workers
Salaries paid to office staff
Carriage on raw material purchase
Carriage on goods sold
Rent and rates of workshop
Fuel, gas, water etc.
Repairs to plant
Depreciation on machinery
Office expenses
Direct chargeable expenses
Advertising
Abnormal loss of raw materials
Sales
Taka
25,000
70,000
2,000
18,800
18,000
2,000
5,000
500
1,500
2,500
1,000
600
1,400
1,500
800
1,200
1,200
125,000
[Marks: 2+4+(8+6) = 20]
* END OF QUESTION PAPER *
Page 6 of 6
CMA MAY- 2022 EXAMINATION
BUSINESS LEVEL
SUBJECT: GE 01. FUNDAMENTALS OF FINANCIAL ACCOUNTING
Time Allocated: Three hours
Total Marks: 100
Instructions to Candidates
You are required to answer ALL questions.
Answers should be properly structured, relevant and computations need to be shown.
You are strongly advised to carefully read ALL the question requirements before attempting
the question concerned (that is all parts and/or sub-questions).
ALL answers must be written in the answer book. Answers written on the question paper will
not be submitted for marking.
Start answering each question from a fresh sheet. Your answers should be clearly numbered
with the sub-question number then ruled off, so that the markers know which sub-question you
are answering.
No of questions
No of sub-questions
Marks allocation
8
Maximum 03
Question 1- 6 = 10 marks each
Question 7- 8 = 20 marks each
TURN OVER
Page 1 of 6
You are advised to spend 18 minutes on Question 1- 6 (10 marks per each) and 36 minutes on
Question 7- 8 (20 marks per each).
QUESTION 1
(a)
(b)
Although the reporting of cash is relatively straightforward, a number of issues merit special
attention. What are those issues? Briefly discuss.
The cash account of Barilgaon Company showed a ledger balance of Tk. 3,969,850 on June
30, 2021. The bank statement as of that date showed a balance of Tk. 4,150,000. Upon
comparing the statement with the cash records, the following facts were determined:
(i)
(ii)
(iii)
There were bank service charges for June of Tk. 25,000.
A bank memo stated that ABC’s note for Tk. 900,000 and interest of Tk. 36,000 had
been collected on June 29, and the bank had made a charge of Tk. 5,500 on the
collection. (No entry had been made on Barilgaon’s books when ABC’s note was sent
to the bank for collection.)
Receipts for June 30 for Tk. 2,890,000 were not deposited until July 2.
(iv)
Checks outstanding on June 30 totaled Tk. 2,136,050.
(v)
The bank had charged the Barilgaon’s account for a customer’s uncollectible check
amounting to Tk. 453,200 on June 29.
(vi) A customer’s check for Tk. 90,000 had been entered as Tk. 60,000 in the cash receipts
journal by Barilgaon on June 15.
(vii) Check no. 742 in the amount of Tk. 491,000 had been entered in the cashbook as Tk.
419,000, and check no. 747 in the amount of Tk. 58,200 had been entered as Tk.
582,000. Both checks had been issued to pay for purchases of equipment.
Required:
Prepare a bank reconciliation dated June 30, 2021, proceeding to a correct cash balance.
[Marks: (2+8) = 10]
QUESTION 2
(a)
(b)
What is “imputed interest”? In what situations is it necessary to impute an interest rate for
notes receivable? What are the considerations in imputing an appropriate interest rate?
The chief accountant for Dickinson Corporation provides you with the following list of
accounts receivable written off in the current year.
Date
March 31
June 30
September 30
December 31
Customer
E. L. Masters Company
Stephen Crane Associates
Amy Lowell’s Dress Shop
R. Frost, Inc.
Amount
$7,800
6,700
7,000
9,830
Dickinson Corporation follows the policy of debiting Bad Debt Expense as accounts are
written off. The chief accountant maintains that this procedure is appropriate for financial
statement purposes because the Internal Revenue Service will not accept other methods for
recognizing bad debts. All of Dickinson Corporation’s sales are on a 30-day credit basis.
Sales for the current year total $2,200,000, and research has determined that bad debt
losses approximate 2% of sales.
Required:
(i)
(ii)
Do you agree or disagree with Dickinson’s policy concerning recognition of bad debt
expense? Why or why not?
By what amount would net income differ if bad debt expense was computed using the
percentage-of- sales approach?
TURN OVER
Page 2 of 6
(c)
On July 1, 2014, Agincourt Inc. made two sales.
1.
It sold land having a fair value of $700,000 in exchange for a 4-year zero-interestbearing promissory note in the face amount of $1,101,460. The land is carried on
Agincourt’s books at a cost of $590,000.
2.
It rendered services in exchange for a 3%, 8-year promissory note having a face value
of $400,000 (interest payable annually).
Agincourt Inc. recently had to pay 8% interest for money that it borrowed from British
National Bank. The customers in these two transactions have credit ratings that require them
to borrow money at 12% interest.
Required:
Record the two journal entries that should be recorded by Agincourt Inc. for the sales
transactions above that took place on July 1, 2014.
[Marks: (3+ 4+3) = 10]
QUESTION 3
Hatch Company has two classes of capital stock outstanding: 8%, Tk.20 par preferred and Tk.5
par common. At December 31, 2014, the following accounts were included in stockholders’ equity.
Preferred Stock, 150,000 shares
Common Stock, 2,000,000 shares
Paid-in Capital in Excess of Par—Preferred Stock
Paid-in Capital in Excess of Par—Common Stock
Retained Earnings
Tk. 3,000,000
10,000,000
200,000
27,000,000
4,500,000
The following transactions affected stockholders’ equity during 2015.
Jan. 1
30,000 shares of preferred stock issued at Tk.22 per share.
Feb. 1
50,000 shares of common stock issued at Tk.20 per share.
June 1
2-for-1 stock split (par value reduced to Tk.2.50).
July 1
30,000 shares of common treasury stock purchased at Tk.10 per share.
Hatch uses the cost method.
Sept. 15
10,000 shares of treasury stock reissued at Tk.11 per share.
Dec. 31
The preferred dividend is declared, and a common dividend of Tk.0.50
per share is declared.
Dec. 31
Net income is Tk.21,00,000.
Required:
Prepare the stockholders’ equity section for Hatch Company at December 31, 2015. Show all
supporting computations.
[Marks: 10]
QUESTION 4
Nitol Motor Industries presents you with the following information.
Description
Date of
Purchased
Cost
Salvage
value
Life
in
Year
Depreciation
Method
Accumulated
depreciation
to 12/31/15
Depreciation
for 2016
Machine-A
Machine-B
Machine-C
Machine-D
2/12/14
8/15/13
7/21/12
10/12/(g)
$142,500
$16,000
21,000
23,500
69000
10
5
8
5
(a)
SL
DDB
SYD
$33,350
29,000
(e)
70,000
(b)
(d)
(f)
(h)
( C)
75,400
219,000
Required:
Complete the table for the year ended December 31, 2016. The company depreciates all assets
using the half-year convention.
[Marks: 10]
TURN OVER
Page 3 of 6
QUESTION 5
(a) Define inventory as per IAS 2. What costs are included in the inventory?
(b) Taranagar Ltd reported the following information relating to the yearend inventories:
Cost to complete
Product
Cost
Sales
and sell
Frozen
Spinach
Tk. 80,000
Tk. 130,000
Tk. 10,000
Carrots
100,000
118,000
8,000
Cut beans
50,000
47,000
7,000
Total frozen
230,000
295,000
25,000
Canned
Peas
90,000
80,000
8,000
Mixed vegetables
95,000
105,000
13,000
Total canned
185,000
185,000
21,000
Total
Tk. 415,000
Tk. 480,000
Tk. 46,000
Instructions:
Calculate the value of ending inventory for above products by individual items, major
groups, and total inventory.
[Marks: (3+7) = 10]
QUESTION 6
(a) “Independence and objectivity are the cornerstones of the auditing profession.” Discuss the
statement critically. Also describe the other qualities of an auditor.
(b) One of the preliminary steps taken by an auditor in a new audit engagement is to obtain
knowledge about the business of the enterprise under audit? How does an auditor gain such
knowledge? How is it useful to the auditor?
(c) What is a flow chart? How is it useful to an auditor?
[Marks: (4+4+2) = 10]
QUESTION 7
The Xinxira Enterprise opened for business few years ago. Its trial balance on June 30, 2021
follows:
Xinxira Enterprise
Trial Balance as on June 30, 2021
Account Title
Debit (Tk.)
Credit (Tk.)
Cash
150,000
Accounts Receivable
100,000
Inventory (01.07.2020)
80,000
Supplies
30,000
Prepaid Insurance
45,000
Land
500,000
Buildings
800,000
Accumulated Depreciation – Buildings
440,000
Equipment
600,000
Accumulated Depreciation – Equipment
330,000
Accounts Payable
70,000
Notes Payable
80,000
10% Bank Loan (long-term)
300,000
Owner’s Capital
800,000
Owner’s Drawings
80,000
Sales Revenue
950,000
Investment Income
30,000
Purchases
500,000
Advertising Expense
30,000
Salaries & Wages Expense
80,000
Utilities Expense
5,000
3,000,000
3,000,000
Total
Page 4 of 6
Other information:
(i)
Ending inventory was valued at Tk. 60,000.
(ii) Prepaid insurance of Tk. 10,000 has been expired during the year.
(iii) Supplies of Tk. 20,000 were used during the year.
(iv) Depreciation on buildings and equipment is charged @5% on cost per year.
(v) 5% of accounts receivable is to be made an allowance for doubtful debt.
(vi) Salaries of Tk. 20,000 were still unpaid.
Required:
Prepare a multiple-step income statement for the year ended 30 June 2021 and a classified
balance sheet as at 30 June 2021.
[Marks: (10+10) = 20]
QUESTION 8
The comparative balance sheets, current income statement and additional information of Kalatia
Ltd are provided below:
Kalatia Ltd
Balance Sheet
As at December 31, 2021
2021 (Tk.)
Assets
Current assets
Cash
Investments (Held for trading at fair value)
Accounts receivable (net)
Notes receivable
Inventory (at lower of FIFO cost and NRV)
Prepaid insurance expenses
Total current assets
Long term investments (Held to maturity at cost)
Property, plant, and equipment
Land
Building (net)
Intangible assets (net)
Total assets
Liabilities and Shareholders’ Equity
Current liabilities
Accounts payable
Accrued interest payable
Income taxes payable
Unearned revenue
Current portion of long-term notes payable
Total current liabilities
Long-term notes payable (due June 30, 2021)
Total liabilities
Shareholders’ equity
Paid in capital
Preferred, (Tk. 2, cumulative, participating – authorized
issued and outstanding, 15,000 shares)
Common (authorized, 400,000 shares; issued and
outstanding (O/S) 250,000 shares for 2021); (2020:
200,000 shares issued and O/S)
Contributed surplus
Retained earnings
Total liabilities and shareholders’ equity
Page 5 of 6
2020 (Tk.)
307,500
12,000
249,510
18,450
708,970
18,450
1,314,880
30,750
250,000
10,000
165,000
22,000
650,000
15,000
1,112,000
0
92,250
232,000
324,250
110,700
1,780,580
92,250
325,000
417,250
125,000
1,654,250
221,000
24,600
54,120
25,000
60,000
384,720
246,000
630,720
78,000
33,000
60,000
225,000
45,000
441,000
280,000
721,000
184,500
184,500
862,500
680,300
18,450
1,065,450
84,410
1,149,860
1,780,580
18,450
883,250
50,000
933,250
1,654,250
Kalatia Ltd
Income Statement
For the year ended December 31, 2021
Tk.
3,500,000
2,100,000
1,400,000
Sales
Cost of goods sold
Gross profit
Operating expenses
Salaries and benefits expense
Depreciation expense
Travel and entertainment expense
Advertising expense
Freight-out expenses
Supplies and postage expense
Telephone and internet expense
Legal and professional expenses
Insurance expense
800,000
43,000
134,000
35,000
50,000
12,000
125,000
48,000
50,000
1,297,000
103,000
Income from operations
Other revenue and expenses
Dividend income
Interest income from investments
Gain from sale of equipment
Interest expense
Income from continuing operations before income tax
Income tax expense
Net income
3,000
2,000
5,000
(3,000)
7,000
110,000
33,000
77,000
Additional information:
1. The trading investment does not meet the criteria to be classified as a cash equivalent and no
purchases or sales took place in the current year.
2. An examination of the intangible assets sub-ledger revealed that a patent had been sold in
the current year. The intangible assets have an indefinite life.
3. No long-term investments were sold during the year.
4. No buildings or patents were purchased during the year.
5. Most of the unearned revenues occurred on December 31, 2020.
6. There were no other additions to the long-term note payable during the year.
7. Common shares were sold for cash. No other transactions occurred during the year.
8. Cash dividends were declared and paid.
Instructions:
Prepare a statement of cash flows for 2021 using indirect method.
[Marks: 20]
*END OF QUESTION PAPER*
Page 6 of 6
CMA JANUARY 2022 EXAMINATION
FOUNDATION LEVEL
FUNDAMENTALS OF FINANCIAL ACCOUNTING
Course Code
Reading Time
: FR111
: 15 minutes
Total Marks
Writing Time
: 100
: 180 minutes
Instructions to Candidates

You MUST NOT write anything during the reading time.

You should attempt ALL questions.

Answers should be properly structured and relevant.

Carefully read ALL the requirements and sub-questions before attempting a specific question.

ALL answers must be written in the answer book.

AVOID WRITING/MARKING on the question paper at any time which may cause disciplinary
action.

Start answering each question from a fresh sheet.

Answers should be clearly numbered with the sub-question number.
Allowable Materials

Writing Stationeries

Non-programmable Calculator
Assessment Structure
Section
A
Section
B
Question 1
Question 2
Question 3
Question 4
Question 5
Question 6
Question 7
Multiple Choice Questions
Modified True/False
Matching
Short Answer Questions
Essay/Computational/Case
Essay/Computational/Case
Essay/Computational/Case
Revision
Total
Subquestion
15
5
5
3
2
2
Marks
15
5
5
15
20
20
20
100
Expected Time
Required
25 minutes
10 minutes
10 minutes
20 minutes
35 minutes
35 minutes
35 minutes
10 minutes
180 minutes
RESTRICTED USE
This paper MUST NOT BE REMOVED from the examination venue
Do not turn the page until instructed
SECTION A [40 MARKS]
THERE ARE 4 (FOUR) QUESTIONS IN THIS PART. ANSWER ALL THE QUESTIONS IN THE
ANSWER SCRIPT FOLLOWING THE EXAMPLE PROVIDED FOR THE SPECIFIC QUESTION.
QUESTION 1
[15 × 1 = 15 MARKS]
There are fifteen (15) multiple-choice questions with five options. Pick the option that best explains
the given question. Write your answer on the answer script [DO NOT PUT ANY MARK ON THE
QUESTION PAPER]. Follow the example given below in providing your answer.
Example:
(i) ICMAB stands for the –
(a) Institute of Cost Management Accounting of Bangladesh
(b) Institute of Cost and Management Accountants of Bangladesh
(c) Institute for Cost Managers and Accounting of Bangladesh
(d) Institute of Cost Management Accountants of Bangladesh
(e) Industrial Cost Management Accountants of Bangladesh
Answer: (i) (b)
(i)
The periodic inventory systems contains all of the following accounts except:
(a) Beginning inventory
(b) Purchase
(c) Cost of goods sold
(d) Ending inventory
(e) None of the above
(ii)
The term 2/10, n/30 is used in:
(a) Cash transactions
(b) Cash discounts
(c) Credit management
(d) Trade discount
(e) Inventory management
(iii) Acid test ratio equals:
(a) Current assets divided by current liabilities
(b) Current assets less inventory divided by current liabilities
(c) Net income divided by average assets
(d) Net income divided by net sales
(e) Current assets divided by quick liabilities
(iv) Which method of charging depreciation does not rely on time:
(a) Straight-line method
(b) Declining balance method
(c) Sum-of-the-years’-digit method
(d) Unit of output/activity
(e) None of the above
CMA January 2022 Examination, FR111 [Page 2 of 7]
(v)
Owner’s equity increases when
(a) Assets decrease
(b) Liabilities decrease
(c) Revenues decrease
(d) Expenses decrease
(e) Asset unchanged
(vi) A balance sheet shows:
(a) The financial position at a specific date
(b) The financial performance for the year
(c) The changes in financial position for the year
(d) The assets, liabilities and owner’s equity for the year
(e) Changes in income and expenses
(vii) Net loss occurs when:
(a) Liabilities exceed assets
(b) Cost of goods sold exceeds net sales revenue
(c) Operating expenses exceed gross profit
(d) Current assets exceed non-current assets
(e) Non-current asset exceeds non-current liabilities
(viii) The accounting process does not deal with which of the following?
(a) Identification of transactions
(b) Verification of transactions
(c) Recording of transactions
(d) Communication of information to interested users
(e) Summarizing of transaction
(ix) Which of the following is not an example of internal users of accounting information?
(a) Owners of a company
(b) Managers
(c) Directors
(d) Employers
(e) None of the above
(x)
During 2021, Gibson Company’s assets decreased Tk.50,000and its liabilities decreased
Tk.90,000. Its owner’s equity therefore:
(a) increased Tk.50,000.
(b) decreased Tk.140,000.
(c) decreased Tk.40,000.
(d) increased Tk.140,000.
(e) increased Tk.40,000.
(xi) When Alexander Company purchased supplies worth Tk.500, it incorrectly recorded a credit to
Supplies for Tk.5,000 and a debit to Cash for Tk.5,000. Before correcting this error:
(a) Cash is overstated and Supplies is overstated.
(b) Cash is understated and Supplies is understated.
(c) Cash is understated and Supplies is overstated.
(d) Cash is overstated and Supplies is understated.
(e) Cash is overstated and Supplies is adjusted.
CMA January 2022 Examination, FR111 [Page 3 of 7]
(xii) If beginning inventory is Tk.60,000, cost of goods purchased is Tk.380,000, and ending
inventory is Tk.50,000, cost of goods sold is:
(a) Tk.380,000.
(b) Tk.390,000.
(c) Tk.370,000.
(d) Tk.330,000.
(e) Tk.420,000.
(xiii) In a bank reconciliation, deposits in transit are:
(a) deducted from the book balance.
(b) added to the book balance.
(c) added to the bank balance.
(d) deducted from the bank balance.
(e) not included in the statement.
(xiv) Net sales for the month are Tk.800,000, and bad debts are expected to be 1.5% of net sales.
The company uses the percentage-of-sales basis. If the Allowance for Doubtful Accounts has a
credit balance of Tk.15,000 before adjustment, what is the balance after adjustment?
(a) Tk.15,000.
(b) Tk.27,500.
(c) Tk.23,000.
(d) Tk.31,000.
(e) Tk.27,000.
(xv) Additions to plant assets are:
(a) revenue expenditures.
(b) debited to a Repair Expense account.
(c) debited to a Purchases account.
(d) capital expenditures.
(e) accrued expenditures.
QUESTION 2
[5 × 1 = 5 MARKS]
There are five (5) statements given under the question. Identify the statements as True or False. If
the statement is false, rewrite the statement on the answer script to make it ‘True’. Reasoning is NOT
required. Follow the example given below in providing your answer.
Example:
(a) ICMAB stands for the Industrial Cost Management and Accounting of Bangladesh.
Answer:
(a) False. ICMAB stands for the Institute of Cost and Management Accountants of
Bangladesh.
Note:
 You will not get any mark if you simply rewrite as ICMAB does not stand for the Industrial
Cost Management Accountants of Bangladesh.
 If the statement is true, you need NOT to rewrite the statement rather only mention that the
statement is True.
(a)
(b)
(c)
(d)
(e)
Sales discount is a contra asset account.
A balance sheet reports the assets, liabilities, and owner’s equity at a specific period of time.
The worksheet is essentially a mandatory tool of the accountant.
Whether a debit or a credit to an account increases the account's balance or decreases the
account's balance depends on the type of account
Owner's Withdrawals are not used to figure the profit or loss for a business.
CMA January 2022 Examination, FR111 [Page 4 of 7]
QUESTION 3
[5 × 1 = 5 MARKS]
Match the items of column A with the most suitable items of column B. Match only one item of column
A with one item of column B. Write your answer on the answer script. Follow the example given below
in providing your answer.
Example:
Column A
1. ICMAB
Column B
(a) Professional accountancy body
(b) University
Answer: 1 (a)
Column A
(1) Cost audit is
(2) GAAP includes
(3) Post-closing trial balance
(4) NSF checks
(5) Intangible assets
Column B
(a) Bangladesh Bank
(b) Amortization
(c) Bangladesh Securities and Exchange Commission
(d) International Financial Reporting Standards
(e) Voluntary
(f)Compulsory
(g) External users of accounting information
(h) IAS, IFRS, BSEC rules and others
(i) Internal users of business information
(j) Accounting practices
(k) Bank reconciliation
(l) Permanent (real) accounts
QUESTION 4
[5 × 3 = 15 MARKS]
(a) Suppose a company has three items of inventories on hand at the year-end. Their costs and
NRVs are as follows:
Item
Cost (Tk.)
NRV (Tk.)
1
36
40
2
28
24
3
46
48
Total
110
112
Required: Calculate the closing value of inventory at the year-end?
(b) Which of the following errors would cause a trial balance to have unequal totals? Explain your answers.
(i)
A payment to a creditor was recorded as a debit to Accounts Payable for Tk. 129 and as a
credit to Cash for Tk. 102.
(ii) A payment of Tk. 150 to a creditor for an account payable was debited to Accounts
Receivable and credited to Cash.
(iii) A purchase of office supplies of Tk. 420 was recorded as a debit to Office Supplies for Tk.
42 and as a credit to Cash for Tk. 42.
(iv) A purchase of equipment for Tk. 450 was recorded as a debit to Supplies for Tk. 450 and
as a credit to Cash for Tk. 450.
(c) On December 31, the adjusted trial balance of Oslo Employment Agency shows the following
selected data.
Accounts Receivable
Tk. 24,000
Commission Revenue
Tk. 92,000
Interest Expense
Tk. 7,800
Interest Payable
Tk. 1,500
Analysis shows that adjusting entries were made to (1) accrue Tk. 4,500 of commission revenue
and (2) accrue Tk. 1,500 interest expense.
Required:
(i)
Prepare the closing entries for the temporary accounts shown above at December 31.
(ii) Prepare the reversing entries on January 1.
(iii) Prepare the entries to record (1) the collection of the accrued commissions on January 10
and (2) the payment of all interest due (Tk. 2,500) on January 15.
END OF SECTION A
CMA January 2022 Examination, FR111 [Page 5 of 7]
SECTION B [60 MARKS]
THERE ARE 3 (THREE) QUESTIONS IN THIS PART. ANSWER ALL THE QUESTIONS IN THE
ANSWER SCRIPT. SHOW ALL RELEVANT COMPUTATION.
QUESTION 5
[Marks: (7+6+7) = 20]
Mr. Jacktion started his own consulting firm, Jacktion Company, on June 1, 2020. The trial balance at
June 30 is shown below:
Jacktion Company
Trial Balance June 30, 2020
Accounts
Cash……………………………
Accounts Receivable……….
Supplies…………………….
Prepaid Insurance…………….
Equipment…………………….
Accounts Payable…………….
Unearned Service Revenue…..
Owner’s Capital……………….
Service Revenue………………
Salaries and Wages Expense….
Rent Expense……………..
Total
Debit (Tk.)
8000
6000
2000
3000
15000
Credit (Tk.)
4500
4000
22600
7900
4000
1000
39000
39000
In addition to those accounts listed on the trial balance, the chart of accounts for Jacktion Company
also contains the following accounts and account: Accumulated Depreciation—Equipment, Salaries
and Wages Payable, Supplies Expense, Depreciation Expense, Insurance Expense, and Utilities
Expense
Other data:
(i)
Supplies on hand at June 30 are Tk.750.
(ii) A utility bill for Tk. 150 has not been recorded and will not be paid until next month.
(iii) The insurance policy is for a year.
(iv) Tk. 2,800 of unearned service revenue has been earned at the end of the month.
(v) Salaries of Tk. 1,900 are accrued at June30.
(vi) The equipment has a 5-year life with no salvage value. It is being depreciated at Tk. 250 per
month for 60months.
(vii) Invoices representing Tk. 1,200 of services performed during the month have not been recorded
as of June30.
Required:
(i)
Prepare the adjusting entries for the month of June.
(ii) Prepare an adjusted trial balance at June30, 2020
(iii) Prepare a classified balance sheet as at June 30, 2020.
QUESTION 6
(a)
[5 + (12+3) = 20 MARKS]
Rizwan Omar is puzzled. His company had a profit margin of 10% in 2020. He feels that this is
an indication that the company is doing well. Bahar Lotus, his accountant, says that more
information is needed to determine the firm’s financial well-being. Who is correct? Why?
CMA January 2022 Examination, FR111 [Page 6 of 7]
(b)
Muldur Corporation’s comparative balance sheets are presented below.
MULDUR CORPORATION
Comparative Balance Sheets
December 31
2020
2019
Cash
Tk. 15,200
Tk. 17,700
Accounts receivable
25,200
22,300
Investments
20,000
16,000
Equipment
60,000
70,000
Accumulated depreciation
(14,000)
(10,000)
Total
Tk.106,400
Tk.116,000
Accounts payable
Tk. 14,600
Tk. 11,100
Bonds payable
10,000
30,000
Common stock
50,000
45,000
Retained earnings
31,800
29,900
Total
Tk.106,400
Tk.116,000
Additional information:
(1) Net income was Tk.18,300. Dividends declared and paid were Tk.16,400.
(2) Equipment which cost Tk.10,000 and had accumulated depreciation of Tk.1,200 was sold for
Tk.3,300.
(3) All other changes in noncurrent account balances had a direct effect on cash flows, except the
change in accumulated depreciation.
Required:
(i)
Prepare a statement of cash flows for 2020 using the indirect method.
(ii) Compute free cash flow.
QUESTION 7
[(6+2) + 12 = 20 MARKS]
(a) The following information pertains to Family Video Company.
(1) Cash balance per bank, July 31, Tk. 7,263.
(2) July bank service charge not recorded by the depositor Tk. 28.
(3) Cash balance per books, July 31, Tk. 7,284.
(4) Deposits in transit, July 31, Tk. 1,500.
(5) Bank collected Tk. 900 note for Family in July, plus interest Tk. 36, less fee Tk. 20.The
collection has not been recorded by Family, and no interest has been accrued.
(6) Outstanding checks, July 31, Tk. 591.
Required:
(i)
Prepare a bank reconciliation at July 31.
(ii) Journalize the adjusting entries at July 31 on the books of Family Video Company.
(b)
Prepare journal entries under perpetual inventory method to record the following merchandising
transactions for both the seller and buyer.
May 4 BMX sold Tk. 1,500 of merchandise on account to SNK, terms FOB shipping point, n/45,
invoice dated May 4. The cost of the merchandise was Tk. 900.
May 6 SNK paid transportation charges of Tk. 30 on the May 4 purchase from BMX.
May 8 BMX sold Tk. 1,000 of merchandise on account to SNK, terms FOB destination, n/30,
invoice dated May 8. The cost of the merchandise was Tk. 700.
May 10 BMX paid transportation costs of Tk. 50 for delivery of merchandise sold to SNK on May 8.
May 16 BMX issued SNK a Tk. 200 credit memorandum for merchandise returned. The
merchandise was purchased by SNK on account on May 8. The cost of the merchandise
returned was Tk. 140.
May 18 BMX received payment from SNK for purchase of May 8.
May 21 BMX sold Tk. 2,400 of merchandise on account to SNK, terms FOB shipping point,
2/10, n/EOM. BMX prepaid transportation costs of Tk. 100, which were added to the invoice.
The cost of the merchandise was Tk. 1,440.
May 31 BMX received payment from SNK for purchase of May 21, less discount 2%.
END OF SECTION B
CMA January 2022 Examination, FR111 [Page 7 of 7]
CMA MAY 2022 EXAMINATION
FOUNDATION LEVEL
FUNDAMENTALS OF FINANCIAL ACCOUNTING
Course Code
Reading Time
: FR111
: 15 minutes
Total Marks
Writing Time
: 100
: 180 minutes
Instructions to Candidates

You MUST NOT write anything during the reading time.

You should attempt ALL questions.

Answers should be properly structured and relevant.

Carefully read ALL the requirements and sub-questions before attempting a specific
question.

ALL answers must be written in the answer book.

AVOID WRITING/MARKING on the question paper at any time which may cause
disciplinary action.

Start answering each question from a fresh sheet.

Answers should be clearly numbered with the sub-question number.
Allowable Materials

Writing Stationaries

Non-programmable Calculator
Assessment Structure
Subquestion
Section
A
Section
B
Question 1
Question 2
Question 3
Question 4
Question 5
Question 6
Question 7
Multiple Choice Questions
Modified True/False
Matching
Short Answer Questions
Essay/Computational/Case
Essay/Computational/Case
Essay/Computational/Case
Revision
Total
15
5
5
3
3
2
2
Marks
15
5
5
15
20
20
20
100
Expected
Time
Required
25 minutes
10 minutes
10 minutes
20 minutes
35 minutes
35 minutes
35 minutes
10 minutes
180 minutes
RESTRICTED USE
This paper MUST NOT BE REMOVED from the examination venue
Do not turn the page until instructed
SECTION A [40 MARKS]
THERE ARE 4 (FOUR) QUESTIONS IN THIS PART. ANSWER ALL THE QUESTIONS IN
THE ANSWER SCRIPT FOLLOWING THE EXAMPLE PROVIDED FOR THE SPECIFIC
QUESTION.
QUESTION 1
[15 × 1 = 15 MARKS]
There are fifteen (15) multiple-choice questions with five options. Pick the option that best
explains the given question. Write your answer on the answer script [DO NOT PUT ANY
MARK ON THE QUESTION PAPER]. Follow the example given below in providing your
answer.
Example:
(i) ICMAB stands for the –
(a) Institute of Cost Management Accounting of Bangladesh
(b) Institute of Cost and Management Accountants of Bangladesh
(c) Institute for Cost Managers and Accounting of Bangladesh
(d) Institute of Cost Management Accountants of Bangladesh
(e) Industrial Cost Management Accountants of Bangladesh
Answer: (i) (b)
(i)
Capital is___
(a) The amount borrowed to set up a business
(b) The amount owed by a business to its proprietor(s)
(c) The value of the assets in a business
(d) The total amount invested in a business by all the providers of capital
(e) The cash available in the treasury of a company
(ii)
What is the statement of financial position?
(a) A list of all the assets and liabilities of a business.
(b) A statement of the net worth of a business.
(c) A statement that shows how a business has changed over time.
(d) A statement of the assets and liabilities of a business at a point in time in financial
terms.
(e) A list of all the assets, liabilities and net income in a table.
(iii)
An invoice received from the supplier is recorded in__
(a) The sales day book
(b) The purchase day book
(c) The sales return day book
(d) The purchases returns day book
(e) The suppliers invoice book
(iv)
A draft income statement shows a gross profit of Tk.2,000 and net profit of Tk. 1,000. It
is then realized that Tk. 400 of rent that should be treated as a prepayment has been
incorrectly treated as an accrual. When this mistake is corrected what happens to
gross and net profit?
(a)
(b)
(c)
(d)
(e)
Gross Profit
No Change
Falls Tk.400
Falls Tk.400
No change
Rises Tk.800
Net Profit
No change
Falls Tk.400
Rises Tk.400
Rises Tk.800
No change
CMA May 2022 Examination, FR111 [Page 2 of 8]
(v)
EOM means in trade credit___
(a) Earnings on Maturity
(b) Earnings of Money
(c) End of Month
(d) Exclusively Opportunistic Management
(e) Exclusively Operating Machine
(vi)
If opening inventory Tk.58,000, closing inventory Tk.62,000, opening payables
Tk.15,000, closing payables Tk.25,000, payments to payables Tk.160,000, The rate of
inventory turnover is;
(a) 2.74 times
(b) 2.58 times
(c) 2.66 times
(d) 2.76 times
(e) 2.06 times
(vii) Which one is applicable to natural resources___
(a) Impairment loss
(b) Depreciation
(c) Depletion
(d) Amortization
(e) Revaluation surplus
(viii) A transaction for Tk.10,000 sales offers a 2% trade discount and a 5% cash discount. If
both discounts are claimed, how much is posted to discounts allowed?
(a) Tk.490
(b) Tk.500
(c) Tk.690
(d) Tk.700
(e) Tk.200
(ix)
Which of the following is not considered in determining depreciation expense under
declining balance method?
(a) Cost of the asset
(b) Estimated life of the asset
(c) Salvage value
(d) Accumulated depreciation
(e) Cost of acquisition
(x)
During the inflation, which inventory costing system is more effective)
(a) FIFO
(b) LIFO
(c) HIFO
(d) Average Cost
(e) Weighted Average Method
(xi)
Use of supplies is an example of……………..
(a) Internal transactions
(b) Noncash transactions
(c) Business transactions
(d) All of the above
(e) None of the above
(xii) VAT, sellers received from buyers is
(a) Liability
(b) Income
(c) Expenses
(d) Assets
(e) Part of owner’s equity
CMA May 2022 Examination, FR111 [Page 3 of 8]
(xiii) If the profit on the purchase is 25% then how much on sale?
(a) 20%
(b) 33.33%
(c) 16.67%
(d) 50%
(e) 19.5%
(xiv) Balance Sheet is prepared
(a) On a specific date
(b) For the year end
(c) For the accounting year
(d) Middle of year
(e) For a certain perion of time
(xv) Depreciation is a process of ...
(a) Evaluation
(b) Analysis
(c) Cash Deposit
(d) Cost Distribution
(e) Cost Equalization
QUESTION 2
[5 × 1 = 5 MARKS]
There are five (5) statements given under the question. Identify the statements as True or
False. If the statement is false, rewrite the statement on the answer script to make it ‘True’.
Reasoning is NOT required. Follow the example given below in providing your answer.
Example:
(a) ICMAB stands for the Industrial Cost Management and Accounting of Bangladesh.
Answer:
(a) False. ICMAB stands for the Institute of Cost and Management Accountants
of Bangladesh.
Note:
 You will not get any mark if you simply rewrite as ICMAB does not stand for the
Industrial Cost Management Accountants of Bangladesh.
 If the statement is true, you need NOT to rewrite the statement rather only
mention that the statement is True.
(a)
(b)
(c)
A debit is an entry made to the right side of an account and always increases an
account balance.
BSEC is the regulator of all companies incorporated in Bangladesh.
(d)
Lawyers and accountants that your business periodically hire are normally considered
to be your employees.
Inventory is valued at a lower of cost and net book value.
(e)
Impairment loss is a part of other comprehensive income.
CMA May 2022 Examination, FR111 [Page 4 of 8]
QUESTION 3
[5 × 1 = 5 MARKS]
Match the items of column A with the most suitable items of column B. Match only one item
of column A with one item of column B. Write your answer on the answer script. Follow the
example given below in providing your answer.
Example:
Column A
1. ICMAB
Column B
(a) Professional accountancy body
(b) University
Answer: 1 (a)
(1) Financial audit is
(2) Financial Accounting serves mainly
(3) AICPA
(4) Expense recognition principles
(5) Recoverability test
(a) International Financial Reporting Standards
(b) Voluntary
(c) Compulsory
(d) External users of Accounting information
(e) is a professional accounting body
(f) Accounting practices
(g) Internal users of business information
(h) Determines impairment loss
(i) Matching efforts with accomplishment
(j) Current assets
(k) Fairly complicated transactions.
(l) Materiality
QUESTION 4
[5 × 3 = 15 MARKS]
(a) Classify with reasons the following items as non-current assets, current assets or
liabilities;
(i)
A personal computer used in the accounts department of a retail store
(ii) A furniture on sale in an office equipment shop
(iii) Wages due to be paid to staff at the end of the week
(iv) Raw materials stored to be used to produce apparels by Textile Company.
(v) An amount owing to a leasing company for the acquisition of a van
(b)
From the following table determine the missing values.
Particulars
January 1, 2016
Assets
Liabilities
Owner’s equity
December 31, 2016
Assets
Liabilities
Owner’s equity
Owner’s equity changes in
year:
Additional investment
Drawings
Total revenues
Total expenses
Square Co. (Tk.)
Beximco Co. (Tk.)
95,000
50,000
(i)
110,000
(iv)
60,000
(ii)
55,000
73,000
145,000
72,000
(v)
(iii)
25,000
375,000
340,000
20,000
(vi)
425,000
383,000
CMA May 2022 Examination, FR111 [Page 5 of 8]
(c)
Identify the accounting assumption, principle and/or constraint that describe each
situation below:
(i)
Ensures that all relevant financial information which may influence the judgment
of individual users is reported.
(ii) When in doubt, choose the method that will least likely to overstate assets and
income.
(iii) Purchase of low cost assets such as waste paper baskets are expensed
immediately after purchase.
(iv) A particular expenditure is recognized as an expense since its contribution to
revenue has been completed.
(v) Indicates that personal and business record keeping should be separately
maintained.
END OF SECTION A
SECTION B [60 MARKS]
THERE ARE 3 (THREE) QUESTIONS IN THIS PART. ANSWER ALL THE QUESTIONS IN
THE ANSWER SCRIPT. SHOW ALL RELEVANT COMPUTATION.
QUESTION 5
[5 + 7+ 8 = 20 MARKS]
(a)
Who are the users of accounting data? How does accounting provide relevant data to
these users?
(b)
On 1st June 2020 a company held 400 units of finished goods valued at Tk. 22 each.
During June, the following transactions took place.
Date
10/06/20
20/06/20
25/06/20
Units Purchased
300
400
500
Cost per Unit
Tk. 23
Tk.24
Tk.25
Goods sold out of inventories during June were as follows:
Date
14/06/20
21/06/20
28/06/20
Units Sold
600
400
100
Sales Price per Unit
Tk.30
Tk.31
Tk.32
Required: Calculate value of inventories using FIFO Method
(c)
On 30 June 2021, Tesla's cash book showed an overdraft of Tk.300 on his current
account. A bank statement as at the end of June 2021 showed that Tesla was in credit
with the bank by Tk.65. On checking the cash book with the bank statement you find
the following;
1)
Cheques drawn of Tk.500, entered in the cash book but not yet presented.
2)
3)
Cheques received of Tk.400, entered in the cash book, but not yet credited by the bank.
The bank had transferred interest received on the deposit account of Tk.60 to the
current account, recording the transfer on 5 July 2021. This amount had been
credited in the cash book as of 30 June 2021.
4)
Bank charges of Tk.35 in the bank statement had not been entered in the cash book.
5)
6)
The payments side of the cash book had been under cast by Tk.10.
Dividends received amounting to Tk.200 were paid directly to the bank and not
entered in the cash book.
7)
A cheque for Tk.50 drawn on deposit account had been shown in the cash book
as drawn on current account.
CMA May 2022 Examination, FR111 [Page 6 of 8]
8)
A cheque issued to Jack for Tk.25 was replaced when out of date. It was credited
again in the cash book, no other entry being made. Both cheques were included
in the total of unpresented cheques shown above.
Required:
(i)
Indicate the appropriate adjustments in the cash book.
(ii) Prepare a statement reconciling the amended balance with that shown in the
bank statement.
QUESTION 6
[5 + 15 = 20 MARKS]
(a) Briefly explain IASs including Regulatory Agencies and Standards Setters. Why is it
necessary to convert from national accounting to international harmonization?
(b) One Stop Mall a departmental store extends credit terms of 2/10, n/30 to all of its customers,
at the end of December 31, 2020. One Stop Mall’s merchandise inventory were Tk.250,000.
The store makes a margin of 20% on all of its merchandise sales. During the month of
January 2021 the following merchandise transaction occurred by the Store:
Jan. 1
Purchased merchandise on account Tk. 4,120,000 from Kepi Suppliers,
FOB shipping point, terms 1/15, n/30. The appropriate party also made
cash payment of Tk. 2,000 for freight on this date.
Jan. 3
Sold merchandise on account to Solo Retailers $80,000.
Jan. 7
Received credit from Kepi suppliers for goods of bad quality and of
wrong size Tk. 3,000.
Jan. 10
Purchased merchandise for cash Tk.130,000, FOB destination.
Jan. 12
Received cash from Solo Retailers the amount due from them.
Jan. 14
Paid Kepi suppliers, the amount due.
Jan. 20
Sold merchandise for cash Tk.180,000.
Jan. 23
Paid cash Tk.1,200 to customers for wrong quality of merchandise
delivered on Jan. 20 sales.
Jan. 31
Sold merchandise on account to Norton Distributors Tk.75,000, terms
FOB destination and paid a transportation bill of tk.550.
Required:
(i)
Calculate the amount of purchase discount.
(ii) Calculate the amount of sales discount.
(iii) Record the above transaction in the books of One Stop Mall using the Perpetual
Inventory system.
(iv) Determine Merchandise inventory value as of January 31, 2021.
QUESTION 7
[15 + 5 = 20 MARKS]
(a) Shabnum Corporation has the following financial statements. You are the financial
controller and are responsible to prepare the complete financial statements.
SHABNUM CORPORATION
Statement of Comprehensive Income
For the year ended 31 December 2021
Revenue
Cost of sales
Gross Profit
Distribution Costs
Administrative Expenses
Interest Received
Interest Paid
Profit before taxation
Taxation
Profit for the period
Amount (Tk.)
25,53,000
(18,14,000)
7,39,000
(1,25,000)
(2,64,000)
3,50,000
25,000
(75,000)
3,00,000
(1,40,000)
1,60,000
CMA May 2022 Examination, FR111 [Page 7 of 8]
SHABNUM CORPORATION
Statement of Financial Position
On 31 December 2021
Property, Plant, and Equipment
Intangible Assets
Investments
Inventories
Receivables
Short-term investments
Cash in hand
Total
Share Capital (Tk.1 per share)
Share premium account
Revaluation reserve
Retained earnings
Loan
Trade payables
Bank overdraft
Taxation
Dividend proposed
Total
2021
Tk.3,80,000
2,50,000
1,50,000
3,90,000
50,000
2,000
12,22,000
2,00,000
1,60,000
1,00,000
1,60,000
1,70,000
1,27,000
85,000
1,20,000
1,00,000
12,22,000
2020
Tk.3,05,000
2,00,000
25,000
1,02,000
3,15,000
1,000
9,48,000
1,50,000
1,50,000
91,000
1,00,000
50,000
1,19,000
98,000
1,10,000
80,000
9,48,000
The following information is available;
(i)
The proceeds of the sale of non-current investments amounted to Tk.30,000.
(ii) Fixtures and fittings, with an original cost of Tk.85,000 and a net book value of
Tk.45,000, were sold for Tk.32,000 during the year.
(iii) The following information relates to the property, plant, and equipment
2021
2020
Cost
7,20,000
5,95,000
Accumulated depreciation
3,40,000
2,90,000
Net book value
3,80,000
3,05,000
(iv) 50,000 (face value of Tk.1) ordinary shares were issued during the year at a
premium of 20 cents per share.
(v) Dividends of 2021 were declared before the reporting date. No payment has yet
been made.
Required:
Prepare a Statement of Cash Flows for the year to 31 December 2021 using the
indirect method.
(b)
You have been asked by the financial vice president to develop a short presentation on the
lower-of-cost or market method for inventory purposes. The financial VP needs to explain
this method to the president because it appears that a portion of the company’s inventory
has declined in value. The financial VP asks you to answer the following questions.
(i)
What is the purpose of the lower-of-cost-or-market method?
(ii)
What is meant by “net realizable value”?
(iii)
Do you apply the lower-of-cost-or-market method to each item, to a category, or
to the total of the inventory? Explain.
(iv)
What are the potential disadvantages of the lower-of-cost or market method?
END OF SECTION B
CMA May 2022 Examination, FR111 [Page 8 of 8]
CMA SEPTEMBER-2022 EXAMINATION
BUSINESS LEVEL
SUBJECT: GE 01. FUNDAMENTALS OF FINANCIAL ACCOUNTING
Time Allocated: Three hours
Total Marks: 100
Instructions to Candidates
You are required to answer ALL questions.
Answers should be properly structured, relevant and computations need to be shown.
You are strongly advised to carefully read ALL the question requirements before
attempting the question concerned (that is all parts and/or sub-questions).
ALL answers must be written in the answer book. Answers written on the question paper
will not be submitted for marking.
Start answering each question from a fresh sheet. Your answers should be clearly
numbered with the sub-question number then ruled off, so that the markers know which
sub-question you are answering.
No of questions
No of sub-questions
Marks allocation
8
Maximum 03
Question 1- 6 = 10 marks each
Question 7- 8 = 20 marks each
TURN OVER
Page 1 of 6
You are advised to spend 18 minutes on Question 1- 6 (10 marks per each) and 36 minutes
on Question 7- 8 (20 marks per each).
QUESTION 1
(a)
What is accounting? Why is it called the language of business?
(b)
What are the enhancing qualities of the qualitative characteristics? Describe the role of
enhancing qualities in conceptual characteristics.
(c)
Distinguish between financial accounting and management accounting.
[Marks: (3+4+3) = 10]
QUESTION 2
(a)
What are two methods of recording accounts receivable transactions when a cash
discount situation is involved? Which is more theoretically correct? Which is used in
practice more of the time? Why?
(b)
On July 31, 2020, PK Company had a cash balance per books of Tk.6,140. The
statement from Dakota State Bank on that date showed a balance of Tk.7,690.80. A
comparison of the bank statement with the Cash account revealed the following facts:
1)
The bank service charge for July was Tk.25.
2)
The bank collected Tk.1,520 for PK Company through electronic funds transfer.
3)
The July 31 receipts of Tk.1,193.30 were not included in the bank deposits for July.
These receipts were deposited by the company in a night deposit vault on July 31.
4)
Company check No. 2480 issued to L. Taylor, a creditor, for Tk.384 that cleared the
bank in July was incorrectly entered as a cash payment on July 10 for Tk.348.
5)
Checks outstanding on July 31 totaled Tk.1,860.10.
6)
On July 31, the bank statement showed an NSF charge of Tk.575 for a check
received by the company from W. Krueger, a customer, on account.
Instructions:
(i)
Prepare the bank reconciliation as of July 31.
(ii) Prepare the necessary adjusting entries at July 31.
(c)
ABC Company reports the following financial information before adjustments.
Tk.
Tk.
Accounts Receivable
1,00,000
Allowance for doubtful debts
2,000
Sale Revenue (All on account)
9,00,000
Sales return and allowances
50,000
Instructions:
Prepare the journal entry to record Bad Debt Expense assuming ABC Company
estimates bad debts at (a) 1% of net sales and (b) 5% of accounts receivable.
[Marks: (2+6+2) = 10]
QUESTION 3
(a) PQR Company was formed on July 1, 2011. It was authorized to issue 500,000 shares of
$10 par value common stock and 100,000 shares of 8%, $25 par value, cumulative and
nonparticipating preferred stock. PQR Company has a July 1–June 30 fiscal year. The
following information relates to the stockholders’ equity accounts of PQR Company.
Common Stock:
Prior to the 2013–2014 fiscal year, PQR Company had 110,000 shares of outstanding
common stock issued as follows.
TURN OVER
Page 2 of 6
(1)
(2)
(3)
95,000 shares were issued for cash on July 1, 2011, at $31 per share.
On July 24, 2011, 5,000 shares were exchanged for a plot of land which cost the seller
$70,000 in 2005 and had an estimated fair value of $220,000 on July 24, 2011.
10,000 shares were issued on March 1, 2013, for $42 per share.
During the 2013–2014 fiscal year, the following transactions regarding common stock took place.
November 30, 2013
December 15, 2013
June 20, 2014
PQR purchased 2,000 shares of its own stock on the open market
at $39 per share. PQR uses the cost method for treasury stock.
PQR declared a 5% stock dividend for stockholders of record on
January 15, 2014, to be issued on January 31, 2014. PQR was
having a liquidity problem and could not afford a cash dividend at
the time. PQR’s common stock was selling at $52 per share on
December 15, 2013.
PQR sold 500 shares of its own common stock that it had
purchased on November 30, 2013, for $21,000.
Preferred Stock:
PQR issued 100,000 shares of preferred stock at $44 per share on July 1, 2012.
Cash Dividends:
PQR has followed a schedule of declaring cash dividends in December and June, with payment
being made to stockholders of record in the following month. The cash dividends which have been
declared since inception of the company through June 30, 2014, are shown below.
Declaration date
Common stock
Preferred stock
15/12/12
$0.30 per share
$0.50 per share
15/06/13
$0.30 per share
$0.50 per share
15/12/13
$0.50 per share
No cash dividends were declared during June 2014 due to the company’s liquidity problems.
Retained Earnings:
As of June 30, 2013, PQR retained earnings account had a balance of $550,000. For the
fiscal year ending June 30, 2014, PQR reported net income of $120,000.
Instructions:
Prepare the stockholders’ equity section of the balance sheet, including appropriate notes, for
PQR Company as of June 30, 2014, as it should appear in its annual report to the shareholders.
What is meant by “accounting symmetry” between the entries recorded by the debtor
and creditor in a troubled debt restructuring involving a modification of terms? In what
ways is the accounting for troubled-debt restructurings non-symmetrical?
[Marks: (8+2) = 10]
QUESTION 4
Square Pharmaceuticals Ltd. presents you with the following information regarding their
different machines.
(b)
Description
Machine-A
Machine-B
Machine-C
Machine-D
Date
Purchase
d
2/12/14
8/15/13
7/21/12
10/12/(g)
Cost
Salvage
value
Life
in
Year
Depreciation
Method
Accumulated
depreciation to
12/31/15
Depreci
ation for
2016
$142,500
( C)
75,400
219,000
$16,000
21,000
23,500
69000
10
5
8
5
(a)
SLM
DDB
SYD
$33,350
29,000
(e)
70,000
(b)
(d)
(f)
(h)
Required
Complete the table for the year ended December 31, 2016. (Show computations where
necessary).
[Marks: 10]
TURN OVER
Page 3 of 6
QUESTION 5
(a)
Why might a company choose not to use revaluation accounting?
(b)
Presented below is net asset information related to the Carlos Division of Kalindi, Inc.
CARLOS DIVISION
NET ASSETS
AS OF DECEMBER 31, 2020
(IN MILLIONS)
Cash
Tk. 50
Accounts receivable
200
Property, plant and equipment (net)
2,600
Goodwill
200
Less: Notes payable
(2,700)
Net assets
Tk. 350
The purpose of the Carlos Division is to develop a nuclear-powered aircraft. If
successful, traveling delays associated with refueling could be substantially reduced.
Many other benefits would also occur. To date, management has not had much
success and is deciding whether a write-down at this time is appropriate. Management
estimated its future net cash flows from the project to be Tk. 400 million. Management
has also received an offer to purchase the division for Tk. 335 million. All identifiable
assets’ and liabilities’ book and fair value amounts are the same.
Instructions:
(i)
Prepare the journal entry (if any) to record the impairment at December 31, 2020.
(ii) At December 31, 2021, it is estimated that the division’s fair value increased to Tk. 345
million. Prepare the journal entry (if any) to record this increase in fair value.
[Marks: (4+6) = 10]
QUESTION 6
(a)
(b)
What are the four aspects of a transaction that should be assigned to different persons
in order to minimize the chances of errors and frauds?
A fellow student asks you why it is necessary to audit petty cash when the size of the
imprest for the period under audit appears to be immaterial. How would you respond to
this query?
(c)
While auditing the accounts of an enterprise, you find that an unusual quantity of goods
is shown to have been sold during the last three days of the accounting year. What
steps would you take in this situation?
[Marks: (4+3+3) = 10]
QUESTION 7
The following trial balance has been extracted from the books of account of Barilgaon Ltd as
at March 2022:
Debits (Tk.)
Credits (Tk.)
Administrative expenses
210,000
Ordinary share capital
600,000
Trade receivables
470,000
Bank overdraft
80,000
Provision for warranty costs
205,000
Distribution costs
420,000
Non-current investments
560,000
Investment income
75,000
Finance cost
10,000
Freehold land and buildings at cost
200,000
TURN OVER
Page 4 of 6
Plant and equipment
At cost
Accumulated depreciation (at 31 March 2022)
Retained earnings (at 1 April 2021)
Purchases
Inventories (at 1 April 2021)
Trade payables
Revenue
2021 final dividend paid
2022 interim dividend paid
550,000
220,000
180,000
960,000
150,000
260,000
2,010,000
65,000
35,000
3,630,000
3,630,000
Additional information:
(1) Inventories at March 2022 were valued at Tk. 160,000.
(2) The following items are already included in the balances listed in this trial balance:
Distribution Costs
Administrative Expenses
Depreciation charge for the year
Tk. 27,000
Tk. 5,000
Employee benefits
150,000
80,000
(3) The income tax charge for the year is estimated at Tk. 74,000.
(4) The warranty provision is to be increased by Tk. 16,000, charged to administrative
expenses.
(5) Staff bonuses totaling Tk. 40,000 are to be provided for, charged equally to distribution
costs and administrative expenses.
(6) In May 2022, a final dividend for 2022 of Tk. 1 per share was proposed on each of the
company’s 60,000 ordinary shares.
Required:
Prepare Barilgaon Ltd’s statement of profit or loss and statement of changes in equity
for the year to 31 March 2022, and a statement of financial position at that date in
accordance with the requirements of IAS 1 Presentation of Financial Statements to the
extent the information is available.
[Marks: (10+10) = 20]
QUESTION 8
The following are the comparative balance sheets and the income statement of Keraniganj Ltd:
Keraniganj Ltd
Balance Sheets as at 31 December 2021 and 2020
2021
2020
Assets
Cash
Tk. 61,000
Tk. 40,000
Accounts receivable
710,000
530,000
Inventory
848,000
860,000
Prepaid expenses
10,000
5,000
Property, plant, and equipment
3,170,000
2,600,000
Accumulated depreciation
(810,000)
(755,000)
Long-term investments
60,000
110,000
Loans to subsidiaries
214,000
170,000
Total assets
Tk. 4,263,000
Tk. 3,560,000
Liabilities
Accounts payable
Tk. 970,000
Tk. 670,000
Accrued liabilities
65,000
82,000
Income taxes payable
95,000
80,000
Bonds payable
820,000
600,000
Total liabilities
1,950,000
1,432,000
Shareholders’ equity
Common stock
1,740,000
1,650,000
Retained earnings
573,000
478,000
Total shareholders’ equity
2,313,000
2,128,000
Total liabilities and shareholders’ equity
Tk. 4,263,000
Tk. 3,560,000
TURN OVER
Page 5 of 6
Keraniganj Ltd
Income Statement for the year ended 31 December 2021
Sales
Cost of goods sold
Gross profit
Selling and administrative expenses
Net operating income
Non-operating items:
Gain on sale of investments
Loss on sale of equipment
Income before taxes
Income taxes
Net income
Tk. 2,000,000
(1,300,000)
700,000
(490,000)
210,000
60,000
(20,000)
40,000
250,000
(80,000)
Tk. 170,000
The following additional information is also relevant:
(i)
(iii)
Equipment was sold during this year for Tk. 70,000. The equipment had cost Tk.
130,000 and had Tk. 40,000 in accumulated depreciation on the date of sale.
Long-term investments were sold during the year for Tk. 110,000. These investments
had cost Tk. 50,000 when purchased several years ago.
The subsidiaries did not repay any outstanding loans during the year.
(iv)
Bonds with a principal balance of Tk. 350,000 were repaid during this year.
(v)
(vi)
Keraniganj did not repurchase any of its own stock during the year.
The company declared and paid a cash dividend this year.
(ii)
Required:
Prepare a statement of cash flows for the year ended 31 December 2021 using direct
method.
[Marks: 20]
*END OF QUESTION PAPER*
Page 6 of 6
CMA SEPTEMBER-2022 EXAMINATION
FOUNDATION LEVEL
FUNDAMENTALS OF FINANCIAL ACCOUNTING
Course Code
Reading Time
: FR111
: 15 minutes
Total Marks
Writing Time
: 100
: 180 minutes
Instructions to Candidates

You MUST NOT write anything during the reading time.

You should attempt ALL questions.

Answers should be properly structured and relevant.

Carefully read ALL the requirements and sub-questions before attempting a specific
question.

ALL answers must be written in the answer book.

AVOID WRITING/MARKING on the question paper at any time which may cause
disciplinary action.

Start answering each question from a fresh sheet.

Answers should be clearly numbered with the sub-question number.
Allowable Materials

Writing Stationaries

Non-programmable Calculator
Assessment Structure
Subquestion
Section
A
Section
B
Question 1
Question 2
Question 3
Question 4
Question 5
Question 6
Question 7
Multiple Choice Questions
Modified True/False
Matching
Short Answer Questions
Essay/Computational/Case
Essay/Computational/Case
Essay/Computational/Case
Revision
Total
15
5
5
3
2
-
Marks
15
5
5
15
20
20
20
100
Expected
Time
Required
25 minutes
10 minutes
10 minutes
20 minutes
35 minutes
35 minutes
35 minutes
10 minutes
180 minutes
RESTRICTED USE
This paper MUST NOT BE REMOVED from the examination venue
Do not turn the page until instructed
SECTION A [40 MARKS]
THERE ARE 4 (FOUR) QUESTIONS IN THIS PART. ANSWER ALL THE QUESTIONS IN
THE ANSWER SCRIPT FOLLOWING THE EXAMPLE PROVIDED FOR THE SPECIFIC
QUESTION.
QUESTION 1
[15 × 1 = 15 MARKS]
There are fifteen (15) multiple-choice questions with five options. Pick the option that best
explains the given question. Write your answer on the answer script [DO NOT PUT ANY
MARK ON THE QUESTION PAPER]. Follow the example given below in providing your
answer.
Example:
(i) ICMAB stands for the –
(a) Institute of Cost Management Accounting of Bangladesh
(b) Institute of Cost and Management Accountants of Bangladesh
(c) Institute for Cost Managers and Accounting of Bangladesh
(d) Institute of Cost Management Accountants of Bangladesh
(e) Industrial Cost Management Accountants of Bangladesh
Answer: (i) (b)
(i)
Which of the following is not an example of a financing activity?
(a) Borrowing money from a bank
(b) Repaying money to a bank
(c) Selling goods on credit
(d) Paying dividends
(e) Interest paid to a bank
(ii)
Which of the following is not an indicator of a company’s profitability?
(a) Current ratio
(b) Earnings per share
(c) Gross profit
(d) Price-earnings ratio
(e) Net profit
(iii)
Which of the following is not a fundamental or enhancing qualitative characteristic of
useful financial information?
(a) Accrual basis of accounting
(b) Relevance
(c) Faithful representation
(d) Comparability
(e) Consistency
(iv)
Which of the following ratios is the best indicator of a company’s ability to pay current
liabilities?
(a) Price-earnings ratio
(b) Current ratio
(c) Debt to total assets
(d) Earnings per share
(e) Gross profit ratio
CMA September 2022 Examination, FR111 [Page 2 of 9]
(v)
Which accounts normally have debit balances?
(a) Assets, expenses, and revenues
(b) Assets, expenses, and retained earnings
(c) Assets, liabilities, and dividends
(d) Assets, dividends, and expenses
(e) Assets, prepaid insurance, accrued salary
(vi)
A trial balance:
(a) is a list of accounts with their balances for a period of time.
(b) proves that transactions have been correctly journalized.
(c) will not balance if a correct journal entry is posted twice.
(d) proves that all transactions have been recorded.
(e) is a list of accounts with their balances at a specific time.
(vii)
A company gave a price quote for a possible service to a client in February,
performed the required service for the client in March, sent an invoice to the client in
April, and received payment in May. In which month should the revenue be
recognized?
(a) February
(b) March
(c) April
(d) May
(e) June
(viii)
Which of the following accounts will have a zero balance after closing entries have
been journalized and posted?
(a) Service Revenue
(b) Supplies
(c) Unearned Revenue
(d) Accumulated Depreciation
(e) Prepaid salary
(ix)
Which type of account will appear in the post-closing trial balance?
(a) Permanent accounts
(b) Temporary accounts
(c) Income statement accounts
(d) The dividend accounts
(e) Revenue account
(x)
A Tk. 1,000 purchase of merchandise inventory is made on June 12, terms 2/10,
n/30. On June 16, merchandise costing Tk. 150 is returned. What amount will be paid
if payment is made in full on June 21? On July 11?
(a) Tk. 980 and Tk. 1,000
(b) Tk. 833 and Tk. 850
(c) Tk. 850 and Tk. 1,000
(d) Tk. 833 and Tk. 980
(e) Tk. 833 and Tk. 1000
(xi)
When goods are shipped with the freight terms FOB shipping point in a perpetual
inventory system:
(a) the seller pays the freight costs and credit Merchandise Inventory.
(b) the buyer pays the freight costs and debits Freight In.
(c) the seller pays the freight costs and debits Cost of Goods Sold.
(d) the seller pays the freight costs and debits Freight Out.
(e) the buyer pays the freight costs and debits Merchandise Inventory.
CMA September 2022 Examination, FR111 [Page 3 of 9]
(xii)
Which of the following is a contra revenue account that normally has a debit
balance?
(a) Sales
(b) Sales Returns and Allowances
(c) Cost of Goods Sold
(d) Freight Out
(e) Provision for bad debts
(xiii)
Beginning inventory is Tk. 45,000; purchases are Tk. 460,000; purchase returns and
allowances are Tk. 30,000; freight in is Tk. 7,500; and ending inventory is Tk 65,000.
What is the cost of goods sold under a periodic inventory system?
(a) Tk. 447,500
(b) Tk. 410,000
(c) Tk. 417,500
(d) Tk. 372,500
(e) Tk. 472,500
(xiv)
Lavigne Ltd. purchased Tk. 12,500 of inventory on credit from Mouton Ltée. Mouton
shipped the inventory on December 21, 2021, FOB shipping point. Lavigne did not
record the purchase until January 2022, when the inventory was received. What are
the effects of this error on the 2021 inventory balance and the 2021 accounts
payable balance?
(a) An understatement and an overstatement
(b) An understatement and an understatement
(c) An overstatement and an overstatement
(d) An overstatement and an understatement
(e) An understatement and no effect
(xv)
Avonlea Corp. had inventory at a cost of Tk. 5,000 and a net realizable value of Tk.
4,750 at the end of 2020. At the end of 2021, it had inventory at a cost of Tk. 6,000
and a net realizable value of Tk. 6,500. The amounts that should be reported for
inventory at the end of 2020 and 2021, respectively, are:
(a) Tk. 5,000 and Tk. 6,000
(b) Tk. 5,000 and Tk. 6,500
(c) Tk. 4,750 and Tk. 6,000
(d) Tk. 4,750 and Tk. 6,500
(e) Tk. 5,000 and Tk. 4,750
QUESTION 2
[5 × 1 = 5 MARKS]
There are five (5) statements given under the question. Identify the statements as True or
False. If the statement is false, rewrite the statement on the answer script to make it ‘True’.
Reasoning is NOT required. Follow the example given below in providing your answer.
Example:
(a) ICMAB stands for the Industrial Cost Management and Accounting of Bangladesh.
Answer:
(a) False. ICMAB stands for the Institute of Cost and Management Accountants
of Bangladesh.
Note:
 You will not get any mark if you simply rewrite as ICMAB does not stand for the
Industrial Cost Management Accountants of Bangladesh.
 If the statement is true, you need NOT to rewrite the statement rather only
mention that the statement is True.
CMA September 2022 Examination, FR111 [Page 4 of 9]
(a)
(b)
General ledger is a book of original entry.
Companies recognize revenue in the period in which it is received in cash.
(c)
Companies record expense only when they pay out cash.
(d)
The operating cycle for a merchandising company is usually longer than that of a
service company.
The cost basis of accounting states that cost is more relevant than fair value.
(e)
QUESTION 3
[5 × 1 = 5 MARKS]
Match the items of column A with the most suitable items of column B. Match only one item
of column A with one item of column B. Write your answer on the answer script. Follow the
example given below in providing your answer.
Example:
Column A
(i) ICMAB
Column B
(a) Professional accountancy body
(b) University
Answer: (i) (a)
Column A
(i) Relevance
(ii) Going concern
(iii) Fair value
(iv) Faithful representation
(v) Verifiability
Column B
(a) The qualitative characteristic that the use of the same
accounting principles enables evaluation of one
company’s results relative to another company’s.
(b) The qualitative characteristic for describing
information that indicates that the information makes a
difference in a decision.
(c) The basis of measurement that assets are reported at
the cost incurred to acquire the item.
(d) The qualitative characteristic that the value of
information should exceed the cost of preparing it.
(e) The qualitative characteristic that presents a true and
transparent picture of what really exists or happened.
(f) The qualitative characteristic that information can be
recalculated and determined to be without errors or
omissions.
(g) The qualitative characteristic that information is
available before it loses its ability to influence decisions.
(h) The assumption that a company will continue to
operate for the foreseeable future.
(i) The qualitative characteristic that informed users are
able to interpret information and comprehend its
meaning.
(j) The basis of measurement that assets are reported at
the price that would be received if the item was sold.
CMA September 2022 Examination, FR111 [Page 5 of 9]
QUESTION 4
[5 × 3 = 15 MARKS]
(a)
What is an accounting information system? Describe some of the factors that may
impact the design of a company’s information system.
(b)
Which of the following events should be recorded in the accounting records? Explain
your answer in each case.
(c)
(i)
The company wins an award as one of the top 50 companies in Canada to work for.
(ii)
Supplies are purchased on account.
(iii)
A shareholder dies.
(iv)
The company pays a cash dividend to its shareholders.
(v)
A local lawyer agrees to provide legal services to the company for the next year.
Standard Limited purchased a machine for its spinning mill for BDT 600,000 with an
estimated useful life of 20 years with estimated residual value of BDT 50,000. Shortly
after the start of year 5, Standard Limited changed the initial estimated useful life to 25
years and lowered the residual value to 19,600.
Calculate new amount of depreciation expense at the end of year 5.
END OF SECTION A
CMA September 2022 Examination, FR111 [Page 6 of 9]
SECTION B [60 MARKS]
THERE ARE 3 (THREE) QUESTIONS IN THIS PART. ANSWER ALL THE QUESTIONS IN
THE ANSWER SCRIPT. SHOW ALL RELEVANT COMPUTATION.
QUESTION 5
[4+8+8 = 20 MARKS]
(a) How does the cash basis of accounting differ from the accrual basis of accounting?
Which basis gives more useful information for decision making? Why?
(b) The Independent Book Shop Ltd. was formed on April 1, 2021. It is a small private
corporation, run by Joanna Kay. On March 31, 2022, Joanna prepared the following
income statement:
INDEPENDENT BOOK SHOP LTD.
Income Statement
Year Ended March 31, 2022
Revenues
Accounts receivable
Service revenue
Total revenues
Expenses
Rent expense
Office expense
Vacation expense
Total expenses
Profit before income tax
Income tax expense
Profit
Tk. 23,000
41,000
Tk. 64,000
Tk. 12,000
5,000
4,000
21,000
85,000
5,000
Tk. 90,000
Joanna admits that her knowledge of accounting is somewhat limited and is concerned
that her income statement might not be correct. She gives you the following additional
information:
(i)
Included in the Service Revenue account is Tk. 3,000 of revenue that the
company expects to earn in April 2022. Joanna included it in this year’s statement
so she wouldn’t forget about it.
(ii) Joanna operates her business in a converted carriage house attached to her
parents’ downtown home. They do not charge her anything for the use of this
building, but she thinks that if she paid rent, it would have cost her about Tk.
12,000 a year. She included this amount in the income statement as Rent
Expense because of the “opportunity cost.”
(iii) To reward herself after a year of hard work, Joanna took a vacation to Greece.
She used personal funds to pay for the trip, but she reported it as an expense on
the income statement since it was her job that made her need the vacation.
Required:
(1) Identify any corrections that should be made to the income statement and explain
why.
(2) Prepare a corrected income statement.
(3) What other financial statements should the Independent Book Shop prepare,
assuming it follows Accounting Standards for Private Enterprises?
(c)
Your examination of the records of Southlake Corp. shows the company collected Tk.
187,800 in cash from customers and paid Tk. 109,400 in cash for operating costs in its
first year of operations. If Southlake followed the accrual basis of accounting, it would
report the following year-end balances in selected accounts:
CMA September 2022 Examination, FR111 [Page 7 of 9]
Accounts payable
Accounts receivable
Accumulated depreciation
Income tax payable
Prepaid insurance
Unearned revenue
Tk. 3,000
8,400
24,600
15,800
3,000
2,800
Required:
(1) Calculate Southlake’s profit on a cash basis for the year.
(2) Calculate Southlake’s profit on an accrual basis for the year.
(3) Which basis of accounting do you recommend Southlake use? Why?
QUESTION 6
(a)
(b)
[4+8+8 = 20 MARKS]
What is a chart of accounts and why is it important? How does numbering the accounts
help?
The following trial balance of Cantpost Ltd., at the end of its first year of operations,
June 30, 2022, does not balance:
Cash
Accounts receivable
Supplies
Equipment
Accumulated depreciation—equipment
Accounts payable
Unearned revenue
Common shares
Retained earnings, June 30, 2022
Dividends
Service revenue
Salaries expense
Office expense
Depreciation expense
Income tax expense
Tk. 1,241
Tk. 2,630
860
3,000
600
2,665
1,200
1,000
2,365
800
8,440
3,400
910
600
365
Tk. 14,365
Tk. 15,711
Each of the listed accounts has a normal balance per the general ledger. However,
each account may not have been listed in the appropriate debit or credit column or may
not belong in the trial balance at all. In addition, an examination of the general ledger
and general journal reveals the following errors:
(i)
(ii)
Cash received from a customer on account was debited for $570, and Accounts
Receivable was credited for the same amount. The actual collection was for
$750.
The purchase of equipment on account for $360 was recorded as a debit to
Supplies for $360 and a credit to Accounts Payable for $360.
(iii)
Services were performed on account for a client for $890. Accounts Receivable
was debited for $890 and Service Revenue was credited for $89.
(iv)
A transposition (reversal of digits) error was made when copying the balance in
the Salaries Expense account. The correct balance should be $4,300.
(v) A payment for rent in the amount of $1,000 was neither recorded nor posted.
Required:
Prepare the correct trial balance.
CMA September 2022 Examination, FR111 [Page 8 of 9]
(c)
Duvall Ltd. and Pele Ltd. incurred the following merchandise transactions in June.
June 10 Duvall sold Tk. 5,000 of merchandise to Pele, terms 1/10, n/30, FOB
shipping point. The merchandise cost Duvall Tk. 3,000 when it was
originally purchased.
11
Freight costs of Tk. 250 were paid by the appropriate company.
12
Duvall received damaged goods returned by Pele for credit. The goods
were originally sold for 500; the cost of the returned merchandise was Tk.
300. The merchandise was not returned to inventory.
19
Duvall received full payment from Pele.
Prepare journal entries for each transaction for Pele Ltd., assuming (1) a perpetual
inventory system is used, and (2) a periodic inventory system is used.
QUESTION 7
(a)
(b)
[5+15 = 20 MARKS]
Distinguish between a quantity discount, a purchase discount, and a sales discount.
Explain how each kind of discount is recorded.
These items are taken from financial statements of Beaulieu Limited for the year ended
December 31, 2021:
Cash
Buildings
Accumulated depreciation—buildings
Accounts receivable
Prepaid insurance
Equipment
Accumulated depreciation—equipment
Accounts payable
Salaries payable
Common shares
Income tax expense
Long-term investments
Retained earnings, Jan. 1
Dividends
Service revenue
Depreciation expense
Insurance expense
Salaries expense
Utilities expense
Interest expense
Interest revenue
Land
Mortgage payable
Tk. 8,000
80,000
12,000
7,500
250
32,000
19,200
9,550
3,000
20,000
5,000
20,000
34,000
3,500
80,500
5,400
2,400
33,000
3,700
8,000
500
50,000
80,000
Additional information:
(i)
Beaulieu started the year with Tk. 15,000 of common shares and issued Tk.
5,000 more during the year.
(ii) Tk. 10,000 of the mortgage payable is due to be repaid within the next year.
Required:
(1) Prepare an income statement, statement of changes in equity, and statement of
financial position for the year.
(2) Explain how each financial statement is related to the others.
= END OF SECTION B =
CMA September 2022 Examination, FR111 [Page 9 of 9]
CMA JANUARY-2023 EXAMINATION
BUSINESS LEVEL
SUBJECT: GE 01. FUNDAMENTALS OF FINANCIAL ACCOUNTING
Time Allocated: Three hours
Total Marks: 100
Instructions to Candidates
You are required to answer ALL questions.
Answers should be properly structured, relevant and computations need to be shown.
You are strongly advised to carefully read ALL the question requirements before
attempting the question concerned (that is all parts and/or sub-questions).
ALL answers must be written in the answer book. Answers written on the question paper
will not be submitted for marking.
Start answering each question from a fresh sheet. Your answers should be clearly
numbered with the sub-question number then ruled off, so that the markers know which
sub-question you are answering.
No of questions
No of sub-questions
Marks allocation
8
Maximum 03
Question 1- 6 = 10 marks each
Question 7- 8 = 20 marks each
TURN OVER
Page 1 of 5
You are advised to spend 18 minutes on Question 1- 6 (10 marks per each) and 36 minutes
on Question 7- 8 (20 marks per each).
QUESTION 1
(a) What are the two key organizations in the development of international accounting
standards? Explain their role.
(b) Distinguish between:
(i)
Financial and Management Accounting
(ii) Capital and Revenue Expenditures
(iii) Tangible and Intangible Assets
(c) On January 1, 2017, Robust Inc. purchased heavy-duty equipment for Tk. 400,000. On
the date of installation, it was estimated that the machine has a useful life of 10 years
and a residual value of Tk. 40,000. Accordingly the annual depreciation worked out to
Tk. 36,000 = [(Tk. 400,000 – Tk. 40,000) / 10].
On January 1, 2021, after four years of using the equipment, the company decided to
review the useful life of the equipment and its residual value. Technical experts were
consulted. According to them, the remaining useful life of the equipment at January 1,
2021, was seven years and its residual value was Tk. 46,000.
Required:
Compute the revised annual depreciation for the year 2021 and future years.
[Marks: (3+4+3) = 10]
QUESTION 2
(a) On June 3, 2022, Kalatia Company sold to Taranagar Company merchandise having a
sales price of Tk. 300,000 with terms of 2/10, n/30, f.o.b. destination. On June 8, 2022,
the appropriate party made payment of the freight cost totaling Tk. 9,000. On June 12,
2022, Taranagar returned some goods having a value of Tk. 20,000 to Kalatia. On
June 13, 2022, Kalatia received a check for the balance due from Taranagar.
Instructions:
(i)
Prepare journal entries on the Kalatia Company books to record all the events
noted above using net method.
(ii) Prepare the journal entry, assuming that Taranagar Company did not remit
payment until June 29, 2022.
(b) On 1 January 2021, Dhaka Foods Limited had a debit balance of Tk. 250,000 in
Accounts Receivable and a credit balance of Tk. 25,000 in Allowance for Doubtful
Debts. During the year, net credit sales were Tk. 500,000 and collection from accounts
receivable was Tk. 330,000. Bad debts written off for the year amounted to Tk. 20,000.
Recovery of bad debts previously written off amounted to Tk. 3,000.
Instructions:
Calculate the bad debt expense and the ending balance in allowance for doubtful debts
assuming a 8% allowance on ending accounts receivable is kept.
[Marks: (6+4) = 10]
QUESTION 3
(a) “Depreciation is a process of cost allocation, not valuation.” Explain.
(b) The cost of equipment purchased by Dhaka Company on June1, 2020 is Tk.
6,700,000. It is estimated that the machine will have a Tk. 400,000 salvage value at the
end of its service life. Its service life is estimated at 7 years; its total working hours are
estimated at 42,000 and its total production is estimated at 525,000 units. During 2020,
the machine was operated 6,000 hours and produced 55,000 units. During 2021, the
machine was operated 5,500 hours and produced 48,000 units.
Instructions:
Compute depreciation expense on the machine for the year ending December 31,
2020 and the year ending December 31, 2021, using the following methods:
(i)
Straight-line
(ii) Units-of-output
(iii) Sum-of-the-years’-digits
(iv) Declining balance (twice the straight-line rate)
[Marks: (2+8) = 10]
Page 2 of 5
QUESTION 4
(a) What are the four steps involved in finding differences between the balance per books
and balance per bank?
(b) Rodriguez Company maintains a checking account at the Imura Bank. At July 31,
selected data from the ledger balance and the bank statement are shown below.
Balance, July 1
July receipts
July credits
July disbursements
July debits
Balance, July 31
Cash in Bank
Per Books
Per bank
17,600
15,800
81,400
83,470
77,150
74,756
21,850
24,514
Analysis of the bank data reveals that the credits consist of Tk. 79,000 of July deposits
and a credit memorandum of Tk. 4,470 for the collection of a Tk. 4,400 note plus
interest revenue of Tk. 70. The July debits per bank consist of checks cleared Tk.
74,700 and a debit memorandum of Tk. 56 for printing additional company checks.
You also discover the following errors involving July checks.
(1) A check for Tk. 230 to a creditor on account that cleared the bank in July was
journalized and posted as Tk. 320.
(2) A salary check to an employee for Tk. 255 was recorded by the bank for Tk. 155.
The June 30 bank reconciliation contained only two reconciling items: deposits in
transit Tk. 8,000 and outstanding checks of Tk. 6,200.
Required
(i)
Prepare a bank reconciliation at July 31, 2022.
(ii) Journalize the adjusting entries to be made by Rodriguez Company. Assume that
interest on the note has not been accrued.
[Marks: (2+6+2) = 10]
QUESTION 5
(a) Under what circumstances is it appropriate to record goodwill in the accounts? How
should goodwill, properly recorded on the books, be written off in order to conform with
IFRS?
(b) Tanzeem Price Company from time to time embarks on a research program when a
special project seems to offer possibilities. In 2020, the company expends Tk. 325,000
on a research project, but by the end of 2020 it is impossible to determine whether any
benefit will be derived from it.
Instructions:
(i)
What account should be charged for the Tk. 325,000, and how should it be
shown in the financial statements?
(ii) The project is completed in 2021, and a successful patent is obtained. The R&D
costs to complete the project are Tk. 110,000. The administrative and legal
expenses incurred in obtaining patent number 472-1001-84 in 2021 total Tk.
16,000. The patent has an expected useful life of 5 years. Record these costs in
journal entry form. Also, record patent amortization (full year) in 2021.
(iii) In 2022, the company successfully defends the patent in extended litigation at a
cost of Tk. 47,200, thereby extending the patent life to December 31, 2029. What
is the proper way to account for this cost? Also, record patent amortization (full
year) in 2022.
(iv) Additional engineering and consulting costs incurred in 2022 required to advance
the design of a product to the manufacturing stage total Tk. 60,000. These costs
enhance the design of the product considerably. Discuss the proper accounting
treatment for this cost.
[Marks: (3+7) = 10]
Page 3 of 5
QUESTION 6
(a) Fraud experts often say that there are three primary factors that contribute to employee
fraud. Identify the three factors and explain what is meant by each.
(b) Identify and describe the five components of a good internal control system.
(c) Write down the major differences between internal and external audit.
[Marks: (2+3+5) = 10]
QUESTION 7
(a) The summarised accounts of PQR Ltd. for the year ended 31 March 2022 are:
STATEMENTS OF FINANCIAL POSITION AT 31 MARCH
Amount in million
2022
2021
Non-current assets
Property, plant and equipment
4,200
3,700
Current assets
Inventories
1,500
1,600
Trade receivables
2,200
1,800
3,700
3,400
7,900
7,100
Equity
Share Capital
1,200
1,200
Retained earnings
2,200
1,900
3,400
3,100
Non-current liabilities
Deferred tax
1,070
850
Finance lease liabilities
1,300
1,200
2,370
2,050
Current liabilities
Trade payables
1,250
1,090
Current tax
225
205
Finance lease liabilities
500
450
Bank overdraft
155
205
2,130
1,950
7,900
7,100
STATEMENT OF PROFIT OR LOSS FOR THE YEAR ENDED 31 MARCH 2022
Amount in million
Revenues
4,300
Cost of Sales
(2,000)
Gross profit
2,300
Operating expenses
1,000
Finance costs
(250)
Profit before tax
1,050
Income tax expense
(450)
PROFIT FOR THE YEAR
600
Dividends paid in the year
300
Notes:
(1) Depreciation charged for the year totaled Tk. 970 million. There were no disposals of
property, plant and equipment in the period.
(2) There was no accrual of interest at the beginning or at the end of the year
(3) PQR Ltd. finances a number (but not all) of its property, plant and equipment
purchases using finance leases. In the period, property, plant and equipment which
would have cost Tk. 600 million to purchase outright was acquired under finance
leases.
Required:
Prepare the statement of cash flows for PQR Ltd. for the year ended 31 March 2022 as
per IAS 7 using the indirect method.
Page 4 of 5
(b)
Villandry's inventory includes three items for which the following details are available.
Product A
Product B
Product C
Supplier's List Price
3,600
2,900
4,200
Net realisable value
5,100
2,800
4,100
The company receives a 2.5% trade discount from its suppliers and it also takes
advantage of a 2% discount for prompt payment.
Required
(i)
Calculate the total value of products A, B and C which should be shown in
inventory in the statement of financial position.
(ii) Explain the difference that changing from a weighted average to FIFO method of
inventory valuation is likely to have on profit or loss.
[Marks: (15+5) = 20]
QUESTION 8
The following are the comparative balance sheets and the income statement of Rahmatganj Ltd.:
Rahmatganj Ltd.
Comparative Balance Sheets
As at 31 December 2022 and 2021
Particulars
2022
2021
Cash
Tk. 38,500
Tk. 13,000
Accounts receivable
12,250
10,000
Inventory
12,000
9,000
Investments
0
3,000
Buildings
0
29,750
Equipment
40,000
20,000
Patents
5,000
6,250
Total debits
Tk. 107,750
Tk. 91,000
Allowance for doubtful accounts
Tk. 3,000
Tk. 4,500
Accumulated depreciation – equipment
2,000
4,500
Accumulated depreciation – buildings
0
6,000
Accounts payable
5,000
3,000
Dividends payable
0
5,000
Notes payable – short-term
3,000
4,000
Long-term notes payable
31,000
25,000
Common stock
43,000
33,000
Retained earnings
20,750
6,000
Total credits
Tk. 107,750
Tk. 91,000
Additional data related to 2022 are as follows:
(1) Equipment that had cost Tk.11,000 and was 30% depreciated at time of disposal was
sold for Tk.2,500.
(2) Tk.10,000 of the long-term note payable was paid by issuing common stock.
(3) Cash dividends paid were Tk.5,000.
(4) On January 1, 2014, the building was completely destroyed by a flood. Insurance
proceeds on the building were Tk.33,000 (net of Tk.4,000 taxes).
(5) Investments (available-for-sale) were sold at Tk.1,500 above their cost. The company
has made similar sales and investments in the past.
(6) Cash was paid for the acquisition of equipment.
(7) A long-term note for Tk.16,000 was issued for the acquisition of equipment.
(8) Interest of Tk.2,000 and income taxes of Tk.5,000 were paid in cash.
Instructions:
Prepare a statement of cash flows for the year ended 31 December 2022 using indirect
method of Rahmatgonj Ltd.
[Marks: 20]
*END OF QUESTION PAPER*
Page 5 of 5
CMA JANUARY 2023 EXAMINATION
FOUNDATION LEVEL
FUNDAMENTALS OF FINANCIAL ACCOUNTING
Course Code
Reading Time
: FR111
: 15 minutes
Total Marks
Writing Time
: 100
: 180 minutes
Instructions to Candidates

You MUST NOT write anything during the reading time.

You should attempt ALL questions.

Answers should be properly structured and relevant.

Carefully read ALL the requirements and sub-questions before attempting a specific
question.

ALL answers must be written in the answer book.

AVOID WRITING/MARKING on the question paper at any time which may cause disciplinary
action.

Start answering each question from a fresh sheet.

Answers should be clearly numbered with the sub-question number.
Allowable Materials

Writing Stationaries

Non-programmable Calculator
Assessment Structure
Section
A
Section
B
Question 1
Question 2
Question 3
Question 4
Question 5
Question 6
Question 7
Multiple Choice Questions
Modified True/False
Matching
Short Answer Questions
Essay/Computational/Case
Essay/Computational/Case
Essay/Computational/Case
Revision
Total
Subquestion
15
5
5
3
3
2
3
Marks
15
5
5
15
20
20
20
100
RESTRICTED USE
This paper MUST NOT BE REMOVED from the examination venue
Do not turn the page until instructed
Expected Time
Required
25 minutes
10 minutes
10 minutes
20 minutes
35 minutes
35 minutes
35 minutes
10 minutes
180 minutes
SECTION A [40 MARKS]
THERE ARE 4 (FOUR) QUESTIONS IN THIS PART. ANSWER ALL THE QUESTIONS IN THE
ANSWER SCRIPT FOLLOWING THE EXAMPLE PROVIDED FOR THE SPECIFIC QUESTION.
QUESTION 1
[15 × 1 = 15 MARKS]
There are fifteen (15) multiple-choice questions with five options. Pick the option that best explains
the given question. Write your answer on the answer script [DO NOT PUT ANY MARK ON THE
QUESTION PAPER]. Follow the example given below in providing your answer.
Example:
(i) ICMAB stands for the –
(a) Institute of Cost Management Accounting of Bangladesh
(b) Institute of Cost and Management Accountants of Bangladesh
(c) Institute for Cost Managers and Accounting of Bangladesh
(d) Institute of Cost Management Accountants of Bangladesh
(e) Industrial Cost Management Accountants of Bangladesh
Answer: (i) (b)
(i)
Which one of the following accounting concepts requires an entity to measure inventories at
the lower of the cost and net realizable value?
(a) Going Concern Concept
(b) Prudence Concept
(c) Matching Concept
(d) Historical Cost Concept
(e) Conservatism
(ii)
AB Ltd operates a petty cash imprest system. Petty cashier is being given an imprest of
BDT100,000 and it is reimbursed on the last day of every month. During the month of
January 2022 petty cashier has spent BDT 89,500 from the imprest. What was the amount
given by main cashier to the petty cashier to reimburse the imprest on 31 January 2022?
(iii)
(iv)
(v)
(a)10,500
(b)100,000
(c) 89,500
(d)189,500
(e) 87,000
On 31 December 2021, an entity sold goods which cost BDT 30,000 on credit by allowing a 10%
trade discount on the selling price of BDT 50,000. The buyer settled the payment after two weeks.
Upon settlement of the payment, the buyer was given a further cash discount of BDT 2,000. What
is the effect of the above events on the equity of the entity as at 31 December 2021?
(a) Equity will increase by 13,000
(b) Equity will increase by 15,000
(c) Equity will increase by 20,000
(d) Equity will decrease by 30,000
(e) No change in equity
A business prepares its accounts to 31 December 2021. The trial balance includes BDT
9,000 for electricity used from 1January to 30 September 2021. How much needs to be
accrued at the year end?
(a) 9,000
(b) 3,000
(c) 6,000
(d) 2,000
(e) 1,000
A business has opening inventory BDT 30,000, achieves a mark up of 25% on sales, sales
totaled BDT 1,000,000,purchases were BDT 840,000. What is the value of closing inventory?
(a) 30,000
(b) 40,000
(c) 120,000
(d) 70,000
(e) 80,000
CMA January 2023 Examination, FR111 [Page 2 of 9]
(vi)
If sales were BDT 51,000, and cost of sales was BDT 42,500, what was the gross profit
percentage?
(a) 16.67%
(b) 20%
(c) 83.33%
(d) 120%
(e) 25%
(vii) Which one of the following is not shown in the statement of changes in equity?
(a) Capital transactions with owners.
(b) The effects of changes in accounting policies.
(c) Dividend payment
(d) Profit /(loss) for the period.
(e) The effects of changes in accounting estimates.
(viii) Which of the following ratios is the best indicator of a company’s ability to survive over the
long term?
(a) Price-earnings ratio
(b) Current ratio
(c) Debt to total assets
(d) Earnings per share
(e) Net book value
(ix) Posting:
(a) normally occurs before journalizing.
(b) transfers general ledger transaction data to the general journal.
(c) is an optional step in the accounting cycle.
(d) is not part of operating cycle.
(e) transfers general journal entries to general ledger accounts.
(x) Which of these statements about journalizing is true?
(a) Journal entries must be prepared after the trial balance is prepared.
(b) Journal entries must be prepared after transactions have been analyzed to determine
their effect on the accounts.
(c) Journal entries don’t involve amounts, the just note in narrative form the details of a
transaction.
(d) If a journal entry affects more than two accounts, it is known as a simple journal entry.
(e) Journal entries must be prepared after the balance sheet is prepared.
(xi) The Retained Earnings balance in an unadjusted trial balance is Tk. 10,000. Profit for the
period is Tk. 2,500 and dividends are Tk. 500. The Retained Earnings account balance in the
adjusted trial balance will be:
(a) Tk. 9,500
(b) Tk. 10,000
(c) Tk. 12,000
(d) Tk. 12,500
(e) Tk. 15,000
(xii) Kant Enterprises Ltd. purchased a truck for Tk 32,000 on July 1, 2021. The truck has an
estimated residual value of Tk. 2,000, an estimated useful life of five years, and an estimated
total mileage of 300,000 km. If 50,000 km are driven in 2021, what amount of depreciation
expense would Kant record at December 31, 2021, assuming it uses the units-of-production
method?
(a) Tk. 2,500
(b) Tk. 3,000
(c) Tk. 5,000
(d) Tk. 5,333
(e) Tk. 5,500
CMA January 2023 Examination, FR111 [Page 3 of 9]
(xiii) On June 15, Kersee Corporation sells merchandise on account to Soo Eng Limited for Tk. 1,000,
terms 2/10, n/30. On June 20, Soo Eng returns merchandise worth Tk. 300. On June 24, payment
is received from Soo Eng for the balance due. What amount will be credited to the Accounts
Receivable account when the collection of this account is recorded on June 24?
(a) Tk. 686
(b) Tk. 680
(c) Tk. 700
(d) Tk. 1,000
(e) Tk. 1,200
(xiv) Accounts and notes receivable are reported in the assets section of the statement of
financial position at their:
(a) net realizable value.
(b) invoice cost.
(c) lower of cost and net realizable value.
(d) carrying amount.
(e) fair value
(xv) In periods of declining prices, the average cost method will result in:
(a) a gross profit that is higher than that of FIFO.
(b) a gross profit that is lower than that of FIFO.
(c) the same gross profit as that of FIFO.
(d) a negative gross profit.
(e) same profit as that of FIFO.
QUESTION 2
[5 × 1 = 5 MARKS]
There are five (5) statements given under the question. Identify the statements as True or False. If
the statement is false, rewrite the statement on the answer script to make it ‘True’. Reasoning is
NOT required. Follow the example given below in providing your answer.
Example:
(a) ICMAB stands for the Industrial Cost Management and Accounting of Bangladesh.
Answer:
(a) False. ICMAB stands for the Institute of Cost and Management Accountants of
Bangladesh.
Note:
 You will not get any mark if you simply rewrite as ICMAB does not stand for the
Industrial Cost Management Accountants of Bangladesh.
 If the statement is true, you need NOT to rewrite the statement rather only mention that
the statement is True.
(a)
(b)
(c)
(d)
(e)
Verifiability means that different knowledgeable and independent observers could reach
consensus, although not necessarily complete agreement, that a particular depiction is a
faithful representation.
Net realizable value is the selling price less all costs to completion and less selling costs.
Statements of cash flows concentrate on the sources and uses of cash and are a useful
indicator of a company's liquidity and solvency.
Operating cycle is an average period of time it takes for a business to pay cash to obtain
products or services and then receive cash from customers for these products or services.
Chart of accounts is a list of a company’s accounts and account numbers that identify where
the accounts are in the general ledger.
CMA January 2023 Examination, FR111 [Page 4 of 9]
QUESTION 3
[5 × 1 = 5 MARKS]
Match the items of column A with the most suitable items of column B. Match only one item of
column A with one item of column B. Write your answer on the answer script. Follow the example
given below in providing your answer.
Example:
Column A
1. ICMAB
Column B
(a) Professional accountancy body
(b) University
Answer: 1 (a)
(1) Comparability
(a) Is a present obligation of the entity to transfer an
economic resource as a result of past events.
(2) Going concern assumption
(b) Profit is earned only if the physical productive capacity
(or operating capability) of the entity (or the resources or
funds needed to achieve that capacity) at the end of the
period exceeds the physical productive capacity at the
beginning of the period, after excluding any distributions
to, and contributions from, owners during the period.
(3) Liability
(c) Provide monetary information about assets, liabilities
and related income and expenses, using information
derived, at least in part, from the price of the transaction or
other event that gave rise to them.
(4) Current value
(d) Present value of the cash flows, or other economic
benefits, that an entity expects to derive from the use of an
asset and from its ultimate disposal.
(5) Financial capital maintenance
(e) Qualitative characteristic that enables users to identify
and understand similarities in, and differences among,
items.
(f) Provides monetary information about assets, liabilities
and related income and expenses, using information
updated to reflect conditions at the measurement date.
(g) Means classifying, characterizing and presenting
information clearly and concisely makes it understandable.
(h) Helps to assure users that information faithfully
represents the economic phenomena it purports to
represent.
(i) Profit is earned only if the financial (or money) amount
of the net assets at the end of the period exceeds the
financial (or money) amount of net assets at the beginning
of the period, after excluding any distributions to, and
contributions from, owners during the period.
(j) Assumes that the entity has neither the intention nor the
need to enter liquidation or to cease trading.
CMA January 2023 Examination, FR111 [Page 5 of 9]
QUESTION 4
(a)
(b)
(c)
[5 × 3 = 15 MARKS]
Describe the conceptual framework and explain how it helps financial reporting. Is the
conceptual framework applicable to publicly traded companies reporting using IFRS, or to
private companies, or to both?
Two students are discussing the use of a trial balance. They wonder whether the following
errors, each considered separately, would prevent the trial balance from balancing. What
would you tell the students?
(i)
The bookkeeper debited Supplies for Tk. 7500 and debited Accounts Payable for Tk.
7500 for the purchase of supplies on account.
(ii) Cash collected on account was debited to Cash for Tk. 1,000 and credited to Service
Revenue for Tk. 1,000.
(ii) A journal entry recording the payment of dividends was posted to the general ledger as
a debit to the Dividends account of Tk. 650 and a credit to the Cash account of Tk. 560.
AB Limited operates hotels in Dhaka and its financial year ends on 31 December. The
accountant of AB Limited is a part-qualified Cost and Management Accountant and he is in
the final stages of completing the draft financial statements for the year ended 31 December
2021. The following issues are yet to be resolved.
During the year the company carried out major repair work on its hotel building. The work
carried out and costs incurred are described below.
(i)
Removal of the roof to add an additional floor was BDT 3 million and the cost to build
the additional floor together with the roof was BDT 45 million.
(ii) Repair of the car park to restore it to the original condition: BDT 5 million
(iii) Improvements to hotel rooms: BDT 120 million (these improvements will result in
charging a higher room rate from guests).
(iv) Painting of existing walls: BDT 6 million
(v) Costs to promote the hotel after the repair work: BDT 2 million
Required:
Recommend the accounting treatment for each of the repair work mentioned above.
END OF SECTION A
SECTION B [60 MARKS]
THERE ARE 3 (THREE) QUESTIONS IN THIS PART. ANSWER ALL THE QUESTIONS IN THE
ANSWER SCRIPT. SHOW ALL RELEVANT COMPUTATION.
QUESTION 5
[3+8+9 = 20 MARKS]
(a) A company makes an accrued revenue adjusting entry for Tk. 780 and an accrued expense
adjusting entry for Tk. 510. How much was profit overstated or understated prior to these
adjusting entries? Explain.
(b) Under Armour, Inc. (“the Company”) specializes in the development, marketing, and
distribution of athletic apparel designed to keep athletes cool and dry in any and every
athletic activity. Unlike lululemon, which sells primarily through its own stores, Under Armour
generates most of its net revenue from product sales through national, regional,
independent, and specialty retailers. It is one of lululemon athletica’s key competitors in
India, although it offers a broader range of athletic clothing than lululemon.
Selected financial information for Under Armour, Inc. (in Tk thousands) for three recent fiscal
years follows:
Cost of goods sold
Merchandise inventory
Current assets
Current liabilities
2012
Tk. 955,624
319,286
903,598
252,228
2011
Tk. 759,848
324,409
689,663
183,607
CMA January 2023 Examination, FR111 [Page 6 of 9]
2010
Tk. 533,420
215,355
555,850
149,147
Selected industry ratios:
2012
2011
Inventory turnover
4.6 times
4.0 times
Days in inventory
79 days
91 days
Current ratio
2.0:1
2.1:1
Required:
(i)
Under Armour uses FIFO. Assume prices have risen over the last two years. If Under
Armour used the average cost method instead of FIFO, would its cost of goods sold,
and its inventory values be higher or lower than currently reported?
(ii)
(c)
Calculate the inventory turnover and days in inventory for 2012 and 2011; and evaluate
Under Armour, Inc.’s inventory management and overall liquidity over the most recent
two years and in comparison with its industry.
GG Corporation, a private corporation, was formed on July 1, 2015. On July 31, Guy
Gelinas, the company’s president, prepared the following statement of financial position:
GG CORPORATION
Statement of Financial Position
July 31, 2015
Assets
Cash
Accounts receivable
Merchandise inventory
Boat
Total assets:
Amount
Tk. 20,000
50,000
36,000
24,000
Tk. 130,000
Liabilities and Shareholders’ Equity
Accounts payable
Boat loan payable
Common shares
Retained earnings
Total liabilities and shareholders’ equity
Tk. 34,000
40,000
50,000
6,000
Tk.130,000
Guy admits that his knowledge of accounting is somewhat limited and is concerned that his
statement of financial position might not be correct. He gives you the following additional
information:
1.
The boat actually belongs to Guy Gelinas, not to GG Corporation. However, because Guy
thinks he might take customers out on the boat occasionally, he decided to list it as an asset
of the company. To be consistent, he also included as a liability of the company the personal
bank loan that he took out to buy the boat.
2.
Included in the accounts receivable balance is Tk 10,000 that Guy personally loaned to his
brother five years ago. Guy included this in the receivables of GG Corporation so that he
wouldn’t forget that his brother owes him money.
3.
Guy’s statements didn’t balance. To make them balance, he adjusted the Common Share
account until assets equalled liabilities and shareholders’ equity.
Required:
(i)
Identify any corrections that should be made to the statement of financial position and
explain why.
(ii)
Prepare a corrected statement of financial position. (Hint: To get the balance sheet to
balance, adjust Common Shares).
CMA January 2023 Examination, FR111 [Page 7 of 9]
QUESTION 6
[(5+15) = 20 MARKS]
(a)
How should Interest and Dividend paid and received should be disclosed in cash flow
statement as per IAS 7?
(b)
The latest financial information of Mozart Traders Ltd are given below
Statement of financial position
As at 31 March
2021
BDT
2020
BDT
645,967
75,000
720,967
185,000
100,000
285,000
Total assets
565,000
120,000
104,000
789,000
1,509,967
350,000
125,000
35,000
510,000
795,000
Equity and liabilities
Equity
Stated capital
Retained earnings
200,000
1,083,467
1,283,467
150,000
470,000
620,000
Assets
Non-current assets
Property, plant and equipment
Investments
Current assets
Inventory
Trade receivables
Cash and cash equivalents
Non-current liabilities
12% interest bearing loans and borrowings
Current liabilities
Trade payables
12% interest bearing loans and borrowings
Total equity and liabilities
112,500
112,500
75,000
39,000
114,000
1,509,967
175,000
175,000
795,000
Extracted information of the statement of comprehensive income for the year ended 31 March
2021:
BDT
Other income: Profit on sale of investment
31,000
Depreciation
30,833
Finance cost
4,500
Profit before tax
648,667
Income tax expenses
35,200
Profit after tax
613,467
Additional information:
(i)
During the year the company acquired BDT 491,800 worth of office equipment.
(ii)
The company has disposed part of its investments for BDT 56,000 and the carrying value of
the same as at the date of disposal was BDT 25,000.
(iii)
A bank loan of BDT 150,000 at an annual interest rate of 12% was obtained on 31 December
2020 under the following terms.

Capital portion of the loan capital is payable in 4 equal annual installments commencing
from 31 December 2021.

The monthly interest of the loan is paid one month in arrears.
CMA January 2023 Examination, FR111 [Page 8 of 9]
Interest charge of the loan from January to March 2021 is included in the finance cost and
the accrued interest for the month of March 2021 is included under the current portion of
interest-bearing loans and borrowings.
(iv)
During the year the company raised a further BDT 50,000 by issuing ordinary shares.
(v)
The company has fully paid the total tax expense by 31 March 2021
Required:
Prepare the statement of cash flows of Mozart Traders Ltd under the indirect method for the
year ended 31 March 2021.
QUESTION 7
(a)
(b)
[MARKS: 4+8+8 = 20]
What is a contra asset account? Give an example. Why do we use a contra asset account to
record accumulated depreciation instead of directly reducing the depreciable asset account?
Gemini Ltd. has accounts receivable of Tk. 370,000 and an unadjusted credit balance in its
allowance for doubtful accounts of Tk. 8,800 at March 31. The company’s accounts
receivable and percentage estimates of its uncollectible accounts are as follows:
Number of Days
Outstanding
0–30
31–60
61–90
Over 90
Total
Accounts
Receivable
$260,000
50,400
34,000
25,600
$370,000
Estimated Percentage
Uncollectible
2%
10%
30%
50%
Required:
(i)
Prepare an aging schedule to determine the total estimated uncollectible at March 31.
(ii) Prepare the adjusting entry at March 31 to record bad debts expense.
(ii) What is the net realizable value of the receivables at March 31?
(c)
Dulcimer Ltd. purchased a piece of equipment at a cost of Tk. 35,000 on June 1, 2015. The
equipment was expected to have a residual value of Tk. 3,000 at the end of its four-year
useful life. Dulcimer has a December 31 year end and prepares adjusting entries annually.
During its useful life, the equipment was expected to be used 10,000 hours. Anticipated
annual hourly use was as follows: 1,300 hours in 2015, 2,800 hours in 2016, 3,300 hours in
2017, 1,900 hours in 2018, and 700 hours in 2019.
Required:
(i)
(ii)
Prepare depreciation schedules showing the expected depreciation expense for 2015
to2019 using the following methods: (1) straight-line, and (2) diminishing balance using
double the straight-line rate.
Prepare the journal entry to record the retirement of the equipment on June 1, 2019,
assuming that the straight-line depreciation method was used, and the equipment was
retired at the end of its useful life for no proceeds.
END OF SECTION B
CMA January 2023 Examination, FR111 [Page 9 of 9]
CMA MAY, 2023 EXAMINATION
BUSINESS LEVEL
SUBJECT: GE 01. FUNDAMENTALS OF FINANCIAL ACCOUNTING
Time Allocated: Three hours
Reading Time
: 15 minutes
Writing Time
Total Marks: 100
: 180 minutes
Instructions to Candidates
You are required to answer ALL questions.
Answers should be properly structured, relevant and computations need to be shown.
You are strongly advised to carefully read ALL the question requirements before attempting
the question concerned (that is all parts and/or sub-questions).
ALL answers must be written in the answer book. Answers written on the question paper will
not be submitted for marking.
Start answering each question from a fresh sheet. Your answers should be clearly
numbered with the sub-question number then ruled off, so that the markers know which
sub-question you are answering.
No of questions
No of sub-questions
Marks allocation
8
Maximum 03
Question 1- 6 = 10 marks each
Question 7- 8 = 20 marks each
TURN OVER
Page 1 of 6
You are advised to spend 18 minutes on Question 1- 6 (10 marks per each) and 36 minutes on
Question 7- 8 (20 marks per each).
QUESTION 1
(a) “Accounting is an information system.” Explain.
(b) What is meant by conceptual framework of accounting? Why is it necessary?
(c) What do you mean capital maintenance? What are the alternative ways of capital
maintenance? Explain.
[Marks: (3+3+4) = 10]
QUESTION 2
(a) What is the normal procedure for handling the collection of accounts receivable previously
written off using the direct write-off method? The allowance method?
(b)
On December 31, 2022, RK Company had a cash balance per book shows an overdraft
of Tk.542.24. The statement from Dhaka Bank Limited on that date showed a balance of
Tk.11,772.56. A comparison of the bank statement with the Cash account revealed the
following facts:
1)
Cash balance includes Tk.600 representing change cash on hand. When the cash
on hand is counted, only Tk. 517 is found.
2)
The cash balance includes Tk.800 representing a petty cash fund. Inspection of the
petty cash fund reveals cash of Tk.640 on hand and a replenishing check drawn on
December 31 for Tk.160.
3)
Proceeds from cash sales of Tk.1,180 for December 27 were stolen. The company
expects to recover this amount from the insurance company and has made no entry
for the loss.
4)
The bank statement shows the depositor charged with a customer’s NSF check for
Tk.94, bank service charges of Tk.31.20, and a check for Tk. 260 drawn by RK and
incorrectly cleared through this account.
5)
The bank statement does not show receipts of December 31 of Tk.3330, which were
deposited on January 3.
6)
Checks outstanding were found to be Tk.18610. This includes the check transferred
to the petty cash fund and also two checks for Tk.228 each payable to PK Limited.
PK had notified the company she had lost the original check and had been sent a
second one, the company stopping payment on the first check.
Instructions:
(i)
Prepare a bank reconciliation as of December 31, 2022.
(ii) Prepare the necessary adjusting entries at December 31, 2022.
(c)
Walton, Inc. had net sales in 2022 of Tk.1,400,000. At December 31, 2022, before
adjusting entries, the balances in selected accounts were: Accounts Receivable
Tk.250,000 debit, and Allowance for Doubtful Accounts Tk.2,400 debit.
1)
If Walton estimates that 2% of its net sales will prove to be uncollectible, prepare the
December 31, 2022, journal entry to record bad debt expense.
2)
Instead of estimating the uncollectible at 2% of net sales, assume that 10% of
accounts receivable will prove to be uncollectible. Prepare the entry to record bad
debt expense.
3)
Instead of estimating uncollectible at 2% of net sales, assume Wilton prepares an
aging schedule that estimates total uncollectible accounts at Tk.24,600. Prepare the
entry to record bad debt expense.
[Marks: (2+5+3) = 10]
Page 2 of 6
QUESTION 3
(a) In what situation will the unrealized holding gain or loss on an available-for-sale security
be reported in income?
(b) Elizabeth Company reported the following amounts in the stockholders’ equity section of
its December 31, 2015, balance sheet.
Preferred stock, 10%, Tk.100 par (10,000 shares authorized, 2,000 shares Tk.200,000
issued)
Common stock, Tk.5 par (100,000 shares authorized, 20,000 shares
100,000
issued)
Share premium-preference
1,25,000
Retained earnings
4,50,000
Total
8,75,000
During 2016, Elizabeth Company took part in the following transactions concerning
stockholders’ equity.
1)
Paid the annual 2015 Tk.8 per share dividend on preferred stock and a Tk.2 per
share dividend on common stock. These dividends had been declared on December
31, 2015.
2)
Purchased 2,700 shares of its own outstanding common stock for Tk.40 per share.
Elizabeth Company uses the cost method.
3)
4)
Reissued 700 treasury shares for land valued at Tk.30,000.
Issued 500 shares of preferred stock at Tk.105 per share.
5)
Declared a 10% stock dividend on the outstanding common stock when the stock is
selling for Tk.45 per share.
Issued the stock dividend.
6)
7)
Declared the annual 2016 Tk.8 per share dividend on preferred stock and the Tk.2
per share dividend on common stock. These dividends are payable in 2017.
Instructions:
(i)
(ii)
Prepare journal entries to record the transactions described above.
Prepare the December 31, 2016, stockholders’ equity section. Assume 2016 net
income was Tk.330,000.
[Marks: (2+8) = 10]
QUESTION 4
(a) What approaches may be employed in applying the lower-of-cost-or-market procedure?
Which approach is normally used and why?
(b) On January 1, 2015, Novotna Company purchased Tk.400,000, 8% bonds of Aguirre Co.
for Tk.369,114. The bonds were purchased to yield 10% interest. Interest is payable
semiannually on July 1 and January 1. The bonds mature on January 1, 2020. Novotna
Company plans to hold the bonds to collect contractual cash flows. On January 1, 2017,
Novotna Company sold the bonds for Tk.370,726 after receiving interest to meet its
liquidity needs.
Instructions:
(i)
Prepare the journal entry to record the purchase of bonds on January 1.
(ii) Prepare the amortization schedule for the bonds.
(iii)
(iv)
(v)
Prepare the journal entries to record the semiannual interest on July 1, 2015, and
December 31, 2015.
Prepare the journal entry to record the sale of the bonds on January 1, 2017.
Assume that Novotna elected the fair value value option for this investment. If the
fair value of Aguirre bonds is Tk.3,68,000 on December 31,2015, prepare the
necessary adjusting entry.
[Marks: (2+8) = 10]
Page 3 of 6
QUESTION 5
(a)
What conditions must exist for the retail inventory method to provide valid results?
(b)
Novo Home Improvement Company installs replacement siding, windows, and louvered
glass doors for single-family homes and condominium complexes in Dhaka and
Chittagong. The company is in the process of preparing its annual financial statements for
the fiscal year ended May 31, 2014, and Razu Paul, controller for Novo, has gathered the
following data concerning inventory.
At May 31, 2014, the balance in Novo’s Raw Materials Inventory account was Tk.408,000,
and Allowance to Reduce Inventory to Market had a credit balance of Tk.27,500. Razu
summarized the relevant inventory cost and market data at May 31, 2014, in the schedule
below.
Razu assigned Nancy, an intern from a local college, the task of calculating the amount
that should appear on Novo’s May 31, 2014, financial statements for inventory under the
lower-of-cost or- market rule as applied to each item in inventory. Nancy expressed
concern over departing from the historical cost principle.
Cost
Aluminum siding
Cedar shake siding
Louvered glass doors
Thermal windows
Tk.70,000
86,000
1,12,000
1,40,000
Tk.4,08,000
Replacement
Cost
Sales Price
Net
Realizable
Value
Normal
Profit
Tk. 62,500
79,400
124,000
126,000
Tk.391,900
Tk. 64,000
94,000
186,400
1,54,800
Tk.499,200
Tk.56,000
84,800
1,68,300
1,40,000
Tk.449,100
Tk. 5,100
7,400
18,500
15,400
Tk.46,400
Required:
(i)
(1)
(2)
Determine the proper balance in Allowance to Reduce Inventory to Market at
May 31, 2014.
For the fiscal year ended May 31, 2014, determine the amount of the gain or
loss that would be recorded due to the change in Allowance to Reduce
Inventory to Market.
(ii)
Explain the rationale for the use of the lower-of-cost-or-market rule as it applies to
inventories.
[Marks: (2+8) = 10]
QUESTION 6
(a) What is the basic difference between fraud and error? Explain with examples.
(b) Distinguish between error of omission and error of commission with examples.
(c) Discuss the characteristics of an adequate and effective internal control.
[Marks: (3+3+4) = 10]
QUESTION 7
Barilgaon Enterprise closed its books of accounts as on 30.06.2022. The following are the
balances taken from the ledger of the enterprise:
Cash and bank, Tk. 240,000; Accounts receivable, Tk. 672,000; Inventory (01.07.2021), Tk.
648,000; Store supplies, Tk. 16,000; Office supplies, Tk. 5,800; Prepaid insurance, Tk. 25,000;
Store equipment, Tk. 170,000; Accumulated depreciation (store equipment), Tk. 45,000; Office
equipment, Tk. 52,000; Accumulated depreciation (office equipment), Tk. 16,000; Accounts
payable, Tk. 360,000; Mortgage notes payable (due 2027), Tk. 600,000; Capital, Tk. 528,000;
Sales, Tk. 2,460,000; Sales discounts, Tk. 54,000; Sales returns, Tk. 33,600; Purchases, Tk.
1,384,800; Purchase returns, Tk. 78,000; Purchase discounts, Tk. 31,600; Sales salaries, Tk.
246,000; Delivery expenses, Tk. 68,000; Rent expenses, Tk. 48,000; Freight-in, Tk. 36,000;
Office salaries, Tk. 136,000; Office expenses, Tk. 15,000; General expenses, Tk. 13,600; Gain
on disposal of assets, Tk. 7,200; Interest expenses, Tk. 30,000; Land, Tk. 232,000
Page 4 of 6
Other relevant information on June 30, 2022 is as follows:
(i)
The inventory on hand is Tk. 507,200.
(ii) Supplies on hand:
Office supplies Tk. 2,200
Store supplies Tk. 9,000
(iii) Insurance expired during the year:
Allocable to selling expenses Tk. 9,700
Allocable to general expenses Tk. 2,600
(iv) Equipment is depreciated at the rate of 10% per annum.
(v) Accrued sales salaries Tk. 4,600.
(vi) Accrued office salaries Tk. 2,100.
(vii) Accrued interest on the mortgage notes payable Tk. 4,800.
(viii) Income tax is estimated at 45% of the income.
Instructions:
Prepare Barilgaon Enterprise’s statement of profit or loss for the year to 30June 2022, and
a statement of financial position at that date in accordance with the requirements of IAS 1
Presentation of Financial Statements to the extent the information is available.
[Marks: (10+10) = 20]
QUESTION 8
The following are the comparative statements of financial position and the statement of
comprehensive income of Rupnagar Ltd:
Rupnagar Ltd
Statement of Comprehensive Income
For the year ended 31 December 2022
Sales
Tk. 30,000
Cost of sales
(10,000)
Gross profit
20,000
Administrative and selling expenses
(2,000)
Interest expense
(2,000)
Depreciation of plant assets
(2,000)
Amortization of prepaid expenses
(500)
Investment income
3,000
Profit before taxation
16,500
Taxes on income
(4,000)
Net profit
Tk. 12,500
Rupnagar Ltd
Statements of Financial Position
As at 31 December 2022 and 2021
2022
2021
Assets
Cash
Tk. 3,000
Tk. 1,000
Accounts receivable
5,000
2,500
Inventory
2,000
1,500
Prepaid expenses
1,000
1,500
Due from associates
19,000
19,000
Plant assets
12,000
22,500
Accumulated depreciation
(5,000)
(6,000)
Total assets
Tk. 37,000
Tk. 42,000
Liabilities
Accounts payable
Tk. 5,000
Tk. 12,500
Income taxes payable
2,000
1,000
Deferred taxes payable
3,000
2,000
Total liabilities
10,000
15,500
Page 5 of 6
Shareholders’ equity
Share capital
Retained earnings
Total shareholders’ equity
Total liabilities and shareholders’ equity
6,500
20,500
27,000
Tk. 37,000
6,500
20,000
26,500
Tk. 42,000
The following additional information is also relevant:
1)
Equipment with a net book value of Tk. 7,500 and original cost of Tk. 10,500 was sold for
Tk. 7,500.
2)
3)
All sales made by the company are credit sales.
The company received cash dividends (from investments) amounting to Tk. 3,000,
recorded as income in the statement of comprehensive income for the year ended 31
December 2022.
4)
The company declared and paid dividends of Tk. 12,000 to its shareholders.
5)
Interest expense for the year 2022 was Tk. 2,000, which was fully paid during the year. All
administrative and selling expenses incurred were paid during the year 2022.
6)
Income tax expense for the year 2022 was provided at Tk. 4,000, out of which the
company paid Tk. 2,000 during 2022 as an estimate.
Required:
Prepare a statement of cash flows for the year ended 31 December 2022 in accordance
with IAS 7 Statement of Cash Flows.
[Marks: 20]
*END OF QUESTION PAPER*
Page 6 of 6
CMA MAY 2023 EXAMINATION
FOUNDATION LEVEL
FUNDAMENTALS OF FINANCIAL ACCOUNTING
Course Code
Reading Time
: FR111
: 15 minutes
Total Marks
Writing Time
: 100
: 180 minutes
Instructions to Candidates

You MUST NOT write anything during the reading time.

You should attempt ALL questions.

Answers should be properly structured and relevant.

Carefully read ALL the requirements and sub-questions before attempting a specific
question.

ALL answers must be written in the answer book.

AVOID WRITING/MARKING on the question paper at any time which may cause
disciplinary action.

Start answering each question from a fresh sheet.

Answers should be clearly numbered with the sub-question number.
Allowable Materials

Writing Stationaries

Non-programmable Calculator
Assessment Structure
Section
A
Section
B
Question 1
Question 2
Question 3
Question 4
Question 5
Question 6
Question 7
Multiple Choice Questions
Modified True/False
Matching
Short Answer Questions
Essay/Computational/Case
Essay/Computational/Case
Essay/Computational/Case
Revision
Total
Subquestion
15
5
5
3
3
3
Marks
15
5
5
15
20
20
20
100
Expected Time
Required
25 minutes
10 minutes
10 minutes
20 minutes
35 minutes
35 minutes
35 minutes
10 minutes
180 minutes
RESTRICTED USE
This paper MUST NOT BE REMOVED from the examination venue
Do not turn the page until instructed
SECTION A [40 MARKS]
THERE ARE 4 (FOUR) QUESTIONS IN THIS PART. ANSWER ALL THE QUESTIONS IN
THE ANSWER SCRIPT FOLLOWING THE EXAMPLE PROVIDED FOR THE SPECIFIC
QUESTION.
QUESTION 1
[15 × 1 = 15 MARKS]
There are fifteen (15) multiple-choice questions with five options. Pick the option that best
explains the given question. Write your answer on the answer script [DO NOT PUT ANY
MARK ON THE QUESTION PAPER]. Follow the example given below in providing your
answer.
Example:
(i). ICMAB stands for the –
(a) Institute of Cost Management Accounting of Bangladesh
(b) Institute of Cost and Management Accountants of Bangladesh
(c) Institute for Cost Managers and Accounting of Bangladesh
(d) Institute of Cost Management Accountants of Bangladesh
(e) Industrial Cost Management Accountants of Bangladesh
Answer: (i) (b)
(i)
Lorrell had the following final balances after the first year of operations: assets,
Tk.55,000; stockholders’ equity, Tk.25,000; dividends, Tk.3,000; and net income,
Tk.10,000. What is the amount of Emmitt’s liabilities?
(a) Tk.55,000
(b) Tk.30,000
(c) Tk.13,000
(d) Tk.7,000
(e) Tk.47,000
(ii) Which of the following best describes revenue?
(a) Resources owned
(b) Cash received from a customer
(c) Amounts earned from providing goods and services to a customer.
(d) Dividends paid to stockholders.
(e) Cash Amounts earned from providing goods and services to a customer.
(iii) JONY Company has paid dividends of Tk.2,410, Tk.0, Tk.1,570 and Tk.1,060 over the
first four years of the company’s existence. If Retained Earnings after year four has an
ending balance of Tk.9,700, what is the average annual amount of net income (loss)
over the past four years for JONY?
(a) Tk.3,685
(b) Tk.14,740
(c) Tk.840
(d) Tk.1,260
(e) Tk.2,260
(iv) Which one is activity ratio?
(a) Gross Profit Ratio
(b)
Debt-Equity Ratio
(c)
Asset Turnover Ratio
(d)
Quick Ratio
(e)
Current Ratio
CMA May 2023 Examination, FR111 [Page 2 of 7]
(v)
DESCO has net income Tk.1,00,000. Total expenses consist among others are
depreciation Tk.10,000, salary Tk.25,000. What will be net cash from operating
activities?
(a) Tk.90,000
(b) Tk.1,10,000
(c) Tk.1,25,000
(d) Tk.1,35,000
(e) Tk.65,000
(vi) BATA sale shoe at sales discount of Tk.20% and cash discount of 10% per pair having
value mentioned in the price tag at Tk.500. what will be the transaction price per pair if
purchased?
(a) Tk.350
(b) Tk.400
(c) Tk.360
(d) Tk.450
(e) Tk.460
(vii) Who are authorized to issue International Financial Reporting Standards(IFRS)?
(a) IFAC
(b) IASB
(c) SAFA
(d) CAPA
(e) ICAEW
(viii) XYZ trading incorporation received BDT 80,000 from a customer for credit sales taken
place in last month. What impact will be in the balance sheet of XYZ trading
incorporation!
(a) Increase in assets & decrease in assets
(b) Increase in assets & decrease in liability
(c) Increase in liability & decrease in assets
(d) Increase in liability & decrease in owners’ equity
(e) Increase in assets & increase in liability
(ix) The trial balance of ABC Limited shows supplies of BDT 10,000. At the end of the
accounting period, it has been identified that the supplies are used by BDT 4,000.
Which of the following is true in providing adjusting journal entry at the end of the
period?
(a) Supplies should be debited by BDT 6,000
(b) Supplies expenses should be debited by BDT 6,000
(c) Supplies expenses should be credited by BDT 6,000
(d) Supplies should be credited by BDT 4,000
(e) Supplies should be debited by BDT 4,000
(x) Which of the following is the last step in the accounting cycle?
(a) Income statement
(b) Worksheet
(c) Adjusted Balance sheet
(d) Financial statement
(e) Reversal entry
(xi) A list helps to understand how long the customer are past due in payment is called(a) Bad debts statement
(b) Account receivable statement
(c) Aging schedule
(d) Outstanding ledger
(e) Payment schedule
CMA May 2023 Examination, FR111 [Page 3 of 7]
(xii) In a price falling situation which method results in more meaningful inventory value.
(a) LIFO
(b) FIFO
(c) Average
(d) Both LIFO & FIFO
(e) None of these
(xiii) As per declining balance method the assets periodic depreciation is based on(a) Depreciable cost
(b) Declining book value
(c) Average value of assets
(d) Market value of assets
(e) Acquisition cost of assets
(xiv) If Cost of goods sold for the first quarter (90 days) is BDT 35,000 & Average Inventory
is BDT 11,000. What will be the yearly (360 days) inventory turnover ratio:
(a) 3.18 times
(b) 12.73 times
(c) 0.79 times
(d) 1.26 times
(e) None of these
(xv) Bank reconciliation statement addresses the following except:
(a) Outstanding cheques
(b) Deposits in transit
(c) Interest charges
(d) Service Charges
(e) Credit sale
QUESTION 2
[5 × 1 = 5 MARKS]
There are five (5) statements given under the question. Identify the statements as True or
False. If the statement is false, rewrite the statement on the answer script to make it ‘True’.
Reasoning is NOT required. Follow the example given below in providing your answer.
Example:
(a) ICMAB stands for the Industrial Cost Management and Accounting of Bangladesh.
Answer:
(a) False. ICMAB stands for the Institute of Cost and Management Accountants
of Bangladesh.
Note:
 You will not get any mark if you simply rewrite as ICMAB does not stand for the
Industrial Cost Management Accountants of Bangladesh.
 If the statement is true, you need NOT to rewrite the statement rather only
mention that the statement is True.
(a)
(b)
(c)
(d)
(e)
Dividends represent a return of the company’s profits to its owners, the stockholders.
Positive difference between selling price and cost of an asset is treated as Income.
A statement of cash flows summarizes information about the cash inflows and outflows
for a specific date.
In straight line depreciation method asset value is same for each year of the asset’s
useful life.
Free cash flow is the amount of net cash provided by operating activities adjusted for
capital expenditures and dividends paid.
CMA May 2023 Examination, FR111 [Page 4 of 7]
QUESTION 3
[5 × 1 = 5 MARKS]
Match the items of column A with the most suitable items of column B. Match only one item
of column A with one item of column B. Write your answer on the answer script. Follow the
example given below in providing your answer.
Example:
Column A
1. ICMAB
Column B
(a) Professional accountancy body
(b) University
Answer: 1 (a)
Column A
(1) Lower Debt Equity Ratio
(2) IFAC stands for
(3) Price Earning (P/E) Ratio reflects
(4) Information is reliable when
(5) IFRS requires that revenue and
costs
Column B
(a) International Financial Accounting
(b) Provides loan information
(c) Protects the Creditors
(d) International Federation of Accountants
(e) Investor’s assessment of the company’s future
earning
(f) Price of individual stock
(g) Must be shown simultaneously
(h) Must be capable of being measured reliably
(i) It is collected from different sources
(j) It is free from material error and bias
QUESTION 4
[5 × 3 = 15 MARKS]
(a) Describe the purpose of General Purpose Financial Statements. Provide five
differences between General Purpose Financial Statements and Special Purpose
Financial Statements.
(b) Maryam Incorporation collected BDT 108,000 from customers in 2022. Of the amount
collected, BDT 25,000 was for services performed in 2021. In addition, Maryam
performed services worth BDT 36,000 in 2022, which will not be collected until 2023.
Maryam Incorporation also paid BDT 72,000 for expenses in 2022. Of the amount paid,
BDT 30,000 was for expenses incurred on account in 2021. In addition,Maryam
incurred BDT 42,000 of expenses in 2022, which will not be paid until 2023.
You are requiring to compute
(i)
Cash basis net income for 2022
(ii) Accrual basis net income for 2022
(c) ZYX company accumulated the following adjustment data at December 31, 2022.
(i)
Services performed but not recorded total BDT 10,000.
(ii) Supplies of BDT 3,000 have been used.
(iii) Utility expenses of BDT 2,250 are unpaid.
(iv) Services related to unearned service revenue of BDT 2,600 were performed.
(v) Salaries of BDT 8,000 are unpaid.
Required:
For each of the above items indicate the following.
(a) The type of adjustment (Prepaid expenses, unearned revenue, accrued revenue
or accrued expenses)
(b) The status of accounts before adjustment (overstatement or understatement)
END OF SECTION A
CMA May 2023 Examination, FR111 [Page 5 of 7]
SECTION B [60 MARKS]
THERE ARE 3 (THREE) QUESTIONS IN THIS PART. ANSWER ALL THE QUESTIONS IN
THE ANSWER SCRIPT. SHOW ALL RELEVANT COMPUTATION.
QUESTION 5
[5+5+10 = 20 MARKS]
(a) Suppose you are the user of accounting information; describe the qualitative
characteristics you would like to demand from particular accounting information.
(b) Define inventory as per IAS 2. What costs are included in the inventory?
(c) ZXY Ltd. reported the following information relating to the year- end inventories:
Product
Electronic Items
Television
Air Conditioner
Fridge
Total electronic
Plastic Items
Plastic Table
Plastic Chair
Total Plastic
Grand Total
Cost
Sales
Tk. 90,000
200,000
40,000
330,000
Tk. 120,000
250,000
50,000
420,000
Cost to complete
and sell
Tk. 20,000
25,000
5,000
50,000
50,000
40,000
90,000
Tk. 420,000
60,000
50,000
110,000
Tk. 530,000
5,000
3,000
8,000
Tk. 58,000
Instructions:
Calculate the value of ending inventory for above products by individual items,
majorgroups, and total inventory.
QUESTION 6
[20 MARKS]
ABC Limited opened for business few years ago. Its trial balance on June 30, 2022 is as follow:
ABC Limited
Trial Balance as on 30-06-2022
Account Title
Debit (Tk.)
Credit (Tk.)
Cash
160,000.00
Accounts Receivable
110,000.00
Inventory (01.07.2021)
90,000.00
Supplies
40,000.00
Prepaid Insurance
55,000.00
Land
510,000.00
Buildings
810,000.00
Accumulated Depreciation – Buildings
450,000.00
Equipment
610,000.00
Accumulated Depreciation – Equipment
340,000.00
Accounts Payable
80,000.00
Notes Payable
90,000.00
10% Bank Loan (long-term)
310,000.00
Owner’s Capital
810,000.00
Owner’s Drawings
90,000.00
Sales Revenue
1,010,000.00
Investment Income
40,000.00
Purchases
510,000.00
Advertising Expense
40,000.00
Salaries & Wages Expense
90,000.00
Utilities Expense
15,000.00
Total
3,130,000.00 3,130,000.00
CMA May 2023 Examination, FR111 [Page 6 of 7]
Other information:
(i)
Ending inventory was valued at Tk. 80,000.
(ii) Prepaid insurance of Tk. 20,000 has been expired during the year.
(iii) Supplies of Tk. 10,000 were used during the year.
(iv) Depreciation on buildings and equipment is charged @10% on cost per year.
(v) 10% of accounts receivable is to be made an allowance for doubtful debt.
(vi) Salaries of Tk. 25,000 were still unpaid.
Required:
Prepare a multiple-step income statement for the year ended 30 June 2022 and a classified
balance sheet as at 30 June 2022.
QUESTION 7
[8+4+8 = 20 MARKS]
(a) (i) Explain substance over form of the accounting transaction.
(ii) Briefly explain the steps of revenue recognition process as per IFRS 15.
(b) XYZ company Ltd purchase a machine at a price of BDT 360,000 on 1st January
2011.The machine was depreciated straight line on the basis of a life of 12 years
having no salvage value. On 1st January 2020 the machine was exchanged for a new
one with a list price of BDT 400,000. The trade-in value agreed for the old machine
was BDT 100,000 and the balance was paid in cash.
Required: Pass journal entry to record the receipt of cash and the profit/loss on the
exchange. Show necessary computations.
(c) On 30 June 2022, LEVER's cash book showed an overdraft of Tk.500 on his current
account. A bank statement as at the end of June 2022 showed that LEVER was in
credit with the bank by Tk.165. On checking the cash book with the bank statement
you find the following;
1) Cheques drawn of Tk.735, entered in the cash book but not yet presented.
2) Cheques received of Tk.600, entered in the cash book, but not yet credited by the bank.
3) The bank had transferred interest received on the deposit account of Tk.100 to the
current account, recording the transfer on 7 July 2022. This amount had been
credited in the cash book as of 30 June 2022.
4) Bank charges of Tk.50 in the bank statement had not been entered in the cash book.
5) The payments side of the cash book had been under cast by Tk.20.
6) Dividends received amounting to Tk.300 were paid directly to the bank and not
entered in the cash book.
7) A cheque for Tk.150 drawn on deposit account had been shown in the cash book
as drawn on current account.
8) A cheque issued to Dorin for Tk.75 was replaced when out of date. It was credited
again in the cash book, no other entry being made. Both cheques were includedin
the total of un-presented cheques shown above.
Required:
(i)
Indicate the appropriate adjustments in the cash book.
(ii) Prepare a statement reconciling the amended balance with that shown in the
bank statement.
END OF SECTION B
CMA May 2023 Examination, FR111 [Page 7 of 7]
CMA SEPTEMBER-2023 EXAMINATION
BUSINESS LEVEL
SUBJECT: GE 01. FUNDAMENTALS OF FINANCIAL ACCOUNTING
Time Allocated: Three hours
Reading Time
: 15 minutes
Writing Time
Total Marks: 100
: 180 minutes
Instructions to Candidates
You are required to answer ALL questions.
Answers should be properly structured, relevant and computations need to be shown.
You are strongly advised to carefully read ALL the question requirements before
attempting the question concerned (that is all parts and/or sub-questions).
ALL answers must be written in the answer book. Answers written on the question paper
will not be submitted for marking.
Start answering each question from a fresh sheet. Your answers should be clearly
numbered with the sub-question number then ruled off, so that the markers know which
sub-question you are answering.
No of questions
No of sub-questions
Marks allocation
8
Maximum 03
Question 1- 6 = 10 marks each
Question 7- 8 = 20 marks each
TURN OVER
Page 1 of 5
You are advised to spend 18 minutes on Question 1- 6 (10 marks per each) and 36 minutes
on Question 7- 8 (20 marks per each).
QUESTION 1
(a) What is accounting? Why is it called the language of business?
(b) What are the enhancing qualities of the qualitative characteristics? Describe the role of
enhancing qualities in conceptual characteristics.
(c) Distinguish between financial accounting and management accounting.
[Marks: (3+4+3) = 10]
QUESTION 2
(a) What are two methods of recording accounts receivable transactions when a cash
discount situation is involved? Which is more theoretically correct? Which is used in
practice more of the time? Why?
(b) Keraniganj Company’s books show a cash balance at the Janata Bank Ltd. on November
30, 2022 of Tk. 2,050,200. The bank statement covering the month of November shows an
ending balance of Tk. 2,219,000. An examination of Keraniganj’s accounting records and
November bank statement identified the following reconciling items:
1.
A deposit of Tk. 368,000 was mailed November 30 but does not appear on the
bank statement.
2.
Checks written in November but not charged to November bank statement are:
Check #7327
Check #7348
Check #7349
3.
4.
5.
6.
7.
Tk. 15,000
482,000
3,100
Keraniganj has not yet recorded the Tk. 60,000 of interest collected by the bank
on November 20 on THT bonds held by the bank for Keraniganj.
Bank service charges of Tk. 1,800 are not yet recorded on Keraniganj’s books.
One of Keraniganj’s customer’s checks for Tk. 22,000 was returned with the bank
statement and marked “NSF”. The bank treated this bad check as a
disbursement.
Keraniganj discovered that check #7322, written in November for Tk. 13,100 in
payment of an account payable, had been incorrectly recorded in its books as Tk.
31,100.
A check for Kaliganj in the amount of Tk. 17,500 had been incorrectly charged to
Keraniganj accompanied the bank statement.
Instructions:
Prepare a bank reconciliation proceeding to a correct cash balance.
[Marks: (3+7) = 10]
QUESTION 3
(a) How will you determine the ownership of inventories in the following cases?
(i)
Goods in transit
(ii) Consigned goods
(b) In your audit of Xinxira Company, you find that a physical inventory on December 31,
2021 showed merchandise with a cost of Tk. 441,000 was on hand at that date. You
also discover the following items were included in the Tk. 441,000:
(i)
Merchandise of Tk. 61,000 which is held by Xinxira on consignment. The
consignor is the Ghatarchar Company.
(ii) Merchandise costing Tk. 33,000 which was shipped by Xinxira f.o.b. destination
to a customer on December 31, 2021. The customer was expected to receive the
merchandise on January 6, 2022.
Page 2 of 5
(iii)
(iv)
(v)
Merchandise costing Tk. 46,000 which was shipped by Xinxira f.o.b. shipping
point to a customer on December 29, 2021. The customer was scheduled to
receive the merchandise on January 2, 2022.
Merchandise costing Tk. 63,000 which was shipped by vendor f.o.b. destination
on December 30, 2021 and received by Xinxira on January 4, 2022.
Merchandise costing Tk. 73,000 which was shipped by vendor f.o.b. shipping
point on December 31, 2021 and received by Xinxira on January 5, 2022.
Instructions:
Based on the above information, calculate the amount that should appear on Xinxira's
statement of financial position at December 31, 2021, for inventory.
[Marks: (3+7) = 10]
QUESTION 4
(a) How are research and development costs accounted for in relation to recognizing an
intangible asset as per IAS 38?
(b) In early January 2020, Kalatia Company applied for a trade name, incurring legal costs
of Tk. 180,000. In January 2021, Kalatia incurred Tk. 78,000 of legal fees in a
successful defense of its trade name.
Instructions:
(i)
Compute 2020 amortization, 31/12/20 book value, 2021 amortization, 31/12/21
book value if the company amortizes the trade name over 10 years.
(ii) Compute the 2021 amortization and the 31/12/21 book value, assuming that at
the beginning of 2021, Kalatia determines that the trade name will provide no
future benefits beyond December 31, 2024.
(iii) Ignoring the response for part (ii), compute the 2022 amortization and the
31/12/22 book value, assuming that at the beginning of 2022, based on new
market research, Kalatia determines that the recoverable amount of the trade
name is Tk. 160,000.
[Marks: (4+6) = 10]
QUESTION 5
(a) The board of directors is considering either a stock split or a stock dividend. They
understand that total stockholders’ equity will remain the same under either action.
However, they are not sure of the different effects of the two types of actions on other
aspects of stockholders’ equity. Explain the differences to the directors.
(b) On January 1, 2021, D Corporation had the following stockholders’ equity accounts.
Common Stock (no-par value, 100,000 shares issued and outstanding) Taka
2,800,000, Retained Earnings Taka 1,000,000.
During the year, the following transactions occurred.
Feb. 1
Declared a Taka 1 cash dividend per share to stockholders of record on
February 15, payable March 1.
Mar. 1
Paid the dividend declared in February.
Apr. 1
Announced a 4-for-1 stock split. Prior to the split, the market price per
share was Taka 36.
July 1
Declared a 5% stock dividend to stockholders of record on July 15, distributable
July 31.On July 1, the market price of the stock was Taka 13 per share.
July 31
Issued the shares for the stock dividend.
Dec. 1
Declared a Taka 0.50 per share dividend to stockholders of record on
December 15, payable January 5, 2022.
Dec. 31 Determined that net income for the year was Taka 700,000.
Required:
Prepare the stockholders’ equity section of the balance sheet at (i) March 31, (ii) June
30, (iii) September 30, and (iv) December 31, 2021.
[Marks: (2+8) = 10]
Page 3 of 5
QUESTION 6
(a) Define ‘internal control’ and state its main objectives. What is the purpose of an
independent financial auditor in carrying out a study and evaluation of internal controls
in an enterprise under audit?
(b) A fellow student argues with you that while independence is required in an independent
financial audit, it is not relevant in an internal audit assignment. Do you agree?
(c) Explain the nature of fraud. Why do people engaged in fraudulent activity? How would
you able to prevention of fraud including level of authorization, documentation, and
staff organization.
[Marks: (4+3+3) = 10]
QUESTION 7
The Barilgaon Enterprise opened for business few years ago. Its trial balance on June 30,
2022 follows:
Barilgaon Enterprise
Trial Balance as on June 30, 2022
Account Title
Debit (Tk.)
Credit (Tk.)
Cash
150,000
Accounts Receivable
100,000
Inventory (01.07.2021)
80,000
Supplies
30,000
Prepaid Insurance
45,000
Land
500,000
Buildings
800,000
Accumulated Depreciation – Buildings
440,000
Equipment
600,000
Accumulated Depreciation – Equipment
330,000
Accounts Payable
70,000
Notes Payable
80,000
10% Bank Loan (long-term)
300,000
Owner’s Capital
800,000
Owner’s Drawings
80,000
Sales Revenue
950,000
Investment Income
30,000
Purchases
500,000
Advertising Expense
30,000
Salaries & Wages Expense
80,000
Utilities Expense
5,000
3,000,000
3,000,000
Total
Other information:
(i)
(ii)
(iii)
(iv)
(v)
(vi)
Ending inventory was valued at Tk. 60,000.
Prepaid insurance of Tk. 10,000 has been expired during the year.
Supplies of Tk. 20,000 were used during the year.
Depreciation on buildings and equipment is charged @5% on cost per year.
5% of accounts receivable is to be made an allowance for doubtful debt.
Salaries of Tk. 20,000 were still unpaid.
Required:
Prepare a multiple-step income statement for the year ended 30 June 2022 and a classified
balance sheet as at 30 June 2022.
[Marks: (10+10) = 20]
Page 4 of 5
QUESTION 8
(a) Why is it necessary to convert accrual-based net income to a cash basis when
preparing a statement of cash flows?
(b) The following statement was prepared by Momen Textiles Ltd.’s accountant.
MOMEN TEXTILES LTD
STATEMENT OF SOURCES AND APPLICATION OF CASH
FOR THE YEAR ENDED SEPTEMBER 30, 2014
Sources of cash
Net income
Tk.1,11,000
Depreciation and depletion
70,000
Increase in long-term debt
1,79,000
Changes in current receivables and inventories, less current
14,000
liabilities (excluding current maturities of long-term debt)
Tk.3,74,000
Application of cash
Cash dividends
Tk. 60,000
Expenditure for property, plant, and equipment
2,14,000
Investments and other uses
20,000
Change in cash
80,000
Tk.3,74,000
The following additional information relating to Momen Textiles Ltd. is available for the year
ended September 30, 2014.
1.
Salaries and wages expense attributable to stock option plans was Tk.25,000 for the
year.
2.
Expenditures for property, plant, and equipment
Tk.2,50,000
Proceeds from retirements of property, plant, and equipment
36,000
Net expenditures
Tk.2,14,000
3.
A stock dividend of 10,000 shares of Momen Textiles Ltd. common stock was
distributed to common stockholders on April 1, 2014, when the per share market price
was Tk.7 and par value was Tk.1.
4.
On July 1, 2014, when its market price was Tk.6 per share, 16,000 shares of Momen
Textiles Ltd. common stock were issued in exchange for 4,000 shares of preferred
stock.
5.
Depreciation expense
Tk. 65,000
Depletion expense
5,000
Tk. 70,000
6.
Increase in long-term debt
Less: Redemption of debt
Net increase
Tk.6,20,000
4,41,000
Tk.1,79,000
Required:
(a) In general, what are the objectives of a statement of the type shown above for Momen
Textiles Ltd.? Explain.
(b) Identify the weaknesses in the form and format of Momen Textiles Ltd.’s statement of
cash flows without reference to the additional information. (Assume adoption of the
indirect method.)
(c) For each of the six items of additional information for the statement of cash flows,
indicate the preferable treatment and explain why the suggested treatment is
preferable.
[Marks: 5+ (4+5+6) = 20]
*END OF QUESTION PAPER*
Page 5 of 5
CMA SEPTEMBER-2023 EXAMINATION
FOUNDATION LEVEL
FUNDAMENTALS OF FINANCIAL ACCOUNTING
Course Code
Reading Time
: FR111
: 15 minutes
Total Marks
Writing Time
: 100
: 180 minutes
Instructions to Candidates

You MUST NOT write anything during the reading time.

You should attempt ALL questions.

Answers should be properly structured and relevant.

Carefully read ALL the requirements and sub-questions before attempting a specific
question.

ALL answers must be written in the answer book.

AVOID WRITING/MARKING on the question paper at any time which may cause
disciplinary action.

Start answering each question from a fresh sheet.

Answers should be clearly numbered with the sub-question number.
Allowable Materials

Writing Stationaries

Non-programmable Calculator
Assessment Structure
Subquestion
Section
A
Section
B
Question 1
Question 2
Question 3
Question 4
Question 5
Question 6
Question 7
Multiple Choice Questions
Modified True/False
Matching
Short Answer Questions
Essay/Computational/Case
Essay/Computational/Case
Essay/Computational/Case
Revision
Total
15
5
5
3
4
2
3
Marks
15
5
5
15
20
20
20
100
Expected
Time
Required
25 minutes
10 minutes
10 minutes
20 minutes
35 minutes
35 minutes
35 minutes
10 minutes
180 minutes
RESTRICTED USE
This paper MUST NOT BE REMOVED from the examination venue
Do not turn the page until instructed
SECTION A [40 MARKS]
THERE ARE 4 (FOUR) QUESTIONS IN THIS PART. ANSWER ALL THE QUESTIONS IN
THE ANSWER SCRIPT FOLLOWING THE EXAMPLE PROVIDED FOR THE SPECIFIC
QUESTION.
QUESTION 1
[15 × 1 = 15 MARKS]
There are fifteen (15) multiple-choice questions with five options. Pick the option that best
explains the given question. Write your answer on the answer script [DO NOT PUT ANY
MARK ON THE QUESTION PAPER]. Follow the example given below in providing your
answer.
Example:
(i) ICMAB stands for the –
(a) Institute of Cost Management Accounting of Bangladesh
(b) Institute of Cost and Management Accountants of Bangladesh
(c) Institute for Cost Managers and Accounting of Bangladesh
(d) Institute of Cost Management Accountants of Bangladesh
(e) Industrial Cost Management Accountants of Bangladesh
Answer: (i) (b)
(i)
(ii)
(iii)
(iv)
(v)
When a credit customer pays an invoice for Tk. 1150 including VAT @15%, the credit
entry in the VAT ledger account will be:
a) 1,150
b) 1,000
c) 150
d) Nil
e) 172.50
When an error in a debit entry is cancelled out by an error in a credit entry, this is
called:
a) A commission error
b) A compensation error
c) An omission error
d) An error of principle
e) None of the above
What would be the effect on a business profit of discovering that inventory with a cost
Tk. 1,250 and a net realizable value of Tk. 1,000 had been omitted from the year-end
inventory count?
a) An increase of Tk. 1,250
b) An increase of Tk. 1,000
c) A decrease of Tk. 250
d) No effect
e) All of the above
Change in accounting estimate requires:
a) Prospective restatement
b) Prospective application
c) Retrospective application
d) Retrospective restatement
e) All of the above
Direct issuance of common stock to purchase assets is a:
a) Cash outflow
b) Cash inflow
c) Noncash activity
d) Operating activities
e) None of the above
CMA September-2023 Examination, FR111 [Page 2 of 8]
(vi)
XYZ company wants to repurchase share from its existing shareholders is an example
of:
a) Financing activities
b) Investing Activities
c) Noncash significant activities
d) Operating activities
e) All of the above
(vii) PQR company has it’s current liabilities Tk.344,500 and current assets are: Cash
Tk.120,000, A/R Tk.230,000, Inventory Tk.200,000 and prepaid expenses Tk.60,000.
What is the Acid-Test ratio?
a) 1.02:1.00
b) 2.96:1.00
c) 1.60:1.00
d) 1.19:1.00
e) 1.50:1.00
(viii) Short-term, highly liquid investments that can be converted to a specific amount of
cash is called:
a) Quality of assets
b) Cash equivalents
c) Free cash
d) Disposable cash
e) Absolute cash
(ix) Various revenues, expenses, gains and losses that are unrelated to the company’s
main line of business are:
a) Non-operating activities
b) Side Business
c) Unrelated activities
d) Less related activities
e) Non-Business activities
(x) The allocation of the cost of a natural resource to expense in a rational and systematic
manner over a resource’s useful life is:
a) Amortization
b) Depreciation
c) Patent
d) Copyright
e) Depletion
(xi) An alternative form of the accounting equation is:
a) Net Income = Revenues - Expenses
b) Stockholders` Equity = Assets + Liabilities
c) Assets = Liabilities - Stockholders` Equity
d) Assets - Liabilities = Stockholders` Equity
e) Capital - Expenses = Net Assets
(xii) The account type that represents payments to stockholders is called:
a) Liabilities
b) Assets
c) Stockholders` equity
d) Dividends
e) Retained Earnings
CMA September-2023 Examination, FR111 [Page 3 of 8]
(xiii) JET Corp. had the following net income (loss) the first three years of operation:
Tk.7,100, (Tk.1,600), and Tk.3,600. If the Retained Earnings balance at the end of year
three is Tk.1,100, what was the total amount of dividends paid over these three years?
a) Tk.500
b) Tk.0
c) Tk.9,100
d) Tk.8,000
e) Tk.1,100
(xiv) Which Accounting Standard deals with interim financial reporting?
a) IFRS 34
b) IAS 16
c) IFAS 34
d) IAS 34
e) IFRS 32
(xv) Balance sheet depicts:
a) Financial strength of a business
b) Earning strength of a business
c) Cash generating strength of a business
d) Past performance of a business
e) Summary of earnings of a business
QUESTION 2
[5 × 1 = 5 MARKS]
There are five (5) statements given under the question. Identify the statements as True or
False. If the statement is false, rewrite the statement on the answer script to make it ‘True’.
Reasoning is NOT required. Follow the example given below in providing your answer.
Example:
(a) ICMAB stands for the Industrial Cost Management and Accounting of Bangladesh.
Answer:
(a) False. ICMAB stands for the Institute of Cost and Management Accountants
of Bangladesh.
Note:
 You will not get any mark if you simply rewrite as ICMAB does not stand for the
Industrial Cost Management Accountants of Bangladesh.
 If the statement is true, you need NOT to rewrite the statement rather only
mention that the statement is True.
(a)
(b)
(c)
An error has led to XYZ’s trial balance failing to balance. This could have been caused
by an error of commission.
Gains and losses can never be offset.
(d)
Wages paid in the ordinary course of business is a revenue expenditure but wages
paid for erection of machinery is a capital expenditure.
Capital gain arises from normal business transactions.
(e)
Impairment is a cash expense.
CMA September-2023 Examination, FR111 [Page 4 of 8]
QUESTION 3
[5 × 1 = 5 MARKS]
Match the items of column A with the most suitable items of column B. Match only one item
of column A with one item of column B. Write your answer on the answer script. Follow the
example given below in providing your answer.
Example:
Column A
1. ICMAB
Column B
(a) Professional accountancy body
(b) University
Answer: 1 (a)
(1) LCM is a method where inventory is
stated at
(2) Fraudulent triangle consists of
a) Average price of inventory
(3) The concept of depreciation is
(4) Payout ratio measures
c) Consistent with conservative principle
d) Percentages of earnings distributed in the
form of cash dividend
e) Opportunity, pressure and rationalization
f) Lower of its cost or market value
g) Opportunity, threats and strengths
h) Net income earned on each share of
common stock
i) Net income earned on all type of stocks
(5) Earnings Per Share (EPS) measures
b) Consistent with going concern assumption
j) Percentages
of
retained
earnings
distributed in the form of cash dividend
QUESTION 4
(a)
(b)
[5 × 3 = 15 MARKS]
On 1st July 2019, a company purchased a Plant for Tk.20,000. Depreciation was
provided at 10% per annum on straight line method on 31st December every year. With
effect from 1-1-2021, the company decided to change the method of depreciation to
Diminishing Balance Method @ 15% p.a. On 1-7-2022, the plant was sold for Tk.
12,000.
Required:
Prepare Plant Account from 2019 to 2022.
The Cash Book of Mr. X shows Tk.8,364 as the balance at Bank as on 31st
December’2022, but you find this does not agree with the balance as per the Bank
Pass Book. On scrutiny, you find the following discrepancies:
1. On the 1st December the payments side of the Cash Book was undercast by
Tk.100.
2. A cheque of Tk. 131 issued on 25th December was not taken in the bank column.
3. One deposit of Tk. 150 was recorded in Cash Book as if there is no bank column
therein.
4. On 18th December the debit balance of Tk. 1,526 as on the previous day was
brought forward as credit balance.
5. Of the total cheques amounting to Tk. 11,514 drawn in the last week of December,
cheques aggregating to Tk. 7,815 were encashed in December.
CMA September-2023 Examination, FR111 [Page 5 of 8]
6. Dividend of Tk. 250 was collected by bank and subscription of Tk. 100 paid which
was not recorded in the cash book.
7. One outgoing cheque of Tk.350 was recorded twice in the Cash Book.
Required: Prepare Bank Reconciliation Statement.
(c) Briefly explain the difference between IFRS and US GAAP.
END OF SECTION A
SECTION B [60 MARKS]
THERE ARE 3 (THREE) QUESTIONS IN THIS PART. ANSWER ALL THE QUESTIONS IN
THE ANSWER SCRIPT. SHOW ALL RELEVANT COMPUTATION.
QUESTION 5
[5+4+3+ 8 = 20 MARKS]
(a) Professional judgment should be used in valuation of inventory. Do you agree? Explain
with example.
(b) Define inventory as per IAS 2. What costs are included in the inventory?
(c) Briefly explain the impact of inventory valuation on profitability of the company.
(d) XYZ Ltd. buys and sells finished goods after carrying out some operations. They began
the year with 3,000 units valued at Tk. 3 per unit. During the year they sold 25,000 units
for an average sale price of Tk. 10 per unit. Purchases were as follows:
4,000 units @Tk. 5.00 per unit
16,000 units @Tk. 6.00 per unit
6,000 units @Tk. 7.00 per unit
The current replacement cost of the unit is Tk. 8.00 and the company’s Taxation Manager
advices that there may be significant tax advantages of purchasing at year end at this price,
as the company uses the LIFO method and has got the acceptance of the tax authorities for
consistently using this method in its assessments. The corporate tax rate is 40%.
Bearing in mind that the warehouse space is limited to 10,000 units, work out the tax
advantages and the cost of year-end purchasing under this situation given that the operating
expenses for the year are Tk. 37,000.
Required:
(i)
Calculate the net profit without year-end purchases.
(ii) Calculate the net profit with year-end purchases.
(iii) Calculate the amount of tax savings.
QUESTION 6
[6 +(6+6+2) = 20 MARKS]
(a) Briefly explain the functions of (i) ICMAB, (ii) ICAB, (iii) FRC, (iv) BSEC.
(b) ABC Co. was organized on July 01’2022. Quarterly financial statements are prepared.
The unadjusted and adjusted trial balances as of September 30 are shown below.
ABC Co
Trial Balance
September 30’2022
Particulars
Cash
Accounts Receivable
Supplies
Prepaid Rent
Equipment
Accumulated Depreciation--Equipment
Unadjusted
Dr.
Cr.
8,700
10,400
1,500
2,200
18,000
0
CMA September-2023 Examination, FR111 [Page 6 of 8]
Figure in Tk.
Adjusted
Dr.
Cr.
8,700
11,500
650
500
18,000
700
Notes Payable
Accounts Payable
Salaries and Wages Payable
Interest Payable
Unearned Rent Revenue
Owner's Capital
Owner's Drawings
Service Revenue
Rent Revenue
Salaries and Wages Expense
Rent Expense
Depreciation Expense
Supplies Expense
Utilities Expense
Interest Expense
Total
10,000
2,500
0
0
1,900
22,000
1,600
10,000
2,500
725
100
450
22,000
1,600
16,000
1,410
8,000
1,900
1,510
53,810
53,810
17,100
2,860
8,725
3,600
700
850
1,510
100
56,435
56,435
Required:
(i)
Journalize the adjusting entries that were made.
(ii) Prepare an income statement and an owner's equity statement for the 3 months ending
September 30 and a balance sheet at September 30.
(iii) If the note bears interest at 12%, how many months has it been outstanding?
QUESTION 7
[3+5+(10+2) = 20 MARKS]
(a) State the criteria for keeping provision as per IAS 37.
(b) Briefly explain the steps of revenue recognition process as per IFRS 15.
(c) You are the financial adviser of PQR corporation. PQR provides you the following
financial statement.
PQR CORPORATION
Comparative Balance Sheet
31st December, 2022
Amount in Tk.
Particulars
Assets:
Cash
Accounts Receivable
Inventory
Equipment
Accumulated Depreciation-Equipment
Total
Liability & Stockholder’s Equity
Accounts Payable
Income Tax Payable
Bond Payable
Common stock
Retain earnings
Total
2022
2021
38,000
30,000
27,000
60,000
(29,000)
126,000
20,000
14,000
20,000
78,000
(24,000)
108,000
24,000
7,000
27,000
18,000
50,000
126,000
15,000
8,000
33,000
14,000
38,000
108,000
CMA September-2023 Examination, FR111 [Page 7 of 8]
PQR CORPORATION
Income Statement
For the year ended 31st December, 2022
Particulars
Sales Revenue
Cost of goods sold
Gross Profit
Operating Expenses
Income from operations
Interest Expenses
Income before income taxes
Income tax expenses
Net Income
Amount in Tk.
242,000
175,000
67,000
24,000
43,000
3,000
40,000
8,000
32,000
Additional Information: (Amount in Tk.)
 Dividends declared and paid were Tk. 20,000.
 During the year equipment was sold for Tk. 8,500 in cash that cost Tk.18,000 and
book value of Tk. 8,500.
 All depreciation expenses of Tk. 14,500 are in the operating expenses.
 All sales and purchases are on account.
Required:
(i)
Prepare a statement of cash flows using indirect method.
(ii) Compute free cash flow.
END OF SECTION B
CMA September-2023 Examination, FR111 [Page 8 of 8]