Financial Accounting and Cost Accounting

Time allowed – 3 hours

Maximum marks – 100
[N.B. – The figures in the margin indicate full marks. Questions must be answered in English. Examiner will take
account of the quality of language and of the way in which the answers are presented. Separate answer
scripts should be used for each section. Different parts, if any, of the same question must be answered in
one place in order of sequence.]

Section I
Marks 50
Marks

1. (a) What conditions need to be satisfied as per BAS for interest to be treated as revenue? 3
(b) What is the objective of BASs followed for (i) Borrowing cost (ii) Inventory (iii)
Property, Plant and Equipment? 6
2. Following are the Trial Balances of A Ltd. and its Rajshahi Branch as on December 31, 2007: 15
Head office Rajshahi Head office Rajshahi
(Tk.) (Tk.) (Tk.) (Tk.)
Stock on 1st Jan. 45,000 16,400 Creditors 20,300 5,400
2007
Purchases 110,000 25,600 Goods sent to 14,400 -
Branch
Wages 80,800 13,100 Sales 330,200 69,900
Manufacturing Exp 35,400 6,800 Head Office A/c - 28,000
Machinery: Capital in Shares of -
Head office 100,000 - Tk.10 each 200,000
Branch 50,000 - Discount earned 1,100 300
Furniture:
Head office 5,000 -
Branch 2,000 - Purchase Returns 2,500 600
Rent 6,000 3,400
Salaries 32,000 11,000
Debtors 38,000 8,000
General Expenses 18,000 4,000
Goods received
from Head Office - 14,400
Cash in hand and at
Bank 10,300 1,500
Branch Account 36,000 -
568,500 104,200 568,500 104,200
Closing Stock at head office was Tk.38,700 and at Rajshahi was Tk.28,700. Depreciation is to
be allowed at 10% on machinery and at 15% on furniture. Rent still payable in respect of 2007
is Tk.300 (for Branch). Prepare the Trading and Profit and Loss Accounts, and the
consolidated Balance Sheet.
3. Following have been extracted from the trial balance of Commercial Banks Ltd. as at 31
December, 2007:
Tk. Tk.
Bills discounted 12,36,00,000
Rebate on bills discounted (31.12.2007) 17,53,000
Discount received 62,65,000
Following have been revealed upon further analysis of the bills discounted:
Amount of bills Due dates Rate of discount
Tk. %
27,50,000 31.12.07 6.5
73,00,000 06.03.08 6
4,18,00,000 15.03.08 5
2,19,00,000 18.06.08 6.5

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You are required to pass appropriate journal entries for the above and show how the relevant
items will appear in the Profit and Loss Account of the bank for the year to 31 December,
2007 and in its Balance Sheet at 31 December, 2007. 10
You are further required to write appropriate but short note to the accounts stating the bank’s
accounting policy on the items. 3
4. (a) Explain the terms, surrender value and paid up value used in life assurance business. Why
these can not be found in other insurance business? 4
(b) From the following figures appearing in the books of Fire Insurance Division of a General
Insurance Company, show the amount of claim as it would appear in its Revenue Account
for the year ended 31 December, 2007. 9
Direct Business Re-insurance
(Tk.(million) Tk.(million)
Claims received during the year 500 600
Claims settled during the year 480 540
Claims payable – 1.1.2007 760 10
31.12.2007 812 5
Management expenses 8
Survey fee 3
Legal and professional 5

Section II
Marks 50
1. (a) State what do you understand by the following terms used in a costing system: (1)
Allocation (2) Apportionment and (3) Absorption. 3
(b) Your factory buys and uses a component for production at Taka 10 per piece. Annual
requirement is 2000 pieces. Carrying cost of inventory is 10% per annum and ordering
cost is Taka 40 per order. The Purchase Manager proposes that, as the ordering cost is very
high, it is advantageous to place a single order for the entire annual requirement. He also
says that, if we order 2,000 pieces at a time, we can get a 4% discount from the supplier. 5
Evaluate this proposal and make recommendation.

2. (a) Define Specific Order Costing and Operation costing with example. 2
(b) Distinguish between Purchase Order and Purchase Requisition. 2
(c) Miza Chemicals Ltd. obtain three joint products X, Y and Z from a process. Cost upto the
point of separation of the products for a particular period amounting to Tk.50,000. Other
particulars are as follows: 6
Product No. of Units Units of raw material used
X 700 200
Y 500 300
Z 300 500
1,500 1,000
Apportion the joint cost of Tk.50,000 to products X, Y and Z on the basis of (i) Physical
measurement (ii) Average unit cost.
3. (a) From the following particulars you are required to workout the earnings of a worker for a
week under (a) Straight Piece Rate (b) Differential Piece Rate (c) Helsey Premium Bonus
Scheme (50% sharing) and (d) Rowan Premium Bonus Scheme: 6
Weekly working hours 48
Hourly wage rate Tk.7.50
Normal time taken per piece 20 minutes
Normal output per week 120 pieces
Actual output for the week 150 pieces
Differential piece rate 80% of piece rate when output is below
normal and 120% of piece rate when
output is at or above normal.

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(b) A manufacturing company provides you with the following information relating to Process
II for the month of April 2008:
a) Opening Work in Progress Nil
b) Units introduced 10,000 units @Tk.5 per unit
c) Expense charged to Process: Material Tk.19,500
Labour Tk.64,750
Overheads Tk.32,400
d) Normal loss in Process 1% of input
e) Closing work in Progress 350 units
Degree of completion: Materials 100%
Labour & overheads 50%
f) Finished output 9,500 units
g) Degree of completion of abnormal loss Materials 100%
Labour & overheads 80%
h) Units scrapped as normal loss were sold Tk.Tk,2 per unit.
i) All the units of abnormal loss were sold at Tk.3 per unit.
You are required to prepare: 12
(i) Statement of Equivalent Production
(ii) Statement of cost
(iii) Process II Account
(iv) Abnormal Loss Account.

4. (a) Exim Ltd. A manufacturing company using a historical cost system and applies overhead
on the basis of predetermined rates. The following data available from the records of the
company for the year ended March 31, 2008:
Taka
Manufacturing Overheads 850,000
Manufacturing overheads applied 750,000
Work in Progress 240,000
Finished Goods Stock 480,000
Cost of Goods Sold 1,68,000
Apply different methods for disposal of unabsorbed overheads showing the implications of
each method on the profits of the company. 6

(b) A transport service company is running five buses between two towns which are 50
kilometer apart. Seating capacity of each bus is 50 passengers. The following particulars
were obtained from their books for the month of April 2008:
Taka
Wages of Drivers, Conductors and Cleaners 24,000
Salaries of Office Staff 10,000
Diesel Oil and other oil 35,000
Repair and Maintenance 8,000
Taxation, Insurance etc. 16,000
Depreciation 26,000
Interest and other expenses 20,000
139,000
Actually passengers carried were 75% of seating capacity. All buses run on all days of the
month. Each bus made one round trip per day. Find out the cost per passenger – kilometer. 8

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