Part I: Job-Related
Accounting & Finance including Sales Tax on Services – 80 Marks
Q. What is ‘Financial Audit’ versus ‘Cost Audit’?
Answer: Financial Audit verifies the overall accuracy of financial statements, while Cost Audit verifies the correctness of cost accounts and adherence to the cost accounting plan.
Q. What is ‘Over-capitalization’?
Answer: A situation where a company has more capital than it needs for its operations, leading to low earnings per share.
Q. In auditing, what is ‘Detection Risk’?
Answer: The risk that the auditor’s procedures will fail to detect a material misstatement that exists in an account balance.
Q. What is ‘Float’ in cash management?
Answer: The difference between the balance shown in a company’s checkbook and the balance shown on the bank’s records due to processing delays.
Q. Which accounting concept requires that ‘Stock’ be valued at cost or net realizable value, whichever is lower?
Answer: Prudence (Conservatism) Concept.
Q. What is ‘Consolidated Financial Statement’?
Answer: The combined financial statements of a parent company and its subsidiaries, presented as a single economic entity.
Q. What is ‘Audit Trail’?
Answer: A step-by-step documented history that allows a financial transaction to be traced back to its source.
Q. What is ‘Negative Confirmation’ in auditing?
Answer: A request that the third party respond only if they disagree with the amount stated in the auditor’s letter.
Q. What is ‘Capital Reserve’?
Answer: Profits created from capital transactions which cannot be used to distribute dividends.
Q. What is ‘Operating Leverage’?
Answer: The degree to which a firm uses fixed costs in its operations.
Q. In a company liquidation, who is paid first?
Answer: Secured Creditors.
Q. What is ‘Statutory Audit’?
Answer: An audit mandated by law to ensure the fairness of financial reports.
Q. What is ‘Sunk Cost’?
Answer: A cost that has already been incurred and cannot be recovered.
Q. What is ‘Internal Check’?
Answer: A system of allocation of duties where the work of one employee is automatically checked by another.
Q. What is ‘Goodwill’ impairment testing?
Answer: The annual process of checking whether the recorded value of goodwill has decreased.
Q. Under Section 66, what is ‘Burden of Proof’?
Answer: The responsibility to prove that a service is exempt or that the tax has been paid lies with the person claiming the exemption.
Q. What is ‘Composite Supply’ in Sales Tax?
Answer: When two or more services are bundled together and the tax rate of the principal service applies.
Q. What is ‘Tax Fraud’ under Section 2(44)?
Answer: Knowingly producing false documents, making false statements, or concealing facts to reduce tax liability.
Q. What is ‘Advance Ruling’ (Section 68)?
Answer: A written clarification provided by PRA regarding a specific future transaction.
Q. Can the PRA recover tax from a person who owes money to the tax defaulter?
Answer: Yes, under Section 48 PRA can issue a notice to a third party to pay the amount to the government.
Q. What is ‘Ex-parte Assessment’?
Answer: An assessment order passed without the presence of the taxpayer due to non-response.
Q. What is ‘Electronic Filing’ (Section 26)?
Answer: The requirement for registered persons to submit their returns through the PRA e-portal.
Q. What is the ‘Authorized Officer’s’ power under Section 37?
Answer: To stop and search vehicles to check tax-related documents.
Q. What is ‘Recovery from Assets’ (Section 48)?
Answer: The power of PRA to seal premises or sell property to recover unpaid tax.
Q. What is ‘Service of Notice’ via Email?
Answer: A notice sent to the registered email address is considered legally served.
Q. What is the ‘KIBOR’ used for in the Act?
Answer: It is used as the base rate for calculating default surcharge.
Q. What is ‘De-registration’ (Section 28)?
Answer: The removal of a person’s name from the sales tax register.
Q. Is ‘Franchise Service’ taxable in Punjab?
Answer: Yes.
Q. What is ‘Revision by Commissioner’ (Section 61)?
Answer: The power of a Commissioner to review and revise an order passed by a subordinate officer.
Q. What is ‘Correction of Errors’?
Answer: Under Section 71, clerical or arithmetical mistakes in an order can be corrected by the issuing officer.
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