For Recruitment to the Posts of Provincial Management Service (PMS)
SUBJECT: Commerce (Paper-1)
Time Allowed: 3 Hours
Maximum Marks: 100
NOTE: Attempt FIVE Questions in all, selecting minimum TWO questions from each part. Calculator is allowed (not programmable).
PART – A
Q. No. 1: Define the Accounting Cycle. How does the accounting cycle provide a pathway to prepare financial statements? Elaborate the steps involved in the Accounting Cycle. (20 Marks)
Q. No. 2: Selected year-end financial statements of ABC Corporation follow. (All sales were on credit). Selected balance sheet amounts at December 31, 2012, were: inventory Rs. 48,900; total assets Rs. 189,400; common stock Rs. 90,000; and retained earnings Rs. 74,800. (20 Marks)
(*) These are short-term notes receivable arising from customer (trade) sales.
Accounts payable: Rs. 17,500 Income taxes payable: Rs. 3,300 Common stock: Rs. 90,000 Total liabilities and equity: Rs. 240,200
Q. No. 3: Mr. Atif runs a small business. He is unable to reconcile the balance on the business bank statement with that shown in his bank column of the cash book. Copies of these two records are shown below. (20 Marks)
Requirement:
Following the steps of preparing a bank reconciliation statement, update and correct the bank column of the cash book.
Prepare a statement reconciling the balance on the bank statement with the cash book balance from (1).
Q. No. 4: The following balances are taken from the books of Javed & Sons, who run a small business: (20 Marks)
Dr / Cr (Rs.) Purchases and Sales: 280,000 Inventory at 1 January 2018: 135,500 Returns: 35,200 Carriage inward: 1,400 Wages and salaries: 29,800 Repairs and maintenance: 7,500 Heating and lighting: 4,200 General expenses: 15,600 Cash in hand: 5,600 Petty cash: 400 Trade receivables and trade payables: 48,200 / 100,000
Premises: 29,000 Furniture and fixtures: 22,000 Provision for depreciation on furniture: 5,600 Motor vehicle at cost: 6,160 Provision for depreciation on motor vehicle: — Capital/Equity at 1 January 2018: 150,000
Total: 462,900 / 462,900
Additional Information:
Inventory at 31 December 2018 was valued at Rs. 40,100
A bill of Rs. 1,500 was owing for repairs and maintenance
A debt of Rs. 1,200 is to be written off as bad; provision for doubtful debts = 5% on receivables
General expenses of Rs. 1,400 have been paid for 2019
Depreciation: 10% on furniture and 20% on vehicles (reducing balance method)
Requirement: Prepare Profit and Loss Statement and Balance Sheet for the year ended 31 December 2018
PART – B
Q. No. 5: Discuss the difference between Job Order Costing System and Process Costing System on the basis of:
Application
Accumulation of Cost
Cost per unit
Work in process account
Cost of operating the system
(20 Marks)
Q. No. 6: Zaman Corporation estimates factory overhead of Rs. 345,000 for next fiscal year. It is estimated that 60,000 units will be produced at a material cost of Rs. 15,000. Conversion will require 34,500 direct labor hours at Rs. 10 per hour, with 25,875 machine hours.
Requirement: Calculate factory overhead rate on:
Units of production
Labor cost
Labor hours
Machine hours
(20 Marks)
Q. No. 7: WXY Ltd. is producing 60,000 units of product “DP”.
Variable cost of production: Rs. 175,000 Separable cost: Rs. 70,000 Fixed costs: Rs. 120,000 Total cost: Rs. 365,000
Another manufacturer offers to supply at Rs. 3.56 per unit.
Requirement: Calculate cost in both make and buy cases and suggest whether to make or buy. (20 Marks)
Q. No. 8: XYZ Limited is operating at 80% capacity producing 20,000 units.
A customer offers to buy additional 10,000 units at Rs. 12 per unit.
Costs: Direct material: Rs. 4 Direct labor: Rs. 3 Variable overhead: Rs. 1 Total variable cost: Rs. 8 Selling price: Rs. 15
Fixed production cost: Rs. 10,000 Other fixed cost: Rs. 25,000
Requirement: Calculate variable cost for additional business and decide whether to accept the order. (20 Marks)
