CSS Accountancy and Auditing Paper I Past Paper 2025

CSS Accountancy and Auditing Paper I 2025 carries 100 marks over 3 hours. It has 7 questions.

Marks: 100
Time: 3 hours
Questions: 7

Years

How to attempt: Attempt ONLY FOUR questions from PART-II by selecting TWO questions from EACH SECTION. ALL questions carry EQUAL marks.

Questions

Question 1 (Part I) is the paper's MCQs, which are not reproduced here.

SECTION – I

Q. 2
ABC Traders is a sole proprietorship owned by Mr. Ali. Below are the financial details of the business as of December 31, 2024:
(20)
i. Cash in hand: PKR 50,000
ii. Accounts Receivable: PKR 80,000
iii. Inventory: PKR 120,000
iv. Office Equipment (at cost): PKR 200,000.
v. Accumulated Depreciation on Office Equipment: PKR 40,000
vi. Accounts Payable: PKR 60,000
vii. Loan Payable to Bank: PKR 100,000
viii. Owner’s Capital (as of January 1, 2024): PKR 300,000
ix. Owner’s Drawings during the year: PKR 30,000
x. Net Income earned during the year: PKR 90,000
Required:
- (a)
  Categorize the above details under different heads of accounting equation.
  (5)
- (b)
  Prepare the balance sheet of ABC Traders as of December 31, 2024 using the information above.
  (15)
Q. 3
Continued with the data provided in Question No 1, Additional Adjustments in the accounts of ABC Traders as of December 31, 2024 are as follow:
(20)
a) Accrued Salaries of PKR 10,000 are unpaid and unrecorded.
b) Office Equipment Depreciation: Straight-line method over 5 years with no residual value.
c) Unearned Revenue of PKR 15,000 was incorrectly recorded as sales revenue.
d) Supplies Expense of PKR 5,000 needs to be recorded for supplies used during the year.
e) Accrued Interest on the bank loan of PKR 4,000 remains unpaid and unrecorded.
Required:
- (a)
  Prepare the necessary adjusting journal entries for the above adjustments.
  (6)
- (b)
  Prepare an Income Statement for the year ended December 31, 2024.
  (7)
- (c)
  Update the Balance Sheet to reflect these adjustments.
  (7)

Q. 4

XYZ Corporation, a merchandising company, is preparing its financial records for the year ended December 31, 2024. Below are the extracted balances from the general ledger:

(20)

Balances of the Items	Amount in PKR
Cash:	70,000
Accounts Receivable:	200,000
Inventory (Beginning):	150,000
Purchases:	500,000
Purchase Returns and Allowances:	30,000
Sales Revenue:	900,000
Sales Returns and Allowances:	20,000
Office Supplies:	10,000
Prepaid Insurance:	24,000
Office Equipment:	300,000
Accumulated Depreciation - Office Equipment:	80,000
Accounts Payable:	90,000
Salaries Payable:	12,000
Bank Loan Payable (Non-Current):	150,000
Salaries Expense:	100,000
Utilities Expense:	45,000
Rent Expense:	60,000
Depreciation Expense:	30,000
Owner’s Capital (January 1, 2024):	400,000
Owner’s Drawings:	50,000

Additional Information for Adjustments

i. Inventory at the end of the year is PKR 120,000.

ii. Office supplies used during the year are PKR 6,000.

iii. Insurance expired during the year amounts to PKR 8,000.

iv. Accrued salaries at year-end are PKR 15,000.

v. Depreciation on office equipment is recorded using the straight-line method over 10 years (no residual value).

Required:

(a)
Prepare an unadjusted Trial Balance as of December 31, 2024.
(10)
(b)
Incorporate the adjustments and prepare the adjusted Trial Balance.
(10)

Q. 5

Ali, Bilal, and Sara formed a partnership business on January 1, 2024, under the name ABS Traders. The partners agreed to share profits and losses in the ratio 3:2:1 respectively. The following balances were provided at the end of the first year, December 31, 2024:

(20)

Particulars	Amount (PKR)
Cash	80,000
Accounts Receivable	150,000
Inventory	200,000
Furniture & Fixtures	100,000
Accounts Payable	90,000
Loan Payable	110,000
Ali's Capital (Jan 1, 2024)	200,000
Bilal's Capital (Jan 1, 2024)	150,000
Sara's Capital (Jan 1, 2024)	100,000
Ali's Drawings	30,000
Bilal's Drawings	20,000
Sara's Drawings	10,000
Net Income for the Year	120,000

Required:

(i)
Using the data provided, prepare an unadjusted trial balance as of December 31, 2024.
(5)
(ii)
Distribute the Net Income of PKR 120,000 among the partners (Ali, Bilal, and Sara) based on their agreed profit-sharing ratio of 3:2:1.
(5)
(iii)
Calculate the adjusted capital balances for each partner after considering their profit ratio.
(5)
(iv)
Prepare the Capital Accounts for Ali, Bilal, and Sara in a T-account format or in a statement form.
(5)

SECTION – II

Q. 6

ABC Manufacturing produces custom furniture. Below are the details for the month of November 2024:

(20)

Accounting Activities/Items	Amounts in PKR
Beginning Balances:
Raw Materials Inventory (Nov 1, 2024):	120,000
Work-in-Process (WIP) Inventory (Nov 1, 2024):	80,000
Finished Goods Inventory (Nov 1, 2024):	150,000
Transactions During November:
Raw materials purchased during November (paid in cash):	350,000
Direct materials issued to production:	280,000
Indirect materials issued:	50,000
Total direct labor incurred: (80% paid in cash; 20% accrued).	200,000
Total indirect labor incurred (paid in cash):	60,000
Total factory overhead incurred including:o Depreciation on machinery: PKR 70,000o Utilities: PKR 50,000o Other factory expenses: PKR 130,000	250,000
Manufacturing overhead applied to production at 120% of direct labor cost.
Ending Balances
Raw Materials Inventory (Nov 30, 2024):	140,000
Work-in-Process (WIP) Inventory (Nov 30, 2024):	100,000
Finished Goods Inventory (Nov 30, 2024):	180,000
SalesTotal finished goods transferred to Cost of Goods Sold:	650,000
Total sales for November (80% received in cash, 20% on account).	800,000

Required:

(a)
Prepare the Raw Materials Inventory T-account, including purchases, usage, and ending balance.
(7)
(b)
Calculate the total manufacturing costs added to production during November.
(7)
(c)
Prepare the Work-in-Process Inventory T-account, including beginning balance, costs added, and ending balance.
(6)

Q. 7

XYZ Furniture Ltd. manufactures wooden chairs. The following standard costs were established for producing one chair:

(20)

Cost Component	Standard Rate	Standard Quantity per Chair
Direct Materials	PKR 500 per unit	2 units
Direct Labor	PKR 300 per hour	4 hours
Factory Overhead	PKR 100 per direct labor hour	Applied at a rate of 50% of direct labor cost

During November 2024, the company produced 1,000 chairs, and the following actual data was recorded:

i. Materials:a. 2,100 units of direct materials were purchased and used.b. Total cost of materials: PKR 1,120,000.

ii. Labor:a. 3,800 hours of direct labor were worked.b. Total labor cost: PKR 1,160,000.

iii. Factory Overhead:a. Actual overhead incurred: PKR 200,000.b. Overhead applied at the standard rate based on actual direct labor hours.

Required:

Calculate and interpret the results of:

(i)
the Material Price Variance and the Material Quantity Variance.
(7)
(ii)
the Labor Rate Variance and the Labor Efficiency Variance.
(7)
(iii)
the Overhead Spending Variance and the Overhead Efficiency Variance.
(6)

Q. 8

ABC Café operates a specialty coffee shop that sells handcrafted beverages and desserts. The café incurs a Total Fixed Costs: PKR 1,000,000 including monthly rent of PKR 500,000, salaries of PKR 300,000, Utilities and Miscellaneous Expenses of PKR 200,000. The owner wants to determine its break-even point to plan for future growth. The following data is provided:

(20)

Product Line Information
1. Coffee Drinks (Regular)	2. Desserts (Premium)
i. Selling Price: PKR 400 per cup	i. Selling Price: PKR 600 per item
ii. Variable Cost: PKR 180 per cup	ii. Variable Cost: PKR 280 per item
iii. Current Sales Mix: 70%	iii. Current Sales Mix: 30%

Required:

(i)
Calculate the contribution margin for both coffee drinks and desserts.
(7)
(ii)
Compute the weighted average contribution margin (WACM) based on the sales mix.
(7)
(iii)
Determine the break-even sales in units for the café.
(6)

Part-II is to be attempted on the separate Answer Book.
Attempt ONLY FOUR questions from PART-II by selecting TWO questions from EACH SECTION. ALL questions carry EQUAL marks.
All the parts (if any) of each Question must be attempted at one place instead of at different places.
Write Q. No. in the Answer Book in accordance with Q. No. in the Q.Paper.
No Page/Space be left blank between the answers. All the blank pages of Answer Book must be crossed.
Extra attempt of any question or any part of the question will not be considered.
Use of Calculator is allowed.