CSS Accountancy and Auditing Paper II Past Paper 2016

CSS Accountancy and Auditing Paper II 2016 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 ATLEAST ONE question from EACH SECTION A, B, & C. ALL questions carry EQUAL marks.

Questions

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

SECTION-A (AUDITING)

Q. 2
As an Auditor of an entity, during your interim visit you observed that Internal Control were not in use throughout the period under Audit. What are the Control Objectives you would like to consider for your purpose?
(20)
Q. 3
What is materiality? Discuss materiality in planning and performing an Audit in relations to ISA-320.
(20)
Q. 4
Financial Statements of a company are prepared in accordance with International Financial Reporting Standards. Being an Auditor what consideration would be taken while planning & performing Audit based on this condition?
(20)

SECTION-B (BUSINESS TAXATION)

Q. 5

(a)
What is Income from Property? What are possible deduction allowed under Income from Property, explain in detail?
(10)

(b)

You are Manager of a Tax Consultant Firm. One of your internee is assigned to prepare an assessment report of your client. Following is the information provided by client

(10)

Basis Salary	Rs. 40,000 p.m
(30,000-5,000-60,000),
Free accommodation facility provided
Cost of motor Vehicle provided for personal use only	Rs. 700,000
Concessional loan @8% p.a Rs. 3000,000 whereas the benchmark rate was 10%.
Medical Allowance	Rs. 50,000
Flying allowance	Rs. 200,000
Agricultural Income	Rs. 90,000
Special allowance	Rs. 5,000
Dearness Allowance	Rs. 12,000

Required: Calculate the Taxable Income & Tax Payable based on above data.

Q. 6

(a)
What is Sales Tax? What procedure a person should follow to get himself registered under Sales Tax Act, 1990? What are conditions under Sales Tax Act, 1990, where registration becomes compulsory?
(10)

(b)

Shahid Dairy Products Ltd is registered manufacturer of Ice-Cream. Data regarding its business for the month of May-2015 is given below. .

(10)

1.	Sales to registered persons	Rs. 300,000
2.	Sales to consumer (Including tax)	Rs. 150,000
3.	Sales to Non registered person	Rs. 100,000
4.	Sales to school children during factory visit	Rs. 20,000
5.	Sales of Dairy products to retailers	Rs. 200,000
6.	Purchase of Milk & vegetables without brand name	Rs. 70,000
7.	Purchase of Milk & vegetables from registered person	Rs. 50,000
8.	Purchase of cream from non-registered person	Rs. 80,000
9.	Ice Cream flavour imported	Rs. 30,000
10.	Purchase of syrup from wholesaler (used in ice cream)	Rs. 18,000

Required: Compute the sales Tax liability of Shahid Dairy Products Ltd for month of May-2015 (Note: Purchase of Milk & Ice cream at Sr. No 6 & 7 is Zero rated)

SECTION-C (BUSINESS STUDES & FINANCE)

Q. 7
- (a)
  Explain the Contemporary challenges posed by business now a days in Pakistan.
  (10)
- (b)
  You have just the following information about ABC Ltd, which pays tax @ 35% p.a
  (10)
  - (i)
    7000 Bonds with 8% coupon, face value of $1000 & maturity period of 15 years, payments to be made semi-annually, currently sold at 90% of par value.
  - (ii)
    300,000 common shares outstanding, currently selling at $ 60 per share having beta of 1.10.
  - (iii)
    20,000 outstanding shares of $6 preferred shares, selling at $95 per share.
  Required: Work out overall cost of capital assuming 7% market risk premium and 5% risk free rate of return.
Q. 8
- (a)
  Define & explain Business Cycle and discuss its implications in detail.
  (10)
- (b)
  Mr. Tom has $ 50,000/- that he can deposit in any of the three saving accounts for a period of three years. Bank A compounds interest on annual basis, Bank B compounds interest on semi-annually basis and bank C compounds interest on quarterly basis. All these banks have a stated rate of 5% per annum.
  Required:
  - (1)
    Compute Effective Annual Rate (EAR), Mr. Tom can earn from each bank.
    (4)
  - (2)
    What amount would Mr. Tom have at the end of 3rd year, leaving all interest paid on deposit (no withdrawals), from each bank?
    (6)

Part-II is to be attempted on the separate Answer Book.
Attempt ONLY FOUR questions from PART-II by selecting ATLEAST ONE question from EACH SECTION A, B, & C. ALL questions carry EQUAL marks.
All the parts (if any) of each Question must be attempted at one place instead of at different places.
Candidate must 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 attempted question will not be considered.
Use of calculator is allowed.