CSS Accountancy and Auditing Paper II Past Paper 2025

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

Years

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

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

Q. 2
What are the different types of financial audit? Discuss the situations where each type of audit is applicable.
(20)
Q. 3
What are the audit working papers? Why should these be carefully preserved by the auditor?
(20)
Q. 4
Differentiate between the following audit terms: (5 each)
(20)
- (a)
  Internal audit and external audit
- (b)
  Vouching and Verification
- (c)
  Qualified audit report and Unqualified audit report
- (d)
  Disclaimer of opinion and Adverse opinion

Q. 5

Mr. Usman Kabir is a registered manufacturer. From the following data, compute the sales tax payable for august 2021

(20)

1.	Taxable supplies at 15% discount (discount is not the normal practice)	2,300,000
2.	Taxable supplies to associated person (open market price 350,000)	300,000
3.	Supplies to consumers (inclusive of sales tax)	200,000
4.	Supplies to employees	100,000
5.	Taxable purchases from registered person (original invoices are available	1,400,000
6.	Input tax not claimed (outstanding) in relevant period (claimed in fifth succeeding period)	15,000
7.	Fixed asset purchased during August 2021 from non-registered person	1,500,000
8.	Furniture, furnishing and office equipments purchased	200,000
9.	Electrical appliance purchased from non-business (personal) use	100,000
10.	Purchase of diaries for valued customers (at the start of new financial year)	60,000
11.	Withholding tax deducted as withholding agent	50,000
12.	Withholding tax deducted by withholding agent	70,000
13.	Mobile phone set purchased by marketing staff	150,000
14.	Goods purchased in auction (treasury challan is not available)	400,000
15.	Unconsumed stock at the time of filing return (purchased 30 days before filing return)	250,000
16.	Imported tax goods (bill of entry is not available)	500,000
17.	Sales tax paid on electricity bill	30,000

Q. 6
What are the inadmissible deductions under the head of “Income from Other Resources”? Explain in detail.
(20)

Q. 7
Why are financial markets important to the health of the economy? Explain in the context of Pakistan.
(20)
Q. 8
(20)
- (a)
  ABC is evaluating a capital investment project. The after-tax cash flows for the project are listed as follows:
  (10)
  Year YEAR EXPECTED CASH FLOW
  0 - 400,000
  1 50,000
  2 50,000
  3 150,000
  4 350,000
  The risk-free rate is 8 percent, the firm’s weighted average cost of capital is 10 percent, and the management-determined risk-adjusted discount rate appropriate to this project is 15 percent. Should the project be accepted? Explain, why or why not?
- (b)
  Explain what is meant by the time value of money. Why is a bird in the hand worth two (or so) in the bush? Which capital budgeting approach ignores this concept? Is it optimal?
  (10)

Part-II is to be attempted on the separate Answer Book.
Attempt ONLY FOUR questions from PART-II by selecting at least ONE question 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.