CSS Past Paper of Accounting & Auditing 2015

FEDERAL PUBLIC SERVICE COMMISSION COMPETITIVE EXAMINATION FOR RECRUITMENT TO POSTS IN BS-17 UNDER THE FEDERAL GOVERNMENT, 2015
Accounting & Auditing - I

TIME ALLOWED: THREE HOURS
PART - I (MCQS): MAXIMUM 30 MINUTES
PART - I (MCQS): MAXIMUM MARKS = 20
PART - II: MAXIMUM MARKS = 80

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

Q.3: Listed below are nine technical terms: (20)

Trend percentage
Leverage
Inventory turnover
Vertical analysis
Yield
Operating cycle
Return on assets
Quick ratio
Book value per share

Each of the following statements may (or may not) describe one of
these technical terms. For each statement, indicate the accounting term described, or answer “None” if the statement does not correctly
describe any of the term.

a. Buying assets with money raised by borrowing or by issuing preferred stock.
b. The proportion of total assets financed by stockholders, as distinguished from creditors.
c. Net asset represented by each share of stock.
d. Changes in financial statement items from a base year to following years expressed as a percentage of the base year amount and designed to show the extent and direction of change.
e. Dividends per share divided by market price per share.
f. Average time period between the purchase of merchandise and the conversion of this merchandise back into cash.
g. Comparison of a particular financial statement item to a total including that item.
h. Net sales divided by average inventory.
i. Comparison of highly liquid current assets (cash, marketable, securities and receivable) with current liabilities.

Q.4: (a) Discuss the limitations of ratio analysis and why they arise. Do you think that they are so serious as to undermine the validity of this approach to the analysis of financial statements? (10)
(b) Financial state ments are prepared to seek the financial position of an
organization. How much the above statement is helpful to overcome the financial issues facing by an organization? Justify the above statement with solid reasons. (10)

SECTION - B