General:

Despite the paper being relatively straight forward, the performance was not up to the mark. It seemed that where the student had solved a similar problem before they were able to hack this, but could not apply logics.

Question-wise comments are given below:

Q.1

In explaining trial balance, students lost marks for poor expressions. Many did not mention that an agreed trial balance is a prima facie evidence of correct posting and arithmetical accuracy.

Q.2

A very scoring question – 13 marks for one word answers. Very few got all correct. Many students were confused between the matching / accrual concept and prudence concept. Also in some instances for example against answer (a), students did write down accrual but gave the incorrect date leading to show that they did not understand the accrual concept.

Q.3

Requirement of the question was a statement showing the adjustments to arrive at the correct profit for the year. A few tried to make a profit and loss account which was not required.

The common  mistakes were:

(a)

Deleting provision for bad debts of Rs.3,600 from the profit.

(b)

Loan interest for twelve months, instead of six months was adjusted.

(c)

Installation charges were deleted instead of being added.

(d)

Drawings were adjusted from the profit.

(e)

In a few cases, the entire amount of depreciation Rs.119,760 was adjusted.

The presentation of the balance sheet was very poor. Candidates should realize that presentation of the paper is equally important.

(a)

Debtors were wrong in most cases.

(b)

The installation charges were not capitalized.

(c)

Petrol expenses were not adjusted from the debtors account. Only if a little importance is given to the double entry these simple mistakes will not occur.

(d)

Bank overdraft was placed on the asset side as a negative figure.

Q.4

A very poor performance was witnessed in this question. Average score was 5 out of 17 marks with only 20% obtaining pass marks.

The common mistakes were:

(a)

The goodwill being brought in as cash was totally ignored.

(b)

Furniture was reduced by 40% not to 40%. It is advised to read the question carefully.

(c)

Bank overdraft was debited to Ghalib’s account, instead of being credited.

(d)

Revaluation loss was distributed among the three partners instead of old partners.

Q.5

A well-attempted question with a majority securing 70 to 80 percent marks. The common mistakes were:

(a)

Opening balance of cash and bank taken to the income and expenditure account.

(b)

Placing of overdraft on the wrong side of the account.

(c)

Accruals were taken to the receipt and payment account.

(d)

Donations and funds treated as income.

(e)

Prepayments adjusted in the receipt and payment account.

(f)

Placing the Income and Expenditure on the wrong sides of the account i.e. income shown on the debit side and expenditure on the credit side.

Q.6

An easy question but badly performed by the students. Mostly those who made the T accounts were able to get the right sale proceed amount but those who tried to calculate it arithmetically got it wrong. Also most students were not aware of the impact of error on the future years of treating a capital expenditure as revenue expense.

Q.7

Most of the students did not attempt this question and those who attempted scored few marks. The common mistakes were:

(a)

Debtors opening balance was posted as opening balance of provision for bad debts account.

(b)

Closing balance was treated as expense for the year.

(c)

Bad debts recovered were credited to provision account.

Very few candidates could work out the actual closing balance of provision account i.e. by deducting the bad debts and discount allowed from the debtors closing balance to arrive at the net figure of debtors on which the 5% provision was to be calculated, and deducting this provision from the net debtors to arrive at the figure on which the 2% provision for discount was to be calculated.

Q.8

This was an easy question and many students obtained full marks. The most common mistake was the lack of understanding of accounting treatment of the shares taken above the cost. Candidates either ignored Rs.100,000 or credited both the amounts i.e Rs.500,000 and Rs.600,000 in the joint venture account. The presentation was extremely poor.