ALLAMA IQBAL OPEN UNIVERSITY ISLAMABAD

(Department of Business Administration)

WARNING
1. PLAGIARISM OR HIRING OF GHOST WRITER(S) FOR SOLVING
THE ASSIGNMENT(S) WILL DEBAR THE STUDENT FROM AWARD
OF DEGREE/CERTIFICATE, IF FOUND AT ANY STAGE.
2. SUBMITTING ASSIGNMENTS BORROWED OR STOLEN FROM
OTHER(S) AS ONE’S OWN WILL BE PENALIZED AS DEFINED IN
“AIOU PLAGIARISM POLICY”.

ASSIGNMENT No. 1
Course: Advance Accounting (8404) Semester: Autumn, 2019
Level: BBA (4 years) Total Marks: 100
Pass Marks: 50

Note: All questions carry equal marks.

Q. 1 Define and explain the following terms with examples: (20)
a) Going Concern
b) Consistency
c) Matching Principle
d) Disclosures

Q. 2 Ken Hensley Enterprises, Inc. is a small recording studio in st. Louis. Rock bands
use the studio to mix the mix-quality demo recordings distributed to talent agents.
New clients are required to pay in advance for studio services. Bands with
established credit are billed for studio services at the end of each month. Adjusting
entries are performed on am monthly basis. An unadjusted trial balance dated
December 31, 2005, follows (Bear in mind that adjusting entries already have been
made for the first eleven months of 2005, but not for December.

KEN HENSLEY ENTERPRISES, INC

Unadjusted Trail Balance
December 31, 2005
Cash $43170
Account receivable 81,400
Studio supplies 7,600
Unexpired insurance 500
Prepaid studio rent 4,000
Recording equipment 90,000
Accumulated depreciation: recording equipment %52,500
Notes payable 16,000
Interest payable 840

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 Income Tax Payable 3,200
Unearned studio revenue 9,600
Capital stock 80,000
Retained earning 38,000
Studio revenue earned 107,000
Salaries expenses 18,000
Supplies expenses 1,200
Insurance expense 2,680
Depreciation expenses: recording equipment 16,500
Studio rent expense 21,000
Interest expense 840
Utilities expense 2,350
Utilities expense 17,900
Income taxes expense $307,140 $307,140

Other Data:
1. Records show that $3,400 in studio revenue had not yet been billed or
recorded as of December 31.
2. Studio supplies on hand at December 31 amount to $3,900.
3. On August 1, 2005 the studio purchased a six month insurance policy for
&15,00. The entire premium as initially debited to unexpired insurance.
4. The studio is located in a rented building. On November 1, 2005 the studio
paid $6,000 rent in advance for November, December and January. The
entire amount was debited to prepaid studio rent.
5. The useful life of the studios recording equipment is estimated to be a five
years (or 60 months) The straight-line method of depreciation is used.
6. On May 1, 2005, the studio borrowed $16,000 by signing a 12-month,
9 percent note payable to first federal bank of St.Louis. The entire $16,000
plus 12 months interest is due in full on April 30, 2006.
7. Records show that $3,600 of cash receipts originally recorded as unearned
studio revenue had been earned as of December 31.
8. Salaries earned by recording to technicians that remain unpaid at December
31 amount to $540.
9. The studios accountant estimated that income taxes expense for the entire
year ended December 31, 2005, is $19,600, (note that $17,900 of this amount
has already been recorded.

Prepare Balance Sheet as on December 31, 20015 and Profit & Loss Statement of
Ken Hensley Enterprises for the year ended December 31, 2005. (20)

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Q. 3 On May 31, following information was available with Bashir & Co. concerning its
bank account:
a) The cash book balance of the account on May 31 was Rs. 95,000.
b) Cash receipts of Rs. 12,000 were deposited on June 01.
c) Also included with the May bank statement was a debit memorandum from the
bank for Rs. 440 representing service charges.
d) Interest on deposits amounting to Rs. 670 was credited by the bank. However, no
entry was made in the cash book.
e) On May 31, outstanding cheques were amounting to Rs. 22,000/-.
f) Included in the May bank statement was a Rs. 2,700 cheque drawn on Zahid &
Co., a customer of Bashir & Co. The cheque was marked “NSF”. It has been
included in the deposit of May 23.

Prepare the bank reconciliation statement as on May 31. Also, prepare adjusting entries
based on the available information. (20)

Q. 4 Sky probe sells state of the art telescope to individual and organizations
interested in studying the solar system. At December 31 last year, the company’s
inventory amounted $250,000. During the first week of January this year, the
company made only one purchase and one sale. The transactions were as follows:
Jan 2: sold one telescope costing $90,000 to central state university for cash
$117,000.
Jan 5: Purchased merchandise on amount from lunar Optics, $50,000. Terms, net
30 days.
a) Prepare a journal report to record these transactions assuming that sky Probe
uses the perpetual inventory systems. Use separate entries to record the sales
revenue and the cost of goods sold for the sale on January 2.
b) Compute the balance of the inventory account on January 7.
c) Prepare journal entries to record the two transactions, assuming that Sky
probe uses the periodic inventory system.
d) Compute the cost of goods sold for the first week of January assuming use of
a periodic inventory system. Use your answer to part b as the ending
inventory.
e) Which inventory system do you believe that a company such as a Sky probe
would probably use? Explain your reasoning. (20)

Q. 5 Differentiate between a share and a bond. How is accounting for share issue and a
bond issue different? (20)

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 ASSIGNMENT No. 2
Total Marks: 100
Pass Marks: 50

This assignment is a research-oriented activity. You are required to select one of the
following topics according to the last digit of your roll number. For example, if your roll
number is D-3427185 then you will select topic number 5 (the last digit). Visit any
business/commercial organization and write a paper of about 1000 words on the topic
allotted to you. Prepare two copies of this report; submit one copy to your tutor for
evaluation and use other for presentation in the workshops, which will be held at the end
of semester prior to your final examination.

0. Uses of Statement of Financial Position

1. Transaction Processing System
2. Perpetual Inventory System
3. Periodic Inventory System
4. Errors and Timing Differences
5. Treatment of Goodwill
6. Types of stock
7. Issuance of Bonds
8. Finance Lease
9. Operating Lease

The report should follow the following format:

1. Title page
2. Acknowledgements
3. An abstract (one page summary of the paper)
4. Table of contents
5. Introduction to the issue (brief history & significance of issue assigned)
6. Practical study of the organization (with respect to the issue)
7. Data collection methods
8. SWOT analysis (strengths, weaknesses, opportunities & threats) relevant to the
issue assigned
9. Conclusion (one page brief covering important aspects of your report)
10. Recommendations (specific recommendations relevant to issue assigned)
11. References (as per APA format)
12. Annexes (if any)

GUIDELINES FOR ASSIGNMENT # 2:

 1.5 line spacing
 Use headers and subheads throughout all sections
 Organization of ideas
 Writing skills (spelling, grammar, punctuation)
 Professionalism (readability and general appearance)

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 Do more than repeat the text
 Express a point of view and defend it.
 WORKSHOPS:
The workshop presentations provide you opportunity to express your communication
skills, knowledge & understanding of concepts learned during practical study assigned in
assignment # 2.

You should use transparencies and any other material for effective presentation. The
transparencies are not the presentation, but only a tool; the presentation is the
combination of the transparencies and your speech. Workshop presentation
transparencies should only be in typed format.
The transparencies should follow the following format:
1) Title page
2) An abstract (one page summary of the paper)
3) Introduction to the issue (brief history & significance of issue assigned)
4) Practical study of the organization (with respect to the issue)
5) Data collection methods
6) SWOT analysis (strengths, weaknesses, opportunities & threats) relevant to the
issue assigned
7) Conclusion (one page brief covering important aspects of your report)
8) Recommendations (specific recommendations relevant to issue assigned)

GUIDELINES FOR WORKSHOP PRESENTATION:

 Make eye contact and react to the audience. Don't read from the transparencies or
from report, and don't look too much at the transparencies (occasional glances are
acceptable to help in recalling the topic to cover).
 A 15-minute presentation can be practiced several times in advance, so do that until
you are confident enough. Some people also use a mirror when rehearsing as a
substitute for an audience.

WEIGHTAGE OF THEORY & PRACTICAL ASPECTS IN ASSIGNMENT # 2 &

WORKSHOP PRESENTATIONS:
Assignment # 2 & workshop presentations are evaluated on the basis of theory & its
applicability. The weightage of each aspect would be:
Theory: 60%
Applicability (practical study of the organization): 40%

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 ADVANCED ACCOUNTING
COURSE OUTLINE (8404)
UNIT 1 INTRODUCTION TO ACCOUNTING
1.1 Accounting Theory & Conceptual Framework
1.2 Conceptual Understanding regarding IAS, IFRS, GAAP
1.3 Role of IASC, IASB
1.4 Classification of IFRS Financial Statements
1.5 Constraints on Relevant, Reliable Information
1.6 Accounting Conventions, Concepts and Principles (IAS 1, and 16)

UNIT 2 ACCOUNTING INFORMATION SYSTEM

2.1 Accounting Information Systems and Business Organizations
2.1.1 Information and Decisions
2.1.2 Information Systems
2.2 Transaction Processing Cycle
2.2.1 Internal Control Process
2.2.2 Elements of Internal Control Process
2.2.3 Segregation of Accounting Functions
2.3 Accounting and Information Technology
2.4 The Accountant and Systems Development
2.5 Using AIS to add Value to Business

UNIT 3ACCOUNTING FOR TRADING ORGANIZATIONS

3.1 Difference between manufacturing and merchandising organizations
3.2 Merchandizing activities
3.3 Accounting for purchases
3.4 Accounting for sales and inventory (IAS 2)
3.4.1 Physical Inventory
3.4.2 Perpetual Inventory
3.5 Returns, Allowances, and Discounts
3.6 Merchandise Reporting
3.7 Work sheet for merchandising concern
3.8 Adjusting entries
3.9 Closing entries

UNIT 4 WORKING CAPITAL ACCOUNTING

4.1 Cash control
4.1.1 Cash management
4.1.2 Internal control over cash
4.1.3 Cash receipts and disbursements
4.1.4 Reconciling the bank statements
4.1.5 The impress petty cash system
4.1.6 The statement of cash flows
4.2 Accounts receivable

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 4.2.1 Uncollectible accounts
4.2.1 Write-off methods
4.2.2 Estimation of credit losses
4.2.3 Management of accounts receivable
4.2.4 Techniques to minimize credit losses
4.2.5 Evaluating the quality of accounts receivable
4.2.6 Notes receivable and interest charges
4.2.7 Credit card sales
4.2.8 Credit risk
4.3 Short term investments
4.3.1 Purchases of marketable securities
4.3.2 Recognition of investment revenue
4.3.3 Adjusting marketable securities to market value
4.3.4 Reporting investment transaction (IAS 21,28,32)

UNIT 5 AMALGAMATION, ABSORPTION AND RECONSTRUCTION

5.1 Distinguishing Amalgamation, absorption and reconstruction
5.2 Definition of holding, subsidiary and associated undertaking,
consolidated financial statements (IAS 27)
5.3 Determination of Purchase consideration
5.3.1 Lump sum method
5.3.2 Net worth method
5.3.3 Net payment method
5.3.4 On the basis of value of shares
5.4 Accounting for amalgamation
5.5 Accounting for absorption
5.5.1 Intercompany Owings
5.5.2 Intercompany stocks
5.5.3 Intercompany holdings
5.6 Accounting for reconstruction
5.7 Reconstruction of share capital
5.8 Capital reduction and its legal provisions
5.9 Reorganization

UNIT 6 ACCOUNTS FOR JOINT STOCK COMPANIES

6.1 Corporation, advantages and disadvantages
6.2 Stockholders’ equity and dividends.
6.3 Rights of common stockholders and preferred stockholders
6.4 Issuance, face value, book value and market value of stocks
6.5 Donated capital
6.6 Continued and discontinued operations
6.7 Changes in accounting policies
6.8 Earnings per share (EPS)
6.9 Stock split and repurchase
6.10 Statement of stockholders equity

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 6.11 Statement of retained earnings
6.12 Preparation of company accounts and consolidated financial statements
as per International 6.13 Accounting Standard (IAS-27) and requirements of
Companies Ordinance 1984
UNIT 7ACCOUNTS FOR LIABILITIES
7.1. Bonds
7.2. Bond Interest
7.3. Accounting for Bonds Payable
7.3.1 Issue at Par
7.3.2 Discount
7.3.3 Premium
7.4. Year-end Adjustments for Bond Interest Expense
7.5. Bond Sinking Fund
7.6. Investment in Corporate Securities
7.7. Short-term and Long-term Investment
UNIT 8 ACCOUNTS FOR PROPERTY, PLANT AND EQUIPMENTS
8.1. Property, Plant and Equipment
8.1.1. Cost of Property, Plant and Equipment
8.1.2. Subsequent Expenditure
8.2. Depreciation
8.2.1. Depreciation Methods
8.2.2. Acquisition of Plant Assets
8.2.3. Disposal
8.2.4. Trade-in
8.2.5. Improvements
8.2.6. Intangible assets and amortization
8.2.7. Wasting assets and depletion
UNIT 9 ACCOUNTING FOR LEASES
9.1 Definition of leases and importance
9.2 Operating and Financial leases
9.3 Accounting for operating and financial leases
9.4 Reporting requirements for financial leases (IAS-17)

Recommended Books:
1. Financial and Managerial Accounting by Williams, Haka, Bettner,
Carcello
2. Advanced Accounting by M.A Ghani
3. Advanced Accountancy by R. L. Gupta, Publisher, Sultan Chand & Sons
23,
Daryaganj, New Delhi.

Other Reading Material

1. Companies Ordinance 1984
2. International Financial Reporting Standards /IAS