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awaisaftab
Partner

Pakistan
1109 Posts

Posted - Jan 31 2009 :  12:56:38 PM  Show Profile  Send awaisaftab a Yahoo! Message
A.O.A

Dear Members,

I have a wounderful idea the idea is that let us share on this website the MCQ's related to accounting and we being professional accountant encounters them very frequently. Ussually all big business organiztion as well as public organization conduct tests for hiring accounting professional.

Let us start to share the MCQ's of our choice


Please give seggestion in this regard

Awais Aftab
ACMA (Finalist)

awaisaftab
Partner

Pakistan
1109 Posts

Posted - Feb 02 2009 :  1:30:54 PM  Show Profile  Send awaisaftab a Yahoo! Message
Please Reply

The profit and loss a/c or income stmt summarizes:
a.Profitability
b.Sales
c.Purchase
d.None of above

Pleaz reply wiht aurgomentst

Edited by - awaisaftab on Feb 02 2009 1:31:59 PM
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danishayub_76
Semi Senior

Pakistan
186 Posts

Posted - Feb 03 2009 :  1:58:32 PM  Show Profile
It summarizes the profitability of the organizaiton/entity.
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danishayub_76
Semi Senior

Pakistan
186 Posts

Posted - Feb 03 2009 :  2:01:46 PM  Show Profile
What is the difference between Management & Administration?
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awaisaftab
Partner

Pakistan
1109 Posts

Posted - Feb 06 2009 :  2:31:32 PM  Show Profile  Send awaisaftab a Yahoo! Message
which of the following manufacturer will not adopt process costing very logically.

1. Frozen Jooses
2.Fertilizers
3.Cement
4.Biscuits
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danishayub_76
Semi Senior

Pakistan
186 Posts

Posted - Feb 06 2009 :  2:35:39 PM  Show Profile
Manufacturer of Frozen Juices. (i think) if i am wrong, please let me know.
Best wishes
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awaisaftab
Partner

Pakistan
1109 Posts

Posted - Feb 06 2009 :  3:27:50 PM  Show Profile  Send awaisaftab a Yahoo! Message
yar some information is missing and I m forgetting it. I will edit it on tomorrow
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Astute Accountant
Manager

Pakistan
660 Posts

Posted - Feb 10 2009 :  3:51:06 PM  Show Profile  Visit Astute Accountant's Homepage
quote:
Originally posted by danishayub_76

What is the difference between Management & Administration?



* Administration is a wider term while management is its subset.

* Administration is the paper work. Management is how you deal with the people or people management.

* Administration manages the outside contacts and the facility as a whole. Management is closer to the employees.

* Administration is over the management and more over the money of the organization and licensing of an organization.

* Management manages employees. As a manger, you can also be administrator but as an administrator, you may not be a manager.

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awaisaftab
Partner

Pakistan
1109 Posts

Posted - Feb 11 2009 :  09:33:50 AM  Show Profile  Send awaisaftab a Yahoo! Message
Who shall receeive the share in capital profits of company:
a.Preference Shareholders
b.Creditors
c.Equity Shareholders
d.Directors
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awaisaftab
Partner

Pakistan
1109 Posts

Posted - Feb 11 2009 :  09:38:09 AM  Show Profile  Send awaisaftab a Yahoo! Message
The contingent liability of a holding company in respect of one of its subsidiary and vice versa shall be shown in the following manner in Consolidated Balance Sheet:
a.As foot note

b.In balace Sheet

c. contingent liability shall not been shown in Consolidated Balance Sheet

d.None of the above
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danishayub_76
Semi Senior

Pakistan
186 Posts

Posted - Feb 12 2009 :  08:48:26 AM  Show Profile
A. As footnote.
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danishayub_76
Semi Senior

Pakistan
186 Posts

Posted - Feb 12 2009 :  09:00:58 AM  Show Profile
quote:
Originally posted by awaisaftab

Who shall receeive the share in capital profits of company:
a.Preference Shareholders
b.Creditors
c.Equity Shareholders
d.Directors



Capital Profits of a company are not available for distribution as dividend etc. to shareholders either Ordinary or Preferred Shareholders. I think the capital profits are not available to any of the above, This profit is available for company itself. For example: Share premium is a capital profit, it can be utilized for wirring of preliminary expenses, commission/discounts on issuance of shares, and bonus shares.
I need your further guidance in this regard
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awaisaftab
Partner

Pakistan
1109 Posts

Posted - Feb 16 2009 :  11:48:01 AM  Show Profile  Send awaisaftab a Yahoo! Message
Dear Danish

You explained the capital reserve in god way but you did not mention the capital profit (Capital Reserves) arising from the purchase of subsidiary at lesser amount.

For instantce Comapany A purchased 60% shares of Company B (60,000 thousands shares out of 100,000 shares @ 10 each ) at a cost of 500,000/- . The capital reserve or capital Profit of Comapany A will be

Paid Up value of Shares========== Rs 600.000
(60,000x10)
Amount Paid by Company A =======Rs 500,000
Capital Reserve =============== Rs 100,000/-



This capital profit shall only be available to the equity shareholders for issuing them right share or for any other purpose,alowed by Law.


Regards

Awais Aftab
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awaisaftab
Partner

Pakistan
1109 Posts

Posted - Feb 16 2009 :  11:53:32 AM  Show Profile  Send awaisaftab a Yahoo! Message
Which of the following is an example Un-Earned Income:

1.Cash Paid to Supplier
2.Advance received from bank
3.Advance received from a customer for a purchase order placed by him
4.Cash discount received from customer.
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danishayub_76
Semi Senior

Pakistan
186 Posts

Posted - Feb 16 2009 :  1:34:03 PM  Show Profile
ii. Advance received from Customer.

Thanks Awais Bhai for explaing capital reserves.

Best wishes
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awaisaftab
Partner

Pakistan
1109 Posts

Posted - Feb 17 2009 :  08:21:55 AM  Show Profile  Send awaisaftab a Yahoo! Message
Dear Danish

Your answer is perfectly correct.

Regards,


Awais Aftab
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danishayub_76
Semi Senior

Pakistan
186 Posts

Posted - Feb 18 2009 :  3:12:05 PM  Show Profile
Difference Between Provision & Reserve?
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faisal_ali
Unregistered Trainee

Pakistan
17 Posts

Posted - Feb 18 2009 :  10:21:29 PM  Show Profile
I just wanna reproduce few things.....
Capital Reserves are all those reservers which company generat from out side the trading activities...e.g. Issuance of Shares more than its nominal(par) value, up revaluation of fixed assest ......where as REVENUE rserve are generated or set aside from trading profit....like general reserves, assets replacement reserves, and retained profit........


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awaisaftab
Partner

Pakistan
1109 Posts

Posted - Feb 19 2009 :  09:16:57 AM  Show Profile  Send awaisaftab a Yahoo! Message
Dear Faisal,

You have mixed the capital reserve,revenue reserve and provisions with each other.


Regards,

Awais Aftab
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danishayub_76
Semi Senior

Pakistan
186 Posts

Posted - Feb 19 2009 :  09:38:20 AM  Show Profile
Dear All.

My question is to differentiate provision and reserve. Or Both are same? Capital reserves and revenue reserves are afterall reserves and not provision.
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awaisaftab
Partner

Pakistan
1109 Posts

Posted - Feb 19 2009 :  1:24:59 PM  Show Profile  Send awaisaftab a Yahoo! Message
There is difference between provisions and reserves. Provisions are created for expected future expenses,loses or any other item chargeable to profit and loss account(Except Provision for tax)

Reserves are the part of owners or share holders equity. Reserves are created for for contigencies and un foreseen unfavourable circumstances (General Reserve & Contigencies Reserve. Some reserves are purely Capital nature for instance Share premium & capital reserve.


Capital Reserves:
Share Premum
Capital Reserve
(Capital Profits


Revenue Reserves:

Undistributed Profits or Credit balance of profit and loss account
General Reserves
Contigency Reserve



Funds:

Some people also mix the concept of funds with reserves.

There is a big difference between funds and reserves. The funds represent the amount of cash keeps in reserve for a certain
purpose(s) but reserve does not show the cash amount reserve is only show accrual rather than cash

Example:
Workers welfare Fund
Endowment Fund
(Ussualy created in Educational and charitable institutions
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danishayub_76
Semi Senior

Pakistan
186 Posts

Posted - Feb 19 2009 :  2:52:50 PM  Show Profile
Thanks Dear.
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awaisaftab
Partner

Pakistan
1109 Posts

Posted - Feb 25 2009 :  11:29:46 AM  Show Profile  Send awaisaftab a Yahoo! Message
Which Budget is prepared first

a.Sales Budget
b.Cost Budget
c.Manufacturing Budget
d.Production Budget
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maani
Partner

Pakistan
1159 Posts

Posted - Feb 25 2009 :  12:07:03 PM  Show Profile
a. sales budget
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awaisaftab
Partner

Pakistan
1109 Posts

Posted - Feb 25 2009 :  12:29:35 PM  Show Profile  Send awaisaftab a Yahoo! Message
quote:
Originally posted by maani

a. sales budget



It is amazing to hear your reply to one of my post. Thanks

Your answer is correct.

Regards

Awais
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awaisaftab
Partner

Pakistan
1109 Posts

Posted - Feb 25 2009 :  12:36:36 PM  Show Profile  Send awaisaftab a Yahoo! Message
which types of accounts are most probably not maintained on the going concern basis:
a.Joint Venture
b.Contract Account
c.Consignment Accounts
d.All of above

Pleas reply with comments
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danishayub_76
Semi Senior

Pakistan
186 Posts

Posted - Feb 25 2009 :  1:21:47 PM  Show Profile
D. All of the above. (joint venture, consignments and contracts)
The reason behind it is that, the activity is definite and has clear ending/finishing date.
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maani
Partner

Pakistan
1159 Posts

Posted - Feb 25 2009 :  5:30:09 PM  Show Profile
quote:
Originally posted by awaisaftab

quote:
Originally posted by maani

a. sales budget



It is amazing to hear your reply to one of my post. Thanks

Your answer is correct.

Regards

Awais




Awais! there is nothing personal between me n you....this is a good knowledge sharing topic, and why I will not reply to your posts?
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kamranACA
Partner

Pakistan
2499 Posts

Posted - Feb 25 2009 :  6:48:48 PM  Show Profile
Maani/Awais,

I appreciate maani's reply to your post. However, if production capacity is taken as a limitation factor keeping in view abundance of demand which always exceeds the supply/production, then how would we come to make the sales budget first of all?

Please throw light.

I feel one should conclude the limiting factor and start preparing budget with that perspective.

Regards,


KAMRAN.

Edited by - kamranACA on Mar 02 2009 5:38:58 PM
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awaisaftab
Partner

Pakistan
1109 Posts

Posted - Feb 26 2009 :  11:22:21 AM  Show Profile  Send awaisaftab a Yahoo! Message
Kamran Bhayee

Usually the sales is taken as "Principle Budget Factor" rather than plant capacity. Here the management accountants assume that the Expected Sale cannot be so abnormal and the expected sales can be produced keeping fixed overhead almost constant.
Furthermore to streamline budgeting process all budgets should be prepared in sequential manner. First sales budget in prepared and then the required production determined after taking in consideration the inventories of work in progress and finished goods and after which production budget is prepared.


Regards,

Awais
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maani
Partner

Pakistan
1159 Posts

Posted - Feb 26 2009 :  12:39:05 PM  Show Profile
Hi kamran bhai / awais

sales volume cannot be taken as a principal budget factor if production capacity is limited for a given period, in this case the principal budget factor will be your limited production capacity....and here production budget must be prepared first and then all other budgets will be linked to this....

in case production capacity is limited, production can be budgeted in a way that excess product is produced in the periods of lower demand, this excess stock will used to cater the periods in which demand is expected to be higher....other alternatives may be used....

Edited by - maani on Feb 26 2009 1:11:59 PM
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awaisaftab
Partner

Pakistan
1109 Posts

Posted - Feb 26 2009 :  1:19:23 PM  Show Profile  Send awaisaftab a Yahoo! Message
Manni Bhayee

Infract the plant capacity can also be taken as Principle Budget Factor or limiting factor if the production cannot be increased beyond a certain limit in near future and the expected sale is much more than the production capacity. There are certain other factors which can be considered as limiting factor for instance availability of raw material etc. But in general speaking sales budget is prepared first and budgeted sales considered as principle budget factor as you have mentioned in replying my question.

Here the question of increasing production capacity can also be raised. If a business wants to increase production capacity then it has certain alternatives for instance number of shifts can be increased or additional plant and machinery can be installed but in many cases if the production capacity needed to be increased then the Fixed overhead do not remain constant. It also makes more difficult the whole budgetary process.


Regards,

Awais
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kamranACA
Partner

Pakistan
2499 Posts

Posted - Mar 02 2009 :  5:43:19 PM  Show Profile
Awais/Maani,

In practical terms, one has to assess the limitation factors first of all whenever preparing such budgets or forecasts etc.

In all decision making processes it is vital. If some one comes to you and ask he wants to start a business, your first question would be how much investment you plan. When he tells you, you will ask which sector you prefer.....and then so on. You have to identify the limitation factor and then proceed within its boundries. One cannot ignore or bypass this vital factor merely for the reason that a particular book has mentioned something weird.

While preparing zero-based budget this gets more and more importance. In incremental budgets one may have certain prejudiced way out to the issue.

Regards,


KAMRAN.

Edited by - kamranACA on Mar 02 2009 5:53:22 PM
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wasim akram
Junior

Pakistan
54 Posts

Posted - Mar 03 2009 :  1:48:56 PM  Show Profile
Dear Kamran, Awais and Maani
I m new and glad to see your academic strength. Due to certian limitation I may not share my understanding in large but definitly will try to update my undertanking from intellectuals like yours. I bit dishearted when I did not receive any comment from any member on my query dt 25-02-09 read as follows.
A private ltd company took over the business on "as is and where is basis " of a Firm through an agreement. Firm owns immoveable assets which are equitabley mortgaged with bank against outstanding fund / non fund based facilities. Comapany approached the bank to change the title of borrower i.e Firm to Company. Bank is of the opinion that till the change of title deed of the property, it is impossible and It is not easy to release property documents in the presence of outstanding balance and firm has to clear its dues first. Then bank will release property documents and It take at least 15-20 days to get altered the title of property from "Patwari etc ".

My questions are:
1- what are the ways company can proceed further to achieve its goal within shortest period and without clearing outstanding balance of the bank ?
2- Can company operate L/C using non fund based facilities enjoyed by the firm? If yes then how?
3- What is Cross counter Guarantee and how is it excercised?
4- What are the convincing arguements for bank?

Keeping in view that Directors of the company were the partners of the firm. pl quote and guide with practical approach.

I could not understand the reason why professionals like Mr. Kamran did not guided me. Till now, I m looking forward even to order me to delete.
As far as concept of sharing ideas is concerned. I think it is very good and would be better if we share knowledge on ISA'S one by one & Sections of CO, ITO etc.
As far as the querry Which Budget is prepared first.
a.Sales Budget b.Cost Budget c.Manufacturing Budget d.Production Budget
In my opinion simple answar is Sales Budget. becoz sales is independent rather that cost and secondly whenever we prepare budget of any item first we see it over all demand then capacity to be installed or installed to meet demand and so on.
Regards to you all.

Wasim Hanjra

Edited by - wasim akram on Mar 03 2009 1:58:19 PM
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awaisaftab
Partner

Pakistan
1109 Posts

Posted - Mar 03 2009 :  5:10:59 PM  Show Profile  Send awaisaftab a Yahoo! Message
Dear Kamran,Mani and Wasim

In fact I was discussing the above issue in relation to MCQ's. While answering to MCQ's the most probable and the most applicable answer is selected. If MCQ's come in Cost Accounting paper of ICAp then you cannot write long explanator note or can even write that some other factors can also be used as limiting or principle budget factor. Rather the answer sales budget choosen by you shall be considered only as good.

Regards,

Awais


Edited by - awaisaftab on Mar 04 2009 09:45:56 AM
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kamranACA
Partner

Pakistan
2499 Posts

Posted - Mar 04 2009 :  3:49:36 PM  Show Profile

Awais,

I know what answer has been suggested by writers in their books and I also know the reasoning explained by them. Certainly I am also supposed to know what exam approach should be specially in case of MCQs.

I only explained the situation that what happens in practical terms. It is for the knowledge sharing beyond the very purpose of this thread.

You are practically handling an accounts department. Try ever to make a budget or forecast or projection without defining the limitation factor. You will come to know what my explanation was meant for.

Regards,


KAMRAN.
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awaisaftab
Partner

Pakistan
1109 Posts

Posted - Mar 04 2009 :  4:14:45 PM  Show Profile  Send awaisaftab a Yahoo! Message
Dear Kamran,

I was not only addressing you. I am agree with you that budgeting is a difficult process and many problems are faced when one actuall make budgets.I think many of my previous posts I have given full explaination.
I have worked with an audit and accounting consultancy firm and I have remained involved in the process of preparation of budgets for many partner NGO's of an international NGO, which was our client.


Regards,
Awais Aftab
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kamranACA
Partner

Pakistan
2499 Posts

Posted - Mar 04 2009 :  6:24:17 PM  Show Profile
Good to know Awais.

Regards,
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wasim akram
Junior

Pakistan
54 Posts

Posted - Mar 04 2009 :  8:03:29 PM  Show Profile
THANKS
F......O........R.........U..........M.........
IS MEHFIL K ADAB KA PERHAPS MUJHAY ....................
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awaisaftab
Partner

Pakistan
1109 Posts

Posted - Mar 05 2009 :  09:04:23 AM  Show Profile  Send awaisaftab a Yahoo! Message
quote:
Originally posted by wasim akram

THANKS
F......O........R.........U..........M.........
IS MEHFIL K ADAB KA PERHAPS MUJHAY ....................




Har Bat pe Meri Kehte ho tum k tu kia ha

Tum hi batao K yeh ANDAZE ZUFTUGU Kia Ha



Regards

Awais Aftab

Edited by - awaisaftab on Mar 05 2009 09:48:14 AM
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shafiqb9
Unregistered Trainee

Pakistan
43 Posts

Posted - Mar 05 2009 :  10:35:31 AM  Show Profile
quote:
Originally posted by wasim akram

Dear Kamran, Awais and Maani
I bit dishearted when I did not receive any comment from any member on my query dt 25-02-09 read as follows.




SORRY FOR WASIM AKRAM

YOUR ARE IGNORED AGAIN.
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wasim akram
Junior

Pakistan
54 Posts

Posted - Mar 05 2009 :  11:53:26 AM  Show Profile
Nahee hay ulfat meeras aqal waloon ke
Tinkay khak ban kar ujala kartay han
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awaisaftab
Partner

Pakistan
1109 Posts

Posted - Mar 05 2009 :  4:27:43 PM  Show Profile  Send awaisaftab a Yahoo! Message
Hadsa Aj Aisa Huwa Roshni keS her Main !!!
Charte Suraj Pe Diay ki hukumrani Ho gayee

Edited by - awaisaftab on Mar 06 2009 08:51:47 AM
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danishayub_76
Semi Senior

Pakistan
186 Posts

Posted - Mar 06 2009 :  10:44:05 AM  Show Profile
Dear All.

I want to learn about depreciation methods and rates used in financial reporting. IAS 16 explains the methods to be adopted for depreciation including Straight line method, declining balance method and units of production method. My question is that what provisions and rates are metnioned in Companies ordinance 1984 in this regard. or in other words What companies Ordinance 1984 says regarding depreciation methods and rates.
Awaiting for your response.

Danish Ayub
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wasim akram
Junior

Pakistan
54 Posts

Posted - Mar 06 2009 :  1:12:15 PM  Show Profile
CO 1984 is silent and left it over to the Board of Directors to adopt policy regarding depreciation method and rates. CO required only to disclose policies regarding provisions, changes in policies etc and disclosure of effects due to change in policies.
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danishayub_76
Semi Senior

Pakistan
186 Posts

Posted - Mar 06 2009 :  1:16:49 PM  Show Profile
Thanks for your valuable guidance.
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kamranACA
Partner

Pakistan
2499 Posts

Posted - Mar 06 2009 :  1:19:38 PM  Show Profile
Dears,

If some qustion remains un-answered, it does not mean that others cannot comment on it.

Rather, the nature of such questions suggests that answer should not be given.

Regards,


KAMRAN.
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wasim akram
Junior

Pakistan
54 Posts

Posted - Mar 06 2009 :  4:30:04 PM  Show Profile
The forum is not a class room where teacher is holding question answer session. What I heard or understand mean to get guidance / recommendation from seniors / Intelectual to minimise ones trouble. As far as my query was concerned that was of utmost practical nature. I did not face such kind of problem during last 20 years of my practical experience. PL... Question remained un-answered does not mean that other cannot comment on it. but it mean for a common man that one does not bother to comment on it........Roothay ho to kaisay manaoon ..... Bolo na.. Bolo na.
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awaisaftab
Partner

Pakistan
1109 Posts

Posted - Mar 06 2009 :  4:38:01 PM  Show Profile  Send awaisaftab a Yahoo! Message
quote:
Originally posted by danishayub_76

Dear All.

I want to learn about depreciation methods and rates used in financial reporting. IAS 16 explains the methods to be adopted for depreciation including Straight line method, declining balance method and units of production method. My question is that what provisions and rates are metnioned in Companies ordinance 1984 in this regard. or in other words What companies Ordinance 1984 says regarding depreciation methods and rates.
Awaiting for your response.

Danish Ayub




Danish Bhayee Company Ordinance is sielent about the depreciation rate. The Schedule -III of Income Tax Ordinance lays down the rate but the companies usually do not use these rates for the purpose of financial reporting. The companies charge depreciation on taking in consideration the usefull life of assets and in accordance with accounting policies of the company. According to ITO,2001 all types businesses are liable to use diminishing balance method.
The depreciation rates of income tax ordinance are used for filling tax return. A company can use any rate for charging depreciation other than rate specified in 3rd schedule of ITO. Two terminologies are used for depreciation with respect to rate i.e Tax Depreciation and Accounting Depreciation.



Regards,

Awais Aftab
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shafiqb9
Unregistered Trainee

Pakistan
43 Posts

Posted - Mar 07 2009 :  09:29:26 AM  Show Profile
would you please that what are the things that does not permit you to comment.
quote:
Originally posted by kamranACA

Dears,

If some qustion remains un-answered, it does not mean that others cannot comment on it.

May be its true that OTHERS cannot not comment but YOU are not in the category of those OTHERS.


quote:

Rather, the nature of such questions suggests that answer should not be given.



may be i m unable to see the things that restrict you to comment may be due my narrow view and inexperince
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awaisaftab
Partner

Pakistan
1109 Posts

Posted - Mar 07 2009 :  10:36:36 AM  Show Profile  Send awaisaftab a Yahoo! Message
Dear Shariq

Please do not be aggressive.

Regards,

Awais
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