Accounting Paper

INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF PAKISTAN

September 2011 Extra Attempt Examinations

Tuesday, the 20th September 2011

Extra Reading Time:

Writing Time:

(i)

(ii)

(iii)

(iv)

(v)

(vi)

(vii)

(viii)

STRATEGIC FINANCIAL MANAGEMENT – (S-601)

STAGE-6

15 Minutes

Maximum Marks: 90

Roll No.:

02 Hours 45 Minutes

Attempt all questions.

Answers must be neat, relevant and brief.

In marking the question paper, the examiners take into account clarity of exposition, logic of arguments,

effective presentation, language and use of clear diagram/ chart, where appropriate.

Read the instructions printed inside the top cover of answer script CAREFULLY before attempting the paper.

Use of non-programmable scientific calculators of any model is allowed.

DO NOT write your Name, Reg. No. or Roll No. anywhere inside the answer script.

Question No.1 – “Multiple Choice Question” printed separately, is an integral part of this question paper.

Question Paper must be returned to invigilator after finishing/ writing the exam.

Answer Script will be provided after lapse o f 15 minutes Extra R eading Time ( 9:30 a.m. or 2: 30 p.m. [PST] as the case may be).

Marks

Q. 2

(a)

A manufacturing company produces and distributes the range of products. Due to

increased demand throughout the country, company is planning to significantly

expand its business. The company is currently facing cash flow difficulties. The bank

also expressed concern about the increasing level of company’s overdraft. The

management has decided that immediate action be taken to rectify the problem and

advised the finance manager to contact a Factor House for factoring accounts

receivables.

Finance manager received the offer on the basis of credit sales for the year just

ended which were Rs. 50,000,000 with an average debtors of Rs.20,000,000.

Debtors are allowed 120 days credit.

Factor has offered the following terms:

(i) Advance to the extent of 75% of credit sales...