Banking Diploma Examination: Accounting for Financial Services: Syllabus and Chapter wise Previous Year Questions

BANKING DIPLOMA EXAMINATION

Banking Diploma Courses under The Institute of Bankers, Bangladesh(IBB)

Accounting for Financial Services-JAIBB

Syllabus and Chapter wise Previous Year Questions Up to Nov-2011

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Module A: Introduction and Environment

Purpose, Nature, Uses and Users of Accounting Information, Functional and Operational Definition of Accounting, Accounting Principles, Standards and Regulations, Forms of Business Organizations and Accounting systems.

Give a functional and operational definition of accounting. (Nov-11)
Distinguish between relevance and reliability of accounting information. (Nov-11)
“Accounting is ingrained in our society and it is vital to our economic system” Do you agree? Explain. (D-09) (N-11)
Define the terms: Asset; Liabilities ;Revenue and Expenses. (D-09) (Nov-11)
What are the different categories of users of accounting information? (D-03) (J-05) (N-06) (M-08)
What is the monetary unit assumption and economic entity assumption (Nov-11)
Mention the users and uses of accounting information. (N-02)
What uses are made by the users of accounting information. (D-03)
For what purpose they use accounting information? (J-05) (N-06) (M-08)
Who are external users of accounting information? Why do they use it? (M-06) (M-09) (Nov-11)
What is the nature of Accounting & what is its function? (M-07) (N-08)
Explain the quantitative characteristics of accounting information. (N-10)
Discuss the role of accounting in an organization. (N-07) (J-10)
Briefly explain the relationship of other disciplines with accounting. (J-10)
Define Ethics. Why is ethics very important in business? (J-10)
Explain the primary and secondary qualities of accounting information. (J-10)
Explain Cost principles, Revenue recognition principle and matching principles. (J-10)
Explain the importance of accounting period. (J-10)
What are the recognition criteria of assets? (J-10)
What do you mean by “Going concern concept of Accounting? (M-07) (N-07) (N-08)
How does GAAP influences the preparation and presentation of financial statements? (N-05)
State two GAAP that relate to adjusting accounts. (N-05)
What is GAAP (Generally Accepted Accounting Principles)? (N-05) (D-09)
What is the necessity of conservatism principles? Explain with example. (D-09)
(what you understand by the terms N-06) (N-07) (M-08)
Why is a business treated as a separate entity for accounting purpose? (M-07) (N-08)
How do business executives use accounting information? (M-07) (N-08)
Differentiate between Book-Keeping & Accounting. (M-07) (N-07) (M-08) (N-08)
“Accounting is called the language of business” – Explain the statement. (M-06) (M-09)
What is the monetary unit assumption? What impact does inflation have on the monetary unit assumption?(M-06)
Why do accrual basis financial statements provide more useful information than cash basis statements? (N-05) (M-06)
What are the recognition criteria of liability? (N-10)
Who are the internal users of accounting data? How does accounting provide relevant data to those users?(M-11)
What are the qualitative characteristics of accounting information? (M-11)
Who are the users of accounting information? What are the information needs of different types of users? (N-07)
Mention the need and importance of accounting information for bank. (J-05) (N-06) (M-08)
What uses of Financial accounting information are made by different users? (D-09)07) (M-11) (N-08)
What are the differences between Revenue expenditure & Capital expenditure? Give five examples of each. (M-
Why a banker should know these principles? (D-04)
Mention the names of the basic accounting principles. (D-03) (mention briefly A P N-06)
Explain the constraints of Accounting Principles. (N-10)
Explain the necessity of Revenue Recognition and Matching Principles. (N-10)
Discuss briefly the principles of accounting. (N-02). with examples. (D-04)
“Accounting is indispensible for banking.” Explain the statement in the context of importance of accounting to
maintain and types of information that are being generated there from. (J-04)
What is forensic accounting? Can this accounting be applied in Bangladesh? (M-11)
What is the basic accounting equation? (M-06) (N-07) (M-08)
How can you justify it(the basic accounting equation)? (M-06)
Explain the components of basic accounting equation. (N-07) (M-08) (M-09 examples)
What is going concern concept assumption? Explain a scenario in which going concern assumption is not applied.M11
How is a deceased partner’s equity determined? (N-05)
How can you apply this equation in making debit and credit? (M-11)
What is accounting Equation? (D-03) (M-11) (M-09)
Where do you find the reflections of the accounting equation? How? (D-03)
“The terms ‘debit’ and ‘credit’ mean increase and decrease respectively.” Do you agree? (D-09)

Module B: Analysis of Financial Statement

Objectives of Financial Statement Analysis, Financial Statement Analysis, Horizontal and Vertical Analysis, Comparative Financial Statements, Communize Statements, Financial Ration Analysis, Trend Percentage, Specialized Analysis, Cash Forecasts, Analysis of Changes in Financial Position, Break-Even Analysis, Cash Flow Statement, Unadjusted Trial Balance and Adjustments.

Explain sensitivity analysis for determining Break-even point. (N-11)
What are the main features of Bank Accounts? (N-02)
What are the five (5) components of financial statements for a Bank? (D-09)
What is I.A.S? Which I.A.S is applicable for bank & other financial institutions? (M-07)
What are the items that a bank must disclose in its financial statements, namely Annul Report? (M-07)
According to Banking Company’s Act, 1991, what are the off-Balance Sheet items which are to be reported by banks? (M-07)
Discuss briefly the accounting system of a bank, mentioning the books of accounts that a bank is required to banks. (J-04)
What do you understand by Financial Sector Reform? What Reforms are already made to our financial sector?(M-07) (N-08)
Mention the uses of financial statement analysis. (J-04) (N-05) (M-06)
Mention the ratios which show the liquidity, profitability and solvency of an enterprise. (N-05)
What is a Balance Sheet? What purposes are served by a Balance Sheet? (D-03) (M-09)
Mention some of the important Balance Sheet ratios that you might head to assess the liquidity position of an undertaking. (N-02)
What are the loan provisioning requirements for Banks as per BRPD circular? (N-10)
Mention the limitations of financial statement analysis. (J-05) (N-05) (M-06)
Mention the ratios that are required to be calculated to assess liquidity, profitability and solvency of an enterprise. M06
Mention some of the financial statements used by your bank and their intended purpose. (N-06 (M-08) (M-09)
What do you know about IFRS (International Financial Reporting Standards)? (N-06) (M-08)
How these are useful in modern business? (N-06) (M-08)
What are financial statements? (N-06) (M-08)
What do you mean by Financial Statement Analysis? Why is it necessary? (N-07)
What are the tools and techniques used in financial statement analysis?
What are the component of financial statement for a Bank? (N-10)
Mention the ratios the are required to be calculated to asses liquidity, profitability and solvency of an enterprise. (N-07)
Discuss the importance of accounting in a modern bank. (M-03) (D-04) (acc info N-05)

Ratio Analysis

What is Ratio Analysis? (N-02) (N-08)
What information can be obtained from Ratio Analysis? (D-03) (N-08)
What do you understand by Ratio Analysis? (N-02)
Discuss the significance of Ratio Analysis. (M-03)
What do you mean by the liquidity of a business? How can the liquidity of a firm be assesses? (M-03)
Why analysis of financial statement become necessary? (D-03) (N-08)
How would you appraise the state of financial affairs of a bank with the help of ratio analysis? Mention the relevant financial ratios. (D-04)
Explain the significance of the following ratios:
Current Ration (D-03) (N-08)
Inventory Turnover Ratio (D-03) (N-08)
Debt-Equity Ratio (D-03) (N-08)
Operating Ratio (D-03)
Mention some limitations of ratio analysis. (N-07)

Module C: Processing and Recording of Accounting Information

Transaction, Analysis of Transaction, Accounting Cycle, Recording of Transaction, Double Entry System, Golden Rule of Debit and Credit, Posting of transactions to the Ledger, T Form and Multi Column Ledger, Preparation of Cash Book, Single Column, Double Column and Triple Column Cash Book, Preparation of Trial Balance, Suspense Accounts, Reflection of Errors Adjusting Entries and Closing Entries Accrued and Deferred Revenue and Expenses.

Abu Yusuf, a fellow student, contends that the double entry system means each transaction must be recorded twice. Is he correct? Explain. (D-09)
What is double entry system of accounting? What benefits can be derived by using the system?
Does your bank use double entry system of accounting? If so, how would you assess its effectiveness?
Explain the cardinal principles of Double Entry System with examples. (N-02)
What is accounting –cycle? (M-03) (J-05) (M-06) (N-06) (N-07) (M-08)
What do you mean by accounting –cycle? (N-02) (M-09)
What are the stages of the accounting-cycle? Explain in brief. (N-02) (M-06) (M-08) (M-09)
What are the stages of the accounting-cycle? (M-03) (J-05) (N-06) (N-07)
What are the golden rule of debit and credit?
Mention the processing and recording of accounting information in a bank. (J-05)
Discuss briefly the accounting process in a bank. (N-06)
What are the basic steps in the recording process? (M-11)
What are the differences between T-Account and Three-column form of account? (M-11)
Many scholars consider accounting as control. Do you agree? Why? (M-11)
Recently an international accounting standard has prescribed some changes in income statement and the balance sheet. What are these changes? (M-11)
Balance Sheet should show true and fair value of assets and liabilities. But continue showing fixed assets at historical cost even these are not true and fair. Explain why? (M-11)
Balance Sheet has to show true and fair view of financial position a business. But log-term assets like land, building and equipments are recorded at cost price though their value changes. Explain what are the rationales for recording long-term assets at cost price. (N-11)
“Financial statements should reflect the true and fair view of the firm.” –Explain. (D-09)
What accounts are usually closed at the end of an accounting period? Which accounts are seen in post closing trial balance? (M-11)
How do reversing entries differ from adjusting entries? Explain with one example of each. (N-10)
“Adjusting entries are required by the matching principle of accounting.” Do you agree? Explain.
What is reversing entry? Why is it necessary? (J-10) How is it recorded? Explain with example. (N-11)
What is adjusting entry? Why is it necessary? (N-10) (N-11)
John Keat, a beginning accounting student, believes that debit balance are favorable and credit balance are unfavorable. Is it correct? Discuss. (N-11)

Ledger

Define subsidiary ledger. (J-10)
Identify and describe the steps in the accounting process. (M-06) (N-10) (D-09)
What are the main ledgers and subsidiary ledgers maintained in a bank? Mention their uses. (M-03)
What is meant by ‘Imprest System of Petty Cash’? How the system operates? (M-03)
Discuss briefly the uses of a Triple Colum Cash Book (J-05)

Trial Balance

What is a Trial Balance? (M-03) (J-04) (D-04) (N-05)
What are the objectives of Trial Balance? (M-03)
What are the causes of non-agreement of the two sides of the Trial Balance? (M-03)
What are the errors that cause disagreement of Trial Balance? (N-02) (D-04)
How Should you rectify these errors? (D-04)
Do the agreement of two sides of the Trial Balance guarantee the arithmetical accuracy in the books of accounts? N-02
Why two sides of a Trial Balance Should agree? What would you do if two sides of a Trial Balance do not agree? (D-03) (M-09)
Is agreement of a Trial Balance a conclusive proof of arithmetical accuracy of books of accounts? Why? (J-04) (D-04) (Explain N-05)
Distinguish between a Trial Balance and a Balance Sheet. (J-04) (N-05)

Module D: Financial Statements for Different Entities

Service, Merchandise and Manufacturing Operation: Income Statement, Cost of Goods Sold, Cash Flow Statement, Balance Sheet, Limitation of Balance Sheet.

Partnership and Joint Stock Companies: Specific Characteristics of Financial Statements of Partnership Capital Account, Current Account, Profit and Loss Adjustments Account. Distinguishing Characteristics of Financial Statements of Companies.

Banks and Other Financial Institutions: Provisions of Bank Company Act, 1991 (with Amendments), Preparation of Profit and Loss Account and Balance Sheet of Banks. Provisions of Financial Institutions Act, 1993 (with Amendments), Preparation of Profit and Loss Account and Balance Sheet of Financial Institutions.

Insurance Companies in Bangladesh under the Insurance Act.1938 do not have to prepare an income statement. Then how do they measure income or loss? (N-11)
“A good accounting system helps a bank to operate more efficiently.”-How? (M-06) (M-09)
What are the different books of accounts maintained by a (commercial) bank? (N-02) (D-04)
Mention their uses. (D-04)
What are the specific characteristics of the financial statements of a partnership firm? (M-03) (J-04)
What are the prime characteristics of a partnership Business? (N-05)
Are the financial statements of partnership similar to those of proprietorship and joint stock company? Discuss. (N-05)
Distinguish between Partners’ Capital Accounts and Current Accounts in a partnership business. (M-03)
What are the principal characteristics of the financial statements of companies? (M-03)
What are the specific characteristics of the financial statements of a Merchandising and Manufacturing Company? (J-04) (J-05) (Difference N-07)
When a separate capital and current account is prepared (required to be maintain in a partnership firm-J-05)? Why? (J-04)
When and why a Profit Loss Adjustment is prepared? (J-04) (in a partnership firm-J-05)
What statements a bank is required to prepare under Banking Company Act,1991, section 38 in the light of IAS# 30. Explain the importance of such statements. (J-04) (J-05)
Present the prescribed forms for Balance Sheet and the Profit & Loss Account under section 38 of Banking Company Act, 1991 with its contents. (J-04) (J-05)
What are the objectives of financial reporting? (N-10)
Mention the types of accounting information that a bank may generate and also their uses in planning and control of banking operations. (N-05)

Module E: Accounting for Assets

Current Assets: Inventory Valuation, Periodic and Perpetual Method for Ascertaining Closing Inventory, Average, Last In First Out (LIFO), First In First Out (FIFO), Account Receivables.

Fixed Assets: Depreciation Methods, Recording of Depreciation, Valuation of Fixed Assets, Depreciation as a Cost Allocation.

Inventory Management

Perpetual Inventory is better than Periodic Inventory. Do you agree? Explain. (N-11)
Mention the importance of inventory management of a business. (M-06)
What are the available methods for valuation of inventory?
Indicate the effects reporting inventories in financial statement. (M-06)
How does inventory valuation influence the financial reporting? Explain the matter with examples. (D-04)
Differentiate between perpetual and periodic system. (M-07) (of inventory recording N-07) (M-11)
How does accounting for inventories affect the financial reporting of profits, inventory valuation, cash flow and tax payable? Explain with examples.
Explain the meaning of thee credit terms 3/10,n/60. (M-11)
What do you mean by 2/10, n/30; FOP Shipping point and FOB Destination? (N-10) (J-10)

Depreciation

What is Depreciation? (N-02) (J-04) (J-05) Why is it provided? (N-02)
What factors are considered while determining depreciation? (N-02) Why it is calculated? (J-04) (M-08)
Mention and discuss briefly the various methods of charging depreciation. (N-02) (J-04) (J-05) (example N-07) (M-08)
What are the major factors considered in determining what depreciation method to use? (N-06)
Difference between Depreciation and Amortization with examples. (J-10)
Explain the factors that affect the computation of depreciation. (M-07) (influence determination of dep.J-10)
What are the similarities and differences between the term: depreciation, depletion and amortization? (M-11) (N-10)
“Depreciation is the allocation of cost.” –Explain this statement with the help of a numerical example. (M-11)
Under what condition is good will recorded? (M-11)
“Accumulated Depreciation is a contra asset account.”-Explain. (N-10)
“Accumulated Depreciation is a valuation account”-Do you agree? Explain.
Differentiate between Depreciation and Impairment. (D-09)

Module F: Journal Rules for Journalizing

Different Types of Journals, Sub-Division of Journals, Posting of Accounts, Ledger, Interpretation of Ledger Account, Writing of Different Types of Cash Book in Columnar Form, Imprest System of Petty Cash, Bank Reconciliation System, Journal Proper.

Explain the advantages of special journals. (J-10)
How do correcting entries differ from adjusting entries? Explain with one example of each. (D-09)
What are the accounting principles related to adjusting entries? (M-11)
Show the classification of account. (N-10) (J-10
Mention the classification of journal and explain the function of each. (D-03)

Bank Reconciliation Statement

What is a Bank Reconciliation Statement? (D-03) (N-05) (N-06) (M-08)
What is the necessity of Bank Reconciliation Statement? (N-08) (M-09)
Why it is prepared? (D-03) (N-05) (N-06) (M-08) (if it is not prepared, what effect might happen) (M-09)
What do you mean by Bank Reconciliation Statement? (N-02)
Why and under what circumstances the preparation of Bank Reconciliation Statement becomes necessary? (N-02) (D-04) (necessity N-07)

Write short notes on any four of the following:

Goodwill (N-02) Sunk Cost (N-11) CAMELS rating (N-11)
Imprest System of Petty Cash (D-03) Cooking the Books of Accounts (N-11)
Imprest System of Cash Book (N-02) (N-11)
Current Account and Account Current (N-02)
Hire Purchase System and Sale (N-02)
LIFO and FIFO methods of inventory valuation (N-02) (D-03) (weighted average D-09)
Bank Reconciliation Statement (M-03)
Users of accounting information (M-03) (D-09)
Methods of charging depreciation (M-03) (M-06) (M-09)
Financial Statements of Merchandising Companies (M-03)
Break Even Analysis (M-03) (M-06) (N-06) (M-08) (N-08) (M-09) (BE Point-J-10; N-11)
Accounting –Cycle (D-03)
Suspense Account (D-03) (M-06)
Depreciation Accounting (D-03)
GAAP (Generally Accepted Accounting Principles) (M-06) (M-07) (N-08) (M-09)
Temporary Accepted Accounting Principles (N-08) matching principles (N-11)
Cash Flow Statement (M-06) (N-06) (N-07)
Double entry system of Accounting (N-06) (M-07)
Trial Balance and its Limitations (N-06) (M-08) (N-11)
Financial statements of a partnership firm (N-06)
Deferred Revenue Expenditures with examples. (N-06)
Asset (M-07) (N-10) (N-08)
Liability (M-07) (N-10) (N-08)
Equity(M-07) (Owner’s N-10) (N-08) Owner’s equity. (M-07)
Temporary and Permanent Account. (M-07) (M-09)
Accounting Information System. (M-07)
Special Journal. (M-07)
Financial Raio(M-07)
Off-Balance Sheet items (N-07) (M-11) (M-08) (N-08) (J-10)
Cash Basis Vs. Accrual basis (N-07) (M-09)
Intangible Asset (N-07) (N-08)
Basel Accord (M-11)
Assumptions of CVP analysis. (M-11) (CVP analysis D-09) Limitation of CVP analysis (N-11)
Tangible Assets (M-11)
Current Assets Vs. Non-Current Assets (M-11)
Accrued Vs. Deferred Revenue (M-11)
Operation Vs. Financial Activities (M-11)
Vertical Vs. Horizontal Analysis. (M-11)
Revenue expenditure & Capital expenditure (M-08)
Perpetual and Periodic Inventory (M-08) (M-09)
Contribution margin (J-10)
Current asset and long term asset. (J-10)
Relevant Cost (J-10)
Substance over form. (D-09)
IFRS (D-09)
Internal and External Audit. (D-09)