Assignment 12

What are the advantages of the withholding tax system for taxpayers?




A. It reduces the burden on taxpayers who would otherwise have to pay considerable amounts within short periods.

B. It is the most effective and inexpensive way of collecting taxes for the tax administration.

C. It ensures a regular flow of revenue to the government.

D. It is a useful instrument in encouraging voluntary compliance.

E. It helps to minimize tax evasion and is especially effective In areas where it is difficult or uneconomic to detect evasion if payments were not taxed at source.



What are the includes in "Borrowing cost" in accordance with SLAS 20?



A. Interest on bank overdrafts and short term and long term borrowings.

B. Amortization of discounts or premiums relating to borrowings

C. Amortization of ancillary costs incurred in connection with the arrangement of borrowings.

D. Exchange difference arising from foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs.



How can we recognize 'Borrowing cost' in the financial statements?



A. Borrowing cost shall be recognized as an expense in the period in which they are incurred.

B. Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset shall be capitalized as part of the cost of that asset.

Assignment 12

What are the advantages of the withholding tax system for taxpayers?




A. It reduces the burden on taxpayers who would otherwise have to pay considerable amounts within short periods.

B. It is the most effective and inexpensive way of collecting taxes for the tax administration.

C. It ensures a regular flow of revenue to the government.

D. It is a useful instrument in encouraging voluntary compliance.

E. It helps to minimize tax evasion and is especially effective In areas where it is difficult or uneconomic to detect evasion if payments were not taxed at source.



What are the includes in "Borrowing cost" in accordance with SLAS 20?



A. Interest on bank overdrafts and short term and long term borrowings.

B. Amortization of discounts or premiums relating to borrowings

C. Amortization of ancillary costs incurred in connection with the arrangement of borrowings.

D. Exchange difference arising from foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs.



How can we recognize 'Borrowing cost' in the financial statements?



A. Borrowing cost shall be recognized as an expense in the period in which they are incurred.

B. Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset shall be capitalized as part of the cost of that asset.http://lahirumanagement.tk/,http://www.carterdecosta.com/

Assignment 11

 How can we explain the concept of "ACCRUAL BASIS"?




Under this basis, the effects of transactions and other events are recognized when they occur (and not as cash or its equivalent is received or paid) and we are recorded in the accounting records and reported in the financial statements of the periods to which they related.



 What is the mean of the concept of "GOING CONCERN"?



The financial statements are normally prepared on the assumption that an entity is a going concern and will continue in operation for the foreseeable future.Hence,it is assumed that the entity has neither the intention nor the need to liquidate or curtail materially the scale of its operation.



 Can you give an example for "FAITHFUL REPRESENTATION"?



For an example, a balance sheet should represent faithfully the transactions and other events that result in assets, liabilities and equity of the entity at the reporting date which meet the recognition criteria. http://lahirumanagement.tk/, Carter De Costa & Company

Assignment 10

 What is the nature of partnership?




A partnership is a form of business organization which is defined in the U.K.partnership Act of 1890 as "the relation which subsists between persons carrying on a business in common with a view to profit".
Carter De Costa & Co ,http://lahirumanagement.tk/



 What are the advantages of partnership form of association?



1. A partnership provide a simple and convenient form of association particularly for those with limited resources and skills who desire to set up a business

2. It also affords an opportunity to a sole proprietor to expand and upgrade his activities by bringing in fresh capital and experienced management.

3. The partnership form is adopted by some professionals who practice jointly, especially since some of them cannot incorporate.



 What are the main characteristics of "Working Partner"?



1. A working partner is not considered a partner for tax purposes and is not treated as such. Generally such a person gets fixed share of the profits though he may or may not draw a salary. He is however not involved in losses.

2. The working partner's share of profits is treated as a salary and allowed as a business expense.

3. The working partner's share of profit and his salary paid if any, is the share of profit before adjustment for tax.

Assignment 9

• How can we explain the inventories in accordance with SLAS 05




1) In according to the SLAS 05 Inventories are assets;

a) Held for sale in the ordinary course of business;

b) In the process of production for such sale; or

c) In the form of materials or supplies to be consumed in the production process or in the rendering of services.





• What are the inventories that we couldn't apply this standard?



a) Work in progress arising under construction contracts, including directly related service contracts.

b) Financial Instruments (Eg;Treasury Bills & Bonds)

c) Biological assets related to agricultural activity and agricultural produce at the point of harvest.



• What are the costs of inventories?

a) Costs of purchase

b) Costs of conversion

c) Other Costs



• What are the includes in cost of purchases?



a) The cost of purchase of inventories comprise the purchase price, import duties, and other taxes(other than those subsequently recoverable by the entity from the taxing authorities),and transport, handling and other costs directly attributable to the acquisition of finished goods, materials and services. Carter De Costa, http://lahirumanagement.tk/

Assignment 8

1. Write a Short Description about the sri Lankan money market?




At the time of regaining independences Sri Lanka had a relatively underdeveloped finance market, consisting of a few banks and a limited number of financial institutions. There had been three distinctive types of economic policy regimes after independence.

-1948 to 1959: Liberalized economic regime.

-1960 to 1977: Controlled regime

-1977 onwards: Open Economy



At present the money market has two elements.

• The Organized sector-consisting of banking and other financial institutions

• The unorganized sector-consisting of money lender's pawn brokers, traders and boutique keepers.

The activities of the banks were primarily confined to the plantations and the urban sector. The major activity of the money was the purchase and sale of bills of exchange. The organized money market has widened with the development of commercial banks, expansion of branches to rural and urban areas.



Following are the main components of the money market of Sri Lanka at present.

• The Treasury Bill Market

• The Inter Bank call money market

• The Foreign Exchange (FOREX) market http://lahirumanagement.tk/

Assignment 7

What is the liability of a paying banker?




A banker is generally bound to honor his customer's cheques when they are duly presented for payments, provided that they are duly presented for payment, provided that they are duly filled and in proper form. But the bankers do not pay the cheques under the following circumstances.

A. If the banker has notice that the customer has died or been declared bankrupt, or mentally incapable or banker customer relationship is terminated on any other ground.

B. If the customer has stopped payment or countermand the payment o the cheque.

C. If the customer does not have sufficient funds in the account to meet the cheque. But if the bankers so desires, he can honor a cheque even though the account does not have sufficient funds provided the banker has confidence that his customer will settle the dues. That depends on the trustworthiness and relationship in between the customer and the banker.

D. If there is a legal bar such as garnishee orders.

E. If the banker has knowledge that the payment of the cheque would amount to a breach of trust such as the holder of the cheque has no title thereto..

Assignment 6

What are the main components of the Sri Lankan Foreign Market & what are their main transactions?




The Foreign Exchange market in the country has two basic components.

• The Domestic market comprising the central bank of Sri Lanka and authorized foreign exchange dealers.

• The off-shore market



The central bank had been the biggest operator in the foreign exchange market, which involved several types of transactions namely;

1. Investment in gold and foreign currency.

2. Purchase and sale of foreign exchange with commercial banks and with the government.

3. Forward exchange operations.

4. Transactions relating to foreign aid received by the government.

5. multilateral currency clearing operations,

6. Imposition of foreign currency working balances on commercial banks.



A duel exchange rate system was introduced in 1968 to the market with the Foreign Exchange Entitlement certificates (FEECS) scheme. Under this scheme government encouraged non-traditional exports while discouraged non –essential imports. This scheme was abandoned in 1977 with the introduction of the liberalized economic policy.

Assignment 5

Give some examples of conditions or event which increase the risk of fraud or error?


Questions with respect to the integrity or competence of management

• Management is dominated by one person (or a small group) and there is no effective oversight board or committee.

• There is a complex corporate structure where complexity does not seem to be warranted.

• There is a continuing failure to correct major weaknesses in internal control where such corrections are practicable.

• There is a high turnover rate of key accounting and financial personnel.

• There is a significant and prolonged understaffing of the accounting department.

• There are frequent changes of legal counsel or auditors



Unusual pressure within or on an entity

• The industry is declining and failures are increasing.

• There is inadequate working capital due to declining profits or too rapid expansion.

• The quality of earnings is deteriorating, for example, increased risk taking with respect to credit sales, changes in business practice or selection of accounting policy alternatives that improve income.

• The entity needs a rising profit trend to support the market price of its shares due to a contemplated public offering, a takeover or other reason.http://lahirumanagement.tk/,http://www.carterdecosta.com/

Assignment 4

1. Who are the organization, key share holders and what are their needs? Identify what you consider to be most important shareholder group and describe how to meet their needs impacts on your work.




Shareholders of an organization are the group who are interested in organizations activities. They are so concerned about all activities, Such as operations, financial activities ect…In addition to share holders there are many groups, who are having different objectives in an organization.

Shareholders are the owners of the company. Their main objective is the maximization of wealth. They concern about performance of the organization. Financial position and financial strong ness, going concern, dividends, profitability, soon to ensure company's safety.

Creditors or lenders are another party who are interested about organization activities. They are concerned in company's ability to meet it's financial obligations. They need to know whether the company can pay to it's debtors.



2. How do you judge whether a piece of work has been successful? What aspects of feedback, Did you have on a recent piece of work. (Either from a client or manager) That was successful?



Judge whether a piece of work has been successful or not if it has meet the following requirement for this judgment I use the recent assignment I did, as an example to explain the answer.



A. If it was possible to cover the risk areas.(Reduce and risk of audit as possible. )

B. If it was possible to obtain all the relevant information from the client. ( Completeness of audit evidence )

C. Clear documentation of working papers.

D. Ability to understand or explain the issues from collected evidence.

E. Finish the audit within the given time frame (As per audit plan )

F. Ability to settle Quarries Successfully.

Assignment 3

1. How and why does your e-mail communication to a colleague differ from that to and external party?




As a way of communication, we can use e-mail communication both for a colleague and for a outside party. But the way of communicating to those parties differ from each others. This depend on the nature of the recipient and the purpose of sending the e-mail. The main difference can be point out as follows.

An e-mail to a colleague is a simple and you can include what ever things you want to communication with. Therefore it can be a very lengthy one. But and e-mail to an external party should be a very short and clear one. It should be on the point where you want to send the e-mail

The language used in an e-mail to a colleague is very simple and understandable. But an e-mail to an external party should be in professional language and easy to understand.

But and large the e-mail to a colleague is very simple and understandable. But an e-mail to an external party should be in professional language and easy to understand.

By and large the e-mail to a colleague is an informal way of communicating and an e-mail to an external is a formal way of communication.

Assignment 2

Cash flow statements (SLAS 09)




1. What are the benefits of cash flow informations?



• A cash flow statement, when used in conjunction with the rest of the financial statements, provides in formation that enables users to evaluate the changes in the assets of an entity, its financial structure (Including its liquidity and solvency) and its ability to affect the amounts and timing of cash flows in order to adapt to changing circumstances and opportunities.

• Cash flow information is useful in assessing the ability of entity to generate cash and cash equivalents and enables Users to develop models to assess and compare the present value of the future cash flows of different entities.

• It also enhances the comparability of the reporting of operating performance by different entities because it eliminates the effects of using different accounting treatments for the same transactions and events.

2. What are the activities, including in a Cash flow statement?



• Operating activities

• Investing activities

• Financing activities

3. Give some examples about the financial activities?



• Cash proceeds from using issuing shares or other equity instruments.

• Cash payment to owners to acquire or redeem the entity's shares.

• Cash proceeds from issuing debentures, loans, notes, bonds, mortgages and other short or long term borrowings.

• Cash repayments of amounts borrowded.

Assignment 1

Events after the Balance Sheet (SLAS 12)


1. What are the objectives of this standard is to prescribe?



• When an entity should adjust its financial statements for events after the balance sheet date; and

• The disclosures that an entity should give about the date when the financial statements were authorized for issue and about events after the balance sheet date.

The Standard also requires that an entity should not prepare its financial statements on a going concern basis if events after the balance sheet date indicate that the going concern assumption is not appropriate.



2. What are the events that we have to adjusted after the balance sheet? Give some examples.



• The bankruptcy of a customer that occurs after the balance sheet date usually confirms that a loss existed at the balance sheet date on a trade receivable and that the entity needs to adjust the carrying amount of the trade receivable; and

• The Sale of inventories after the balance sheet date may give evidence about their net realizable value at the balance sheet date.

• The determination after the balance sheet date of the cost of assets purchased, or the proceeds from assets sold, before the balance sheet date.

• The discovery of fraud or errors that show that the financial statements are incorrect.