Model Exam One

Project 1: Perform Tax Computation

MDF manufa, cturing PLC imported materials for birr 2,500,000.00 and purchased local
materials for birr 1,000,000.00 before VAT for production of glove in 2014. The local custom
duty charges are birr 200,000 paid to tax authority. The factory sells 30,000 gloves at Br 150
each before VAT including 2% sales commission. The company paid 53,000 administrative
expenses and employment income tax of birr 30,000. Imported materials are exempted from
VAT and withholding taxes. Business profit tax is 30%.

Task 1.1: Calculate Net profits

Task 1.2: Calculate Direct and Indirect Tax.

Task 1.3: Identify Relevant Documents for Taxation

Project 2: Compute Debt and Consumer Credit

DL Hotel present loan proposal to Dashen bank and the bank provides three credit schemes to
the loan. The first option is to borrow Birr 230,000.00 mortgages to be paid with 8 years at equal
installment at rate of 15% semiannually. The second and third options are to borrow Birr
450,000.00 for 30 months at equal installments at rate of 13% and birr 300,000.00 for a year at
equal installments at rate of 12.50% semiannually, respectively. The bank agreed with the hotel
and the loan disbursed with additional service charges of birr 27,500.00 (one time borrowing cost
for the three loans).

Task 2.1: Calculate the interest expense and other charges at the end of first year.

Task 2.2: Calculate total loan repaid at the end of second year.

Task 2.3: Demonstrate major documents required to open bank account at NIB Bank by the
hotel.

Task 2.4: What is the advantage of credit facility to the society?

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Project 3: Develop and Use Personal Budget and Saving Plan

Abebe an employee of 3F Furniture Company earns a monthly net income of Birr 15,000.00.
25% of the total income is used to cover his fixed cost and the remaining income is used to cover
his variable expense and savings. His saving is 15% of his variable expense. The actual variable
expense is 85% of budgeted variable expense but fixed cost remains constant. If the variable
expenses budget is deficit deducted from personal saving and if surplus added to personal saving.
His salary expected to increase by 20% for the month of February 2015.

Task 3.1: Prepare budget performance report for the month of December 2014.

Task 3.2: Develop personal budget for March 2015.

Task 3.3: Calculate total saving at the end of March 2015 and identify the related investment
opportunities.

Task 3.4: Identify the investment related risks of personal saving.

Project 4: Develop Understanding of Ethiopian financial system to work effectively in the

financial sector.

In the Arada city Administrative 25 individual’s established medium scale enterprise (MSE) that
works on trading, service rendering and small scale manufacturing. The team management,
marketing of the product and service and continues improvement in performances are the
challenges of the MSE. Assume that you are an employee of this enterprise and perform the
following tasks which are related to your jobs.

Task 4.1: Identify your own role and responsibility within team.

Task 4.2: Demonstrate your role to Work Effectively in the financial service sector.

Task 4.3: Demonstrate your role in workplace meetings and discussions.

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 Answer for Model Exam One

Project One

Task 1.1: Calculate Net Profits

Revenue:

Sales (30,000*150) --------------------------------------------------------------4,410,000

Cost of Goods Sold:

Purchase (2,500, 000+1,000, 000) --------------------------------------------- 3,500,000

Gross Profit -------------------------------------------------------------------------910,000

Operating Expense:

Selling Expenses--------------------------------------------90,000

Administrative Expense------------------------------------53,000

Total Operating Expense ----------------------------------------------------------- (143,000)

Operating Income ---------------------------------------------------------------------- 767,000

Income Tax Expense (657,000*0.3) ------------------------------------------------ (230,100)

Net Income ------------------------------------------------------------------------------- 536,900

Task 1.2 Computing Direct Taxes and Indirect Taxes

Direct Tax = Employee Income Tax + Business Income Tax

= 30, 0000 + 230,100
=260,100
Indirect Taxes
VAT Payable = Output VAT – Input VAT
= (4,410,000X15/100) – (1,000,000X15/100)
= 661,500 – 150,000
= 511,500
Custom Duty Tax----------------------------------200,000
Total Indirect Taxes ------------------- 711,500

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Task 1.3: Identify Relevant Documents for Taxation

 Record of the business assets and liabilities

 Record of all daily income and expenses related to the business activity
 Record of all purchases and sales of goods and services to the business activity
 Record of trading stock on hand at the end of the accounting period
 Any other document relevant for the determination of the tax liability;

Project 2: Compute Debt and Consumer Credit

Task 2.1 Calculate the interest expense and other charges at the end of first year

The first option loan amount =230,000

Annual Payment =230,000/8=28,750

Annual Interest = PRT = 230, 000*15%*1=34,500

Semiannual Interest =34,500*1/2=17,250

Other Charge=27,500

Task 2.2: Calculate Total Loan repaid at the end of second year

Total Loan Repayment = Principal (Annual Payment) + Interest

Interest =PRT

Principal of 2nd year =230,000 - 28,750 = 201,250

Interest = 201,250*0.15*1=30,187.50

Total Annual Loan Repayment = 28,750+30,187.50 =58,937.50

Semiannual Total Repayment =58,937.5*1/2

= 29,468.75

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Task 2.3 Demonstrate major document required to open bank account at NIB Bank by the
hotel

Information required for opening accounts may include:

 purpose for which the account will be used

 primary account holder's: name, address and contact details

 signatories to the account

 amount of initial deposit

 required links to other accounts held

Task 2.4: What are the advantages of credit facility to the society?

 obtain and can use purchased item immediately

 minimizes the need to carry cash or write cheques
 allows for installment payments on expensive items
 convenient form of payment when travelling, especially overseas

Project 3: Develop and use Personal Budget and Saving Plan

Task 3.1:Prepares Budget Performance Report for month of Dec, 2014

Description Planned budget Actual budget

Net Income 15,000 15,000
Fixed Cost(25%*15,000) 3,750 3,750
Variable Cost 9,562.50 8,128.13
Saving 1,687.50 1,687.50
Total Expense 15,000 13,565.63
Deficit or Surplus 0 1,434.38

Saving 1,434.38

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Task 3.2 Develop Personal Budget for March 2015.

Planned budget Actual budget

Net Income 18,000 18,000
Fixed cost(25%*18,000 ) 4,500 4,500
Variable cost 11,475 9,753.75
Saving 2,025 2,025
Total Expense 18,000 16,278.75
Deficit or Surplus 0 1,721.25

Saving 1,721.25

Task 3.3: Calculate total saving at the end of March 2015 and identify the related
investment opportunity.

Total Saving = 1,721.25

- There is investment opportunity in the future by 1,721.25 because the planned expense
less than actual expense incurred.

Task 3.4: Identify Investment related risk of Personal Saving

 Interest risk
 Price risk
 Buying securities on credit
 Purchasing power decrease

Project 4: develop understanding of Ethiopian financial system to work effectively in the

financial sector

Task 4.1 Identify your own role and responsibility within the team

 Role of Team
 Effectively provide higher quality and introduce more innovations
 Members of teams that work well together have relatively low stress levels.
 A diverse range of professional groups working together is associated with higher levels of
innovation
 Good quality meetings, communication and integration processes in teams contribute to the
introduction of new and improved ways of performance.
 Clear leadership contributes to effective team processes, to high quality production and to
innovation

 Responsibilities of team
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  Improve quality
 Find better ways of working and make continuous improvements
 Provide training
 Make it possible for everyone to do a better job with greater satisfaction

Task 4.2: Demonstrative your role to work effectively in the financial service sector

 Communicate positively
 Cooperate with others
 Look and act the part of a responsible worker
 Set high work standards
 Prioritizing activities
 Get better at managing your time
 Get better at goal setting

Task 4.3:Demonstrate your role in work place meetings and discussion

 Attend team meeting and discussion on time

 Own opinions are clearly expressed and those of others are listened to without
interruption
 Meeting inputs are consistent with the meeting purpose and established protocols.
 Workplace interactions are conducted in a courteous manner
 Meetings outcomes are interpreted and implemented.

Model Exam Two

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Project 1: Maintain Customers Accounts and Process Transactions

Instruction: Under this project you are expected to perform the following tasks based on
the information provided.

Brothers PLC is a merchandising business which is established in order to purchase and sale of
soft drinks and packed waters. Currently the PLC is an account holder (Current Account) of Nib
International Bank and planned to borrow a term loan from the bank in order to supplement its
working capital. Assuming that you are a bank clerk of this bank:

Task 1.1: Process Customer Transactions

Assume that MrTola need to start a new merchandising business in the next year (December 31,
2016) with a capital of birr 110,250. If he deposits his money at bank, the bank will allow him an
interest rate of 5% per year.

A. Calculate the amount that MrTola should deposit today (January 1, 2015).
B. Calculate the amount of interest income at the end of December 31, 2016.

Task 1.2: Work Effectively in the Financial Services Sector

Chala is a new employee joining Ethiopian Electric Utility as Accounting Clerk and he
understood that there are some information’s and activities he need to know about the
organization to be an effective worker.

What are the possible information’s and activities should Chala need to know about the
organization to be effective worker?

Task 1.3: Process Customer Accounts

Ethio Telecom was using Commercial Bank of Ethiopia Nazreth branch for deposits and the
company need to close the existing deposit account and open a new account at Adama branch.

A. What are the procedures required to close the existing account?

B. What are the procedures required to open the new account?

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Task 1.4: Work Effectively with Others

AtoYohannes is a permanent employee of Metehara Sugar Factory. He was recruited as Junior

Accounting clerk of that organization in cost department. Yohannes recognized that the newly
assigned job demands team working and he is finding the way how he can optimize his capacity
by working with other staffs.

What are the activity atoYohannes need to follow for the effectiveness of the team member?

Task 1.5: Understanding of Debt and Customer Credit

In Ethiopia, there are many financial institutions which are providing credit facility for customers
like Cooperative banks. Assume that you are the employee of this institution, what are the
importances of providing customer credit?

Project 2: Perform Tax AccountingInstruction: Under this project you are expected to
perform the following tasks based on the information provided.

Kiya PLC is a famous merchandizing business which was engaged in purchasing and selling of
various products located at Bishoftu Town. As per the Ethiopian Tax regulation, the PLC is a
VAT registered and during the month of December 2015, the following information’s are related
to the business activities of Kiya PLC and assume that profit tax is 30% and the PLC will pay
taxes to Inland Revenue on regular basis.

1. Purchase of products for the month of December including VAT birr 115,000.
2. Sales made during the month excluding VAT birr 210,000.
3. Employee payroll tax for the month of December birr 15,000.
4. Business income before tax birr 90,000.
5. Excise tax birr 6,000.

Using the above information the candidate is expected to perform the following tasks:

Task 2.1: Determine the indirect tax liabilities of the business for the given month.

Task 2.2: Determine the direct tax liabilities of the business for the given month.

Task 2.3: Understanding how to present tax to inland tax authority

A. Determine the total amount of tax Kiya PLC will present to tax authority
B. When does the indirect tax will be presented to tax authority

Project 3: Develop personal budget, saving plan and Business Practice

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Instruction: Under this project you are expected to perform the following tasks based on
the information provided.

The following data is given for Actual income and expenditures of Bilise for the month of
December 2015. The difference between total income and expenditures is personal saving. Using
her personal saving, Bilise has a plan to establish a business in the future.

Description Actual income and expenditures

(December, 2015)
INCOME:
Salary Income (net) 6,000
EXPENDITURES:
Clothing 500
Food 2,000
Entertainment 100
Utility 500
Personal Expense 50
School Fee 700
Cost Sharing 100
Transportation 100
Other 150

Using the above information the candidate is expected to perform the following tasks:

Task 3.1: Develop and Use a Personal Budget

Assume that the Salary income and expenditures will increase by 10% prepare budget plan and
Budget variance for January 2016.

Task 3.2: Developing Personal Budget

Assume that expenditures will increase by 10% and no change in Salary Income, prepare budget
plan for January 2016.

Task 3.3: Developing of Saving Plan

Assume that expenditure of December 2015 remains unchanged in January 2016 and Bilise need
to find other source of income in addition to her salary to have birr 2,000 saving amount in
January 2016. Calculate the additional amount to her salary that Bilise need to finance to reach a
saving of birr 2,000.

Task 3.4: Understanding of Saving for the Society

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What are the advantages of saving for society

Answer for Model Exam Two

Project One
Task 1.1: Calculating the Present Value and Interest
A. Present Value = Future Value (PVFn,i)
= 110,250(1/ (1+.05)2)
= 110,250 (.90703)
= 100,000

B. Interest = 110,250 – 100,000

= 10,250

Task 1.2: Possible information and activities required to be an effective worker

 Communicate positively and Cooperate with others
 Look and act the part of a responsible worker
 Set high work standards
 Prioritizing activities
 Get better at managing your time
 Get better at goal setting

Task 1.3: Process Customer Accounts

A. Procedures required to close the existing account
Check the balance on the account you want to close
Confirm that you are able to transfer funds
Transfer the fund and confirm that you have cancelled all bank services associated
with old account.
B. Procedures required to open the new account
 Purpose for which the account will be used (checking or saving)
 Collect the personal information like account holder’s name, address and contact.
 Open your new account
 Deposit your fund into your new account

Task 1.4: Work Effectively with Others

Better Team Communication
Be a better team leader
Create a culture of learning
Recognition and incentives
Operating processes
Support innovation
Build commitment

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 Establish leadership
Foster team work
Set ground rules for the team
Task 1.5: Importance of Providing Customer Credit
 Establishing trust with customers
 Increase customer loyalty
 Enhance your reputation
 Gain a competitive edge
 Increase sales
 Competitive edge over businesses
 Give interest to their members
 Sense of security
Project Two
Task 2.1: Computing Indirect Tax
Purchase (Input VAT) = 115,000 x 15/115 = 15,000
Sales (Output VAT) = 210,000 x 15/100 = 31,500
VAT Payable = Output VAT – Input VAT
= 31,500 – 15,000 = 16,500
Total Indirect Taxes = VAT Payable + Excise Tax
= 16,500 + 6,000 = 22,500
Task 2.2: Computing Direct Taxes
Sales --------------------------------------------------------210,000
Less: CGS -------------------------------------------------100,000
Income Before Tax -------------------------------------- 110,000
Less: Business Income Tax -------------------------------33,000
Net Income -------------------------------------------------77,000
Total Direct Taxes = Business Income Tax + Employee Income Tax
= 33,000 + 15,000 = 48,000
Task 2.3:
A. Total amount of Tax to be paid:
= 22,500 + 48,000 = 70,500
B. Monthly i.e within 30 days of the next month (VAT and Excise Tax) and quarterly (TOT).

Project Three
Task 3.1: Develop and Use a Personal Budget
Description Planned Income Actual Income Income Variance
INCOME:

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 Income salary 6000 x 10% = 6,600 6,000 600

Description Planned Budget Actual Budget Budget Variance

EXPENDITURES:
Closing 500 x 10% = 550 500 50
Food 2000 x 10% = 2,200 2,000 200
Entertainment 100 x 10% = 110 100 10
Utility 500 x 10% = 550 500 50
Personal expense 50 x 10% = 55 50 5
School fee 700 x 10% = 770 700 70
Cost share 100 x 10% = 110 100 10
Transportation 100 x 10% = 110 100 10
Other 150 x 10% = 165 150 15
Total 4,620 4,200 420

Budget Variance = Planned Budget – Actual Budget

= 4,620 – 4,200 = 420
Saving = Income – Actual Budget
= 6,600 – 4,200 = 2,400
Task 3.2: Developing Personal Budget
Description Planned Income Actual Income Income Variance
INCOME:
Income salary 6000 6,000 0

Description Planned Budget Actual Budget Budget Variance

EXPENDITURES:
Closing 500 x 10% = 550 500 50
Food 2000 x 10% = 2,200 2,000 200
Entertainment 100 x 10% = 110 100 10
Utility 500 x 10% = 550 500 50
Personal expense 50 x 10% = 55 50 5
School fee 700 x 10% = 770 700 70
Cost share 100 x 10% = 110 100 10
Transportation 100 x 10% = 110 100 10
Other 150 x 10% = 165 150 15
Total 4,620 4,200 420

Budget Variance = Planned Budget – Actual Budget

= 4,620 – 4,200 = 420
Saving = Income – Actual Budget
= 6,000 – 4,200 =1,800

Task 3.3: Developing Saving Plan

Saving = Income – Actual Budget

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 = 6,000 – 4,200 =1,800
Bilise needs to heve Br 2,000 saving amount in January, 2016 and her saving is Br 1,800. So, she
need additional Br 200 (2,000 – 1,800).
Task 3.4: Advantage of Saving for the Society
Become financially independent
Buy a home, car, and other utilities
Get out of debt
To cover annual expenses
Unforeseen expense
Emergencies
To have a good life
Model Exam Three

Project One

Develop Understanding of Taxation

BesualemPlc is an importer of reinforcement bars from Belgium. The company has been
engaged in buying and selling activities. At the end of November 2014, the company paid net
amount of 3,000.00 ETB to ERCA for VAT. During the month of November it earns birr
1,541,000 VAT inclusive sales of reinforcement bars. In addition BesualemPlc paid an
employment income tax of 6,000 ETB per month collected from employees and also paid
administrative and general expenses of 15,000.00 ETB during the month.

Task 1.1: Determine amount of Direct tax liability of the company for month of October 2014.

Task 1.2: Determine the amount of input and output VAT for the month of October 2014.

Project Two

Work effectively in the financial service sector

DNB Bank a newly established bank as per the proclamation of Ethiopia and you are an
employee of this bank and assigned to perform banking activities to prepare daily report on
saving/withdrawal amount of more than 200,000.00 ETB to the National Bank of Ethiopia and
financial intelligence office.

Task 2.1: Identify the five organizational policies, guidelines, legislation, procedures or code of
practice.

Task 2.2: As a team member in the bank identify your roles in supporting your team member
and your work place interaction mechanisms.

Task 2.3: Identify the business technology applied to send your report to the national bank of
Ethiopia and financial office.

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Project Three

Develop and Use Personal Budget and Saving Plan

AtoFantahun is a permanent employee of Ethio Construction Company earns monthly net salary
of 9,500 ETB. The monthly personal expenditures as per the following description and the
remaining amount will be deposited to his personal saving account.

1. Clothing ………………………….15%
2. Food and Beverage………………..20%
3. Medical…………………………….5%
4. Rent………………………………..20%
5. Transportation……………………..2%
6. Education…………………………..10%

He plans to open Barber Shop with capital of 80,520.00 ETB after one year. As per his business
plan, this capital is covered from annual personal saving account and the remaining from Addis
Saving and Credit Association with 8.5% annual interest rate for three years and the principal
amount will be paid semiannually at equal installment.

Task 3.1: Prepare monthly and annual budget for the year considering that there is no change in
earning and expense in the year.

Task 3.2: Identify the sources of information to develop business plan.

Task 3.3: Determine:

a. Amount of loan from Addis Saving and Credit Association.

b. Amount of principal and interest payment for the first year.
c. Amount of outstanding principal balance at the end of the second year.

Project Four
Process Customer Accounts and Transaction
Assume you are an account officer of AlemPlc among the tasks and responsibilities listed on
your job description to handle issues related to financial sectors, to create business relationship
with concerned government and private companies and to process customers’ account and
transaction of your company.

Task 4.1: Demonstrate the possible document required from your companies to open current
bank account in CBE.
Task 4.2: Demonstrate the advantages of saving deposit account to your company if you maintain
saving account.
Task 4.3: Demonstrate the possible challenges that affect your job with regards to banks
activities.

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 Answer for Model Exam Three

Project One

Task 1.1: Calculation of Direct Taxes

Net Sales -------------------------------------------------------------1,340,000

Less: Administrative and General Expense ------------------- 15,000

Income before VAT -------------------------------------------------1,325,000

Less: Business Income Tax (30%) ---------------------------------397,500

Net Income -----------------------------------------------------------927,500

Total Direct Taxes = Business Income Tax + Employment Income Tax

= 397,500 + 6,000

= 403,500

Task 1.2: Calculation of Indirect Taxes

Output VAT = 1,541,000 x 15/115 = 201,000

Input VAT = 3,000

VAT Payable = Output VAT – Input VAT

= 201,000 – 3,000

= 198,000

Project Two

Task 2.1: Organizational Policies, guidelines, legislation, procedures or code of practice

 Anti-discrimination legislation
 Electronic fund transfer (EFT) code of conduct
 Finance code
 Financial service reform act (FSRA)
 Financial transaction reports act
 Industry code of practice
 Legislation covering competition prudential regulation
 Anti-money laundering and counter terrorism financing acts.

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Task 2.2: Roles in supporting a team member and work place interaction

 Explaining and clarifying

 Helping colleagues
 Problem solving
 Providing encouragement
 Providing feedback to a team member
 Undertaking extra tasks if necessary

Task 2.3: Business Technology applied to send Report

Computer technology such as laptop and personal computers

Printer
Scanner
Fax machine
Telephone
Fax machine, etc.

Project Three

Task 3.1: preparing Monthly Annual Budget

S.N Expenditures Monthly Budget Annual Budget

1 Clothing 9,500 x 15% = 1,425 1,425 x 12 = 17,100
2 Food and Beverage 9,500 x 20% = 1,900 1,900 x 12 = 22,800
3 Medical 9,500 x 5% = 475 475 x 12 = 5,700
4 Rent 9,500 x 20% = 1,900 1,900 x 12 = 22,800
5 Transportation 9,500 x 2% = 190 190 x 12 = 2,280
6 Education Fee 9,500 x 10% = 950 950 x 12 = 11,400
Total 6,840 82,080

Annual Income of AtoFantahun

= Monthly Income x 12

= 9,500 x 12 = 114,000

Personal Saving

= Income – Expenditure

= 114,000 – 82,080 = 31,920

Task 3.2: Source of Information to develop the business plan

 Chamber of commerce

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  Financial planners and financial institution representatives, business planning specialists
and marketing specialists
 accountants
 lawyers and providers of legal advice
 government agencies
 industry/trade associations
 online gateways
 business brokers/business consultants

Task 3.3:

A. Amount of Loan
= Capital – Personal saving
= 80,520 – 31,920
= 48,600
B. I= PRT
= 48,600 x 8.5% x1
= 4,131

Maturity Value of 1st Year

MV = P + I

= 16,200 + 4,131

= 20,331

C. Outstanding Principal at the end of 2nd Year

= 8,100 x 4 = 32,400

Exam Model Four

Project One

Bilise is a secretary at Gafat Company her net earnings of 3,000.00; 1,000.00 and 1,500.00 for
salary, transportation allowance and house allowance respectively, 60% of her net salary and
transportation allowance is for her variable expenditure on the other hands, the sum of 50% her
variable expenditure and 70% of her house allowance is fixed expenditure, the excess amount
from her total expenditure will be deposited to saving account develop under taxation.

Task 1.1: Prepare the semiannual personal budget.

Task 1.2: Determine the percentage of variable expenditure, fixed expenditure and saving
amount from total earning.

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Task 1.3: Demonstrate the possible ways to reduce the personal expenditure and increase
personal saving develop understanding taxation.

Project Two

During the month of December 2014, FM manufacturing earns birr 0.5 million VAT inclusive
from sales of finished products with a manufacturing cost of 0.3 million VAT inclusive and
general and administrative expense of 80,000 ETB reported from finance department FM
manufacturing declares bonus of 48,000.00 ETB for the years 2014 to be paid on January,
February, and March at equal installment in 2015 for AtoBilisumma who permanent employer is
earning 7,800.00 ETB per month for January 2015, during the month of January, AtoBilisumma
earn over time of 1,200 ETB.

Task 2.1: Determine total of direct tax liability of FM manufacture for the month of December
2014.

Task 2.2: Determine the total tax liability of AtoBiisumma for the month of January 2015.

Task 2.3: Determine indirect tax liability of FM manufacturing for the month of December.

Project Three

Gada International Bank Share Company is a newly established commercial bank to which you
are assigned as its bank clerk as long as manager of FalmataPlc which is a new customer to the
bank has appropriated and requested you to open and process current account its name you have
opened the bank account accordingly.

Task 3.1: List the possible guidelines or directives that help you open and process customer
accounts.

Task 3.2: Demonstrate the procedures for customer identification and the accuracy and
sufficiency of information provided by customer.

Task 3.3: Demonstrate at least five possible transactions that can be processed by you.

Task 3.4: Determine and list at least five equipments which are needed to automate the opening
and processing of customer transaction.

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Project Four

ORO engineering corporation has signed a road construction agreement contact with Ethiopia
road authority to reward construction the main road from Addis Ababa to Dire Dawa with a
contact amount of 250 million 80% of the contract amount will be financed from the loan
released by commercial bank of Ethiopia at an annual interest rate of 13% to be paid and the paid
as following terms payment.

 At the end of the 1st Year……………………………..10% of principal

 At the end of the 2nd Year………………………….. 20% of the principal
 At the end of the 3rd Year…………………………….30% of the principal
 At the end of the 4th Year…………………………….20% of the principal
 At the end of the 5th Year…………………………….25% of the principal
 At the end of the 6th Year…………………………….5% of the principal

Task 4.1: Determine:

A. Amount of loan from commercial bank of Ethiopia.

B. Amount of principal and interest repayment from the 2nd year.
C. Amount of outstanding balance at the end of the 5th year including interest expense.
D. Total interest of the loan.

Answer for Model Exam Four

Project One

Task 1.1: Preparation of Semiannual Personal Budget

Description Monthly Budget Plan Semi-Annual Budget Plan

Earnings (Income):
Salary Income 3,000 3,000*6 = 18,000
Transportation Allowance 1,000 1,000*6 = 6,000
House Allowance 1,500 1,500*6 = 9,000
Total Income 5,500 5,500*6 = 33,000
Variable Cost
60%*3000 + 1000 2,400 2,400*6 = 14,400
Fixed Cost
50%*2400+70%*1500 2,250 2,250*6 = 13,500
Total Expense:
(Fixed+ Variable Cost) 4650*6 4,650*6 = 27,900
Saving 850 5,100

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Task 1.2:Determine the percentage of variable expenditure, fixed expenditure and saving
amount from total earning.
Variable Cost = 2400/5500*100 = 43.63%
Fixed Cost = 2250/5500*100 = 40.9%
Saving Rate = 850/5500*100 = 15.45%

Task 1.3: Possible ways to reduce the personal expenditure and increase personal saving

Ways to reduce expenses may include:

 comparing prices for essential items
 monitoring use of utilities such as electricity, gas and water
 moving back home
 reducing expenditure on discretionary items such as expensive clothing, magazines,
eating out
 share accommodation
 using cheaper modes of transport

Ways to increase income may include:

 combining part-time work with studying
 investigating eligibility for student allowances or other relevant government benefits
 taking on a part-time job or holiday work.
Project Two: Understanding of Taxation

FM Manufacturing
Income Statement for Tax Purpose
For the month of December 31, 2014

Sales (500,000-65,217.39) --------------------------- 434,782.61

Less: CGM (300,000-39,130.43) -------------------- 260,869.57
Gross Profit ----------------------------------------------173,913.04
Less: General administrative expense----------------- 80,000
Income before Tax ----------------------------------- 93,913.04
Less: Income Tax (93,913.04 x 30%) --------------- 28,173.90
Net Income------------------------------------------------ 65,739.14

Task 2.1: Determine total of direct tax liability of FM manufacture for the month of December
2014.
Personal Income Tax =7,800*35% - 662.50
= 2067.5
Total Direct Tax for 2014=28,173.90 + 2,067.50 = 30,241.40

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Task 2.2: Total tax liability of AtoBilisuma for the month of January 2015.

Total Direct Tax for January 2015= 7,800+16,000 (48,000/3) +1,200

= 25,000*35% - 662.50
= 8,087.70

Task 2.3: Indirect Tax Liability

 Sales including VAT = 500,000
Output VAT = 500000*15/115= 65,217.39

 Cost of good manufactured including VAT = 300,000

Input VAT = 300,000*15/115= 39,130.43

 VAT Payable = Output VAT – Input VAT

= 65,217.39 – 39,130.43
= 26,086.96

Project Three

Task 3.1: information required for opening accounts

 Purpose for which the account will be used.

 Primary account holders’ name, address and contact
 Amount of initial deposits
 Signatories to the account
 Required links to other account s held.

Information required for processing customer accounts:

 Identify customer accounts needs

 Open customer accounts
 Transfer or close customer accounts
 Administer the account process

Task 3.2: Procedures for Customer Identification and Accuracy of the Information:

 Authenticity of signatures
 Checks against or links to existing customer account information
 Completeness of documentation

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  Provision of sufficient documentary evidence (points) to meet the requirements for
establishing a new account.

Task 3.3: Duties expected from a Bank Clerk:

 Provide customer service

 Process basic financial transactions
 Administer the transaction process
 Primary contact of customers. They are responsible for answering customer questions
about baking products and services,
 Administering various banking transactions and marketing financial products, among
others.

Task 3.4: Equipment needed to automate the opening and processing the customer
transaction:

Laptop or personal computer

Printer
Scanner
Photocopier
Fax machine
Telephone

Project Four

Yea Principal % of Payment amount Interest of 13% Remaining Total

r Payment from Principal Payment
1 200,000,000 10% 20,000,000 26,000,000 180,000,000 46,000,000
2 200,000,000 20% 40,000,000 23,400,000 140,000,000 63,400,000
3 200,000,000 30% 60,000,000 18,200,000 80,000,000 78,200,000
4 200,000,000 20% 40,000,000 10,400,000 40,000,000 50,400,000
5 200,000,000 15% 30,000,000 5,200,000 100,000,000 35,200,000
6 200,000,000 5% 10,000,000 1,300,000 0 11,300,000
200,000,000 84,500,000 284,500,000

Task 4.1:

A. 250,000,000 x 80%= 200,000,000

B. 40,000,000 +23,400,000= 63,400,000
C. 10,000,000+1,300,000= 11,300,000

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 D. 26,000,000+23,400,000+18,200,000 +10,400,000+5,200,000+1,300,000 =84,500,000

Model Exam Five

Project One

Task 1.1: List Standard procedures and system of financial services institutions.

Project Two

Task 2.1: Write at least four (4) fixed expenses

Task 2.2: Write at least four (4) variable expenses

Task 2.3: What are the ways to reduce expenses?

Project Three: Develop Understanding of Taxation

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The following transactions are given:

November 1: Purchase Machinery for cash birr 50,000 subject to VAT of 15%.

November 2: Purchase merchandise for cash birr 100,000 from XYZ subject to VAT of 15%.

November 5: Sold Merchandise for cash VAT exclusive price of birr 400,000.

November 10: Purchase merchandise on account from ABC Company birr 30,000.

November 20: Sold Merchandise on account at VAT exclusive price of birr 10,000.

Required:

Task 3.1: Record the necessary journal entries.

Task 3.2: Calculate VAT Payable.

Task 3.3: Calculate VAT Receivable.

Task 3.4: Determine the amount of VAT to be paid declared by Walta to tax authority as of
November 30.

Answer for Model Exam Five

Project One

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Task 1.1: Standards may include:

ethical behaviour expectations

legislation
organisational policies and procedures
specified work standards
standards set by work group.

Safety procedures may include:

 completing required documentation
 displaying health and safety brochures, magazines and other material
 following OHS guidelines relevant to workplace
 keeping workplace clean and tidy
 local, State or Territory and Commonwealth legislation
 office practice manual
 undergoing operator training when using new equipment or processes.

A financial system is a system that allows the exchange of funds between lenders, investors,

and borrowers. Financial systems operate at national, global, and firm-specific levels.

Project Two
Task 2.1: Fixed Expenses includes
Rent Expenses
School Expenses
Mortgage expense
Insurance Expenses
Utility Expenses (electricity, water, etc)

Task 2.2: Variable Expenses includes

Groceries
Parking
Eating Out
Clothing and Shoes
Hair Care
Magazines, books, news paper
Lottery
Daycare

Task 2.3: Ways to reduce Expenses

Comparing price of alternative items
Eliminating eating out

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 Reduce grooming expense
Use public transportation
Move to a less expensive area
Project Three
Task 3.1: Recording the Necessary Journal Entry
November 1: Machinery…………………………………………..50,000
VAT Receivable…………………………………….7, 500
Cash……………………………………………..57,500
November 2: Purchase………………………………………….100,000
VAT Receivable…………………………………..15,000
Cash……………………………………………..115,000
November 5: Cash……………………………………….460,000
Sales………………………………………400,000
VAT Payable……………………………….60,000
November 10: Purchase…………………………………30,000
VAT Receivable………………………….4,500
Accounts Payable…………………………….34,500
November 20: Accounts Receivable……………………11,500
Sales………………………………………10,000
VAT Payable……………………………….1,500
Task 3.2: VAT Payable
= 60,000 + 1,500
= 61,500
Task 3.3: VAT Receivable
= 7,500 + 15,000 + 4,500
= 27,000

Task 3.4: VAT to be Paid

= VAT Payable – VAT Receivable
= 61,500 – 27,000
= 34,500

Model Exam Six

Project One: Your Company and Commercial Bank of Ethiopia

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Task 1.1: Demonstrate the possible documents required from your company to open current
bank account in CBE.

Task 1.2: Demonstrate the advantages of saving deposit account for your company if you
maintain saving account.

Task 1.3: Demonstrate the possible challenges that affect your job regards to banks activities.

Project Two: Develop Personal Budget and Saving Plan

AtoFantahun is a permanent employee of Ethio Construction Company earning monthly salary

of 9,500 ETB. He has monthly personal expenditures as per the following and the remaining
amount will be deposited to his personal saving account.

• Clothing ………………………………………..….15%
• Food and Beverage………………………………...20%
• Medical………………………………………..……5%
• Rent……………………………………...………….20%
• Transportation………………………………….……2%
• Education Fees………………………..………….…10%

He plans to open a Barber Shop with capital of 80,520.00 ETB after one year. As per this
business plan, this capital is covered from annual personal saving account and the remaining
from Addis Saving and Credit Association at 8.5% annual interest rate for three years and
principal amount will be paid semiannually at equal installment.

Task 2.1: Prepare monthly and annual budget for the year consider that there is no change in
earnings and expenses in the year.

Task 2.2: Identify the source of information’s to develop his business plan.

Task 2.3: Determine:

A. Amount of loan from Addis Saving and Credit Association.

B. Amount of principal and interest repayment for the first year.
C. Amount of outstanding principal balance at the end of the second year.

Project Three: Develop Customer account and Transaction

Task 3.1: State Financial and non-financial institutions that are available in Ethiopia and
financial markets in Ethiopia.

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Task 3.2: State financial instrument that are used in the money market in Ethiopia and on a
global scale and instruments traded on the short term money market in Ethiopian context.

Task 3.3: Explain the company strategies or opportunities in measuring business performance.

Project Four: Understanding of Taxation and Direct Tax and Indirect Tax

Commercial Bank of Ethiopia purchase IT infrastructure materials Br 300,000 before VAT and
the have five employees and the company paid employment income tax Br 8,500 for the month
of January 2015. The company earns income for the year 2015 Br 1,081,000 VAT included.

Task 4.1.Calculate direct and indirect tax for the year 2015.

Task 4.2.State the necessary documents for the tax in the questions.
Answer for Model Exam Six

Project One

Task 1.1: Possible Documents required to open current bank account

 Purpose for which the account will be used

 Primary account holder’s name, address, and contact
 Signatories to the new account
 Amount of initial deposits
 Required links to other accounts held

Task 1.2: Advantages of Saving Deposit Account

Save for major purchases

Provide financial cushion
Expand and grow
Liquidity
Safety
Positive reinforcement

Task 1.3: Possible Challenges that affect your job regards to bank activities

 Customer service management of the bank

 Performance management
 Operation and execution
 Uncertainty (Risk)

Project Two

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Task 2.1: Preparation of Monthly and Annual Budget

S.N Expenditures Monthly Budget Annual Budget

1 Clothing 9,500 x 15% = 1,425 1,425 x 12 = 17,100
2 Food and Beverage 9,500 x 20% = 1,900 1,900 x 12 = 22,800
3 Medical 9,500 x 5% = 475 475 x 12 = 5,700
4 Rent 9,500 x 20% = 1,900 1,900 x 12 = 22,800
5 Transportation 9,500 x 2% = 190 190 x 12 = 2,280
6 Education Fee 9,500 x 10% = 950 950 x 12 = 11,400
Total 6,840 82,080

Annual Income of AtoFantahun

= Monthly Income x 12

= 9,500 x 12 = 114,000

Personal Saving

= Income – Expenditure

= 114,000 – 82,080 = 31,920

Task 2.2: Source of Information to develop the business plan

 Chamber of commerce
 Financial planners and financial institution representatives, business planning specialists
and marketing specialists
 accountants
 lawyers and providers of legal advice
 government agencies
 industry/trade associations
 online gateways
 business brokers/business consultants

Task 2.3:

D. Amount of Loan
= Capital – Personal Saving
= 80,520 – 31,920
= 48,600
E. Amount of Principal and Interest repayment for the first year
I= PRT
= 48,600 x 8.5% x1
= 4,131

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Maturity Value of 1st Year

MV= P + I

= 16,200 + 4,131

= 20,331

F. Outstanding Principal at the end of 2nd Year

= 8,100 x 4 = 32,400

Project Three

Task 3.1: State Financial and Non-Financial Institutions Available in Ethiopia

 Commercial Banks
 Investment Banks
 Insurance Companies
 Brokerages
 Investment Companies

 Non-financial institutions include other reporting entities and international cooperation’s,

etc.
Task 3.2: Instruments traded on the short term money market include:
 Bills of exchange
 Commercial bills
 Government bills
 Promissory notes
 Treasury bills.

Task 3.3: Company strategies or opportunities in measuring business performance

 Career planning or development

 Coaching, mentoring and/or supervision
 Formal/informal learning programs
 Performance appraisals
 Personal study

Project Four

Task 4.1: Computing Direct and Indirect Taxes

Purchase = 300,000 before VAT

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Income = 1,081,000 VAT included

Indirect Tax (VAT)

Output VAT = 1,081,000 X 15/115 = 141,000

Input VAT = 300,000 X 15/100 = 45,000

VAT Payable = Output VAT – Input VAT

= 141,000 – 45,000

= 96,000

Total Indirect Tax = 96,000

Direct Taxes

Income (1,081,000 – 141,000) ---------------------------940,000

Less: Purchase ---------------------------------------------- 300,000

Income Before Tax --------------------------------------- 640,000

Less: Income Tax (30%) -------------------------------192,000

Net Income -------------------------------------------------448,000

Total Direct Taxes

1. Employee Income Tax --------------------------102,000

2. Business Profit Tax ------------------------------192,000
Total Direct Taxes -------------------------------194,000

Task 4.2: Necessary Tax Documents Required

Profit and Loss Statement

VAT Declaration
Business Income Tax Declaration
Employment Income Tax Declaration, etc.

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 Model Exam Seven

Project One: Process Customer Transaction

AtoAsefa opens a new business on March 1, 2007 using the following transactions.

Instruction: Pass the necessary Journal entry.

On March 1, 2007:

Cash birr 8,300.00

Supplies birr 2,000.00

Office Equipment birr 19,000.00

On March 2 paid birr 1,800.00 for the three month rent on building leased.

On March 3 purchase machinery for birr 3,600.00 on cash.

On March 4 paid birr 200.00 for advertising expense.

On March 8 paid birr 100.00 for customers entertainments and other items.

On March 13 paid weekly salary birr 1,200.00.

On March 16 received birr 4,400.00 from services rendered to customers.

On March 20 paid weekly salary birr 1,200.00.

On March 20 purchase additional repair machinery on account for birr 2,000 from the suppliers.

On March 24 purchase supplies for birr 800.00 on cash.

On March 27 paid weekly salary birr 1,200.00.

On March 31 paid Br 500.00 cash for electricity & for other utility consumed during the month.

On March 31 received birr 4,200.00 from services rendered to customers on cash.

On March 31 Services rendered to customers during the month but not collected by the end of
the month birr 4,600.00.

On March 31AtoAsefa paid birr 1,800.00 cash for personal use.

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Project Two: Determination of Taxation

On May 20,2014 Rahwa Grocery sold birr 20,000.00 merchandise which is subject to 5% sales
tax terms 3/10,n/30. On May 21 the purchaser returned for birr 2,000.00 which is for defective
goods and paid for the remaining amount on May 31, 2014. Based on the above information
answer the following tasks:

Task 2.1: Calculate the Credit Side of the accounts

Task 2.2: Calculate the Debit Side of the accounts

Task 2.3: Calculate the total balances.

Project Three: Team Performance

Instruction: Under this project you are expected to perform the following tasks based on the
information provided:

Task 3.1. List at least four performance review tips of a team.

Task 3.2. List at least three heart of a true team.

Task 3.3. List at least four settings of ground rules of team.

Task 3.4. List at least four important skills and habits of a team member.

Project Four: Develop Business Practice

Task 4.1. List at least four conditions that business opportunities may be influenced.

Task 4.2. List at least five conditions business viability may include.
Answer for Model Exam Seven
Project One
March 1: Recording the Necessary Journal Entry
Cash --------------------8,300
Supplies ---------------2,000
Office Equipment ----19,000
Asefa’s Capital -----------------29,300

March 2:
Prepaid Rent --------------1,800
Cash ----------------------------------1,800

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March 3:
Machinery ------------------3,600
Cash ----------------------------- 3,600

March 4:
Advertising Expense --------------200
Cash ----------------------------------- 200

March 8:
Entertainment Expense -----------100
Cash ---------------------------------100

March 13:
Salary Expense -----------------1,200
Cash -------------------------- 1,200

March 16:
Cash ---------------------4,400
Service Revenue -------------4,400

March 20:
Salary Expense -----------------1,200
Cash -------------------------- 1,200

March 20:
Repair Machinery ------------------2,000
Accounts Payable --------------------2,000

March 24:
Supplies ------------------800
Cash -------------------- 800

March 27:
Salary Expense -----------------1,200
Cash -------------------------- 1,200

March 31:
Utility Expense -----------------500
Cash --------------------------500

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March 31:
Cash ---------------------------4,200
Service Revenue -----------------4,200

March 31:
Accounts Receivable --------------4,600
Service Revenue --------------------------4,600

March 31:
Drawing -----------------1,800
Cash ------------------------1,800

Project Two
Determination of Taxation
Task 2.1: 20,000 x 5% = 1,000 (credit side)
Task 2.2: 2,000 x 5% = 100 (debit side)
Task 2.3: Credit Side – Debit Side
= 1,000 – 100 = 900
Or
20,000 – 2,000 = 18,000 x5% = 900
Project Three: Team Performance
Task 3.1: Performance Review Tips of a Team
 Support innovation
 Leadership matters
 Hire the right people
 Keep learning
 Streamline processes
 Build commitment
 Get the team involved in managing resources
 Leave rank at a door
 Listen actively
Task 3.2: Heart of a True team
 Demonstrates reliability
 Communicates constructively
 Listen’s actively
 Functions as an active participant
 Shares openly and willingly
 Cooperates and pitches into help
 Exhibits flexibility
 Shows commitment to the team
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  Workers as a problem solver

Task 3.3: Settings of Ground Rules of a Team

 Start the meeting on time
 Have a prepared agenda with an objective and expected outcomes
 End the meeting on time
 Parking lot discussion items that don’t relate to this meeting’s objective
 Complete action items as committed
 One person speaks at a time
 All team members are equals

Task 3.4: Important Skills and Habits of a Team Member

 Communication skills
 Skills for a healthy group climate
 Skills for an effective group process
 Flexibility over structure
 Begin with the end in mind
 Be proactive
 Happiness over stress
Project Four
Task 4.1: Conditions that Business Opportunities may be influenced
Expected financial viability
Skills of operator
Amount and types of finance available
Returns expected or required by owners
Likely return on investment
Finance required
Lifestyle issues
Task 4.2: Elements of Business Viability
 Market competition
 Timing/cyclical considerations
 Skills available
 Resources available
 Location and/or premises available
 Risk related to a particular business opportunity especially in OHS and
 Environmental Considerations.

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 Model Exam Eight
Project One
Process Customer Accounts
Assume that you are the employee of Commercial Bank of Ethiopia in the Clerical position and a
new customer wants to open a new bank account and you are required to perform the following
tasks:
Task 1.1: What is the information you provide to your customer?
Task 1.2: What is the information required to for opening accounts?
Task 1.3: What is the information required to transfer or close a bank account?
Task 1.4: How could you process the customer accounts?

Project Two
Develop Understanding of the Ethiopian Financial System and Markets
You are required to perform the following task:
Task 2.1: Describe the specific financial markets in Ethiopia. Which financial market enables us
to translate the Dollar to Birr?
Task 2.2: List down the major purposes of Ethiopian Financial Markets.
Task 2.3: Explain the major participant in the financial markets.
Task 2.4: What are the instruments traded in the short term money markets?

Project Three
Personal Budget and Saving
The total income of budgetary plan for Megabit 30, 2006 is 3,000. The following information is
given during the month:
S.N Expenses Budgetary Budgetary Actual Variance
rate for the expenditure for budget for budget for the
month of the month of the month of month of
Megabit Megabit Megabit Megabit
1 Food &Groceries 35% 1,000
2 Rent expense 10% 350
3 Transportation 15% 400
4 Clothes &Shoes 10% 250
5 Medical expense 8% 250
6 Laundry 3% 125
7 Utility 5% 150
8 Education expense 5% 200
Saving
Total Budget

Task 3.1: Prepare the budget Expenditure in birr for the expenses incurred during Megabit.

38 | P a g e
Task 3.2: Prepare the budget Variance.
Task 3.3: Calculate the net saving in birr and saving rate during the month.

Project Four
Develop Understanding of Taxation
Brothers Plc is a business organization and during Megabit 30, 2006 the following information
are given for the tax purpose:

S.N Tax Categories Amount Tax Amount

1 Business profit 100,000
2 Sales VAT Inclusive 34,500
3 Employee Income 10,000
4 Dividend Income 15,000
5 Excise Tax 15,000
6 Custom duty 17,000

The company purchased infrastructures during Megabit by 11,500 Inclusive VAT.

Task 4.1: Calculate the Direct and Indirect tax for the month of Megabit.
Task 4.2: What are the roles of TAX for the Ethiopian Economy?
Answer for Model Exam Eight

Project One

Task 1.1: Information provided to customer may include descriptions of:

 Resolve Problems
 Provide operational Support
 Sell bank products
 Provides information to customers by verifying understanding of request; answering
questions; offering assistance.
 Initiates service by recording requests; forwarding to dispatching.
 Collects revenue by receiving and recording payments.
 Resolves billing problems by identifying the problem; explaining procedures;
 Improves quality results by evaluating processes; recommending changes.
 Accomplishes customer service

Task 1.2: Information required for Opening accounts:

 Amount of initial deposits
 Other signatories to the account
 Primary account holder’s name, address and contact.

39 | P a g e
  Purpose for which the account will be used.
 Required links to other accounts held.
Task 1.3: Required information to transfer or close an account:
 Account details to enable transfer of remaining funds.
 Details of possible complaints relating to the account.
 Reasons for transfer or closure of accounts.
Task 1.4: How could you process customer accounts?
 Identify customer accounts needs.
 Open customer account.
 Transfer or close customer account.
 Administer the account process.

Project Two
Task 2.1: Financial markets in Ethiopia includes:
 bond market
 derivatives markets
 foreign exchange market
 money market including the short term money market
 Options and futures market.
NB: Foreign Exchange market enables us to translate Dollar to Birr?

Task 2.2: The purpose of Ethiopia financial markets includes:

 Enabling participants to invest surplus funds by buying securities.
 Enabling participants to raise required funds by issuing securities.
Task 2.3: Participants in the financial markets may include:
 banks and non-banking financial institutions
 Investors include either corporations or individuals.
 local and international governments
 Speculators include either corporations or individuals.

Task 2.4: Instruments traded on the short term money market include:
 Bills of exchange
 Commercial bills
 Government bills
 Promissory notes
 Treasury bills.

Project Three: Personal Budget and Saving

S.N Expenses Budgetary Budgetary Actual Variance
rate for the expenditure for budget for budget for the
month of the month of the month of month of

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 Megabit Megabit Megabit Megabit
1 Food &Groceries 35% 1,050 1,000 50
2 Rent expense 10% 300 350 (50)
3 Transportation 15% 450 400 50
4 Clothes &Shoes 10% 300 250 50
5 Medical expense 8% 240 250 (10)
6 Laundry 3% 90 125 (35)
7 Utility 5% 250 150 0
8 Education expense 5% 150 200 (50)
Saving
Total Budget 2730 2,725 5

Saving in Birr = Income – Actual Budget

= 3,000 – 2,725

= 275

Saving Rate (%)

3,000 = 100

275 =?

27,500/3,000 = 9.17%

Project Four

Task 4.1: Calculation of Direct Taxes

 Business Profit Tax = 100,000 * 30% = 30,000

 Employee Income Tax = 10,000
 Dividend Income Tax = 15,000 * 10% = 1,500

Total Direct Taxes = 30,000 + 10,000 + 1,500 = 41,500

Calculation of Indirect Taxes

Vat Payable

= Out Put VAT – Input VAT

= 4,500 (34,500 * 15/115) – 1,500 (11,500 * 15/115)

= 3,000

Task 4.2: Role of Tax for Ethiopian Economy

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  financing government activity
 maintaining equity in the national economy
 promoting efficiency where markets fail to control pollution or health dangers
 social infrastructure
 social services

Model Exam Nine

Project One

Task 1.1. Process customer Transaction

The PLC has borrowed birr 200,000 to be repaid at a lump sum at one year with an interest rate
of 12% per annum. Calculate the total amount that should be collected from the PLC at the end
of the year.

Task 1.2.Process Customer Account and Work effectively in the financial sector.

At the end of year one the PLC has planned to shift its business and hence wants to close its
accounts which are maintained in your bank. As a bank clerk, what activities do you perform to
close the accounts of brothers PLC?

Task 1.3. Identify the role of the Ethiopian Financial System

NIB International Bank is one of the financial institutions which was established in order to play
its intermediary role in the Ethiopia economy. Explain this intermediary role of your bank.

Task 1.4. Develop Understanding of Debt and Consumer Credit.

What is the importance of receiving credit for firms from financial institutions such as Brothers
PLC given above?

Task 1.5: In order to start a business evaluating business viability is essential. If Tamirat has
proposed a new business for you and ask for advice in order to evaluate its viability as an adviser
of him, how can you evaluate his proposed business viability?

Project Two:

Develop Understanding of Taxation

EX Share Company is registered and licensed a supplier of Enjera to different Universities in

Ethiopia. During the year 2012, the company earns an income of Birr 1,500,000 and birr
1,800,000 from Adama and Addis Ababa Universities respectively including VAT. The total
cost of the product is 1,980,000 before VAT.

In addition, the company earned birr 160,000 from other source of income with zero VAT rate.

42 | P a g e
On the other hand the company incurred 300,000 general and administrative expenses for the
year. During the last month of 2012, the company withholds birr 65,000 for employment
income tax and the company is expected to pay 30% profit tax.

Task 2.1: Calculate the Direct Tax.

Task 2.2: Calculate the Indirect Tax for EX Share Company.

Answer for Model Exam Nine

Project One

Task 1.1:

I = PRT

= 200,000 X 12% = 24,000

MV = P+I

= 200,000 + 24,000

= 224,000

Task 1.2: Activities required to Close the Accounts

 Check the balance on the Brother’s account you want close

 Confirm that you are transferred the fund balance
 Issue the check for the remaining balance
 Close the account
 Remove any revolving bank services from the account

Task 1.3: Role of NIB International Banks as Financial Intermediaries

 Credit provision
 Liquidity provision
 Risk management services
 Remittance of Money
 Rapid Economic Development
 Promotion of Entrepreneurship 
 Employ credit analysts who have the ability to assess the creditworthiness of firms that
wish to borrow funds.
 Serve as financial intermediaries by placing the securities that are issued by firms.
 Repackage the deposits received from investors into loans that are provided to firms.

Task 1.4: Importance of Receiving Credit

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  Flexibility
 Cost Effective
 Retained Profits
 Tax Benefits
 Source of Capital

Task 1.5: Factors to consider when evaluating viable business opportunities 

• Potential for growth

• Infrastructure
• Market for the goods and services
• Rewarding to the investor
• Price structure
• Competition and Competitive advantage 
• Incentives
• Legal Consideration
• Financial viability
• Personnel, Training and Management

Project Two: Develop Understanding of Taxation

Total Income = 1,500,000 + 1,800,000 VAT Inclusive

= 3,300,000 x 15/115

= 430,434,78

Therefore, 3,300,000 – 430,434.78 = 2,869,565.22

Total Net Sales = 2,869,565.22 + 160,000

= 3,029,565.22

Income Statement for Tax Purpose

Sales ---------------------------------------------------------------------------------3,029,565.22

Less: CGS --------------------------------------------------------------------------- 1,980,000

Gross Profit ------------------------------------------------------------------------- 1,049,565.22

Less: General and Administrative Expense --------------------------------------- 300,000

Income Before Taxes ----------------------------------------------------------------- 749,565.22

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Less: Business Income Tax (30%) -------------------------------------------------- 224,869.57

Net Income ------------------------------------------------------------------------------- 524,695.65

Total Direct Tax = 224,869.57 + 65,000

= 289,869.57

Indirect Tax

VAT Payable = Output VAT – Input VAT

= 430,434.78 – 297,000 (1,980,000 x 15/100)

= 133, 434,78

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