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Caa 101 Introduction To Accounting Ii (Saturday) Question Paper
Caa 101 Introduction To Accounting Ii (Saturday)
Course:Bachelor Of Commerce
Institution: Kca University question papers
Exam Year:2011
1
UNIVERSITY EXAMINATIONS: 2010/2011
EXAMINATION FOR THE BACHELOR OF COMMERCE
CAA 101 INTRODUCTION TO ACCOUNTING II (SATURDAY)
DATE: DECEMBER 2011 TIME: 2 HOURS
INSTRUCTIONSAnswer ALL Questions
QUESTION ONE
a) Discuss the qualitative characteristics of financial statement information (10 Marks)
b) Briefly explain the importance of a cash flow statement to a firm (5 Marks)
c) In financial statement analysis various categories of ratios may be used to determine the
performance of an enterprise. Briefly explain any five classifications (10 Marks)
QUESTION TWO
The following version of the receipts and payments account has been provided by the treasurer of
Maendeleo Social Club for the year ended 31 October 2003.
Sh '000' Sh '000'
Opening balance 500
Accountancy fees 200
Bar purchases 24,000
Bar sales 55,000
Dance: Expenses 900
Ticket sales 1600
Foods: Purchases 4,500
Sales 8,000
Insurance 500
Electricity 1,500
2
Member's subscription 35,000
Office expenses 22,000
Purchase of furniture 4,000
Rates 2,000
Salaries and wages: Bar staff 10,000
Other staff 14,000
Telephone 3,000
Traveling expenses 13,000
Balance carried forward 500
100,100 100,100
Additional information:
1. Fixed assets At 1 November 2002
Club premises at cost 18,000
Furniture and fittings at cost 35,000
Less provision for depreciation 14,000 21,000
39,000
2. Accruals and sundry creditors At 1 Nov 2002 At 31 Oct 2003
Accountancy fees 200 250
Bar purchases 1,500 2,000
Electricity 400 300
Members subscription (paid in advance) 1,000 800
Telephone 600 700
3. Sundry prepayments and receivables:
Insurance 300 200
Members subscription (in arrears) 6000 7,000
4. Maendeleo Social Club has a bank account, which had a balance of Sh 2,500,000 on
1 November 2002. This bank account was not used during the year to 31 October
2003.
5. Depreciation on furniture and fittings is at the rate of 10% per annum on cost. A
full year's depreciations provided for any furniture bought during the year.
3
6. Bar stock was valued at Sh 7,000,000 on 1 November 2002 and at Sh 1,500,000 on
31 October 2003.
7. No apportionment of costs is made between bar activities and other club activities.
Required
a) Income and expenditure account for the year ended 31 October 2003. (8 Marks)
b) Balance sheet as at 31 October 2003. (7 Marks)
QUESTION THREE
The following information has been availed to you with respect to Kana Limited.
KANA Limited
Income Statement
For the year ended 30th September 2008
Sh.Million Sh. Million
Turnover 1660
Cost of sales (840)
Gross profit 820
Other Operating income 60
880
Administration costs (240)
Selling and distribution costs (240)
Operating profit 400
Investment income 20
Finance Costs (20)
Profit before taxation 400
Income tax expense (180)
Net profit for the period 220
Kana Limited
Statement of changes in equity
For the period ended 30th September
4
Share Share Revaluation Accumulated Total
capital premium reserve Profit
Sh.million Sh.million Sh.million Sh.million Sh.million
As at 1st October 2007 273 27 66 400 766
Net Profit for the period 220 220
Dividends:
Paid (30) (30)
Issue of shares 77 3 80
As at 30th September 2008 350 30 66 590 1036
Kana Limited
Balance Sheet
As at 30th September
2007 2008
Sh.Million Sh.Million
Assets
Non –current assets
Freehold Property 60 164
Plant and Machinery 360 450
Furniture and fittings 40 32
Motor Vehicles 23 20
Goodwill 10 10
Investments 334 351
827 1027
Current assets
Inventories 34 46
Accounts receivable 203 164
Prepayments 15 10
Cash and cash equivalents 33 76
5
285 296
1112 1323
Equity and Liabilities
Capital and reserves
Share capital 273 350
Share Premium 27 30
Revaluation reserve 66 66
Accumulated Profit 400 590
Shareholders’ funds 766 1036
Non-current liabilities
16% loan stock 212 164
Current Liabilities
Accounts Payable 112 98
Taxation Payable 22 25
134 123
1112 1323
Additional information
Kana Limited disposed off, during the year, a piece of machinery with a net book value of Sh.20
million. It is the policy of the company not to depreciate freehold property. Total depreciation
charge for the year amounted to Sh.220 Million. Other operating income relates to disposal of
machinery.
Required:
A statement of cash flow of Kana Limited for the period ended 30th September 2008 in accordance
with the requirements of IAS No.7 (15 marks)
QUESTION FOUR
6
The following is the Balance Sheet of P and S Trading as P & S Co on 31 December 2007, profits
being divided 3/5 to P and 2/5 to S.
Liabilities Kshs Assets Ksh
P's Capital Account
S's Capital Account
Sundry Creditors
7,000
4,000
3,000
Debtors
Buildings
Plant
Bank
4,400
3,000
5,000
1,600
14,000 14,000
They agree to admit a new partner B on 1 January 2008 and the following arrangements are
made: -
a) Goodwill to be created amounting to Ksh 3500, to be credited to P and S in the
same proportions as they divide profits
b) The building and plant are independently valued at Ksh 3500 and Ksh 6000
respectively, the increased valued to be similarly credited to P and S.
c) B to bring Ksh 4000 cash as his capital;
d) All partners t be credited with 5% interest per annum on capital and to be charged
5% interest on drawings, which amount to Ksh 200 a month, drawn by each partner
at the end of each month.
e) Profits to be divided in the proportion P5, S3 and B2. The profit to 30 June 2008
before allowing interest was Ksh 15000.
Required;
I) Revaluation account (3 Marks)
II) Bank Account (3 Marks)
III) P & L Appropriation account for the six months ending 30th June 2008 (3 Marks)
IV) Partners Current accounts as on 30 June 2008 (3 Marks)
V) Partners capital accounts as on 30 June 2008 (3 Marks)
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