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Financial And Management Accounting Question Paper

Financial And Management Accounting

Course:Bachelor Of Science In Information Technology

Institution: Kca University question papers

Exam Year:2009

UNIVERSITY EXAMINATIONS: 2009/2010
FIRST YEAR EXAMINATION FOR THE DEGREE OF BACHELOR OF
SCIENCE IN INFORMATION TECHNOLOGY
BIT 1208: FINANCIAL AND MANAGEMENT ACCOUNTING
DATE: DECEMBER 2009 TIME: 2 HOURS
INSTRUCTIONS: Answer question ONE and any other TWO questions
QUESTION ONE
a) Identify four main ledgers used for bookkeeping in a business organization. (2 Marks)
b) Identify three main purposes of accounting. (3 Marks)
c) All business organizations have different interested users (often referred to as internal and
external stakeholders).
i. Identify six different stakeholders interested in the accounts of a large business. (6 Marks)
ii. For each of the six stakeholders you have identified, comment on why each might be interested
in the financial information of the business. (9 Marks)
d) Explain giving appropriate examples the following accounting principles
i) materiality
ii) prudence
iii) money measurement
iv) consistency
v) substance over form (10 Marks)
(30 Marks)
2
QUESTION TWO
The following list of balances has been extracted from the books of Adrian Phillips, a sole
trader, as at 30 June 2008.
Sh000 Sh000
Land – cost 90,000
Premises – cost 10,600
Vehicles – cost 6,400
Provision for depreciation
• premises 3,180
• vehicles 1,280
Stock (1 July 2007) 3,820
Purchases 17,800
Sales 36,700
Wages 3,920
Heating 740
Insurance 360
Rent 270
Rates 1,010
Admin expenses 1,050
Debtors 2,400
Creditors 1,980
Bank 620
Drawings 11,000
Capital 106,850
149,990 149,990
The following additional information is also available:
1. Stock at 30 June 2008 Sh4, 660,000.
2. At 30 June 2008 wages outstanding Sh80,000.
3. At 30 June 2008 insurance expenses prepaid Sh60000.
4. Depreciation for the year to 30 June 2008 is to be provided as follows:
• premises – 10% on straight line method
3
• vehicles – 20% on reducing balance method
Required:
a) Prepare the trading and profit and loss account for Adrian Phillips for the period ended 30 June
2008. (10 Marks)
b) Prepare the balance sheet for Adrian Phillips as at 30 June 2008. (10 Marks)
(Total 20 Marks)
QUESTION THREE
a) State and briefly explain the five types of books of original entry. (10 Marks)
b) James Ondiek is a sole trader operating in Kariobangi light industries. The following credit
transactions took place during the month of March 2009:
March 1: Purchased goods from; Abc ltd sh.12000, L.Otieno sh.20,000, V.Mwangi
sh.15,500.
March 8: Sold goods to; J.Akinyi sh.8,900, D.Thairu sh.11,300.
March 15: Purchased goods from; M.Kiprotich sh.23,500, B.Nyambura sh.48,000.
March 19: Returned goods to; V.Mwangi sh.1,200,M.Kiprotich sh.900.
March 20: Purchased goods from; Abc ltd sh.16,400, V.Mwangi sh.4,900,
A.Mwendia sh.10,800.
March 23: Sold goods to; D.Thairu sh.5,600, J.Wambugu sh. 24,300, K.Lugalia
sh.9,900.
March 27: The following returned goods; D.Thairu sh. 3,000, K.Lugalia sh.1,300.
Required:
Prepare books of prime entry. (10 Marks)
(Total 20 Marks)
QUESTION FOUR
The following balances were extracted from the books of Joshua, a sole trader, as at 1 January 2009.
Sh
Fixed assets 250,000
Stocks in trade 42,000
Trade creditors 45,000
Trade debtors 60,000
4
Balance at bank 360,000
Cash balance 12,000
Bank loan 130,000
The following transactions took place in the month of January 2009:
January 3: The business made credit sales of sh.850,000 and cash sales of sh.120,000.
January 7: The business purchased goods on credit worth sh.630,000. Further purchases of
goods worth sh.80,000 were made and paid by cheque.
January 10: Debtors paid sh.800,000 less discount of 2% by a cheque.
January 14: Fixed assets were purchased for sh.150,000 and paid for by cheque.
January 16: The proprietor withdrew sh.40,000 from the bank sh.20,000 from the cash box for
personal use.
January 21: Trade creditors were paid sh.600,000 by cheque less 3% discount.
January 25: Bank loan repayment of sh.20,000 was made by cheque. In addition, interest on
bank loan amounting to sh.3,000 was paid also by cheque.
January 30: A cash deposit of sh.90,000 was made in the bank from the cash account.
Required:
Relevant ledger accounts (including a three-column cash book) to record the above transactions.
(Total 20 Marks)
QUESTION FIVE
a) Define depreciation and explain the reasons for providing for depreciation. (10 Marks)
b) A business firm purchased a motor vehicle (KAQ) on 1 January 2006 for sh.600,000 and another
one (KAU) 0n 1 January 2008 for sh.500,000.
It is the company’s policy to depreciate fixed assets at 20% using straight line method.
The financial year of the business ends on 31 December.
Required:
For the years 2006-2008, prepare:
(i) Motor vehicle account. (4 Marks)
(ii) Provision for depreciation of motor vehicles account. (6 Marks)
(Total: 20 Marks)

Financial And Management Accounting Question Paper

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