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Bca 1103 / Dps 1103 Financial Accounting 1 Question Paper
Bca 1103 / Dps 1103 Financial Accounting 1
Course:Diploma In Business Administration
Institution: Dedan Kimathi University Of Technology question papers
Exam Year:2011
KIMATHI UNIVERSITY COLLEGE OF TECHNOLOGY
UNIVERSITY EXAMINATION 2011/2012
EXAMINATION FOR DIPLOMA IN BUSINESS ADMINISTRATION AND DIPLOMA
IN PURCHASING AND SUPPLIES MANAGEMENT
BCA 1103 / DPS 1103 FINANCIAL ACCOUNTING 1
Question One
a) Explain the following terms giving an example in each case.
i) Going concern concept (2 marks)
ii) Credit note (2 marks)
iii) Accrual Concept (2 marks)
iv) Prepaid expenses (2 marks)
v) Bad debts (2 marks)
b) The following transactions took place in Patrick’s business for the month of March 2005.
March
1 Started business with sh. 1,000,000
2 Bought goods on credit from A click sh. 296,000
3 Paid rent by cash sh. 28,000
4 Paid sh. 1,000,000 of the cash of the firm into the bank account
5 Sold goods on credit to Simpson sh. 54,000
7 Bought stationery sh 15,000 paying by cheque
11 Cash sale sh. 49,000
14 Goods returned by us to A Click sh. 17,000
17 Sold goods on credit to P. Lotz sh. 29,000
20 Paid for repairs to the building by cash sh. 18,000
22 Simpson returned goods to us sh. 14,000
27 Paid A Click by cheque sh. 279,000
28 Cash purchased sh. 125,000
29 Bought a motor vehicle paying by cheque sh. 395,000
30 Paid motor expenses in cash sh. 15,000
31 Bought fixtures sh 120,000 on credit from R. West.
Required
a) Prepare ledger accounts to record the above transaction (10
marks)
Page 1 of 5
b) Prepare a trial balance as at 31st March 2005 (10 marks)
Question Two
a) Explain the meaning of the following giving clear examples
i) Error of principle (2 marks)
ii) Error of complete reversal of entries (2 marks)
iii) Compensating errors (2 marks)
b) A trial balance extracted from the books of Clinton had the following totals
Debt Column totals sh 938,400
Credit Column totals sh 932,300
Clinton opened a suspense account and entered this difference in this account. He discovered
the following errors and omissions.
i) Rent income received sh. 2,200 had been credited to premise account.
ii) Sales account had been overstated by sh 9,400
iii) Discount allowed sh. 2,350 were credited to discount received account
iv) A cheque of sh. 8,000 received from Isaac a debtor had been correctly entered in the
cashbook but it was debited in his account.
v) Purchase account had been overstated by sh 7,500.
Required
a) Prepare the journal entries necessary to correct this error (4 marks)
b) Post the entries to the respective ledger accounts and balance off the suspense account
(5
marks)
Question Three
Isaac maintains a petty cash book on the imprest system, the imprest being sh. 30,000. The
following transactions took place in Aril 2011.
April
1 Received imprest from the cashier of sh. 30,000
3 Bought postage stamps of sh. 2,000
6 Paid sh. 4,000 for Peters account in purchases ledger
7 Bought stationery sh. 5,000
8 Paid traveling allowance to S. Otieno an employee sh 4,000
10 Paid window cleaning expenses sh 6,000
12 Paid Lenana’s account in the purchases ledger sh. 5,000
Page 2 of 5
14 Paid subscription for trade association sh 2,000
17 Paid Office cleaning expenses shs. 2,000
18 Received sh. 30,000 from the cashier
20 Paid S. Otieno for traveling expenses sh. 10,000
22 Bought electric light bulbs sh. 2,000
25 Paid Lenana’s account in the purchases ledger sh 2,500
28 Paid traveling expenses sh 1,000
30 Paid for sugar, tea and milk sh. 3,000
Required
Enter the transactions into the petty cashbook under the analysis columns:- postage and
stationery, traveling expenses, cleaning expenses and a ledger column. Balance the cashbook
showing the reimbursement required to restore the imprest on 1 May 2000
(10
marks)
b) Highlight the advantages of a petty cashbook (5 marks)
Question Four
The following information was obtained from the books of Nyeri traders as at 31st December
2010.
Balance at 1st January 2010
Sales ledger - sh. 240,000 Debit
- Sh. 30,000 Credit
Purchases ledger - sh 372,000 credit
- sh 16,000 Debit
The following transactions tool place during the year ended 31st December 2010
Sh.
Credit sales 850,000
Cash Purchases 76,000
Contra Settlements 18,000
Discount Allowed 24,000
Cheques received from credit customers 340,000
Returns inwards 36,000
Cash sales 152,000
Cheque payments to credit supplies 460,000
Dishonored cheques from debtors 38,400
Page 3 of 5
Discount received 13,400
Bad debts written off 22,100
Refund from creditor for overpayment 4,800
Return outwards 19,400
Credit purchase 12,200
Interest charged by creditors on overdue accounts 3,200
Credit purchases 1,120,000
Provision for doubtful debts 3,000
Balance at 31st December 2010
Sales ledger 26,000 Credit
Purchase ledger 21,000 Debit
Required
a) Sales ledger control account (6 marks)
b) Purchases ledger control account (6
marks)
c) What are the reasons for preparing control accounts (3 marks)
Question Five
The following trial balance was extracted from the books of Alice and Alex traders for the year
ended 31st December 2010
Debit
(sh)
Credit
(sh)
Machinery at cost
Provision for depreciation – machinery at 1/1/2010
Motor vehicle at cost
Provision for depreciation- motor vehicle at 1/1/2010
Purchases
Sales
Returns outwards
Returns inwards
Carriage inwards
Discount allowed
Discount received
Rent income
Electricity expenses
Insurance expenses
Stock at 1/1/2010
Debtors
Creditors
3 year Bank loan
450,000
250,000
500,000
30,000
4,000
5,000
6,700
10,000
60,000
150,000
90,000
45,000
900,000
15,000
8,000
26,000
80,000
75,000
Page 4 of 5
Drawings
Provision for doubtful debts
Capital
3,000
_________
1,468,700
8,000
221,700
1,468,700
Additional Information
i) Value of closing stock sh. 45,000
ii) Unpaid electricity as at 31/12/10 was sh. 3,000
iii) Rent Income receivable as at 31/12/1- was sh. 4,000
iv) Prepaid insurance expenses sh. 2,000
v) Bad debt to be written off sh. 7,000
vi) Provision for doubtful debts to be 10% of remaining debtors
vii)Machinery to be depreciated at a rate of 10% p.a on cost
viii) Motor vehicle to be depreciated at a rate of 5% p.a using the reducing balance
method.
Required
a) Trading profit and loss account for the year ended 31/12/2010 ( 9 marks)
b) Balance sheet as at 31/12/2010 .( 6 marks)
Page 5 of 5
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