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Dibm 0113: Principles Of Accounting Question Paper
Dibm 0113: Principles Of Accounting
Course:Diploma In Business Management
Institution: Chuka University question papers
Exam Year:2013
CHUKA
UNIVERSITY
UNIVERSITY EXAMINATIONS
FIRST YEAR EXAMINATION FOR THE AWARD OF
DIPLOMA IN PROCUREMENT & LOGISTICS MANAGEMENT &
DIPLOMA IN BUSINESS MANAGEMENT
DIBM 0113: PRINCIPLES OF ACCOUNTING
STREAMS: DPLM & DIBM Y1S1 TIME: 2 HOURS
DAY/DATE: WEDNESDAY 7/8/2013 8.30 A.M. – 10.30 A.M.
INSTRUCTIONS:
ANSWER ALL QUESTIONS
DO NOT WRITE ON THE QUESTION PAPER
Question 1
1. (a) Briefly explain the following accounting concepts
Going concern [2 marks]
Consistency [2 marks]
Historical cost principle [2 marks]
(b) Explain what makes financial statements relevant to users. [4 marks]
(c) Luanda runs a business in Nakuru. His trial balance for the period ending 31/12/04 is as follows:
Dr Cr
Sh. Sh.
‘000’ ‘000’
Land and Buildings 5000
Motor vehicle 3000
Furniture 2500
Stock (1/1/04) 2200
Purchases 7500
Sales 16000
Returns 800 400
Carriage 500
Rent 900
Electricity 800
Salaries & wages 600
Drawings 400
Discounts 600
Bad debt 600
Debtors and creditors 3600 2000
Provision for bad and doubtful debts 300
Capital 10000
Carriage In 500 ______
29500
==== 29500
=====
Additional information
1. Sock as at 31/12/04 was Sh.3,500,000
2. Provision for bad and doubtful debts is set to be increased by 2% for debtors.
3. Motor vehicle expenses and electricity unpaid amount to Sh.100,000 and Sh.200,000 respectively
4. A fifth of the rent relate to the year 2005
5. Unpaid salaries & wages amount to Sh.100,000
6. Depreciation is provided on motor vehicle and furniture at 15% and 10% respectively on cost.
Required:
(a) Trading, Profit and Loss a/c for the year ended 31/12/04 [12 marks]
(b) Draw the balance sheet as at 31/12/04. [8 marks]
Question 2
2. (a) Explain 3 types of errors that do not affect the Trial Balance. [3 marks]
(b) The trial balance of S. Mwangi, a sole trader, did not balance on 30 April 2011. The difference of Sh.6800 was put on the credit side of suspense account. The fuel accounts were then prepared and showed a net profit of Sh.64,000. During audit the following errors were noted:
• A cheque of Sh.4000 for rent received was not entered in the books of account.
• A loan from ABD Bank of Sh.10000 was entered correctly in the cashbook but not posted in the ledger.
• Discount allowed of Sh.500 was debited in the discount received account.
• The opening stock was understated by Sh.3200.
• In reconciling the cashbook with the bank statement it was found that bank charges of Sh.38,000 had not been entered in the company’s records.
• The trader had purchased some plant on 30th March 2011 for Sh.1,600,000. The payment was currently entered in the cashbook but was debited to plant repairs account. Depreciation on sales plant is provided for at the rate of 20% per annum on cost.
Required:
(i) Journal entries to correct the errors. [7 marks]
(ii) Suspense account [3 marks]
Question 3
3. (a) Explain the purpose for which control accounts are prepared in organizations.
[3 marks]
(b) Poesha Limited keeps sales and purchases accounts in the general ledger. The transactions for the month ended 30 April 2000 were as follows:
Credit balances on 1 April 2000 - Sales ledger 154,000
Purchases ledger 569,000
Debit balances on 1 April 2000 - Sales ledger 956,000
Purchases ledger 196,000
Credit balances on 30 April 2000 - Sales ledger 178,000
Debit balances on 30 April 2000 - Purchases ledger 189000
Credit purchases 2,450,000
Credit sales 4,563,000
Cheques received from Debtors 3,140,000
Cash received from debtors 1,367,000
Cheque payments to creditors 1,994,000
Cash payment to creditors 352,000
Bad debts written-off 68,000
Discount received 104,000
Discount allowed 169,000
Contra entry to sales ledger from purchases ledger 234,000
Refunds to debtors 62,000
Return outwards 138,000
Return inwards 231,000
Required:
Prepare the Sales ledger & Purchases ledger control account. [10 marks]
Question 4
4. Kipyegon’s Business has provided the following information for the year ended 31 December 2009.
Trading Profit & Loss account
Details:
Sales 1,000,000
Less: Cost of sales
Opening stock 210,000
Purchases 690,000
900,000
Less: Closing stock (200,000) (700,000)
Gross profit 300,000
Less: Expenses
Wages & Salaries 70,000
Interest on loans 15,000
Water & Electricity 15,000
Rent & Rates 16,000
General expenses 104,000 220,000
80,000
=======
Balance Sheet
Fixed Assets:
Land & Buildings 700,000
Plant and Machinery 500,000
Motor vehicles 450,000
Fixture & Fittings 150,000
1,800,000
Current Assets:
Debtors 250,000
Cash at Bank 300,000
Cash at Hand 150,000
Stock 200,000
900,000
Current Liabilities:
Creditors 400,000
Proposed dividends 250,000
Provision for tax 50,000
(700,000) 200,000
2,000,000
=======
Financed By:
Capital 1,000,000
10% Co-op loan 500,000
Retained profits 500,000
2,000,000
=======
Required:
(i) Stock turnover ratio [2 marks]
(ii) Net profit ratio [2 marks]
(iii) Current ratio [2 marks]
(iv) Return on Capital Employed [2 marks]
(v) Gearing ratio [2 marks]
(vi) Debtors collection period [2 marks]
(vii) Creditors payment period [2 marks]
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