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Foundamentals Of Accounting I Question Paper
Foundamentals Of Accounting I
Course:Bachelor Of Commerce
Institution: Kenyatta University question papers
Exam Year:2009
KENY ATTA UNIVERSITY
UNIVERSITY EXAMINATIONS 2008/2009
SECOND SEMESTER EXAMINATION FOR THE DEGREE OF BACHELOR OF
COMMERCE
BAC 100: FOUNDAMENTALS OF ACCOUNTING I
DATE: WEDNESDAY, 9TH SEPTEMBER 2009
TIME:
11.00 A.M. - 1.00 P.M.
INSTRUCTIONS:
Answer ALL questions.
1.
a)
What is accounting?
[6marks]
b)
Outline the users of accounting information and clearly show how they benefit
from this information.
[6marks]
c)
What are GAAPS?
[2marks]
d)
Explain i) historical cost convention and ii) substance over form.
[6marks]
2.
The balances extracted from the ledger of Kamau, a sole trader, are as shown here below
as at 31st December 2008.
Dr (shs)
Cr (shs)
Plant and machinery
180,000
Kamau capital
500,000
Depreciation on plant
20,000
Sales
2,490,000
and machinery
Repairs to plant
16,000
Overdraft
38,000
Wages
280,000
Salary outstanding
20,000
Salaries
40,000
Bills payable
30,000
Cash
25,000
Provision for Bad debts
60,000
Land and building
745,000
Purchase discounts
40,000
Page I of 4
Depreciation
on building
25,000
Accounts payable
233,000
•
Net purchases
1,235,000
Accrued
income
15,000
Bills Receivable
100,000
Bad debts
10,000
Accounts Receivable
350,000
Stock 01.01.08
370,000
3,411,000
3,411,000
Additional Information
i)
Stock on 31 st December
2008 was shs 300,000
ii)
Write off shs 30,000 bad debts and maintain a provision of 5% on account receivable.
iii)
Shs 12,000 worth of rent was debited to landlord account and included in the list of
account receivable.
REQUIRED
(a)
The income statement for Kamau for period ended December 31, 2008
[10 marks]
(b)
A balance sheet as at that date
[10 marks]
3.
A trial balance of the ledger of Yasin Car cleaners as at 31 st December 2008 is shown
here below:
Yasin Car cleaners
Trial Balance
As at December 31 2008
Page 2 of 4
(Shs)
(Shs)
Bank
74,550
Account Receivable
15,050
Prepaid Insurance
92,400
Cleaning supplies
57,050
Prepaid rent
21,000
Cleaning
Equipment
182,700
Accumulated
Depreciation:
Cleaning Equipment
79,800
Motor vehicles
1,159,200
Accumulated
Depreciation:
motor vehicles
267,400
Accounts payable
45,150
Unearned cleaning Revenue
28000
Mohammed Yasin Capital
822,150
Mohammed Yasin Drawing
1081500
Cleaning Revenue Earned
2,422,700
Wages expense
870,800
Rent expense
56,000
Motor Vehicle Running Expenses
54,950
3,665,200
3,665,200
Additional Information:
(a)
Expired Insurance shs.
66500.
(b)
An inventory cleaning supplies showed shs. 87750 on hand
(c)
The cleaning services rents a garage and equipment storage space. At the
beginning of the year, three months rent was prepaid on the first day of each
month and debited to the rent expense account. The December rent was unpaid
as the trial balance date.
Page 3 of 4
(d)
Estimated depreciation on cleaning equipment shs. 25,550 and on motor vehicles
shs. 151900.
(e)
On November 15, the company entered into contract and began cleaning vehicles
for Citi Hopa for shs. 14,000 a month. Citi Hopa paid for two months services in
advance and the amount was credited to unearned cleaning revenue account to
clean vehicles for Emba Sacco. By end of month of December, shs. 84,00 had
been earned on this contract but had not been recorded.
REQUIRED:
(a)
A ten column work sheet.
[20 marks]
(b)
Prepare adjusting and closing entries.
[10 marks]
*****************
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Page 4 of 4
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