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Intermidiate Accounting 1 Question Paper
Intermidiate Accounting 1
Course:Bachelor Of Business Administration
Institution: Kenya Methodist University question papers
Exam Year:2012
1
KENYA METHODIST UNIVERSITY
SEPTEMBER – DECEMBER 2012
FACULTY : BUSINESS & MANAGEMENT STUDIES
DEPARTMENT : ACCOUNTIN G , FINANCE & INVESTMENT
COURSE CODE : ACCF 330
COURSETITLE : Intermediate Accounting 1
DISTANCE LEARNING MODE
INSTRUCTIONS
? Answer ALL Questions
Question One
A. Discuss the qualitative characteristics the makes the financial statements useful for
decision making. (15 marks)
B. Write short notes on the following intangible assets and their accounting treatment.
i. Patents
ii. Copyrights
iii. Trademarks
iv. Franchises
v. Goodwill
(15 Marks)
Question Two
A. Zamzam Company maintains its motor vehicle accounts at cost and provides for
depreciation at 20% per annum on the diminishing balance method. A full year’s
depreciation is provided in the year of purchase and non in the year of disposal.
On 1st January 2008, the company had the following motor vehicles:
KAA 4044H at cost Kshs 4,000,000 written down value of Kshs 2,100,000
2
KAB 8021A at cost Kshs 4,200,000 accumulated depreciation Kshs 1,600,000
KAC 1407B at cost Kshs 5,500,000 accumulated depreciation Kshs 3,300,000
During the year ended 31st December 2008, the following were the transactions
involving motor vehicles.
KAD 1243H purchased for cash Kshs 5,200,000
KAB 8021A was involved in an accident and was written off during the year. A sum
of Kshs. 2,000,000 was received from the insurance company as compensation.
Prepare the following accounts as at 31st December 2008
i. Motor vehicles accounts
ii. Provision for depreciation on motor vehicles account
iii. Disposal of motor vehicles account
(10 marks)
B. Identify and describe the steps in the accounting cycle. (10 marks)
Question Three
Kuona Mbele Company sells its products, offering 30 days credit to its customers. Uncollectible
amounts are estimated by a monthly charge to bad debts expenses equal to 2% of credit sales. At
the end of the year, the allowance for Uncollectible accounts is adjusted based on aging of
accounts receivables. The company began 2006 with the following balances in its accounts:
Accounts receivables 305,000
Allowance for Uncollectible accounts (25,500)
During 2007, sales on credit were Kshs 1,300,000, cash collection from customers were Kshs
1,250,000 and actual write offs of accounts were Kshs 25,000. an aging of accounts receivables at
the end of 2007 indicates a required allowance of Kshs 30,000
Required:
3
I. Determine the balances in accounts receivables and allowances for Uncollectible
accounts at the end of 2007. (12 marks)
II. Determine bad debt expenses for 2007. (2 marks).
III. Prepare journal entries for the monthly accrual of bad debts, the write off of
receivables and the year end adjusting entry for bad debts. (6 marks)
Question Four
The following information relates to ABC Limited in the year 2008
Transaction Date Purchased Sold
January 1 inventory @
Shs 1200
January 12 purchases @ shs. 1.10
January 14 –sales
January 18- Purchases @ shs.1.16
January 22 –sales
January 24 purchases @ shs.1.26
300
400
100
400
300
Required
i) Prepare schedules to compute ending inventory and the cost of goods sold under each of
the following inventory flow methods;
FIFO, LIFO, and Weighted average
(15 marks)
ii) Discuss the differences between periodic and perpetual inventory Stock control systems
(5 marks)
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