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Dit 302: Financial Management For Information Technology Question Paper
Dit 302: Financial Management For Information Technology
Course:Diploma In Information Technology
Institution: Kca University question papers
Exam Year:2012
INSTRUCTIONS:
1. Answer Any THREE Questions.
2. All Questions Carry EQUAL Marks.
3. Time Allowed is 1hr 30mins.
Question One
a) Define the following accounting concepts and for each explain their implication in the preparation of financial statements.
i. The Going Concern Concept. [4 marks]
ii. Business Entity Concept. [4 marks]
iii. Materiality. [4 marks]
iv. Realization. [4 marks]
b) Two accounting concepts or convections could crash or there could be inconsistency between them. Give two examples of such situations and explain how the inconsistency should be resolved. [4 marks]
Question Two
a) Explain giving examples the distinguishing features of liabilities, provisions and reserves. [9 marks]
b) State how each of these items in (a) above are to be included and shown in the financial statements of a company. [6 marks]
c) Explain the accounging equation. [5 marks]
Question Three
a) Explain the term 'bank reconciliation' and state the reasons for its preparation. [6 marks]
b) Ssemakula, a sole trader, received his bank statement for the month of June 2001. At that date the bank balance was Kshs. 706,500 whereas his cash book balance was Kshs. 2,366,500. His accountant investigated the matter and discovered the following discrepancies:
1.Bank charges of Kshs. 3,000 had not been entered in the cash book.
2. Cheques drawn by Ssemakula totaling Kshs. 22,500 had not yet been presented to the bank.
3. He had not yet entered receipts of Kshs. 26,500 in his cash book.
4. The bank had not credited Mr. Ssemakula with receipts of Kshs. 98,500 paid into the bank on 30th June 2001.
5. Standing order payments amounting to Kshs. 62,000 had not been entered into the cash book.
6. In the cash book Ssemakula had entered a payment of Kshs. 74,900.
7. A cheque for Kshs. 15,000 from a debtor had been returned by the bank marked 'refer to drawer' but had not been written back into the cash book.
8. Ssemakula had brought forward the opening cash balance of Kshs. 329,250 as a debit balance instead of a credit balance.
9. An old cheque payment amounting to Kshs. 44,000 had been written back in the cash book but the bank had already honoured it.
10. Some of Ssemakula's customers had agreed to settle their debts by paying directly into his bank account. Unfortunately, the bank had credited some deposits amounting to Kshs. 832,500 to another customer's account. However, acting on information from his customers, Ssemakula had actually entered the expected receipts from the debtors in his cash book.
Required:
i. A statement showing Ssemakula's adjusted cash book balance as at 30th June 2001. [9 marks]
ii. A bank reconciliation statement as at 30th June 2001. [5 marks]
Question Four
a) The accounting profession has for a long time relied on certain accounting conventions to guide accounting accounting practices. Yet the application of the same conventions has been the source of criticism of the quality and relevance of information contained in financial reports.
Some of these conventions include:
* The business entity principle.
* The historical cost principle.
* The monetary principle.
* The matching principle.
* The conservatism principle.
Required:
For each of the principles listed above;
i. Explain its meaning. [5 marks]
ii. Justify its use. [5 marks]
iii. Explain any weaknesses associated with its use. [5 marks]
iv. Explain the difference between the balance sheet and the profit and loss account. [5 marks]
Question Five
a) Distinguish between each of the following pairs of terms:
i. Receipts and revenue. [4 marks]
ii. Balance sheet and statement of affairs. [4 marks]
iii. Cash basis of accounting and accrual basis of accounting. [4 marks]
iv. Materiality and substance over form. [4 marks]
b) What conflicts may exist in the application of the fundamental accounting concepts. [4 marks]
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