Get premium membership and access revision papers, questions with answers as well as video lessons.
Caa 100 Introduction To Accounting I Question Paper
Caa 100 Introduction To Accounting I
Course:Bachelor Of Commerce
Institution: Kca University question papers
Exam Year:2012
1
UNIVERSITY EXAMINATIONS: 2011/2012
YEAR 1 EXAMINATION FOR THE BACHELOR OF COMMERCE
CAA 100 INTRODUCTION TO ACCOUNTING I (SATURDAY)
DATE: APRIL 2012 TIME: 2 HOURS
INSTRUCTIONS: Answer Question One and Any other Two Questions
QUESTION ONE
Ford Fenn is the founder and president of Kidney Construction, a real estate development venture. The
business transactions during April, 2011 while the company was being organized are listed below.
Apr. 1 Fenn and several others invested KES800,000 cash in the business in exchange for shares
of capital stock.
Apr. 6 The company purchased office facilities for KES400,000, of which KES80,000 was
applicable to the land, and KES320,000 to the building. A cash payment of KES90,000
was made and a note payable was issued for the balance of the purchase price.
Apr. 10 Computer equipment was purchased from PCWorld for KES10,000 cash.
Apr. 12 Office furnishings were purchased from Fred’s Furniture at a cost of KES10,000. A
KES1,000 cash payment was made at the time of purchase, and an agreement was made to
pay the remaining balance in two equal installments due May 1 and June 1. Fred’s
Furniture did not require that Kidney sign a promissory note.
Apr. 20 Office supplies were purchased from Office Planet for KES800 cash.
Apr. 25 Kidney discovered that it paid too much for a computer printer purchased on April 10. The
unit should have cost only KES500, but Kidney was charged KES550. PCWorld promised
to refund the difference within seven days.
Apr. 28 Mailed Fred’s Furniture the first installment due on the account payable for office
2
furnishings purchased on April 12.
Apr. 29 Received KES50 from PCWorld in full settlement of the account receivable created on
April 25.
Instructions
a. Prepare journal entries to record the above transactions. Select the appropriate account titles
from the following chart of accounts:
Cash Land
Accounts Receivable Office Building
Office Supplies Notes Payable
Office Furnishings Accounts Payable
Computer Systems Capital Stock
(10 Marks)
b) Post the journal entries to the relevant ledger accounts (10 Marks)
QUESTION TWO
a) Within financial accounting there is a general agreement that there are twelve traditional accounting
concepts. Five of these concepts are:
i) Accruals
ii) Going concern
iii) Business entity
iv) Prudence
v) Substance over form
Required
Using suitable examples, explain each of the above five concepts. (5 Marks)
b) Explain briefly five users of accounting information and their respective needs (5 Marks)
c) State in which books of prime entry the following transactions would be entered.
(i) Your business pays A Brown (a supplier) KES4,500.
(ii) You send D Smith (a customer) an invoice for KES6,500.
(iii) Your accounts manager asks you for KES120 urgently in order to buy some
envelopes.
(iv) You receive an invoice from A Brown for KES3,000.
3
(v) You pay D Smith KES5,000.
(vi) F Jones (a customer) returns goods to the value of KES2,500.
(vii) You return goods to J Green to the value of KES5,040.
(viii) F Jones pays you KES5,000.
(5 Marks)
QUESTION THREE
The trial balance of square Ltd. Revealed a difference in the books. In order that errors could be
located it was decided to prepare control accounts. The following balances were provided:
2011
May 1 Purchases ledger balances 11,874
Sales ledger balances 19,744
Totals for the month:
Purchases journal 154,562
Sales journal 199,662
Returns outwards journal 2,648
Returns inwards journal 4,556
Cheques paid to suppliers 146,100
Petty cash paid to suppliers 78
Cheques and cash received from customers 185,960
Discounts allowed 5,830
Discount received 2,134
Balances on the sales ledger set off against
Balances in the purchases ledger 1,036
May 31 The list of balances from the purchases ledger shows a total of Shs. 14,530 and
that from the sales ledger a total of Shs.22,024
Required
Prepare the debtors and creditors ledger control accounts and show where an error may have been
made. (15 Marks)
QUESTION FOUR
The following is a trial balance, which has been incorrectly drawn up:
4
Trial Balance as on 31 May 2011
Shs. ‘000 Shs. ‘000
Capital 1 June 2010 5,500
Drawings 2,800
Stock 1 June 2010 2,597
Trade debtors 2,130
Furniture and fittings 1,750
Cash in hand 1,020
Trade creditors 2,735
Sales 7,430
Returns inwards 85
Discount received 46
Business expenses 950
Purchases 4,380
16,446 14,977
In addition to the mistakes evident above, the following errors were also discovered:
i.) A payment of Shs. 75,000 made to a creditor had not been posted from the cash book into the
purchases ledger.
ii.) A cheque for Shs. 56,000 received from a customer had been correctly entered in the cash book
but posted to the customer’s account as Shs. 50,000
iii.) A purchase of fitting Shs. 120,000 had been included in the purchases account.
iv.) The total of the discounts allowed column in the cash book of Shs. 38,000 had not been posted
into the general ledger.
v.) A page of the sales journals was correctly totaled as Shs. 564,000 but carried forward as Shs.
456,000
Required:
a) Journal entries to correct the errors (i) – (v) above (10 Marks)
b) Trial balance after all the errors have been corrected. (10 Marks)
More Question Papers
Popular Exams
Return to Question Papers