Get premium membership and access revision papers, questions with answers as well as video lessons.
Caa 101: Introduction To Accounting Ii Question Paper
Caa 101: Introduction To Accounting Ii
Course:Bachelor Of Commerce
Institution: Kca University question papers
Exam Year:2009
1
UNIVERSITY EXAMINATIONS: 2009/2010
FIRST YEAR STAGE II EXAMINATION FOR THE DEGREE OF
BACHELOR OF COMMERCE
CAA 101: INTRODUCTION TO ACCOUNTING II
DATE: DECEMBER 2009 TIME: 2 HOURS
INSTRUCTIONS: Answer ALL the questions
QUESTION ONE (30 Marks)
a. State and explain three differences between receipts and payments accounts and income and
expenditure account (6 Marks)
b. Define the following terms (i) work in progress
(ii) Accumulated fund. (4 Marks)
c. Floral company ltd is a retailer provider with an Authorized share capital of 800,000 sh.20
ordinary shares and 250,000 8% sh 20 redeemable shares.
The following financial information reflects the information of the company as at 31st
December 2008 after preparing the trading profit and loss account.
Sh”000”
Provision for depreciation ----- Fittings 1500
------motor vehicles 3740
Goodwill 1200
Issued share capital 600000 sh.20 Ordinary shares 12000
250000 sh.20 Redeemable preference shares 5000
Share premium account 400
2
Trade debtors and prepayments 1708
Land and building at valuation (cost Sh 400000) 18,400
Capital redemption reserve fund 3000
Fittings at cost 3000
Motor vehicles at cost 7940
10% Debentures 1600
Trade creditors and accruals 960
Short term investment (Market value Sh.860000) 780
Stock 31 December 2008 2960
Bank overdraft 540
Revaluation reserve 1000
Net profit for the year 1440
Retained profit as at 1 January 2008 4460
General reserve 1100
Provisional for doubtful debts 48
Interim dividends paid ----ordinary 600
-----preference 200
The following resolution relating to the year ended 31 December 2008 has been passed by the board of
directors of the company.
1. Transfer 500,000 to general reserve
2. Provide for 5% final dividend and final preference dividend on shares issued and
outstanding on 31 December 2008.
Required:
i). The appropriation account of Masaba Company Ltd for the year ended 31
December 2008. (10 Marks)
ii). The balance sheet of Masaba Company Ltd as at 31 December 2008. (10 Marks)
QUESTION TWO (20 Marks)
The following trial balance was extracted form the books of Anne and Betty as at 30 June 2008
Sh Sh
3
Capital accounts: Anne 1,200,000
Betty 960,000
Current accounts: Anne 48,000
Betty 26,400
Drawings: Anne 216,000
Betty 168,000
Shop fittings and fixtures (costs) 840,000
Office furniture (cost) 36,000
Provisions for depreciation:
Shop fittings and fixtures 120,000
Office furniture 12,000
Debtors and creditors 1,739,520 552,720
Stock as at 1 July 2007 631,200
Purchases and sales 5,322,240 7,377,600
Carriage inwards 30,480
Returns inwards and returns outwards 38,400 13,920
Insurance 76,080
Rent and rates 326,400
General expenses 155,520
Staff salaries 848,400
Carriage outwards 74,880
Provision for doubtful debts 15,600
Bank overdraft 188,400
Advertising 11,520 -------------
10,514,640
===========
10,514,640
========
Additional Information
1 Stock as at 30 June 2008 was valued at sh. 974,400.
2 Rates paid in advance as at 30 June 2008 amounted to sh.21,120.
3 The provision for doubtful debts is to be increased to sh 40,320.
4
4 Depreciations to be provided as follows:
Shop fittings and fixtures – 10% per annum on straight-line basis.
Office furniture - 20% per annum on straight-line basis
5 Betty is to earn a salary of sh.120,000 per annum
6 Interest is to be allowed as follows:
On fixed capitals – 5% per annum
On drawings – 2 ½ % per annum
7 Profits and losses are shared between Anne and Betty in the ratio of 3:2 respectively.
Required
i). Trading and profit and loss and appropriation accounts for the year ended 30 June
2008. (8 Marks)
ii). Partners’ current accounts as at 30 June 2008. (4 Marks)
iii). Balance sheet as at 30 June 2008. (8 Marks)
QUESTION THREE (Total 20 Marks)
The following balances were extracted from the books of Umoja limited, a furniture manufacturing
company, as at 30th April 2008:
Sh.’000’
Factory machinery (cost) 28,000
Office equipment (cost) 2,000
Accumulated depreciation (1 May 2007)
Factory machinery 5,000
Office equipment 800
Trade receivables 15,000
Trade payable 16,000
Cash and bank balances 2,300
Bank loan 11,000
Inventories (1 May 2007): Raw materials 4,000
Work in progress 16,400
Finished goods 11,250
Carriage inwards 1,200
Carriage outwards 700
5
Purchases - raw material 84,000
Electricity 3,000
Rent and rate 6,600
Factory wages 19,900
Office salaries 5,200
Sales commission to selling agents 1,400
Sales of finished goods 140,000
Ordinary share capital 30,000
Retained earnings 5,000
Directors emoluments 9,100
Provision for unrealized profit 2,250
Additional Information
1. On 20 January 2008, the company paid 600,000 being rent for the period of 1 January 2008 to
30 June 2008.
2. As at 30 April 2008, accrued factory wages and office salaries amounted to 600,000 and
100,000 respectively
3. Inventories as at 30 April 2008 were valued as follows
Sh.’000’
Raw material 5,400
Work in progress 17,000
Finished goods 8,000:
4. Depreciation is to be provided for factory machinery using the straight line method over the
useful life of seven years while the office depreciation using the reducing balance method at the
rate of 25% per annum.
5. A provision of Sh1, 000,000 should be made for bad and doubtful debts.
6. Electricity is to be apportioned between the factory and the office in the ratio 4:1 respectively
while rent and rates is to be apportioned between the factory and the office in the ratio 3:1
respectively.
7. It is the company policy to transfer goods manufactured from the factory to the warehouse at
cost plus 25%
Required:
6
(a) Manufacturing, trading and profit loss account for the year ended 30 April 2008
(12 Marks)
(b) Balance sheet as at 30th April 2009. (8 Marks)
QUESTION FOUR (20 Marks)
The summarized financial statements of Baraka Enterprises Ltd. are as follows:
Income statements for the year ended 30
September:
2003
Sh.’000’
2004
Sh.’000’
Sales
Cost of sales
Gross profit
Administrative expenses
Debenture interest
Net profit
20,000
(15,000)
5,000
(3,800)
-
1,200
28,000
(21,000)
7,000
(4,600)
(400)
2,000
Balance Sheet as at 30 September:
2003
Sh.’000’
2004
Sh.’000’
Assets:
Non-current assets (net book value)
Current assets:
Inventories
Trade and other receivables
Balance at bank
Total assets
11,000
2,000
2,500
-
4,500
15,500
14,000
3,000
2,800
500
6,300
20,300
Equity and liabilities:
Capital and reserves:
Issued and fully paid
1,000,000 ordinary shares of Sh.10
10,000
10,000
7
Required:
For each year, calculate the following:
(i) Gross profit margin (2 Marks)
(ii) Inventory turnover (3 Marks)
(iii) Return on equity (3 Marks)
(iv) Return on assets (3 Marks)
(v) Acid test ratio (3 Marks)
(vi) Current ratio (3 Marks)
(vii) Financial leverage (3 Marks)
each
revenue reserves
Non-current liabilities:
8% debentures
Current liabilities:
Trade and other payables
Bank overdraft
Total equity and liabilities
Stock as at 1 October 2002 was
Sh.5,000,000
3,000
13,000
-
1,500
1,000
2,500
15,500
4,100
14,100
5,000
1,200
-
1,200
20,300
More Question Papers
Popular Exams
Return to Question Papers