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Acct 411: Advanced Accounting I Question Paper
Acct 411: Advanced Accounting I
Course:Advanced Accounting 1
Institution: Kabarak University question papers
Exam Year:2009
KABARAK UNIVERSITY
UNIVERSITY EXAMINATIONS
2009/2010 ACADEMIC YEAR
FOR THE DEGREE OF BACHELOR OF COMMERCE
COURSE CODE: ACCT 411
COURSE TITLE: ADVANCED ACCOUNTING 1
STREAM: Y4S1
DAY: FRIDAY
TIME: 9:00A.M – 11:00A.M.
DATE: 11/12/2009
Instructions
1. Answer Question one & any other two question
2. Be neat and show all the workings
Question One
(a) Identify three options that the drawer of a bill of exchange can exercise after
acceptance of a bill by the drawee? (3marks)
(b) Mr. Kipkoech draws abill for Shs 6000 on Ms Martin Martha on 1st January 2008 for
three months. On maturity Ms Martha faild to honour the bill.
Required.
(i) Show the necessary journal entries in the books of the two parties. (4marks)
(ii) Show the necessary ledger accounts that would be maintained by the two
parties. (8marks)
(c) Identify 5 characteristics of a joint venture. (5marks)
(d) Flower and stalk were partners in a joint venture sharing profit and loses in the ratio
of 3:2 respectively. Flower supplies goods to the value of Ksh100,000 and incurs on
transport charges Kshs5000. Stalk also supplies goods to the value of Ksh80,000 and
incurred Kshs4000 towards transport and other charges. Stalk sold the entire stock of
goods on behalf of the joint venture for Ksh250, 000. Stalk was entitled to a
commission of 5% on sales. Stalk settled his account by remitting a bank draft.
Required.
Ledger Accounts in the books of Stalk only. (10marks)
Question Two
(a) Identify five advantages of value added statements (5Marks)
(b) The following information is extracted from the books of Mwendo Ltd. for the year
ended 31st December 2007.
Ksh. ‘000’
Salaries, wages and pension 250,000
Purchased materials used in production 450,000
Depreciation of fixed assets 35,000
Sales to customers 1,265,000
Corporation tax 40,000
Proposed dividend 25,000
Surplus on disposal of fixed assets and investments 8,000
Loan interest paid 19,000
Exercise duty 390,000
Social security contributions 20,000
Required
Prepare a value added statement for Mwendo Limited. (15marks)
Question Three.
Safina Transport Company purchased on 1st January 2007 from GM Limited three trucks
costing 4,000,000 each on hire purchase system. Payment was to be made as follows,
3,000,000 down payments and the remainder in three equal installments together with
interest at 5%. Safina transport ltd writes off depreciation at 20% pa on reducing balance
method. It paid the Instalment due at the end of the 1st year but could not pay the rest.
GM agreed to leave one truck with the hire purchaser adjusting the value of the other two
truck against the amount due. The trucks were valuid on the basis of 30% depreciation
annually.
Required
Show the necessary ledger accounts in the books of safina Transporters ltd for two years.
(20marks)
Question Four
(a) Identify and explain three objective of branch accounting. (6marks)
(b) Nakuru Mattress limited owns a retail stationery shop which was partly destroyed
by fire on 27th June 2007. The stock was insured for She 13,000,000. The Balance
sheet drawn on 31st December 2008 included the following items.
Stock sh 12,500,000
Creditors 3,500,000
On examination of the books of accounts for the subsequent period up to the date of the
fire the following particulars were obtained.
Sales shs 88,800,000
Payment to creditors for goods shs75, 000,000
Creditors as on 27th June 2008 shs1, 800,000
A physical check of stock after the fire showed that undamaged were shs7, 000,000. The
normal rate of gross profit is 25% on purchases but the stock on 31st december2008
included items of discontinued lines totaling to sh3.800.000 which were sold during the
next two month at cost.
Required
Compute the amount of claim to be made to the insurer if there is an average Clause.
(14marks)
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