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Peco 431: Economic Accounting Question Paper
Peco 431: Economic Accounting
Course:Bachelor Of Education Primary Option
Institution: Chuka University question papers
Exam Year:2013
CHUKA
UNIVERSITY
UNIVERSITY EXAMINATIONS
FOURTH YEAR EXAMINATION FOR THE AWARD OF
DEGREE OF BACHELOR OF EDUCATION (PRIMARY)
PECO 431: ECONOMIC ACCOUNTING
STREAMS: BED (P) L IV TIME: 2 HOURS
DAY/DATE: THURSDAY 15/8/2013 8.30 AM- 10.30 AM
INSTRUCTIONS:
1. Answer Question ONE and other TWO Questions
2. Do Not write on the Question Paper. QUESTION ONE (30 MARKS)
(a) Discuss the functions of accounting in the management of economic enterprises.
[6 Marks]
(b) The following trial balance was extracted from the books of Mrs. Mugo, a sole proprietor running a business in Embu town as on 31st December 2010.
Dr (sh) Cr (sh)
Motor vehicle 14,000
Stock (1.1.2010) 3,000
Purchases 28,000
Sales 50,000
Returns inwards 2,000
Returns outwards 1,000
Discount received 2,000
Discount allowed 1,500
Debtors 5,000
Furniture 4,000
Bad debts 2,000
General expenses 3,000
Salaries and wages 4,000
Drawings 12,000
Capital 8,500
5 year loan 10,000
Creditors _______ _7,000_
78,500
====== 78,500
======
Additional information:
(i) Closing stock amounted to sh 2,000
(ii) Depreciate motor vehicles and furniture at 10% on cost.
Required:
(i) Prepare Mrs. Mugo’s income statement for the year ended 31st Dec 2010.
[12 Marks]
(ii) What limitations does Mrs. Mugo face as a sole proprietor? [6 Marks]
(c) Outline the advantages of budgeting as a too l of planning and control. [6 Marks]
QUESTION TWO (20 MARKS)
(a) Discuss five functions of commercial banks on an economy. [5 Marks]
(b) Record the following transactions in a three column cash book and balance it at the end of the month. [11 Marks]
January 1st 2010: Cash in hand sh 50,500, cash at bank sh 80,850 Dr
January 5th: Cash sales sh 7,050, paid for stationery by cheque sh 15,000.
January 10th: Received cash sh 17,000 from a debtor after allowing sh 300 cash discount.
January 22nd: Banked cash sh 12,000
January 25th: Paid a supplier by cheque sh 13,000
January 30th: Banked all cash except sh 2,000 for emergency.
(c) Explain four tools of monetary policy used by the central bank. [4 Marks]
QUESTION THREE (20 MARKS)
(a) Explain the meaning of the following elements of accounting information.
(i) Non – current assets
(ii) Equity
(iii) Good will
(iv) Current liabilities. [4 Marks]
(b) Outline the events that can give rise to dissolution of partnerships. [6 Marks]
(c) Write up the following transactions in the ledger accounts of C. Mohamed.
March 1 2011: Started business with sh 20,000 cash.
2nd: Bought stock on credit from Abubakar sh 8,000
4th: Bought stationery by cash sh 1,200
5th: Returned stock worth sh 1,200 to Abubakar.
10th: Cash drawings sh 1,000 [10 Marks]
QUESTION FOUR (20 MARKS)
(a) Outline 5 differences between a Public Ltd Company and a Private Limited Company. [5 Marks]
(b) Identify and explain the users of accounting information. [5 Marks]
(c) Taxes are essential components of our fiscal activities. Discuss the role of taxation in achievement of goals of an economy. [5 Marks]
(d) Argue the case for government involvement in economic activities. [5 Marks]
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