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Acct 211: Intermediate Accounting I Year 2010 Question Paper
Acct 211: Intermediate Accounting I Year 2010
Course:Bmit
Institution: Kabarak University question papers
Exam Year:2010
COURSE CODE: ACCT 211
COURSE TITLE: INTERMEDIATE
ACCOUNTING I
STREAM: Y2S1
INSTRUCTIONS:
1. Answer all questions.
2. All question carry equal marks.
QUESTION 1
a) Explain three underlying assumptions of the generally accepted accounting principles.
(6 marks)
b) Distinguish between the following terms:
(i) Comprehensive income and gains. (2 marks)
(ii) Cash and cash equivalents. (2 marks)
(iii) Equity and investment by owners. (2 marks)
c) Discuss the objectives of financial reporting to any organization. (4 marks)
d) Explain the primary qualitative characteristics of accounting information. (4 marks)
e) What is internal control in reference to Cash? State three internal control measures for
cash disbursements. (5 marks)
QUESTION 2
a) During the first year of operations, Kenya Traders company Limited sold goods worth Sh
4,000,000 on accountant. The goods had cost Shs.2,400,000 (60% of the selling price).
Industry experience indicates that 10% of all sales will be returned. Customers’ returned
Sh. 260,000 in sales during year 2008; prior to making the payment.
Required:
Prepare journal entries to record sales and foods returned during the year using the
perpetual inventory system. (12 marks)
b) On 1st January 2009, a company reported the following transaction in stock that accorded
during the month of December 2008.
Date Units received Cost (Sh)
4
th Dec 1,200 15
15th Dec 1,600 18
28th Dec 2,000 19
Sales were as follows:
Date Units received Cost (sh)
5
th Dec 1,100 20
18th Dec 1,400 25
30th Dec 2,500 25
At the beginning of the month of December there were 500 units valued at sh 14 each:
Required:
Determine the value of closing stock using the LIFO method and ascertain the profit for the
month of December. (13 marks)
QUESTION 3
(i) What are the major characteristics of plant assets? (6 marks)
(ii) Benard Inc owns land that it purchased on Jan 1st 1995 for Shs 400,000. At what
amount should Benard report this asset on its December 31st, 2002 balance sheet?
Explain. (6 marks)
(iii) Name the items, in addition to the amount paid to the former owner or contractor that
may properly be included as part of the acquisition of the following plant assets:
(a) Land. (2 marks)
(b) Machinery and equipment. (3 marks)
(c) Buildings. (2 marks)
(iv) Distinguish between depreciation, depletion and amortization. (6 marks)
QUESTION 4
(i) Presented below are certain account balances of Mackenzie Products Co.
Shs.
Ending inventory 48,000
Rental revenues 6,500
Interest expenses 12,700
Purchase allowances 10,500
Beginning retained earnings 114,400
Ending retained earnings 134,000
Freight in 10,100
Dividends earned 71,000
Sales returns 5,800
Sales discounts 21,300
Selling expenses 99,400
Income taxes 405,000
Income taxes 38,500
Beginning inventory 35,300
Purchases 190,000
Purchase discount 17,300
Administrative expenses 82,500
Required:
Prepare a single-set income statement. (15 marks)
(ii) Identify the importance of income statements and its limitations. ( 6 marks)
(iii) Highlight the major characteristics that may be used to divide intangibles. (4 marks)
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