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Chtm 0023: Basic Accounting Question Paper
Chtm 0023: Basic Accounting
Course:Certificate In Hospitality And Tourism Management
Institution: Chuka University question papers
Exam Year:2013
CHUKA
UNIVERSITY
UNIVERSITY EXAMINATIONS
EXAMINATIONS FOR THE AWARD OF CERTIFICATE IN HOSPITALITY AND TOURISM MANAGEMENT
CHTM 0023: BASIC ACCOUNTING
STREAMS: CHTM TIME: 2 HOURS
DAY/DATE: MONDAY 22/4/2013 2.30 PM – 4.30 PM
INSTRUCTIONS:
Answer all questions
Do not write on the question paper
QUESTION ONE
1. (a) Explain the following qualitative characteristics of financial statements showing
clearly how each of the attributes may be achieved.
(i) Comparability [3 Marks]
(ii) Reliability [3 Marks]
(iii) Relevance. [3 Marks]
(b) George opened a supermarket at Chuka Town. The following are the transactions relating to his business for the month of November 2012.
November 1: George opened an account with cooperative bank for the business and deposited 300,000.
3: He purchased land for 60,000 paying cash.
5: He purchased a building for 40,000 paying 10,000 cash and issuing a note payable for the balance (30,000)
17: He purchased tools and equipment on account for 15,000.
20: He paid rent Sh 50,000 cash for two months in advance.
22: He sold some of the tools and equipment on account at a price equal to their cost (3,000)
25: He received 1,500 in partial collection of account receivable from the sale of tools.
30: He paid sh 8,000 cash in partial payment of account payable.
Required:
Show the effect of each of the transactions on the accounting equations.
[11 Marks]
QUESTION TWO
While preparing the draft year – end accounts of John services the accountant discovered a difference between the totals in trial balance. This difference was entered in a suspense account. The draft income statement showed a profit of sh 5, 800, 0000 and the suspense account was shown in the draft balance sheet. Later the following errors were discovered and corrected. The balance in the suspense account was then eliminated.
1. One of the pages of the sales day book totaling to 480,000 was not posted to the sales account.
2. The year – end stock had been overcast by sh. 120,000.
3. The last page of the purchases daybook totaling sh. 778,000 had been posted to the purchase account as sh. 178,000.
4. An invoice for 6,400 entered correctly in the sales day book had been posted to the customers account as 16,400.
5. An entry in the purchase day book of sh. 8,000 had not been posted to the supplies account.
6. An error had been made in balancing the petty cash. The corrected amount was 25,000 and not 2,500.
Required:
(i) Journal the entries to correct the above errors [6 Marks]
(ii) Suspense account showing the amount of original difference. [6 Marks]
(iii) Explain the importance of conceptual framework. [5 Marks]
QUESTION THREE
The following balances were extracted from the books of Gitonga, a sole trader as at 1st January 2012.
Fixed assets 150,000
Balance at bank 40,000
Bank loan 100,000
Accrued sundry expenses 20,000
Stock in trade 52,000
Trade debtors 70,000
Trade creditors 50,000
Cash balance 15,000
The following transactions took place in the month of January 2012
January 3: Fixed assets were purchase for sh 120,000 and paid by cheque.
5: Salaries and wages amounting to 42, 0000 were paid by cheque.
7: Trade creditors were paid 600,000 by cheque less 3% discount.
10: Debtors paid 800,000 less a discount of 2%.
12: The business made credit sales of 840,000 and cash sales of sh 150,000.
15: The business purchased goods on credit worth 620,000 further purchase of goods worth sh 100,000 and paid by cheque.
17: The proprietor withdrew sh 50,000 was made by cheque.
24: Bank loan repayment of 50,000 was made by cheque.
27: Sundry expenses amounting to 25,000 was paid by cash.
Required:
(a) Prepare the relevant ledger accounts (including a three column cash book to record the above transactions) [12 Marks]
(b) Extract a trial balance as at 31st January 2012 [6 Marks]
QUESTION FOUR
The following trial balance from the accounting records of Omari as on December 31st 2007
Dr Cr
Capital 250,000
Stock(1.1.2007) 25,000
Plant and machinery (cost) 250,000
Motor vehicle
Provision for depreciation on plant and machinery 20,000
Provision for depreciation on motor vehicle 15,000
Purchases 300,000
Sales 600,000
Sales returns 40,000
Purchases returns 20,000
Discounts Allowed 5,000
Discounts received 4,000
Wages and salaries 60,000
Postage and telephone 7,500
Water and electricity 8,000
General expenses 8,500
Rent and rates 15,000
Debtors 50,000
Creditors 45,000
Cash in hand 5,000
Cash at bank 20,000 ______
954,000
====== 954,000
======
Additional information:
(a) Closing stock on 31st December 2007 was valued at sh 22,500.
(b) Depreciation is to be charged at 10% of cost of plant and machinery and 20% of cost of motor vehicles.
(c) Accrued rent is 3000 and prepaid rates are sh 1000.
(d) Outstanding electricity expense is sh 600
Required:
Prepare Trading profit and loss account for the year ending 31st December 2007 and a balance
sheet as at that date. [15 Marks]
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