Get premium membership and access revision papers, questions with answers as well as video lessons.

Got a question or eager to learn? Discover limitless learning on WhatsApp now - Start Now!

Financial Accounting Question Paper

Financial Accounting

Course:

Institution: Nairobi Technical Training Institute question papers

Exam Year:2011

INSTRUCTIONS TO CANDIDATE:
this paper consist of seven questions;
Answer any five questions from this paper.

1.(a) The following balances were extracted from the accounting record of Memory
Suppliers as at 30th September, 2011.

Ksh''000''
Motor vehicle 15,000
Accounts receivable 850
Motor expenses 230
Rent and rates 250
Discount received 46
Wages and salaries 2,420
Account payable 1,850
Provision for depreciation: Motor vehicles(1st October, 2010) 1,500
Carriage outwards 410
Cash at bank 1,060
Drawings 1,230
Gross profit 8,570
Inventories 5,500
Capital 14,984

Aditional information:

Motor vehicles are to be depreciated at a rate of 20% per anum on
reducing balance basis.

Ast at 30th September, 2011;

Salaries and wages outstanding was Ksh.280,000
Rent and rates was prepaid by Ksh.150,000

Prepaire:

(i) A statement of financial performance(profit and loss statement) for the
year ednded 30th September, 2011

(ii) A statement of financial position( balance sheet) as at
30th September, 2011. (12 marks)

(b) Explain each of the following business documents:

(i) Statement of account;
(ii) PUrchase order;
(iii) Delivery note;
(iv) Invoice;

2(a) Classify the following costs as either capital expenditure or revenue expemditure:

(i) Cost of partitionioning a building;
(ii) Cost of replacing a motor vehicle engine;
(iii) Cost of painting a new building;
(iv) Wages paid to workers engaged in installing a new machine;
(v) Legal costs of collecting debts;
(vi) Wges of computer operators;
(vii) Cost of buying a "second-hand" motor vehicle.
(8 marks)

(b) Umoja Distributors provide for depreciation on its motor vehicle at 20% per annum
on reducing balance basis.

The firm provides for a full year''s depreciation charg in the year of purchase and
no depreciation charge in the year of disposal.
The financial year of the firm ends on 31st December.

In the years 2009, 2010 and 2011, the following transactions took place:
2009
June 1st Bought a motor vehicle ''X'' for Ksh.9,000,000
2010
July 20th Bought motor vehicle ''Y'' for Ksh.7,000,000
2011
May 20th Bought motor vehicle ''Z'' for Ksh.9,200,000
November 23rd Sold motor vehicle ''X'' for Ksh.6,300,000

For the years ended 31 December, 2009, 2010 and 2011, prepaire:

(i) motor vehicle account;
(ii) provision for depreciation on motor vehcle account;
(iii)motor vehicle disposal account (only for the year,2011);
(iv) an extract for motor vehicles account from the balances sheet
to show the balances the balance in the account at the end of each
of the three years. (12 marks)

3.(a) Magic Traders operates a petty cash on an imprest system. The monthly cash float
is Ksh.30,000. Reimbursment is done at the begenning of each month. The cash
balance on 30th April, 2011 was Ksh.4,700 and the reimbursment was done on the
due date. The following transactions took place during the month of May, 2011:
2011 Ksh.
May 2 Postage stamps 1,500
5 Staff bus fare 2,000
7 Motor vehicle repairs 1,200
10 Bonde, a supplier 7,600
12 Ceaning detergents 800
16 Photocopying papers 550
18 Postage stamp 700
20 Fuel for motor vehicles 1,600
24 Office chair 1,400
26 Mssenger''s bus fare 500
28 Cleaning services 4,500
30 Photocopying papers 600

Prepaire a petty cash book with analysis column for:
-Travelling
-Motor expences
-Cleaning
-Stationary
-Postage
-General ledger
(11 marks)

(b)The following is a summery of bank transactions for Mpatanishi Social club for the
year ended June, 2011:
Receipts: Ksh''000''

Sale of raffle tickets 300
Investment income 450
Subscriptions received 1,340
Registration fees 250
Donations 750

payments:

Saff wages 150
Insurance 75
Postage and stationary 28
Purchase of fixed assets 180
Rent and rates 56
Cost of raffle 84

Additional information:

Balances as at: 1st July 2010 30th June 2011
Ksh ''000'' Ksh''000''
Subscriptions owing 250 300
Subscription in advance 160 200
Value of fixed assets 1,600 ?
Cash at bank 850 3,567

Fixed assets are to be depreciated at 20%

Prepaire:

(i) Statement of affairs as at 1st July 2010;
(ii)income statement for the year ended 30th June, 2011
(9 marks)
4.(a) Explain the following accounting concepts:

(i) Business entity concept;
(ii) Consistency concept;
(iii) Accruals concept;
(iv) Money measurement concept
(8 marks)

(b) On 31st August, a trial balance extracted from the books of account of Magneta
Logistics did not balance. The totals on the credit side exceeded the totals
on the debit side by Ksh24,500.This amount was recorded in the suspence account.
The draft final account showed a net profit of Ksh650,000.
Subsequent investigations revealed the following errors:
(i) Purchase account was under-cast by Ksh 14,000
(ii) Motor expences of Ksh 10,400 was entered in the motor vehicles account.
(iii)Sales account was overcast by Ksh12,500
(iv) A cash receipt of Ksh28,000 was entered in the cash book as Ksh 18,000.
(v) Rent received of Ksh 12,000 was entered in the cash book only.
(vi) Discount received of ksh 5,000 was credited to the discount allowed account.

Prepaire:

(i) Journal entries necessary to correct the errors above;
(ii) Statement of corrected net profit for the year ended 31st August, 2011.
(12 marks)

5.(a) The cash book of Ojwang Depots showed a credit balance of Ksh.420,000 as at 31st
July, 2011. The bank statement for July 2011 showed a different balance..
On subsequent review, the following information was found:

Mwema, a debtor, had made a credit deposit of Ksh200,000 into the bank account.
A cheque for Ksh.350,000 received fromMwamba during the month had been dishonoured.
Bank charges amounted to Ksh.45,000.
The bank had effected a standing order for Ksh.160,000
Acheque for Ksh.400,000 received from Wamalwa had been credited in the cash book.
Cheques amounting to Ksh.475,000 deposited in the bank on 31st July,2011 were not
entered in the bank statement.
Cheques for amounts totalling Ksh. 360,000, issued to creditors, had not been
presented to the bank for payments.
A cheque for Ksh.145,000 issued to Otieno but later stoped for payment by Ojwang
Depots, was paid by the bank.

Prepaire:

(i) An adjusted cash book;
(ii)A bank reconciliation stastement for July,2011.
(10 marks)

(b) Smart Manufacturers had the following transactions in the month of October, 2011:

October 1 Bought goods on credit from:
- Omollo for Ksh.46,000
- Mwangi for Ksh 24,000
" Returned goods to Omollo for Ksh.2,000
" Sold goods on credit to:
- Obasu for Ksh.39,000
- Kagwe for Ksh52,000
" 12 Goods were returned to Smart Manufacturers by Kagwe worth Ksh.5,000

(i) Post the transactions above to the relevant journals;

(ii)Post the journal entries to the relevant ledger accounts.
(10 marks)

6.(a) The following informatiom is extracted from the account records of Fresh Milk
Processors for the month ended 30th April, 2011.

Balances as at 1st April, 2011: Ksh.
-Purchases ledger(credit) 465,000
-Sales ledger(debit) 676,000
Totals for the month:
Return inwards 57,000
Bad debts 45,000
Discount received 36,000
Return outwards 49,000
Payments to creditors 575,000
Discount allowed 46,000
Dishonoured cheques 48,000
Receipts from debtors 700,000
Debtors account settled by contra accounts with creditors 74,000
Balances as at 30th April, 2011:
- Purchases ledger(credit) 582,000
- Sale ledger(debit) 441,000

(i) Prepaire the control accounts to establish the credit sales and
the credit purchases for the month of April, 2011.
(ii)Comment on the level of credit sales and the credit purchases.
(10 marks)

(b) The bank balance and cash balance of Makinon Freighters as at 31st May, 2011 were
Ksh.475,000 and Ksh.97,000, respectively.
The following transactions took place during the month of May, 2011.

May2 Received a cheque of Ksh.285,000 from Loise after deducting a 5% cash discount;
5 Sold goods for Ksh.27,000in cash;
10 Musoma settled his account of Ksh.85,000, by cheque after deducting
5% cash discount;
20 Withdrew Ksh.75,000 from the bank for business use;
22 Paid Ksh.60,000 for rent in cash;
30 All the cash in hand except Ksh.50,000 was deposited into the bank account;
31 Paid Ksh.184,000 for wages by cheque;
31 The proprietor introduced extra capital of Ksh.50,000 into the business
by cheque.

(i) Prepaire a three column cash book for the month of May, 2011.
(ii)Post the discount totals to the ledger accounts.
(10 marks)

7.(a) Pixel Enterprises whose financial year ends on 31st December, had the following
balances as at 1st January, 2010:
Kshs.
Rent prepaid 25,000
Rent outstanding 30,000
Commission receivable due 28,000
Stock of packaging materials 40,000

During the year ended 31 December, 2010 the following transactions took place.
- Paid Ksh.140,000 for rent by cheque;
- Paid Ksh.70,000 for rates by cheque;
- Received commission of Ksh.150,000 by cheque;
- Paid Ksh 78,000 for packaging by cheque.

Balances as at 31st December, 2010:
Ksh.
Rent Owing 45,000
Rent prepaid 10,000
Commission receivable due 24,000
Packaging material owing 12,000

(i) Prepaire:
(I) rent and rates controll account;
(II) commission receivable account;
(III) packaging material account

(ii) The three accounts above were not taken into the account when
prepairing the profit and loss statement for the year ended 2010.
The profit was Ksh.1,250,000. State the effect that the information
in the accounts above will have on the reported profit for t5he year.
(12 marks)

(b)The following transactions relate to Fiar Traders for the month of March, 2011:
2011
March 1 Started business with Ksh.450,000 at bank;
5 Bought goods for Ksh.84,000 from Wafula on credit;
10 Sold goods for Ksh.120,000 to Wanyonyi on credit;
15 Paid Ksh.250,000 for motor vehicle expenses by cheque;
20 Withdrew Ksh.100,000 from the bank for personal use;
22 Bought a motor van for Ksh.320,000 on credit from Mix motors;
28 Received Ksh.100,000 from Wanyonyi on account;
31 Received Ksh.40,000 for rent by cheque.

Record the transactions in the relevant ledger accounts.
(8 marks)

Financial Accounting Question Paper

More Question Papers

Popular Exams