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Daa 101 Introduction To Accounting Ii Question Paper

Daa 101 Introduction To Accounting Ii

Course:Diploma In Business Management

Institution: Kca University question papers

Exam Year:2014

UNIVERSITY EXAMINATIONS: 2013/2014
STAGE III ORDINARY EXAMINATION FOR THE DIPLOMA IN
BUSINESS MANAGEMENT
DAA 101 INTRODUCTION TO ACCOUNTING II
DATE: AUGUST 2014
TIME: 1 1/2 Hours
INSTRUCTION: Answer any THREE questions
QUESTION ONE: (20 MARKS)
Mr. Alex Joseph is a sole trader who prepares his financial statements annually to 30th April. His
summarized balance sheets for the last two years are shown below:
STATEMENT OF FINANCIAL POSITION
FOR THE YEAR ENDED 30TH APRIL,
2012
Kshs.
2013
Kshs.
Kshs.
Kshs.
Non-current assets 15,500 18,500
Less: provision for depreciation (1,500) (1,700)
14,000 16,800
Current assets
Inventory 3,100 5,900
Trade accounts receivable 3,900 3,400
Bank 1,500
Total assets
8,500
22,500
1
-
9,300
26,100
Current liabilities
Trade accounts payable
2,000 -
Bank overdraft
2,200
900
Total liabilities (2,000) (3,100)
Net assets 20,500 23,000
Capital as at 1 May 20,000 20,500
Add: Net profit for the year 7,000 8,500
- 2,000
27,000 31,000
Less: Drawings (6,500) (8,000)
Total capital 20,500 23,000
Financed by:
Additional capital introduced
Mr. Alex Joseph is surprised to see that he now has an overdraft, in spite of making a profit and
bringing in additional capital during the year.
Required:
Draw up a suitable statement which will explain to Mr. Alex Joseph how his overdraft has arisen.
(20 Marks)
QUESTION TWO: (20 MARKS)
The following balances have been extracted from the books of Malava Manufacturers, a small
scale manufacturing enterprise, as at 31 December 2013:
Kshs. “000”
Stocks as at 1 January 2013:
Raw materials 7,000
Work in progress 5,000
Finished goods 6,900
Purchases of raw materials 38,000
Direct labour 28,000
Factory overheads:
Variable
2
16,000
Fixed
Administrative expenses:
9,000
Rent and rates
19,000
Lighting 6,000
Stationery and postage 2,000
Staff salaries
19,380
Sales
192,000
Plant and machinery:
At cost Provision for depreciation 12,000
At cost
Motor vehicles (for sales deliveries):
30,000
16,000
Provision for depreciation
4,000
Creditors 5,500
Debtors 28,000
Drawings 11,500
Balance at bank 16,600
Capital at 1 January 2013 48,000
Provision for unrealized profit at 1 January 2013 1,380
Motor vehicles running costs 4,500
Additional information:
(i)
Stocks at 31 December 2013 were as follows:
Kshs. “000”
Raw materials 9,000
Work in progress 8,000
Finished goods
(ii)
10,500
The factory output is transferred to the trading account at factory cost plus 25% of factory
profit.
(iii)
Depreciation is provided at the rates shown below on the original cost of fixed assets held
at the end of each financial year:
Plant and machinery
-
10% per annum
3
Motor vehicles
(iv)
-
25% per annum
Amounts accrued at 31 December 2013 for direct labour amounted to Kshs. 3,000,000
and rent and rates prepaid at 31 December 2013 amounted to Kshs. 2,000,000.
Required:
(i)
Manufacturing, trading and profit and loss accounts for the year ended 31 December
2013.
(ii)
(12 Marks)
Balance Sheet as at 31 December 2013. (8 Marks)
QUESTION THREE: (20 MARKS)
Explain the meaning of the following terms as used in accounting for partnership business:
(i) Interest on capital (3 Marks)
(ii) Interest on drawings (3 Marks)
(iii) Partnership salaries (3 Marks)
(iv) Partnership deed (3 Marks)
(v) Appropriation account (3 Marks)
(vi) Current account (3 Marks)
(vii) Profit and loss sharing ratio (2 Marks)
QUESTION FOUR: (20 MARKS)
The following is a summary of the receipts and payments of the Sher Karuturi Football Club
during the year ended 31 July 2009.
Kshs.
Kshs.
Cash and bank balances b/d 10,500 Secretarial expenses Sales of competition tickets 21,850 Rent 70,100
Members’ subscriptions 99,350 Visiting speakers’ expenses 63,750
Donations
Refund of rent
Balance c/d
8,150
8,850 Donations to charities 1,750
25,000 Prizes for competitions 13,500
650 Stationery and printing 8,950
166,200
4
166,200
The following valuations are also available:
As at 31 July
2008 2009
Kshs. Kshs.
48,750 39,000
3,250 4,250
500 1,850
Owing to suppliers of competition prizes 2,900 3,400
Inventory of competition prizes 1,900 2,300
Equipment (original cost Kshs. 73,500)
Subscriptions in arrears
Subscriptions in advance
Required:
(a) Calculate the value of the accumulated fund of the Sher Karuturi Rotary Club as at 1
August, 2008.
(4 Marks)
(b) Reconstruct the following accounts for the year ended 31 July, 2009:
(i) The subscription account, (2 Marks)
(ii) The competition prizes account. (2 Marks)
(iii) Prepare an income and expenditure account for the Sher Karuturi Rotary Club for
the year ending 31 July 2009 and a balance sheet as at that date.
(12 Marks)
QUESTION FIVE: (20 MARKS)
The following are the summarized financial statements of Deweto Limited:
INCOME STEMENT
FOR THE YEAR ENDED 31 OCTOBER
2009 2010
Kshs. „000? Kshs. „000?
93,500 111,350
Cost of sales (55,120) (72,970)
Gross profit 38,380 38,380
(26,230) (23,960)
Net profit before interest and tax 12,150 14,420
Loan interest (450) (375)
Net profit before tax 11,700 14,045
Sales
Expenses
5
Taxation
(3,510) 8,190
Retained profit
(6,000)
2,190
Dividend
8,631.5
(6,000)
Net profit after tax
(5,413.5)
2,631.5
STATEMENT OF FINANCIAL POSITION
FOR THE YEAR ENDED OCTOBER
2009
Kshs.
2010
Kshs. „000?
Kshs. „000?
Kshs. „000?
„000?
Fixed Assets:
Freehold premises 10,500 10,500
Plant and equipment 7,200 9,500
Motor vehicles 5,350
23,050
7,300
27,300
Current Assets:
Stock 12,500 11,800
Debtors 9,850 8,900
Bank balance and cash in hand 5,950
28,300
5,864.5
26,564.5
Current Liabilities
Creditors 8,350 7,830
Taxation 3,510 5,413.5
Dividend 3,000
(14,860)
3,000
(16,243.5)
36,490 37,621
Ordinary share capital 30,000 30,000
Reserves 3,490 5,121
33,490 35,121
3,000 2,500
36,490 37,621
15% loan
6
Note:
(i) 80% of the sales are on credit
(ii) The stock as at 31 October 2008 was valued at Kshs. 13,000,000.
Required:
(i) Calculate two ratios for each classification identified below for the financial years ended 31
October 2009 and 2010:
a) Profitability ratios (4 Marks)
b) Liquidity ratios. (4 Marks)
c) Gearing ratios (4 Marks)
d) Activity ratios. (4 Marks)
(ii) Comment on Deweto Ltd.’s profitability and liquidity positions.
7
(4 Marks)

Daa 101 Introduction To Accounting Ii Question Paper

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