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Bit 1309: Financial Management For It Question Paper
Bit 1309: Financial Management For It
Course:Bachelor Of Science In Information Technology
Institution: Kca University question papers
Exam Year:2014
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UNIVERSITY EXAMINATIONS: 2013/2014 ORDINARY EXAMINATION FOR THE BACHELOR OF SCIENCE IN INFORMATION TECHNOLOGY BIT 1309 FINANCIAL MANAGEMENT FOR IT DATE: APRIL, 2014 TIME: 2 HOURS INSTRUCTIONS: Answer Question ONE and any other TWO QUESTION ONE
a) Describe any Six users of financial statements. Within your description, comment on the needs of each user. (12 Marks)
b) Discuss the limitations of financial accounting (6 Marks)
c) i. Discuss main stages in the accounting cycle (4 Marks)
ii. How are the stages described above relate to input- processing- output relationship of a system (4 Marks)
d) Differentiate between direct and indirect costs in the context of manufacturing accounts (4 Marks)
QUESTION TWO The following ledger balances were extracted from the books of the Rufus Hotel: Balances as at 31 May 2010 Sh. “000” Advertising 1,000 Bank (overdrawn) 27,000 Capital ? Cash 400 Trade payables 9,000 Trade receivables 4,600 Drawings 14,000
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Electricity 800 Equipment (cost) 40,000 Equipment (provision for depreciation) 17,100 General expenses 2,300 Insurance 3,500 Opening Stock 4, 400 Premises 160,000 Purchases 22,000 Rates 4,300 Sales 79,100 Telephone 2,400 Wages 11,000 Required: i) Prepare a Trial Balance as at 31 May 2010, disclosing the Capital balance (4 Marks) and ii) Statement of Financial performance for the year ended 31 May 2010 and the Statement of Financial position as at that date, incorporating the following adjustments: (16 Marks)
a) The closing stock at 31 May 2010 was Sh.3600,000
b) Provide for depreciation on equipment 20% per annum on a straight line basis
c) Insurance is prepaid by Sh.500,000
d) An electricity bill of Sh.200,000 is outstanding
QUESTION THREE Assume you started a business on 1st March 2013. Prepare the necessary accounts balance them off and extract a trial balance from the following information. March 1 Started firm with capital in cash of Shs.250,000. “ 2 Bought goods on credit from the following persons: R Kamanzi Shs.54,000; P Muiru Shs. 87,000; J Rufus Shs.25,000; D Wasilwa Sh.76,000; Ian Matu Shs.64,000. “4 Sold goods on credit to: C Wanje Shs.43,000; B Linda Shs.62,000 ; F Karimi Shs.176,000.
“ 6 Paid rent by cash Shs.12,000.
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“ 9 C Wanje paid us his account by cheque Shs33,000. “ 10 F Karimi paid us Shs.150,000 by cheque. “ 12 We paid the following by cheque: J Rufus Shs.25,000; R Kamanzi Shs.54,000. “ 15 Paid carriage by cash Shs.23,000. “ 18 Bought goods on credit from P Muiru Shs.43,000; Wasilwa Kshs.110,000. “ 21 Sold goods on credit to B Linda Shs.67,0000. “ 31 Paid rent by cheque Shs.18,000. QUESTION FOUR
a) Give the accounting definition of the term depreciation (2 Marks)
b) Using a suitable example in each case explain the factors that cause the assets to depreciate (6 Marks)
c) The following information appeared in the balance sheet as Paradiso transporters Ltd as at 31 December 2010
Motor vehicles
Sh. “000”
Cost
13,500
Accumulated depreciation
(5750)
NBV
7750
The following is information is relevant for the year 2011
1 Acquired a pick-up KBM at a cost of 15,000,000
2 Disposed off a bus KBA at 750,000. This bus was acquired in the year 2008 at cost of 3m.
3 Traded in an old truck for a new one making an additional cash payment of 1.2m. The old truck was acquired in 2008 at a cost 2.4 m and for trading purposes was valued at 900,000.
4 As per the company’s policy motor-vehicles are depreciated at 15% straight line basis full depreciation is given in the years of acquisition non in the year of disposal
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Required Prepare:
i. Motor-vehicle account (4 Marks)
ii. Provision for depreciation account (4 Marks)
iii. Motor-vehicle disposal account (4 Marks)
QUESTION FIVE
a) Discuss the significant differences between receipts and payments account and income and expenditure account (8 Marks)
b) The Sellassie Hotel has been trading for a number of years. In November 2007, in anticipation of a debt problem, a provision for doubtful debts of Sh.400,000 was created. In subsequent years a provision of 4% of outstanding debtors is to be made at the end of each year.
The following data applies: Year to 30 November
2008
2009
2010
Sh. “000”
Sh. “000”
Sh. “000”
Outstanding debtors
12,000
14,000
14,500
Bad debts discovered within the above debtors
500
600
1,200
Required: Calculate the provision for doubtful debts, (use net debtors) and
i. Show the income statement entries relating to bad and doubtful debts for the years ended 30 November 2008, 2009 and 2010 (6 Marks)
ii. State the value of debtors to be shown in the statement of Financial position as at 30 November each year (6 Marks)
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