Accounting For Assets Question Paper

Accounting For Assets

Course:Bachelor Of Commerce

Institution: Kenyatta University question papers

Exam Year:2008

KENYATTA UNIVERSITY
UNIVERSITY EXAMINATIONS 2007/2008
INSTITUTE OF OPEN LEARNING
SPECIAL/SUPPLEMENTARY EXAMINATION FOR THE DEGREE OF
BACHELOR OF COMMERCE
BAC 200:
ACCOUNTING FOR ASSETS
DATE: WEDNESDAY, 8TH OCTOBER 2008
TIME: 1.00 P.M. – 3.00 P.M.

INSTRUCTIONS:

1.
Attempt any four questions.
2.
Time allowed is 2 hours.
3.
Be neat & precise.
4.
Marks allocated to each question are shown at the end of each question.

Question One:

(a)
Explain the importance of a cash flow statement of an enterprise.
(6 marks)

(b)
The asset register of Machine Ltd on 1st January 2008 showed the following

machines:

Machine
Cost (Shs)
Year of Purchase
V
5 m
1997
W
6 m
2001
X
7.5 m
2003
Y
8.0 m
2006
Z
10 m
2007

2

Machine Ltd?s depreciation policies are as follows:
1.
Machine V and W on straight line basis assuming no scrap value over 10 years.
2.
Machine X on reducing balance basis at 20% p.a. assuming scrap value of
Shs500,000.
3.
Machine Y and Z on straight line basis assuming a scrap value equal to 10%
of the original cost over 5 years.
4.
All machines get a full year?s depreciation in the year of purchase.
Required: Prepare a table showing for each machine cost, depreciation to date
and net balance sheet figures.

(14 marks)

(Total 20 marks)

Question Two

(a)
Using hypothetical examples explain three distinguishing features of
intangible fixed assets.

(6 marks)

(b)
The following are the summarized balance sheet of Katitu Ltd as at

31st March 08
31st March 07
Assets
Shs„000?
Shs„000?
Non current Assets at cost
13,000
10,000
Less: Accumulated Depreciation
(6,000)
(4,000)

7,000
6,000
Investments at cost
1,000
4,000
Current Assets

Stocks
14,000
8,000
Debtors
31,000
27,000
Cash & Bank balance
-
2,000

53,000
47,000
Current Liabilities

Bank overdraft
(1,200)
-
Creditors
(15,800)
(13,000)
Taxation
(3,800)
(4,6000)

3
Proposed dividends
(2,600)
(3,000)

(23,400)
(20,600)

29,600
26,400
Called up share capital (Sh10 par) 15,000
10,000
Share premium
4,000
3,000
Profit and loss A/c
10,600
13,400

29,600
26,400

Additional information:
1.
During the year ended 31st March 2008, some fixed assets originally costing
Shs500,000 were sold for Shs400,000. This amount was received in cash. The
accumulated depreciation on these fixed assets at 31st March 2007 amounted to
Shs200,000. In addition, some investments originally costing Shs3,000,000 was
sold for cash at their book value.

2.
The balances on taxation accounts disclosed in the above balance sheets represent
the actual amounts agreed with the Kenya Revenue Authority. All taxes were paid
on their due dates.

3.
No interim dividend was paid during the year ended 31st March 2008.

4.
During the year ended 31st March 2008, the company made a one for two rights
issue of 500,000 ordinary shares of Sh10 par value at Sh12 par share.

Required:
Katitu Ltd?s cash flow statement in conformity with the requirements of
IAS 7 for the year ended 31st March 2008.

(14 marks)

(Total 20 marks)

4

Question Three

(a)
Briefly explain three methods of valuing goodwill.

(6 marks)

(b)
Bura Ltd undertook the following transactions during the month of March 2008:

Purchases for the month of March 2008:

Date
Quantity (Units)
Price per Unit (Shs)
13
1000
38
20
1200
39
25
1600
40
28
500
38

Sales for the month of March 2008:

Date
Quantity (Units)
Price per Unit (Shs)
3
350
46
4
500
45
16
400
46
24
900
43
26
1900
44

Additional information:

1.
The closing stock for the month of February 2008 was 2500 units valued at Shs90,000.
2.
The following returns were made by the customers:
14 March: 75 units had been sold on 3rd March.

27 March: 175 units which had been sold on 24th March.
3.
On 22nd March 2008, the officer in charge detected a shortage of 50 units.
4.
Operating expenses for the month of March 2008 amount to Shs4500.

📘 Access 10,000+ CBC Exams With Marking Schemes

Accounting For Assets Question Paper

More Question Papers

Exams With Marking Schemes

End Term 3 Exams

Mid Term Exams

End Term 1 Exams

Opener Exams

Full Set Exams