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Principles Of Accounts Question Paper

Principles Of Accounts

Course:Certificate Course In Management

Institution: Kenya Institute Of Management (Kim) question papers

Exam Year:2011

Certificate course in management

June 2012 Examination

Subject name: Principles of Accounts

Date: 6th June 2012

Time: 3 Hours

Instructions
1. Write your index number in the space provided in the answer booklet.
2. Answer any five questions
3. All questions carry equal marks
4. No writing should be done on this question paper
5. Candidates who break KIM examination rules and regulations or commit any malpractice will be Disqualified

1. Explain the main classification of accounts and show how the double entry role apply in each case (6 marks)

b) Explain reasons why the balance shown by the bank statement may not agree with that shown by the cash book (14 marks)

2. Snow man and sons purchased a plant for Shs 40000 on 1st January 05. They spend Shs 4000 on its installation. The plant was bought in use form 1st April 05. The market value of the plant on 1-1-06 was Shs 45000, charge depreciation at 10% p.a on straight line method.

Required:

i) Plant account for four years (8 marks)
ii) Depreciation account for four years (4 marks)

b) Define the term trial balance and discuss the errors that affect it (8 marks)

3. On 31st Dec. 04 the bank column of the cash book of Karate showed a credit balance of Shs 236200. On examination of the cash book and bank statement, the following were discovered.

i. Cheques received and recorded in the cash book but not set to the bank for collection amounted to Shs 29800

ii) A cheque of Shs 14000 paid into the bak on Nov. 04 had been debited by the bank in Dec 04

iii) Cheques issued amounting to sHS 350400 in Dec 04 had been entered in the cash book as Shs 345000 and the cheques were not presented to the bank for payment until Jan 05.

iv) Interest of Shs 17600 charged by the bank was not recorded in the cash book

v) The payment side of the cash book had been under-cast by Shs 2000

vi Shs 69800 was entered in the cash book as paid into the bank on 31/12/04 but not credited by the bank until the following day.

vii) Payment received from a customer direct by the bank Shs 54 600 but no entry was made in the cash book

Required

a) Adjusted cash book (12 marks)

b) Bank reconciliation statement (8 marks)

4. An accountant could not tally the trial balance. The difference was placed in the suspense account. The following errors were discovered on thorough checking.

i) Commission of Sh 250 was posted twice, one to discount account and again to the commission account

ii) The sales book was under-cast by Shs 500

iii) A sale of Sh 1390 to Ian was posted wrongly to his account as Sh 1930

iv) A purchase from Nelly of Sh 920 was wrongly debited to his personal account

v) Discount column of the receipt side of the cash book was wrongly added as Sh 1400 instead of Sh 1200

Required

a) Pass the necessary journal entries to correct the errors
b) Prepare a suspense account
c) Corrected profit if the original profit was Shs 100000

5. Discuss any five books and five documents of original entry (10 marks)

b) Discuss the advantages of using the imp rest system (10 marks)

6.Distinguish between the following

a) Revenue expenditure and capital expenditure
b) Revenue receipt and capital receipt
c) Carriage inwards and carriage outwards
d) Sales account and sales journal
e) Purchases accounts and purchases journal (20 marks)

7. Define depreciation and explain the causes of depreciation (10 marks)

b) Distinguish between the straight line and the reducing balance method of depreciation and stat the advantages of the straight line method (10 marks)

Principles Of Accounts Question Paper

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