University Examinations - School of Business - ACC1101 - PDF

UNIVERSITY EXAMINATIONS SCHOOL OF BUSINESS ORDINARY EXAMINATION FOR BACHEOR OF COMMERCE ACC1101: INTRODUCTION TO FINANCIAL ACCOUNTING 1 DATE: DECEMBER 2021 TIME: 2 HOURS INSTRUCTIONS: ANSWER ALL THE...

UNIVERSITY EXAMINATIONS SCHOOL OF BUSINESS ORDINARY EXAMINATION FOR BACHEOR OF COMMERCE ACC1101: INTRODUCTION TO FINANCIAL ACCOUNTING 1 DATE: DECEMBER 2021 TIME: 2 HOURS INSTRUCTIONS: ANSWER ALL THE QUESTIONS QUESTION ONE Linda started business with sh. 500,000 on 1st September 2021. The money was deposited in a bank account on that day. In the month of September, she made the following transactions. Date Particulars Amount (Ksh.) 2.9.2021 Withdrew cash from the bank for office use 120,000 Bought goods by cash 30,000 Cash sales 40,000 Paid rent by cash 10,000 3.9.2021 Bought van paying by cheque 300,000 4.9.2021 Bought goods on credit- Mary 30,000 - Ken 50,000 - Ann 60,000 5.9.2021 Credit sales- Kezia 40,000 -Belly 25,000 -Njeri 36,000 8.9.2021 Sales by cheque 62,000 10.9.2021 Bought goods paying by cheque 48,000 12.9.2021 Credit sales- Kezia 22,000 Njeri 46,000 Kelly 54,000 13.9.2021 Received goods returned by- Njeri 6,000 - Kelly 7,000  15.9.2021 Credit purchases- Mary 88,000 - Ken 64,000 Joseph 58,000 16.9.2021 Goods returned to - Mary 4,000 - Ken 5,000 18.9.2021 Cash sales 80,000 Deposited cash into the bank 60,000 19.9.2021 Paid by cash- wages 5,000 - Electricity 4,000 -airtime 2,000 22.9.2021 Paid by cheque the following debts less 5% cash 100,000 discount- Mary -Ken 60,000 24.9.2021 Received cash from customers for the following debts 20,000 less 6% cash discount- Kezia - Njeri 40,000 25.9.2021 Cash drawn for personal use 30,000 28.9.2021 Cash purchases 44,000 30.9.2021 Cash sales 57,000 Paid wages by cash 10,000 Deposited sh. 40,000 in the bank 30,000 Required From above transactions; (a) Prepare the relevant daybooks ( 4 Marks) (b) Prepare a three column cash book ( 5 Marks) (c) Prepare the ledger accounts ( 8 Marks) (d) Prepare a trial balance ( 3 Marks) QUESTION TWO (20 MARKS) The following balances were extracted from the books of Hasina traders as at 30th September, 2021 Ksh.’000’ Land and buildings at cost 20,000 Motor vehicles at cost 4,000 Furniture at cost 400 Inventory on1.10.2020 5,000 Provision for depreciation on 1.10.2020- motor vehicles 1,600 - Furniture 80 Sales 80,000 Purchases 52,000 Discount allowed 4,000 Insurance paid 8,000 Discount received 7,000 Return inwards 15,000 Return outwards 4,500 Rent 15,000 Electricity 12,000 Trade receivables 22,000 Trade payables 18,000 Cash at Bank 24,000 Cash in hand 4,200 Bad debts 600 Additional information; 1. Inventory on 30.9.2021 was valued at sh. 13,000,000 2. Provision for depreciation is on straight line basis. Motor vehicles 25%, furniture 10% 3. Electricity bill of sh. 4,000 is outstanding while insurance paid include sh. 120,000 paid on 1st July 2021 is to cover six months ending on 31st December, 2021. 4. Inventory costing sh. 20,000 taken for personal use, no record was made.  Required (a) Prepare the statement of the profit or for the year ending 30th September 2021 (10 Marks) (b) Prepare the statement of financial position as at 30th September 2021 (10 Marks) QUESTION THREE (10 MARKS) a) Identify the accounting concept applicable on the following records for Dan on 30th September, 2021. Support your answer (i) Closing inventory was valued at sh. 40,000 (ii) Motor vehicle bought in 2018 at sh. 400,000 (iii) Office staple pins bought at sh. 600. Half of the pins were unused as at close of financial year (iv) Rent due of sh. 12,000 at 30.9.2021 (v) Dan paid school fees for his daughter from business money sh. 40,000 for September- December semester. (5 Marks) b) Discuss any five users of the accounting information and their interest in the information (5 Marks)