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Acct 112: Principles Of Accounting 1 Question Paper
Acct 112: Principles Of Accounting 1
Course:Bachelor Of Business Management
Institution: Kenya Methodist University question papers
Exam Year:2013
INSTRUCTIONS
Answer question one and any two other questions.
Question one
a. Define and explain the relevance of the following accounting concepts
i. Neutrality (2 marks)
ii Money measurement (2 marks)
iii Accruals (2 marks)
iv. Substance over form (2 marks)
v. Consistency (2 marks)
b. D Moody has the following assets and liabilities as at 31 April 2011
Creditors 15,800
Equipment 46,000
Motor vehicle 25,160
Stock 24,600
Debtors 23,080
Cash in hand 160
Cash at bank 29,120
During the first week of may 2011 Moody
i. Bought extra equipment on credit Shs5520
ii Bought extra stocks by cheque Shs2280
iii Paid creditors by cheque shs3160
iv Debtors paid shs3360 by cheque and shs240 by cash
v Moody put in extra shs1000 cash as capital
Required
i Determine the capital as at 1st may 2011 (2 marks)
ii Draw up a statement of financial statement after the above transactions have been completed (4 marks)
c. i) Define a book of original entry and state its purpose (4 marks)
ii) Enter the following items in the books, post to personal accounts and show transfers to the general ledgers. (10 marks)
March
1 Credit purchases from K. Hill shs3800, M.Morman shs500, M.Senior shs.106
3 Credit sales to E.Rigley shs.510, E.Philips shs246, F.Thompson shs.356
5 Credit purchases from R.Morton shs2, J.Cook shs180, D.Edwards shs410, C.Davies shs66
8 Credit sales to A.Green shs307, H. George shs250, J. Ferguson shs185
12 Returns outwards to M.Norman shs30, N.Senior shs16
14 Returns inwards from E.Philips shs18, F.Thompson shs22
20 Credit sales to E.Philips shs188, F.Powell shs310, E.Lee shs420
24 Credit purchases from Ferguson shs550, K. Enuvor shs900
31 Returns inwards from E.Philips shs27, E.Rigley shs30
31 Returns outwards to J.Cook shs13, C.Davies shs11
Question Two
a. Explain the following terms as used in accounting
i. Personal accounts (2 marks)
ii Real accounts (2 marks)
iii Nominal (2 marks)
b. Identify and explain seven users of accounting information (14 marks)
Question Three
After preparing a trial balance, the accountant discovered it would not balance. The credits exceeded debits by shs5360. He placed this figure in a suspense account pending investigations. Upon investigations the following errors were found out
i) A balance of shs870 on the debtors account had been omitted from the schedule of debtors, the total of which was entered in the trial balance as debtor figure.
ii) An amount written off on machinery of shs12000 was posted to repairs instead.
iii)The receipts side of the cash book has been undercasted by shs7200
iv) The total sales on one page had been carried forward as shs81540
v) A credit not of shs1790 received from a supplier had been posted to the wrong side of his account.
vi) An electricity bill of shs1520, not yet accrued for is discovered in the filing tray.
vii)A debtor, whose debt has been provided for, finally paid shs7310 to clear has debts. Her personal account was credited but the cheque has not yet been recorded in the cash book.
Require
a. Prepare the suspense account and show the entries necessary to clear. (12 marks)
b. State the effect on all the affected accounts of correcting the errors(8 marks)
Question Four
i) Accounting being a language of business has basic principle that govern the use and make communication easy. comment (10 marks)
ii) Identify and explain your qualities of a good accounting system (8 marks)
iii)Why are control accounts important (2 marks)
Question Five
Record the following transactions in a three column cash book of ABC Ltd
June 1 Balance BF cash in shs625, cash at bank shs9847
June 4 pain transport in cash shs200
June 8 issued a cheque to Mabura, setting an invoice for shs7500 less 2% cash discount
June 15 Sold goods for cash shs3000 less 1.5cash discount
June 21 deposited cash with bank shs1500
June 21 received a cheque from Jones shs2940 after deducting 2% cash discount
June 23 paid wages in cash shs175
June 24 Paid telephone bill in cash shs594
June 24 withdrew cash from bank for office use shs750
June 24 Issued a cheque for shs1000 to K-rep as part payment of a loan
June 28 received a cheque for shs4950 (after deduction of 1% cash discount from punu)
June 28 Paid a cheque to Mabura shs2600 less 2% cash discount
June 28 issued a cheque for salaries shs6114
June 29 Sold goods for cash shs900 less 2% cash discount
June 30 Paid wages in cash shs 488 (2 marks)
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