Daa 100 Introduction To Accounting I Question Paper
Daa 100 Introduction To Accounting I
Course:Diploma In Business Management
Institution: Kca University question papers
Exam Year:2014
UNIVERSITY EXAMINATIONS: 2013/2014
STAGE II ORDINARY EXAMINATION FOR THE DIPLOMA IN
BUSINESS MANAGEMENT
DAA 100 INTRODUCTION TO ACCOUNTING I
DATE: AUGUST 2014
TIME: 1 1/2 Hours
INSTRUCTION: Answer any THREE questions
QUESTION ONE: (20 MARKS)
a)
The value of accounting information provided to the users is affected by the qualities of
such information. Explain the required characteristics of good accounting information.
(5 Marks)
b)
The following transactions relates to Jane a sole trader in Kiambu County:
2014 May 1
Started in business with Kshs.250,000 in bank
“ 3 Bought machinery worth Kshs.750,000 on credit from XYZ ltd.
“ 5 Bought a motor van paying by cheque Kshs.600, 000
“ 8 Paid the amount owing to XYZ Ltd by cheque
“ 15 Purchased stock from Unga Ltd. on credit Kshs.200,000
“ 17 Sold goods on credit to Stima Club Kshs.100,000
“ 18 Returned goods to Unga Ltd worth Kshs.10,000
“ 23 Stima Club returned goods to us worth Kshs.15,000
“ 25 Paid the amount owing to Unga Ltd. by cheque
“ 30 Bought more machinery by cheque Kshs.28,000
Required
(i) Prepare the relevant ledger accounts
(ii) Balance off the ledger accounts and prepare a trial balance
1
(15 Marks)
QUESTION TWO: (20 MARKS)
(a)
The following is the trial balance of Miwa traders as at 31st December 2008.
DR CR
Sh Sh
Capital
196,900
Carriage inwards 1,900
Purchases and sales 119,000
Furniture and fittings at cost 36,000
Debtors and creditors 78,000
Stock 59,200
Salaries and wages 16,000
Drawings 25,000
Buildings 49,300
Bank 19,800
Office expenses 20,000
Rent and rates 14,800
439,000
195,200
46,900
439,000
Additional information
(i) Stocks as at 31.12.2008 were valued at Sh. 26,500
(ii) Furniture and fittings are depreciated at a rate of 10% on straight line basis
(iii) Salaries and wages owing as at 31st
December 2008 amounted to Sh. 800
(iv) A debts of Sh. 10,000 was written off and a provision for doubtful debts of 2% of net debtors
was created
Required:
(i) A trading profit and loss account for the year ended 31st December 2008.
(ii) A balance sheet as at 31st December 2008.
(20 Marks)
QUESTION THREE: (20 MARKS)
2
a)
Explain five reasons for the difference in cash book balance and bank account balance at
any given time.
(5 Marks)
b) Explain five errors that violate the equality of a trial balance totals
(5 Marks)
c) Given below are the cash book (bank column) and the bank statement of Kama traders
for the month of May 2014
Cheque
Date
Details
Sh
Date
Details
No Sh
Ngambo
5-May Balance b/d 90,200 4-May School 101 60,400
9-May J. Kombo 45,100 18-May JM Ltd 102 58,600
21-May Sales 26,000 26-May 103 18,200
24-May K Mwendwa 40,900 27-May S. Mungai 104 10,000
31-May B Bona 35,000 30-May Jambo Ltd 105 41,700
P Muli
31-May Balance c/d
237,200
48,300
237,200
Cash Book (Bank Column)
Sh
Sh
May 1 Balance b/d
90,200
May 9 Cheque deposit
May 10 Cheque No 101
Sh
45,100
60,400
135,300
74,900
May 21 Cash deposit 26,000 100,900
May 26 K Mwendwa 40,900 141,800
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May 27 Cheque No. 103 18,200 123,600
May 27 Bank Charges 1,640 121,960
May 28 Ledger fees 2,420 119,540
May 30 Direct deposit
May 31 Standing order
15,100
14,000
134,640
120,640
Required
(i) Adjusted Cash Book
(ii) Bank Reconciliation Statement as at 31 May 2014
(10 Marks)
QUESTION FOUR: (20 MARKS)
a)
On 1/1/2008 the business bought a motor vehicle worth KShs.50,000 in cash. On
1/1/2009 The business also bought another motor vehicle worth KSh.s150,000. The
policy of the business is to charge depreciation at the rate of 10% p.a. on straight line
method. On 15/4/2010 the vehicle bought on 1/1/2008 was disposed of at Shs.35,000.
Open the following accounts, and post the above transactions: -
i) ii) Provision for depreciation (motor vehicle);
iii) Disposal Account.
iv)
b)
Motor vehicle account;
Balance sheet extracts
(10 Marks)
Accounting profession has for a long time relied on a number of assumptions and
principles to relay information. These assumptions and principles have been a subject of
discussion due a number of weaknesses. The following are some of the principles and
assumptions
i. Revenue recognition concept
ii. Monetary concept
iii. Going concern concept
iv. Matching concept
v. Periodicity concept
Required
4
Explain the meaning of each of the above principles and assumptions of accounting and
explain any weaknesses associated with its use
(10 Marks)
QUESTION FIVE: (20 MARKS)
The following trial balance of Upima Traders prepared as at 31st March, 2010 failed to agree and
the differences were placed in a suspense account.
Dr Cr
Sh. Sh.
Sales
900, 000
Purchases 700,000
Returns inwards 10,000
Debtors and Creditors 40,000
Cash 25,000
Capital
50,000
187,000
Drawings 64,000
General expenses 230,000
Furniture 80,000
Motor vehicle 270,000
Suspense Account
282, 000
1,419,000
1,419,000
The following errors were subsequently discovered:
i. Furniture bought for sh. 30,000 was entered in the purchases account.
ii. Sales were under cast by sh. 18,000
iii. Goods returned by a customer worth sh. 3,000 had not been posted to the account of the
debtor
iv. Cash drawings of sh. 5,000 were omitted from the books.
v. Goods bought on credit for sh. 12,000 were entered in the account of a creditor as sh.
21,000.
5
vi.
A personal motor vehicle worth sh. 270,000 was converted to business use during the
year but was only recorded in the motor vehicles account.
Prepare:
(i) Journal entries to correct the above errors (6 Marks)
(ii) Suspense account duly balanced (4 Marks)
(iii) Corrected Trial Balance as at 31st March, 2010. (8 Marks)
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