Get premium membership and access revision papers, questions with answers as well as video lessons.
Accf 330Intermediate Accounting 1 Question Paper
Accf 330Intermediate Accounting 1
Course:Intermediate Accounting I
Institution: Kenya Methodist University question papers
Exam Year:2011
KENYA METHODIST UNIVERSITY
END OF 3''RD ''TRIMESTER 2011 EXAMINATIONS
SCHOOL : BUSINESS AND ECONOMICS
DEPARTMENT : BUSINESS ADMINISTRATION
UNIT CODE : ACCF 330
UNIT TITLE : INTERMEDIATE ACCOUNTING 1
TIME: 2 HOURS
Instructions: Answer Question ONE (COMPULSORY) and any Other TWO
Questions.
Question One
Explain the requirement of IAA 2: valuation of inventory, regarding the value at which inventory should be recognized in the financial statement. (4 Marks)
Explain the following terms are used in the International Accounting Standard 16:
Carrying amount
Impairment value
Useful life
Property, plant and equipments
Depreciable amount
(10 Marks)
The following are details regarding the receipts and issues of material X in respect of Tripple T Ltd.
Receipts:
January 1 balance: 5,000 units @ 400 per unit.
January 5 purchase order 10,500 units @ 300 per unit
January 8 purchase order 12,300 units @ 400 per unit
January 15 purchase order 18,500 units @ 500 per unit
January 26 purchase order 13,500 units @ 300 per unit
Issues
January 10 Material requisition 20,500 units
January 12 Material requisition 6,500 units
January 20 Material requisition 16,000 units
January 31 Material requisition 7,500 units
The firm uses the perpetual inventory system for maintaining in store records.
Required:
Calculate the value of the inventory on 31st January 2011 using the following pricing materials.
FIFO
LIFO
Weighed Average Price Method
Question Two
The balance sheet of Mtwapa Limited as at 31st October 2000 includes the following note on non-current assets:
Non Current Assets: Freehold land
& Buildings Leasehold
Land &
building Motor
Vehicles Furniture
Equipment
Kshs (000) Kshs (000) Kshs (000) Kshs (000)
Cost
Accumulated
17,000 13,000 4,200 1,560
Depreciation 1,600 2,050 625
17,000 11,400 2,150 935
The company policies on depreciation of non-current assets requires that the straight-line method be used and the following rates to be applied:
Freehold land and building Nil
Leasehold land and building 5%
Motor vehicles 25%
Furniture and equipment 12½ %
A full year’s depreciation is provided in the year of acquisition but no charge in mode in the year of disposal.
Additional Information:
A piece of equipment purchased in may 1996 at a cost of Shs. 400,000 was disposed off for Shs. 240,000 during the year ended 31st October, 2001.
The freehold land and buildings were revalued at Shs. 29,000,000 by value ZXY consultants Ltd a firm of professional valuers.
A motor vehicle purchased in July 1998 for Shs. 1,200,000 was traded part payment for a new vehicle costing Shs. 2,250,000. Additional cash amounting to Shs. 1,500,000 was paid.
A type writer which had cost Shs. 60,000 in June 1990 was scraped during the year and Shs. 15,000 received from the "waster" equipment dealer for the scrap.
Required:
Schedule of non-current assets movement for the year ended 31st October 2001.
(10 Marks)
Disposal account.
(4 Marks)
Profit and Loss extracts showing item(s) that would appear in the account of the year in regard to sited items.
(4 Marks)
Question Three
Explain TWO types of lease giving the characteristics of each and the
difference between the two. (5 Marks)
Explain all costs that should be included in the recording at acquisition of a piece of equipment as per the IAS 16 (property, plant and equipments).
(5 Marks)
On January 2010 Mambo Poa Ltd had no short term investment. During the year 2010, the following transactions took place.
2010:
Jan 2
Purchased 10,000 shares of Alphs Ltd for Shs. 110 per share plus
a brokerage fee of Shs 1,500.
March 4
Purchased 5,000 shares of Beta Ltd for Shs. 4 per share plus a
brokerage fee of Shs. 1,200.
August 10 Sold half of the Alpha Ltd stock for Shs 12 per share and paid a
brokerage fee at 2000.
Sept 15
Received a dividend of Shs 5 per share on Beta Company Ltd
stock.
Dec 20 Received a 10% dividend on the Alpha Ltd stock.
Dec 31st
At year end, the market price of Mambo Poa Ltd securities were as
follows:
Alpha Ltd Stock Shs 8 per share
Beta Ltd stock Shs. 5 per share
Required:
Journal entries to record the above transactions.
(10 Marks)
Journal entries to record the year end adjustments as the value of the portfolio.
(10 Marks)
Question Four
Sam Sam Company Ltd sells its products, offering 30 days credit to its customers. Uncollectible amounts are estimated by a monthly charge to bad debts expenses equal to 2% of credit sales. At the end of year, the allowance for uncollectible accounts is adjusted based on aging of accounts receivables. The company began 2009 with the following balance in its accounts.
Accounts receivables Kshs. 305,000
Allowance for uncollectible accounts Kshs. (25,500)
During 2010, sales on credit wre Kshs. 1,300,000, cash collection from customers were Kshs. 1,250,000 and actual write offs of accounts were Kshs 25,000 an aging of accounts receivable at the end of 2010 indicates a required allowance of Kshs. 30,000.
Required:
Determine the balances in accounts receivable and allowances for uncollectable accounts at the end of 2010.
(10 Marks)
Determine bad debt expenses for 2010.
(2 Marks)
Prepare journal entries for the monthly accrual of bad debts, the write off of receivables and the year end adjusting entry for bad debts.
(5 Marks)
(b) Discuss the qualitative characteristics that make financial statements useful
for decision making. (3 Marks)
Question Five
IAS 1 recognizes the following as fundamental accounting assumptions:
Going concern
Consistency
Accruals
Define accounting standards and explain their purpose in the modern accounting practice.
(6 Marks)
Explain the FOUR professional accounting bodies in Kenya and outline their functions.
(8 Marks)
More Question Papers