Bac 405 Accounting Theory Question Paper
Bac 405 Accounting Theory
Course:Bachelor Of Commerce
Institution: Kenyatta University question papers
Exam Year:2017
INSTRUCTIONS
ANSWER ALL QUESTIONS
QUESTION ONE
a) MR. Harun a sole trader realized a net profit of shs 4,000,000 in 2016 and the bank had an overdraft of shs. 1,000,000. He could not understand why the two balances are not equal.
Required: Give an explanation to Mr. Harun on the possibility of the two figures not being the same. (6 marks)
b) Explain the meaning of conceptual framework in accounting (4 Marks)
c) Identify the qualitative characteristics of preparing useful financial statements (6 marks)
d) State and explain any two problems of financial statements (4 marks)
QUESTION TWO
a) Explain the role of International Accounting Standard Board (IASB) (6 marks)
b) Explain the need for harmonization of Accounting standards (4 marks)
What benefits arise from International harmonization of accounting standards (4 marks)
What are the problems encountered in a bid to harmonize the accounting standards (4 marks)
QUESTION THREE
a) There has been a lot of outcry in the country in relation to corruption. Accountants have the mandate to ensure adherence to the accountant’s ethics code. Explain the code of ethics and how the accountants should reduce the issue of corruption in Kenya. (12 marks)
b) Explain three methods of accounting for human resource (6 marks)
Which method above is most applicable in Kenya (support your answer) (2 marks)
QUESTION FOUR
a) Ken bought a machine from machinery distributors. The cash price was shs 500,000 hire purchase was shs. 560,000. He paid 160,000 cash as he picked the machine. The balance is to be paid in 4 equal installments for the next 4 years starting 1/1/2017. Ken charges depreciation on the machine on a straight line basis
REQUIRED
i. Explain the meaning of substance over form ( 4 marks)
ii. Illustrate how the records would appear in the books of ken on 31/12/2017 (6 Marks)
b) Explain the case for and against social responsibility accounting (6 marks)
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