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Financial Accounting 1 Question Paper
Financial Accounting 1
Course:Bachelor Of Commerce
Institution: Kenyatta University question papers
Exam Year:2009
KENYATTA UNIVERSITY
UNIVERSITY EXAMINATIONS 2009/2010
FIRST SEMESTER EXAMINATION FOR THE DEGREE OF BACHELOR OF
COMMERCE
BAC 100: FUNDAMENTALS OF A CCOUNTING I
DATE: MONDAY, 21ST DECEMBER 2009
TIME: 11.00 A.M. - 1.00 P.M.
INSTRUCTIONS: Answer ALL Questions.
Question 1
(a) Explain
the
following
accounting concepts:
(i)
Historical cost
(2 marks)
(ii)
Objectivity
(1 mark)
(iii)
Going
concern
(1
mark)
(iv)
Matching
(1 mark)
(b)
For the year ended Dec 31st 2008, Timothy Kipkobei reported a net profit
of KSh .79,800. The trial balance failed to balance and a suspense account
was opened.
Subsequently the following accounting errors were detected.
1)
A page in the purchase day book had been added KShs140,800
instead
of
104,800.
2)
KSh4,500 paid to Milly, a trade creditor has not been posted to her
account.
3)
Three months rent of KSh.6,000, remaining unpaid has not been
accounted
for.
4)
Discount of KSh.2,500 had been entered in the cash book but not posted
to the ledger accounts.
5)
A credit purchase of a computer worth KSh38,000 had been wrongly
entered in the sales return day book.
Page 1 of 5
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6)
A cheque for Shs.3,154 paid to a creditor had been entered in the cash
book as 3,514 and had subsequently been posted to the ledger account as 3,514.
7)
The personal account of a debtor had been debited with KSh.250 for sales
invoice of KSh2,500 which had been erroneously recorded in the sales day
book.
Required
(a)
Pass
journal
entries
to
correct the errors above.
(7 marks)
(b)
Write and balance the suspense account.
(4 marks)
(c)
Calculate
the
correct
net
profit. (4
marks)
Question 2
The following trial balance was extracted from the books of Cheka Business, a sole
trader in Mombasa.
Trial Balance
As at 31st December 2008
Dr.
Cr.
Sales
427,726
Purchases 302,419
Carriage Inwards
476
Carriage outward
829
Wages & Salaries
64,210
Rates & Rent
12,466
Heat & Lighting
4,757
Stock at 1/1/2008
15,310
Drawings 21,600
Equipment at cost
103,000
Motor van at cost
43,270
Provision for depreciation
(a) Equipment
22,250
(b) Motor van
5,920
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Debtors/Creditors 50,633
41,792
Bank
3,295
Sundry expenses
8,426
Cash 477
Capital
122,890
626,873 626,873
The following information was also provided:
(i)
KSh.350 is owing for heat & light.
(ii)
KSh.620 has been prepaid for rent and rates.
(iii)
Depreciation is to be provided for the year as follows.
Equipment - 10% on cost
Motor vehicle - 20% on cost
(iv)
Closing stock was valued KSh.16,480.
Required
(i)
Prepare the Income Statement for the year ended 31st December 2008.
(12 marks)
(ii)
Prepare a Balance Sheet as at 31st
December
2008.
(8
marks)
Question 3
The following information relates to Otieno Kopiyo Printing business in Kisumu as
at 31st December 2007.
Trial Balance
As at 31st December 2009
Dr.
Cr.
Capital
160,000
Cash 12,000
Bank 40,000
125,000
Revenues
Account Receivables
34,000
Account Payable
21,000
Rent 50,000
Wages 60,000
Office Equipment
40,000
Computers 70,000
306,000
306,000
Page 3 of 5
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The following transactions were made in the month of January 2008:
Jan 2008:
1
Made additional investment into the business with KSh.50,000
4
Offered printing service to an account for Shs20,000
5
Deposited KSh.10,000 in business bank account
7
Paid rent by cheque Ksh.2,000
9
Purchased office equipment on credit worth KSh.9,000
12
Offered services for cash KSh.5,500
15
Debtors for transaction on Jan 4th paid half of their account by cheque.
20
Received a donation of computer equipments worth KSh20,000 from
Computer
Kenya
Ltd.
25
Paid wages by cash KSh.3,000.
28
Made part payment Ksh.4,500 for office equipment bought on account.
Required
(a)
Record the transactions in the journal for the month of January.
(b)
Post the journal entries into the relevant ledger accounts.
(15 marks)
Question 4
KU company was established on January 15 of the current year. Its sales of merchandise
on account and related returns and allowances during the remainder of the month are as
follows: Terms of sale are 1/10 N30.
January 20
sold merchandise on account to Korir Traders Invoice No.1, Shs60,000.
22
Sold merchandise on account to Kamau, Invoice No 2, Shs137,500.
24
Sold merchandise to Otieno on account, Invoice No.3, Shs158,750.
25
Issued credit memorandum No.1 for Shs5,000 to Korir Traders for
merchandise
returned.
27
Sold merchandise on account to Murungi, Invoice No.4, Shs125,000.
28
Sold merchandise on account to Ogutu, Invoice No.5, Shs75,000.
28
Issued credit memorandum No.2 for Sh7,500 to Kamau for merchandise
returned.
30
Sold merchandise on account to Kamau Invoice No.6, Shs146,250.
Page 4 of 5
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30
Issued credit memorandum No.3 for Shs3,750 for damages to
merchandise caused by faulty packing.
31
Sold merchandise on account to Otieno invoice No.7, Shs49,750.
Required
(a)
Sales Journal
(7 marks)
(b)
Sales
returns
Journal
(3
marks)
(c)
Sales
ledger
accounts
(3
marks)
(d)
Total
debtors
control
account
(2
marks)
*********************
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