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Financial Accounting 1 Question Paper
Financial Accounting 1
Course:Bachelor Of Commerce
Institution: Kenyatta University question papers
Exam Year:2010
KENYATTA UNIVERSITY
UNIVERSITY EXAMINATIONS 2008/2009
INSTITUTE OF OPEN LEARNING
EXAMINATION FOR THE DEGREE OF BACHELOR OF COMMERCE
BAC 101:
FUNDAMENTALS OF ACCOUNTING II
DATE: WEDNESDAY 12TH AUGUST 2009 TIME: 2.00 P.M. – 4.00 P.M.
INSTRUCTIONS:
1)
Answer all the questions
2)
Complete you answers logically
3)
Marks are indicated at the end of every question
QUESTION 1
a)
Explain the rule in Garner versus
Murray.
(5
marks)
b)
The balance sheet of James, Joseph and Jully at 30th June, 2008 after realization
of assets was as follows:-
Balance sheet
30th June, 2008
Capital and
Assets
Liabilities
Capital Sh.
Shs
James 1000
Cash
1,150
Joseph
500
Deficiency
750
Jully (600)
Creditors 1000
1900
1900
Page 1 of 4
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Required:
Show the final dissolution of the firm under;
a)
Convenience
procedure
b)
Strict observance of partnership
Act.
(20
marks)
QUESTION TWO
The trial balance extracted from the books of Chui Ltd at 31 December, 2004 was as
follows:
Shs Shs
Share
100,000
Profit and Loss A/c balance 34,280
on 31 December, 2003
Freehold premises at cost
65,000
Machinery at cost
55,000
Provision for depreciation
15,800
on machinery
Purchases and sales
201,698
316,810
General expenses
32,168
Wages and sales
54,207
Rent 4300
Lighting expenses
1549
Bad debts
748
Provision for doubtful debts
861
December 31, 2003
Debtors and creditors
21,784
17,493
Stock on Jan 1, 2004
25,689
Cash at bank
23,101
485,244 485,244
Page 2 of 4
--------------------------------------------------------------------------------
Required:
Prepare a Trading profit and less A/c for 2004 and the balance sheet as at that date
after
considering the following:
i)
Authorized and issued capital is divided into 100,000 shares of
sh. 1 each.
ii)
Stock valuation at 31 December, 2004 was sh. 29,142.
iii)
Wages and salaries due sh.581.
iv)
Rent paid in advance at 31 December, 2004 sh. 300.
v)
Directors propose dividend of sh. 10,000.
vi)
Increased provision for doubtful debts to sh. 938.
vii)
Depreciation was charged on machinery at 10% P.A on cash.
(25 mark)
QUESTION THREE
Explain the following terms.
a)
Mark
up
and
margin.
(4
marks)
b)
Stock
turnover
ration
(2
marks)
c)
Share
premium (2
marks)
d)
Forfeiture
of
shares.
(2
marks)
Total (10 marks)
QUESTION FOUR
Julie Designers and manufacturers provided the following balances at the close of
business on 30th April, 2000.
Sh
Stocks at May 1, 1999
Raw
materials
17,500
Work-in-progress
15,270
Finished
goods 24,800
Page 3 of 4
--------------------------------------------------------------------------------
Wages and salaries
Factory (direct)
138,500
Factory
(indirect)
27,200
Purchase of raw materials
95,600
Indirect power and fuel
18,260
Sales
410,400
Insurance
3,680
Returns in for finished goods
5,200
Stocks April, 2000:
Raw
materials
13,200
Work-in-progress
15,700
Finished
goods 14,600
Adjustments
i)
Company’s machinery cost shs. 82,000 and the provision for depreciation
was sh. 27,000. Machinery was depreciated by 20% p.a using reducing
balance method.
ii)
Fuel and power in arrears at 30th April, 2000 was shs. 390 while insurance
of sh. 240 was paid in advance on the same date.
iii)
Insurance is to be apportioned 5/8 to factory and 3/8 to office cost.
Required
a)
Prepare a manufacturing account for the year, showing clearly;
i)
Cost of raw materials consumed
(2 marks)
ii)
Prime cost
(2 marks)
iii)
Total
cost
of
production
(2
marks)
b)
A trading Account for the year showing clearly
i)
Cost of sales of finished goods.
(3 marks)
ii)
Gross
profit.
(1
mark)
Total (10 marks)
Page 4 of 4
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