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Explain the purposes for which control accounts are prepared in a business organisation
(Solved)
Explain the purposes for which control accounts are prepared in a business organisation.
Date posted:
November 26, 2018
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Answers (1)
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The following is the bank statement of Kakamega Retail Traders for the month of October 1996:
(Solved)
The following is the bank statement of Kakamega Retail Traders for the month of October 1996:
Notes:
1. The bank reconciliation on 30 September 1996 showed that one deposit was in transit and
two cheques had not yet been presented to the bank.
2. Deposits of Sh.62, 500 and Sh.36, 000 had been entered in the cash book as Sh.26,500
and Sh.36,000 and in the bank statement as Sh.62,500 and Sh.63,000, respectively.
3. A cheque from Mkulima for Sh.15,700 was deposited on 18 October 1996 but
was dishonoured and the advice was received on 4 November 1996.
4. Counterfoils for cheques no. 76 and no. 88 showed they had been drawn for Sh.5,800 and
Sh.35,500 respectively.
Required:
(a) A correct cashbook balance.
(b) A bank reconciliation statement on 31 October 1996.
Date posted:
November 25, 2018
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Answers (1)
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What is the purpose of preparing a bank reconciliation statement?
(Solved)
What is the purpose of preparing a bank reconciliation statement?
Date posted:
November 25, 2018
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Answers (1)
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The treasurer of Kay Club and Ray Society has prepared the following receipts and payments
account for the year ended 31 December 1994:
(Solved)
The treasurer of Kay Club and Ray Society has prepared the following receipts and payments
account for the year ended 31 December 1994:
Note. It is the policy of the Society NOT to take into account subscriptions in arrear until
theyare paid.
1) The mobile hut which was sold during 1994 had been valued at Sh.400,000 on 31
December 1993, and was used for the society's activities until sold on 30 June 1994.
2) Immediately after the sale of the mobile hut, the Society rented a new hall at Sh.165,000 per
annum.
3) The above receipts and payments account is a summary of the society's bank account for
the year ended 31 December 1994; the opening and closing balances shown above were the
balances shown in the bank statements on 31 December 1993 and 1994 respectively.
4) All cash is banked immediately and all payments are made by cheque.
5) A cheque for Sh.l00,000 drawn by the society on 28 December 1994 for stationery was not
paid by the bank until 4 January 1995.
6) The Society's assets and liabilities at 31 December 1993 and 1994, in addition to those
mentioned earlier, were as follows:
Required:
a) The Society's Income and Expenditure Account for the year ended 31 December
1994, and balance sheet as at that date. (Comparative figures are not required).
b) Outline the advantages of income and expenditure accounts as compared with
receipts and payments accounts.
Date posted:
November 25, 2018
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Answers (1)
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Manga Munene is the proprietor of a retail business, which has two main departments, which
sell hardware and electrical goods, respectively. He had previously prepared his...
(Solved)
Manga Munene is the proprietor of a retail business, which has two main departments, which
sell hardware and electrical goods, respectively. He had previously prepared his annual accounts
in such a way that the relative profitability of the two departments was not ascertainable, but
now he wishes to attempt to identify the profit attributable to each department in order that he
may pay a bonus to the more successful of the departmental managers. At 30 September 1994,
the balances in the books of the business were as follows:
The general administrative expenses are primarily incurred in relation to the processing
of purchases and sales invoices.
Required:
(a) A schedule showing the basis on which you have apportioned the various expenses
between the two departments.
(b) The departmental and combined Trading and Profit and Loss Account for the year
ended 30 September 1994.
(c) Balance Sheet at 30 September 1994.
Date posted:
November 25, 2018
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Answers (1)
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The following trial balance was extracted from the books of Hiza Ltd. as on 30 September 1995
(Solved)
The following trial balance was extracted from the books of Hiza Ltd. as on 30 September 1995:
You are given the following information:
1. Stock in trade, 30 September 1995 was Sh.28, 875,000.
2. The provisions for bad debts is to be increased to Sh.750,000.
3. Salaries and .wages outstanding at 30 September 1995 is Sh.500,000.
4. Rates and insurance paid in advance at 30 September 1995 is Sh. 155,000.
5. The item 'rent receivable Sh.625,000 includes Sh. 125,000 in respect of the period from 1
October 1995 to 31 December 1995.
6. Provision is to be W de for depreciation of motor vehicles at the rate of 20 per cent
per annum on cost.
7. During the year to 30 September 1995, Ombima, one of the directors took goods (cost
Sh.437,500) out of business stock for his own use. No entry for this transaction has
been made in the books.
Required:
(a) Trading and Profit and Loss Account for the year to 30 September 1995.
(b) Balance Sheet as at that date.
Date posted:
November 25, 2018
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Answers (1)
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With reference to International Accounting Standards explain the following:
(a) Fundamental accounting concepts
(b) Accounting bases
(c) Accounting policies
(Solved)
With reference to International Accounting Standards explain the following:
(a) Fundamental accounting concepts
(b) Accounting bases
(c) Accounting policies
Date posted:
November 25, 2018
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Answers (1)
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James Mbuvi started a taxi business in Nairobi in March 1990 under the firm name Mbuvi
Taxis. The firm had two vehicles KA and KB which...
(Solved)
James Mbuvi started a taxi business in Nairobi in March 1990 under the firm name Mbuvi
Taxis. The firm had two vehicles KA and KB which had been purchased for Sh.560,000 and
Sh.720,000 respectively earlier in the year.
In February 1992 vehicle KB was involved in an accident and was written off. The insurance
company paid the firm Sh.160,000 for the vehicle. In the same year the firm purchased two
vehicles, KC and KD for Sh.800,000 each.
In November 1993' vehicle KC was sold for Sh.716,000. In January 1994 vehicle KE was
purchased for Sh.840,000. In March 1994 another vehicle KF was purchased for Sh.960.000.
The firm's policy is to depreciate vehicles at the rate of 25 per cent on cost on vehicles on hand
at the end of the year irrespective of the date of purchase. Depreciation is not provided for
vehicles disposed of during the year. The firm's year ends on 31 December.
Required:
(a) Calculate the amount of depreciation charged in the profit and loss account for each of the five
years.
(b) Prepare the motor vehicle account (at cost).
(c) Calculate the profit or loss on disposal of each of the vehicles disposed of by the company.
Date posted:
November 25, 2018
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Answers (1)
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The Chief Accountant of KK Ltd. has extracted the following trial balance as at 31 October 1998:
(Solved)
The Chief Accountant of KK Ltd. has extracted the following trial balance as at 31 October 1998:
Notes:
1. Credit sales amounting to Sh. 165,000 were made on 31 October 1998 but no entries were
made in the books.
2. Returns outwards amounting to Sh. 128,000 were dispatched on 31 October 1998 but no
entries were made in the books.
3. Closing stock was valued at Sh.4, 398,000.
4. Accrued salaries and telephone bills amounted to Sh. 134,000 and Sh.55, 000 respectively.
5. Rent for the month of October 1998 amounting to Sh.35, 000 had not been received
from the tenant.
6. Provision for depreciation on furniture and fittings and the motor vehicles are 10% and
20% on cost respectively.
7. Provision for bad and doubtful debts of 5 % on trade debtors should be made.
8. Corporation tax should be provided at 35 % of the net profit before tax.
9. The directors propose a dividend of 15% on issued share capital and a transfer of
Sh.2, 500,000 to the general reserve.
10. The debenture interest has not yet been paid.
Required:
(a) Trading, profit and loss account for the year ended 31 October 1998.
(b) Balance sheet as at 31 October.
Date posted:
November 25, 2018
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Answers (1)
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List and explain five characteristics of a partnership
(Solved)
List and explain five characteristics of a partnership.
Date posted:
November 24, 2018
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Answers (1)
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Kathryn Rochford keeps her petty cashbook on the imprest system, the imprest being Sh.25. For the month of April 20X9 her petty cash transactions were...
(Solved)
(a) Kathryn Rochford keeps her petty cashbook on the imprest system, the imprest being Sh.25. For the month of April 20X9 her petty cash transactions were as follows:
(i) Enter the above transactions in the petty cashbook and balance the petty
cashbook at 30 April, bringing down the balance on 1 May.
(ii) On 1 May Kathryn Rochford received an amount of cash from the cashier
to restore the imprest. Enter this transaction in the petty cashbook.
(b) Open the ledger accounts to complete the double entry for the following:
(i) The petty cash analysis columns headed Postage and Stationery and Travelling Expenses;
(iii) The transactions dated 9 and 23 April 20X9.
Date posted:
November 24, 2018
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Answers (1)
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Why do some businesses keep a petty cashbook as well as a cashbook?
(Solved)
Why do some businesses keep a petty cashbook as well as a cashbook?
Date posted:
November 24, 2018
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Answers (1)
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The directors of Hawk, a limited liability company, wish to compare the company's most recent financial statements with those of the previous year. The company's...
(Solved)
The directors of Hawk, a limited liability company, wish to compare the company's most recent financial statements with those of the previous year. The company's financial statements are given below:
Required:
(a) Calculate, for each of the two years, eight accounting ratios which should assist the directors
in their comparison, using closing figures for balance sheet items needed.
(b) Suggest possible reasons for the changes in the ratios between the two years.
Date posted:
November 24, 2018
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Answers (1)
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Briefly explain the following accounting Concepts. (i) Going concern (ii) Accruals (iii) Consistency (iv) Prudence or conservatism (v) Materiality
(Solved)
i) Going concern
ii) Accruals
iii) Consistency
iv) Prudence or conservatism
v) Materiality
vi) Substance over form
vii) Business entity concept
viii) Money measurement
ix) Historical cost
x) Objectivity
xi) Realization
xii) Duality
Date posted:
November 24, 2018
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Answers (1)
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What are accounting concepts, Bases, Policies?
(Solved)
What are accounting concepts, Bases, Policies?
Date posted:
November 24, 2018
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Answers (1)
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The treasurer of Watembezi Sports Club has presented the following information for the year ended 31 October 1998
(Solved)
The treasurer of Watembezi Sports Club has presented the following information for the year ended 31 October 1998
Notes:
1) The Harambee donations were for the extension of the club. The funds shall remain in this
account until the works, are completed when' the balance will be transferred to the
accumulated fund.
2) The depreciation on fixed assets is at 10% and 15% on cost on furniture and fittings; and
equipment respectively.
3) Equipment which had cost Sh.25,000 was sold on credit for Sh.14,000 to a member who
owed the club the money at the end of the year. The provision for depreciation on this
equipment was Sh.7,000. Another equipment sold for cash had an accumulated provision
for depreciation of Sh.19,000.
4) Audit fees of Sh.50,000 should be provided.
5) Subscription in arrears are written-off after 12 months.
Required:
a) Income and expenditure account for the year ended 31 October 1998
b) Balance as at 31 October 1998
Date posted:
November 24, 2018
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Answers (1)
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Reviewing the draft accounts of Uzee Ltd for the year ended 31 st December 2001 as prepared by the Chief Accountant, the Managing Director suggests...
(Solved)
Reviewing the draft accounts of Uzee Ltd for the year ended 31 st December 2001 as prepared by the Chief Accountant, the Managing Director suggests that the written down value of plant is too low. To support his argument he produces the following schedule of plant on hand at 31 December 2001:
After discussing the matter the following policy is agreed:
1) Each item of plant to be depreciated on a straight line basis to its estimated scrap value over
its estimated life.
2) A full year's depreciation to be charged in the year of
purchase. On investigation you ascertain that:
There is no plant register.
Plant which includes the lorry is shown in the accounts at cost less proceeds of sales.
3) For some years depreciation was charged at 15% on the reducing balance and then from 31st
December 1994 at 10% of cost less proceeds of sales on a straight line basis.
4) The Plant account for the year ended 31st December 2001 was:
You are required to show, after implementing the new policy:
a) The Plant Account as it should appear in the books of the company for the year ended 31st
December 2001
b) The entries which should appear in the Balance Sheet as on 31st December 2001 and
c) A note explaining the effect on the profits on the change of depreciation policy.
Date posted:
November 24, 2018
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Answers (1)
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Juhudi Ltd. has two accounts "A" and "B" with different banks. On 31 March 1995 the cash
book showed a balance of Sh.200,000 in Account" A"...
(Solved)
Juhudi Ltd. has two accounts "A" and "B" with different banks. On 31 March 1995 the cash
book showed a balance of Sh.200,000 in Account" A" and an overdraft of Sh. 90,000 in
account "B". However the bank statements obtained on the same day showed different
balances for the two accounts.
Further investigation reveals the following information: -
1. A deposit of Sh.60,000 made into account" A" on 1 March 1995 has been entered in
the cash book in account "B".
2. A withdrawal of Sh.20,000 from account" A" on 3 March 1995 has been debited in
the cash book in account "B".
3. Cheques of Sh.25,000 and Sh.30,000 deposited in account" A" on 9 March 1995 were
entered in the cash book in account"B". The second cheque has been dishonored by
the bankers. The entry for this dishonored cheque has been entered in the cash book
in account "B".
4. Cheques for Sh.40.000 and Sh.500.000 drawn on accounts" A" and "B" respectively
on 30 March 1995 were not paid by the banks until 5 April 1995.
5. Incidental charges of Sh.400 and Sh.1.000charged in the accounts" A" and "B"
respectively have not been entered in the cash book.
6. The bank has credited an interest of Sh.2.000 for account" A" and has debited bank
charges of Sh.1,500 to account "B". These transactions have not been entered in the
cash book.
7. Deposits of Sh.200,000 and Sh.140,000 made into the accounts" A" and "B"
respectively have not yet been credited by the bank.
8. Dividends amounting to Sh.8,000 had been paid direct to the bank in account "B".
9. A cheque for Sh.3.500 drawn on account" A" on 30 March 1995 in payment of an
electricity bill had been entered in the cash book as Sh.5,300.
Required:
i) The necessary adjustments in both cash books in order to correct the errors.
ii) Bank reconciliation statements for both cash books.
Date posted:
November 24, 2018
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Answers (1)
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Define the term bank reconciliation statement and indicate its three main functions
(Solved)
Define the term bank reconciliation statement and indicate its three main functions.
Date posted:
November 24, 2018
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Answers (1)
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Explain four ways in which the use of historical cost accounting may cause users of financial statements to be misled when prices are rising.
(Solved)
Explain four ways in which the use of historical cost accounting may cause users of financial statements to be misled when prices are rising.
Date posted:
November 24, 2018
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Answers (1)