i) Income and expenditure account is not confined to cash transactions only, i.e. noncash
transactions are also included in it. While in receipts and payment only cash
transactions are recorded here.
ii) Income and expenditure account closing balance represents either surplus or
deficit. Credit balance indicates surplus, while debit balance indicates deficit.
While in receipts and payment does not show deficit or surplus it only shows
balance that is carried down to the following year opening balance.
Kavungya answered the question on May 16, 2019 at 13:52
- The following is the summary of the cashbook of Mbedodo Football Club for the year ended 30 June
2011:
Additional information:
1. The assets of the club on...(Solved)
The following is the summary of the cashbook of Mbedodo Football Club for the year ended 30 June
2011:
Additional information:
1. The assets of the club on 1 July 2010 were as follows:
Sh. '000'
Land 650,000
Gymnasium and equipment 250,000
Bar inventory 10,800
Prizes in hand 4,800
2. Bar supplies owing amounted to Sh. 4,200,000 on 1 July 2010
3. On 30 June 2011 the bar inventory was Sh. 9,600,000, prizes in hand - Sh. 2,400,00 and
Sh. 5,640,000 was owing for bar supplies.
4. The secretary is to receive a leave allowance of 5% of his basic salary. It was also agreed that
the bar manager should receive aSh. 500,000 bonus for increased sales during the year.
5. From the register of members, it appeared that unpaid subscriptions as at 30 June 2011
totaled Sh. 5,100,000. Subscriptions received during the year included Sh. 2,550,000 in
respect of the previous year and Sh. 1,700,000 in respect of the year starting 1 July 2011.
6. Interest earned on the deposit with the SACCO for the year ended 30 June 2011 amounted to Sh.
1,750,000
7. The rent paid was for fifteen months up to 30th September 2011
8. The gymnasium and equipment are to be depreciated at the rate of 10% per annum on straight
line basis
Required;-
a) Income and expenditure account for the year ended 30 June 2011
b) Statement of financial position as at 30 June 2011
Date posted: May 16, 2019. Answers (1)
- Differentiate between "receipts and payments account" and "income and expenditure account".(Solved)
Differentiate between "receipts and payments account" and "income and expenditure account".
Date posted: May 16, 2019. Answers (1)
- Explain three reasons why in many organisations the cash flow for a given period differs from the
profit realised by the organisation in the same period.(Solved)
Explain three reasons why in many organisations the cash flow for a given period differs from the
profit realised by the organisation in the same period.
Date posted: May 16, 2019. Answers (1)
- Discuss three categories of financial ratios(Solved)
Discuss three categories of financial ratios
Date posted: May 16, 2019. Answers (1)
- Summarise three limitations of ratio analysis.(Solved)
Summarise three limitations of ratio analysis.
Date posted: May 16, 2019. Answers (1)
- Highlight six purposes of public sector accounting.(Solved)
Highlight six purposes of public sector accounting.
Date posted: May 16, 2019. Answers (1)
- The following were the approved estimates and actual expenditure for the Ministry of health for
the financial year ended 30 June 2013:
Drawings from the Exchequer during...(Solved)
The following were the approved estimates and actual expenditure for the Ministry of health for
the financial year ended 30 June 2013:
Drawings from the Exchequer during the financial year ended 30 June 2013 amounted to
Sh.127, 500,000.
Required:
(i) General account of vote.
(ii) Exchequer account.
(iii) Paymaster general account.
Date posted: May 16, 2019. Answers (1)
- Uzuri County Council authorised the construction of a city hall on 1 July 2012. The hall was
expected to cost Sh. 160,000,000. The project was to...(Solved)
Uzuri County Council authorised the construction of a city hall on 1 July 2012. The hall was
expected to cost Sh. 160,000,000. The project was to be financed as follows:
Sh. 80,000,000 from a 6.5% bond issue.
Sh. 64,000,000 from a government grant.
Sh. l6,000,000 from the general fund.
The following transactions and events took place during the year ended 30 June 2013:
1. The county council transferred Sh. 16,000,000 from the general fund to the city hall capital
fund. The capital project fund was for the purpose of construction of the city hall.
2. Planning and architects fees amounting to Sh.6,400,000 were paid.
3. The contract was awarded for Sh. 152, 000,000.
4. The 6.5% bonds were sold for Sh. 80,320,000 and the amount of the premium transferred to
the debt service fund.
5. The contract was certified 50% complete and an invoice for Sh.76,000,000 was received from
the contractor.
The contractor was paid the invoiced amount less 10% retention
Required:
i) Journal entries to record the above transactions.
ii) Statement of revenue and expenditure of the capital project fund for the year ended 30 June
2013.
iii) Statement of financial position of the capital project fund as at 30 June 2013.
Date posted: May 16, 2019. Answers (1)
- The following were the estimates and actual expenditure of Barani Ministry of Youth and Sports for
the financial year ended 30 June 2012.
Drawings from the exchequer...(Solved)
The following were the estimates and actual expenditure of Barani Ministry of Youth and Sports for
the financial year ended 30 June 2012.
Drawings from the exchequer during the financial year ended 30 June 2012 amounted to
Sh.226,000,000
Required;
a) General account of vote
b) Exchequer account
c) Paymaster general (PMG) account
d) Appropriation account for the year ended 30 June 2012
e) Statement of assets and liabilities as at 30 June 2012
Date posted: May 16, 2019. Answers (1)
- The following details relate to the approved estimates and actual expenditure of a certain
government ministry for the financial year ended June 2012.
Required;-
Appropriation account for the...(Solved)
The following details relate to the approved estimates and actual expenditure of a certain
government ministry for the financial year ended June 2012.
Required;-
Appropriation account for the year ended 30 June 2012.
Date posted: May 16, 2019. Answers (1)
- Explain the following terms in the context of public sector accounting:
i) Commitment accounting
ii) Fund accounting(Solved)
Explain the following terms in the context of public sector accounting:
i) Commitment accounting
ii) Fund accounting
Date posted: May 16, 2019. Answers (1)
- Explain three roles of the International Public Sector Accounting Standards Board (IPSASB).(Solved)
Explain three roles of the International Public Sector Accounting Standards Board (IPSASB).
Date posted: May 16, 2019. Answers (1)
- Explain the meaning of the following terms in relation to Public Sector Accounting:
i) Appropriation-In-Aid
ii) Paymaster general
iii) General Account of Vote
iv) Exchequer Account(Solved)
Explain the meaning of the following terms in relation to Public Sector Accounting:
i) Appropriation-In-Aid
ii) Paymaster general
iii) General Account of Vote
iv) Exchequer Account
Date posted: May 16, 2019. Answers (1)
- The Ministry of Finance estimated the revenue from licences for the year ended 30 June 2010 to be
follows:
During the year, the treasury introduced a new...(Solved)
The Ministry of Finance estimated the revenue from licences for the year ended 30 June 2010 to be
follows:
During the year, the treasury introduced a new vote head 018, second hand clothes licences
under supplement estimate number 1.The estimated revenue from this vote head was Sh450
million. The actual revenue during the year was as follows:
Additional information:
1. The balance of revenue from licences as at 1 July 2009 was Sh. 325 million.
2. As at 30 June 2010, the amount of revenue from licences due to the Exchequer was Sh124 million
Required:
Statement of revenue for the year ended 30 June 2010.
Date posted: May 16, 2019. Answers (1)
- Highlight the importance of using accounting standards as the basis for preparing financial
statements.(Solved)
Highlight the importance of using accounting standards as the basis for preparing financial
statements.
Date posted: May 16, 2019. Answers (1)
- The International Public Sector Accounting Standards (IPSASs) recommend the use of accrual
basis of accounting for public sector entities.
Discuss the case for and against the use...(Solved)
The International Public Sector Accounting Standards (IPSASs) recommend the use of accrual
basis of accounting for public sector entities.
Discuss the case for and against the use of accrual basis of accounting in the public sector.
Date posted: May 16, 2019. Answers (1)
- Government expenditure is classified into recurrent expenditure and development
expenditure. Citing two examples, explain the two categories of expenditure.(Solved)
Government expenditure is classified into recurrent expenditure and development
expenditure. Citing two examples, explain the two categories of expenditure.
Date posted: May 16, 2019. Answers (1)
- Sunny Side Ltd. began its operations on 1 July 2012 by raising Sh.52 million ordinary share
capital and issuing 18% per annum debentures.
The following information was...(Solved)
Sunny Side Ltd. began its operations on 1 July 2012 by raising Sh.52 million ordinary share
capital and issuing 18% per annum debentures.
The following information was extracted from the books of the company for the year ended 30
June 2013:
1.
Item Sh. ‘000’
Dividends paid 3,376
Cash and bank balance 2,500
Operating costs (excluding finance cost) 31,320
Total non-current assets at net book value 60,000
2. The total current assets as at 30 June 2013 consisted
of: Σ Trade receivables.
Σ Inventory.
Σ Cash and bank balance.
3. The total current liabilities as at 30 June 2013 consisted of:
Σ Trade payables.
Σ Taxation charge for the year.
4. Taxation is to be provided for at the rate of 30% per annum.
5. 20% of the total sales for the year were made in cash.
6. Credit purchases during the year amounted to Sh. 28,800,000.
7. The accountant provided the following ratios which were determined from the financial
statements of the company:
Σ Inventory turnover 4.4 times
Σ Non-current asset turnover 1.8 times
Σ Gross profit margin 45%
Σ Average debt collection period 84 days
Σ Interest cover 4 times
Σ Average credit repayment period 90 days
Required:
i) Income statement for the year ended 30 June 2013.
ii) Statement of financial position as at 30 June 2013.
Note: Assume a year has 360 days.
Date posted: May 16, 2019. Answers (1)
- Explain the following terms as used in company accounts.
i) Cumulative preference shares.
ii) Public offer.
iii) Mortgaged debenture(Solved)
Explain the following terms as used in company accounts.
i) Cumulative preference shares.
ii) Public offer.
iii) Mortgaged debenture
Date posted: May 16, 2019. Answers (1)
- Meja and Kariuki have been trading as partners sharing profits and losses in the ratio of their fixed
capitals. The statement of financial position of the...(Solved)
Meja and Kariuki have been trading as partners sharing profits and losses in the ratio of their fixed
capitals. The statement of financial position of the partnership as at 31 March 2011 was as follows:
The partners have been having some disagreements on the following issues:
1. The historical cost of the assets did not reflect the fair value of the assets.
2. Although the partners contributed different amounts as fixed capital, the partnership agreement
did not provide for payment of interest on capital.
3. Kariuki devoted his entire working time to the business of the partnership but the partnership
agreement did not provide for any salaries for active partners.
4. Kariuki strongly believed that the present profits and losses sharing ratio was inequitable.
At a meeting convened to resolve the above issues, the partners agreed as follows:
i) The non-current assets as at 31 March 2011 were to be revalued as follows:
Sh.
Motor vehicles 600,000
Fixtures and fittings 262,500
Office equipment 225,000
ii) Inventories as at 31 March 2011 were to be written down to Sh. 275,000 and Sh 16,000 was
to be written off as bad debts. An allowance for doubtful debts of 5% was to be provided on
the remaining accounts receivable.
iii) Interest on capital was to be allowed at 5% per annum for the years ended 31 March 2010 and
31 March 2011.
iv) Kariuki was to be paid a salary of Sh 90,000 per annum for the years ended 31 March 2010
and 31 March 2011.
v) Profits and losses were to be shared equally with effect from 1 April 2009
vi) Meja was to be compensated for his loss arising from the new profit sharing agreement by
allowing him goodwill of Sh. 200,000.The goodwill would not be retained in the books of the
partnership. The net profits for the year ended 31 March 2009,2010 and 2011 were Sh.
425,000,Sh. 525000 and Sh. 412,500 respectively.
Required:
a) Adjusted income statement and appropriation 2011 account for the years ended 31 March 2010
and 31March 2011
b) Partners' current accounts.
c) Statement of financial position as at 31 March 2011.
Date posted: May 16, 2019. Answers (1)