- Explain three functions of each of the following parliamentary committees in the context of public sector
accounting:
(i) Committee of ways and means
(ii) Public Accounts committee(Solved)
Explain three functions of each of the following parliamentary committees in the context of public sector
accounting:
(i) Committee of ways and means
(ii) Public Accounts committee
Date posted: October 3, 2022. Answers (1)
- XYZ Limited is in the process of computerizing its accounting system. A critical component of this task is the creation of a database for non-current...(Solved)
XYZ Limited is in the process of computerizing its accounting system. A critical component of this task is
the creation of a database for non-current assets.
Required:
Advise XYZ Ltd on the features of a suitable accounting package and the information that would form the
database for the non-current assets
Date posted: October 3, 2022. Answers (1)
- The following trial balance was extracted from the books of Mali Ltd, a manufacturing company, as at 31
December 2010
...(Solved)
The following trial balance was extracted from the books of Mali Ltd, a manufacturing company, as at 31
December 2010
Sh. "000" Sh. "000"
Inventories as at 1 January 2010:
Raw materials 21,000
Finished goods 38,900
Work in progress 13,500
Wages:
Direct 180,000
Factory 145,000
Sale of scrap raw materials 35,000
Royalties 7,000
Carriage inwards 3,500
Purchases of raw materials 370,000
Machinery (Cost sh. 280,000,000) 230,000
Computers (Cost sh. 20,000,000) 12,000
General factory expenses 31,000
Lighting 7,500
Factory power 13,700
Sales 1,000,000
Administrative salaries 44,000
Sales representative salaries 30,000
Commission on sales 11,500
Rent 12,000
Insurance 4,200
General administrative expenses 13,400
Bank charges 2,300
Discount allowed 4,800
Carriage outwards 5,900
Accounts payables 64,000
Ordinary share capital (sh. 10 each) 360,000
10% Debentures 60,000
Buildings 111,000
Accounts receivables 142,300
Balance at bank 76,800
Cash in hand 1,500
Allowance for doubtful debts 6,500
Retained profits (1 January 2010) 10,300
Debenture interest 3,000
1,535,800 1,535,800
Additional information
1. Rent, insurance and light expenses are to be apportioned between factory, office and distribution as follows:
Factory Office Distribution
% % %
Rent 70 30 -
Insurance 60 10 30
Lighting 80 20 -
2. Allowance for doubtful debts is to be maintained at 5% and bad debts of sh. 3,500,000 are to be written off.
3. Inventories as at 31st December 2010 were valued as follows:
Sh.
Raw materials 14,000,000
Finished goods 42,000,000
Work-in-progress 15,500,000
4. Accrued rent and general administrative expenses as at 31 December 2010 amounted to sh. 1,200,000 and sh. 1,500,000 respectively.
5. Prepaid insurance as ta 31 December 2010 amounted to sh. 360,000
6. A provision for corporation tax amounting to sh. 25,340,000 is to be made.
7. Depreciation is to be provided as follows
Asset Rate per annum
Machinery 12.5% on reducing balance basis
Computers 15% on straight line basis
Ignore depreciation on buildings
8. The directors propose to pay a dividend of sh. 0.50 per share
Required:
(a) Manufacturing, trading and income statement for the year ended 31 December 2010.
(b) Statement of financial position as at 31 December 2010
Date posted: October 3, 2022. Answers (1)
- The following assets and liabilities were extracted from the books of Jipemoyo Sport Club as at 31 March:
...(Solved)
The following assets and liabilities were extracted from the books of Jipemoyo Sport Club as at 31 March:
2010 2011
Sh. Sh.
Investment at cost 500,000 400,000
Sports Equipment 60,000 68,000
Furniture 40,000 36,000
Subscription in arrears 18,000 12,000
Subscription in advance 15,000 30,000
Bar Inventory 12,000 22,000
Bar payables 3,000 13,000
Stock of stationary 2,000 1,000
Accrued rates 1,500 2,500
Prepaid insurance 1,400 3,400
The summary of receipts and payments account for the year ended 31 March 2011 was as follows:
Receipts Sh.
Bank balance (1 April 2010) 25,000
Bar takings 360,000
Donations 80,000
Subscriptions 280,000
Income from investment 40,500
Annual dinner sales 140,000
Entry fees 75,000
Proceeds from sale of investment 125,000
1,125,500
Payments
Ground maintenance 40,500
Staff salaries 239,000
Bar payables 120,000
New Equipment 20,000
Subscriptions refunded to members 2,000
Bar man's wages 120,000
Stationary 30,000
Annual dinner costs 80,000
Rates 8,000
Insurance 24,000
Bank balance (31 March 2011) 442,000
1,125,500
1. Included in the subscriptions received during the year of sh. 280,000 is sh. 15,000 being arrears for the year ended 31 March 2010. It is the policy of the club to write off subscriptions arrears owing for more than twelve months.
2. During the year, an investment with cost of sh. 100,000 was sold for sh. 125,000. The clubs accountant recorded only the receipt of proceeds from sale of investment in the books of accounts.
Required:
(i) Bar income statement for the year ended 31 March 2011
(ii) Subscriptions accounts
(iii) Income and expenditure for the year ended 31 March 2011
Date posted: October 3, 2022. Answers (1)
- In accounting for inventories, it is important to understand the composition of inventories and how to value the inventories in the financial statements.
Required:
(i) Explain the...(Solved)
In accounting for inventories, it is important to understand the composition of inventories and how to value the inventories in the financial statements.
Required:
(i) Explain the term inventories.
(ii) Describe how you would measure the value of inventories.
(iii) Outline the component costs of inventories.
Date posted: October 3, 2022. Answers (1)
- Enock Safari is a photographer and does not keep a complete set of accounting records. An extract of his receipts and payments for the year...(Solved)
Enock Safari is a photographer and does not keep a complete set of accounting records. An extract of his receipts and payments for the year ended 31 December 2010 was as follows
Sh. 000 Sh. 000
Receipts
Cash in hand (1 January 2010) 3,000
Balance at bank ( 1 January 2010) 420,600
Cash sales 658,000
Credit sales 592,000
rent received from sub-letting 10,400
Sale of Equipment (Book value sh. 6,000) 2,000
Additional capital introduced 30,000
Income tax refund (personal) 5,000
Cash from bank 243,600
259,000 1,705,600
Payments
Purchases for resale 844,000
General expenses 12,000 40,000
rent and rates 59,000
Wages 112,000
personal drawings 130,000
Income tax (personal) 60,000
Cost of new equipment 32,000
Cash withdrawn 243,600
Balance at Bank ( 31 December 2010) 427,000
Cash in hand (31 December 2010) 5,000
259,000 1,705,600
Additional information
1. Inspection of the credit sales invoice books showed that customers owed sh.250,000 on 1 January 2010 and sh.323,600 0n 31 December 2010. The amounts did not include goods withdrawn by Enock Safari for
personal use.
2. Examination of the paid invoices for purchases disclosed trade payables of sh.190,000 as at 1 January 2010 and sh.212,000 as at 31 December 2010.
3. Enock Safari estimated that he had withdrawn goods for his own domestic use which cost sh.5,200 during the year and had not paid for them.
4. As at 1 January 2010, equipment on which depreciation is charged at 5% per annum stood at sh.114,000.
5. Inventory as at 1 January 2010 was valued at sh.190,000 and sh.180,000 as at 31 December 2010.
Required:
(a) Income statement for the year ended 31 December 2010.
(b) Statement of financial position as at 31 December 2010
Date posted: October 3, 2022. Answers (1)
- Alice, Bibianne and Christine have been in partnership for several years sharing profits and losses in the ratio of 2:2:1 respectively after charging interest on...(Solved)
Alice, Bibianne and Christine have been in partnership for several years sharing profits and losses in the ratio of 2:2:1 respectively after charging interest on capital at the rate of 10%
On 1st April 2010, Christine retired from the partnership. Alice and Bibianne agreed to continue with the partnership and to share profits and losses equally after charging interest on capital at the rate of 10% per annum.
For the purpose of retirement of Christine from the partnership, Land and Buildings were revalued at sh. 2,000,000 and furniture and fittings at sh. 3,000,000. Goodwill of the partnership was valued at sh. 1,200,000 on 1st April 2010
The partners agreed that goodwill was to be written off immediately.
The relevant adjustments relating to the above transactions had not been made when the following trial balance as at 30 September 2010 was extracted from the books of the partnership.
Sh. "000" Sh. "000"
Capital
Alice 800
Bibianne 700
Christine 600
Current Accounts
Alice 200
Bibianne 200
Christine 100
Drawings
Alice 180
Bibianne 140
Christine 180
Inventory (30 September 2010) 500
Land and Buildings 1,500
Furniture and fittings 400
Motor vehicles 800
Accounts receivables 470
Accounts payables 200
Prepaid insurance 50
Accrued electricity 20
Bank balance 1,000
Net profit for the year 2,400
5,220 5,220
Additional information
1. Assume the net profit accrued evenly throughout the year
2. Christine agreed to take on her retirement one of the motor vehicles at book value of sh. 400,000 and the balance due to her to be paid in cash
Required:
(a) Income statement for the year ended 30 September 2010
(b) Partner’s current accounts
(c) Partner’s capital accounts
(d) Statement of financial position as at 30th September 2010
Date posted: October 3, 2022. Answers (1)
- The following information was obtained from the books of Nairobi water fund for the financial year ended
30th June 2011
1. Payment of sh. 3,000,000 was made...(Solved)
The following information was obtained from the books of Nairobi water fund for the financial year ended
30th June 2011
1. Payment of sh. 3,000,000 was made to the members
2. Administrative salaries amounted to sh. 400,000 while other administrative expenses amounted to sh.
500,000
3. Total contributions received from members were sh. 4,800,000
4. The total investments in the fund amounted to sh. 12,000,000 which earned interest of sh. 2,400,000
5. On 30th June 2010, the fund account had a credit balance of sh. 10,800,000 while the paymaster general account had a debit balance of sh. 2,00,000
Required:
(i) Income statement for the year ended 30th June 2011
(ii) Statement of financial position as at 3oth June 2011
Date posted: October 3, 2022. Answers (1)
- In the context of not-for-profit organizations, explain the following terms
(i) Honorarium
(ii) Subscription
(iii) Legacy(Solved)
In the context of not-for-profit organizations, explain the following terms
(i) Honorarium
(ii) Subscription
(iii) Legacy
Date posted: October 3, 2022. Answers (1)
- Highlight six types of report that could be generated by an accounting package (Solved)
Highlight six types of report that could be generated by an accounting package
Date posted: October 3, 2022. Answers (1)
- Mashariki Enterprises provided the following details of assets and liabilities as at 1st June 2010. The cost details were obtained from the invoice files while...(Solved)
Mashariki Enterprises provided the following details of assets and liabilities as at 1st June 2010. The cost details were obtained from the invoice files while others were obtained verbally from the managing director who was the proprietor
Asset Cost/Valuation Date of acquisition Depreciation
Sh. "000"
Equipment and furniture 2,300 1-Sep-2008 10 % per annum
Buildings 26,000 1-Jan-2005 5 % per annum
Land 3,400 1-Jan-2005 nil
Motor Vehicles 1,600 1-May-2010 20 % per annum
Bank balances 1,000
Trade receivables 1,380
Opening inventory 1,800
Prepaid insurance 450
Cash 120
Trade payables 1,100
Bank Loan 2,400
Accrued sundry expenses 2,600
The policy of the firm is to provide full depreciation in the year of purchase and non in the year of disposal, using the straight-line method
The following is a summary of receipts and payment for the year ended 31st May 2011
Bank Cash Bank Cash
Sh. "000" Sh. "000" Sh. "000" Sh. "000"
Sale of Equipment 200 Rent 2,000
Receipts from debtors 13,000 Donations 250
Sales 4,150 Supplier of goods 5,000
Furniture 900
Salaries and wages 1,400
Stationary 300
Motor vehicles 400
Bank loan 600
Drawings 200
Sales commission 150
Insurance 1,200
Bank charges 120
Sundry expenses 2,800
Interest on loan 240
Additional information
1. The following balances were available as at 31 May 2011
• Prepaid insurance sh. 250,000
• Accrued salaries Sh. 150,000
2. Equipment with a cost of Sh. 300,000 was disposed of during the year
3. Closing inventory was valued at sh. 1,200,000
4. Trade receivables as at 31st May 2011 were sh. 1,150,000 while trade payables were sh. 1,250,000
Required:
(a) Income statement for the year ended 31 May 2011
(b) Statement of financial position as at 31 May 2011
Date posted: October 3, 2022. Answers (1)
- (a) The following information relates to the property, plant and Equipment of Annex construction Limited as at
1
st October 2010:
Asset Cost Accumulated Depreciation Estimated useful life...(Solved)
(a) The following information relates to the property, plant and Equipment of Annex construction Limited as at
1
st October 2010:
Asset Cost Accumulated Depreciation Estimated useful life (years)
Sh. "000" Sh. "000" Sh. "000"
Freehold Land 60,000 - -
Buildings: Factory 150,000 30,000 50
:Office premises 180,000 30,000 45
Plant and Machinery 475,000 365,000 10
Computers 295,000 85,000 4
Motor Vehicles 50,000 35,000 4
Furniture and Fittings 100,000 40,000 5
Additional information
1. None of the assets was fully depreciated as at the end of the year
2. The following assets were acquired on 1st April 2011
Sh. “million”
Plant and Machinery 100
Computers 8
Motor Vehicles 28
3. On 1st April 2011, Motor vehicles with a cost of sh. 6,000,000 were disposed of for sh. 2 million. The cumulative depreciation on the Motor vehicles as at 1st October 2010 was sh. 5 million.
4. Freehold Land and Buildings were revalued on 2nd October 2010 as follows
Sh. “million”
Freehold Land 400
Buildings: Factory 240
: Office Premises 150
5. Depreciation is provided on a prorate basis from the date of acquisition using the straight-line method
6. Assume nil residue value for the assets
Required:
(a) The company’s property, Plant and Equipment movement schedule for the year ended 30th September 2011
(b) Define an intangible asset
(c) Outline four ethical issues that guide accountants while executing their duties
Date posted: October 3, 2022. Answers (1)
- Chungala limited is a public company incorporated to trade on recycled products. The accountant presented the finance manager the following financial statements for the years...(Solved)
Chungala limited is a public company incorporated to trade on recycled products. The accountant presented the finance manager the following financial statements for the years 2010 and 2011
Sh. "millions"
Sales 9,348
Cost of sales (5,688)
Gross profits 3,660
Distribution costs (1,128)
Administrative expenses (1,200)
Operating profit 1,332
Gain on disposal 20
interests paid (60)
Profit before tax 1,292
Income tax expense (304)
Profit after tax 988
Dividends (300)
Retained profits for the year 688
Retained profits brought forward 1616
Retained profits carried forward 2,304
Chungana Ltd
Statement of financial position as at 30 September
2011 2010
Sh. "million" Sh. "million"
Non-Current Assets
Plant and Equipment 6,400 5,200
Motor Vehicles 2,400 1,600
8,800 6,800
Current Assets
Inventory 300 240
Accounts receivables 124 100
Bank balances 216 140
640 480
Total assets 9,440 7,280
Equity and Liabilities
Ordinary Share Capital (sh. 10 each) 5,200 4,800
Share premium 880 320
Retained profits 2,304 1,616
8,384 6,736
Non-Current Liabilities
Long term loan 320 80
Current Liabilities
Accounts payables 96 56
Taxation 480 320
proposed dividends 160 88
736 464
Total capital and Liabilities 9,440 7,280
Additional Information
1. During the year, plant worth sh. 2,200,000 was acquired and Motor vehicles which had cost sh. 200,000,000 were disposed of.
2. The book values of the plant and Equipment and Motor Vehicles comprise
Plant and Equipment Motor Vehicles
2010 2012 2010 2012
Sh. Million Sh. Million Sh. Million Sh. Million
Cost 6,120 7,700 1,920 2,880
Accumulated depreciation (920) (1,300) (320) (480)
Net Book Value 5,200 6,400 1,600 2,400
3. Administration expenses comprise
Sh. Million
Depreciation Plant and equipment 840
Motor Vehicles 300
Others 60
1,200
4. Gain on disposal comprises
Sh. Million
Gain on disposal of Plant and equipment 40
Loss on disposal of Motor Vehicles (20)
20
Required:
Statement of cash flows for the year ended 30th September 2011 in conformity with the requirements of
International Accounting Standard (IAS 7), “Statement of Cash flows”
Date posted: October 3, 2022. Answers (1)
- The following trial balance was extracted from the books of Malezi Ltd as at 31st October 2011:
...(Solved)
The following trial balance was extracted from the books of Malezi Ltd as at 31st October 2011:
Sh. "000" Sh. "000"
Buildings (Cost) 10,000
Plant and Equipment (Cost) 1,400
Motor Vehicles (Cost) 320
Accumulated Depreciation (1 November 2010)
Buildings 4,000
Plant and Equipment 480
Motor vehicles 120
Cash at Bank 100
Inventory (1 November 2010) 2,200
Administrative expenses 2,206
Distribution costs 650
Suspense 1,500
Retained earnings 360
Trade receivables 876
Purchases 4,200
Dividends paid 200
Sales revenue 11,752
Value added Tax (VAT) Payable 1,390
Trade payables 1,050
Share premium 500
Ordinary Shares of sh. 100 each 1,000
22,152 22,152
Additional information
1. Inventory as at 31st October 2011 was valued at sh. 1,600,000
2. Depreciation is to be provided as follows
Assets Rate per annum
Buildings 5 % on straight line
Plant and Equipment 20 % on reducing balance
Motor vehicles 25 % on reducing balance
Depreciation is to be charged to administration expenses
3. The directors do not propose payment of dividends
4. An allowance for bad debts of sh. 76,000 is to be made relating to a customer who was declared bankrupt. A further allowance for doubtful debts of 5 % is to be made with respect to the trade receivables as at 31st October 2011
5. The suspense account of sh. 1,500,000 relates to 10,000 new ordinary shares which were issued at par value of sh. 150 each on 1st October 2011
Required:
(a) Statement of comprehensive income for year ended 31st October 2011
(b) Statement of financial position as at 31st October 2011
Date posted: October 3, 2022. Answers (1)
- The estimates and expenditure details relating to the ministry of Youth and social services for the year
2010/2012 were as follows
Code Details
...(Solved)
The estimates and expenditure details relating to the ministry of Youth and social services for the year
2010/2012 were as follows
Code Details
Original estimates Actual expenditure
Sh. "millions" Sh. "millions"
010 Personal emoluments 288 324
050 House allowances 54 46.8
080 Passage and leave 18 16.2
115 Travelling expenses 79.2 82.8
140 Electricity and water 21.6 23.4
221 Purchase of Equipment 180 144
640 Appropriation-in-Aid 54 43.2
Supplementary estimates authorized during the year were as follows
010 Personal emoluments Sh. 28.8 million (increased)
115 Travelling expenses Sh. 7.2 million (reduced)
Required:
Appropriation account for the year ended 30June 2011, showing the net surplus to be surrendered to the exchequer
Date posted: October 3, 2022. Answers (1)
- In the context of public sector accounting, explain the following terms:
(i) Vote book
(ii) Trust fund
(iii)Capital project fund(Solved)
In the context of public sector accounting, explain the following terms:
(i) Vote book
(ii) Trust fund
(iii)Capital project fund
Date posted: October 3, 2022. Answers (1)
- Outline five components of a computerized accounting system.(Solved)
Outline five components of a computerized accounting system.
Date posted: October 3, 2022. Answers (1)
- The financial statements of Wendani Limited for the year ended 31st January 2011 and 31st January 2012 are given below
Statement of financial position as at...(Solved)
The financial statements of Wendani Limited for the year ended 31st January 2011 and 31st January 2012 are given below
Statement of financial position as at 31st January
2011 2012
Sh. '000' Sh. '000'
Assets
Non-Current Assets (Net Book Value) 11,000 14,000
Current Assets
Inventory 2,000 3,000
Trade receivables 2,500 2,800
Bank balance - 500
4,500 6,300
Total Assets 15,500 20,300
Equity and Liabilities
Capital and Reserves
1,000,000 ordinary shares of sh. 10 each 10,000 10,000
Revenue Reserves 3,000 4,100
13,000 14,100
Non-Current Liabilities
8% debentures - 5,000
Current Liabilities
Trade payables 1,500 1,200
Bank Overdraft 1,000 -
2,500 1,200
Total Capital and Liabilities 15,500 15,300
Income Statement for the year ended
2011 2012
Sh. '000' Sh. '000'
Sales 20,000 28,000
Cost of sales (15,000) (21,000)
Gross profits 5,000 7,000
Administrative expenses (3,800) (4,600)
Finance costs - (400)
Net profit 1,200 2,000
Inventory as at 1st February 2010 was sh. 5,000,000
Required:
For each year, compute the following
(i) Gross profit margin
(ii) Inventory turnover
(iii) Return on Equity
(iv) Return on assets
(v) Acid test ratio
(vi) Current ratio
(vii) Financial leverage
(b) Comment on the liquidity of the company
Date posted: October 3, 2022. Answers (1)
- Explain three reasons why the amount of cash flows of a business entity might differ from the profits
generated by the business entity during the same...(Solved)
Explain three reasons why the amount of cash flows of a business entity might differ from the profits
generated by the business entity during the same period
Date posted: October 3, 2022. Answers (1)
- The following assets and liabilities were extracted from the books of Sparrows Sports Club as at 31st March:
...(Solved)
The following assets and liabilities were extracted from the books of Sparrows Sports Club as at 31st March:
2011 2012
Sh. '000' Sh. '000'
Equipment 18000 16000
Furniture and fittings 1200 1000
Subscription in arrears 130 100
Subscription in advance 600 500
Inventory of stationary 15 5
Bar inventory 3500 ?
Cash at Bank 1000 ?
Petty cash 25 15
Bar payables 700 1000
Accrued electricity 30 40
The summary of receipts and payments for year ended 31st March 2012 was as follows:
Receipts Payments
Sh. 000 Sh. 000
Subscriptions 4,400
Bar takings 20,000
Entry fees 390
Bar payables 13,700
petty cash 180
New equipment 2,000
Cash refund to members 200
Electricity and water 400
Barman's wages 1,600
Bar glasses 100
Repairs and maintenance 300
Rates and insurance 160
Honoraria to treasurer 290
Additional information
1. The club maintains a uniform gross profit margin of 25% on bar sales
2. The bar glasses are considered as revenue expense
3. The bar man is entitled to an annual bonus of 10% of bar net profit after charging the bonus
4. The petty cash was used to buy stationary only
5. Subscriptions received during the year included sh. 400,000 being arrears of previous year. It’s the policy of the club to write off arrear of more than one year
Required:
(a) Bar income statement for the year ended 31st March 2012
(b) Subscriptions account
(c) Income and expenditure account
(d) Statement of financial position as at 31st March 2012
Date posted: October 3, 2022. Answers (1)