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Bca 100 - Introduction To Financial Accounting

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95 views

Bca 100 - Introduction To Financial Accounting

Uploaded by

aloyceguzman3560
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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MURANG’A UNIVERSITY OF TECHNOLOGY

SCHOOL OF BUSINESS AND ECONOMICS


DEPARTMENT OF COMMERCE

UNIVERSITY ORDINARY EXAMINATION

2020/2021 ACADEMIC YEAR


FIRST YEAR FIRST SEMESTER EXAMINATION FOR, BACHELOR OF SCIENCE
IN COMMERCE, BPSM, ENTER, HRM, IT, BBIT, Bed ARTS

UNIT CODE: BCA 100

UNIT TITLE: INTRODUCTION TO FINANCIAL ACCOUNTING

DURATION:2 HOURS

Instructions to candidates:

1. Answer question One and Any Other Two questions.


2. Mobile phones are not allowed in the examination room.
3. You are not allowed to write on this examination question paper.

1
SECTION A: ANSWER ALL QUESTIONS IN THIS SECTION

QUESTION ONE (30 MARKS)

a) Outline any six users of financial information (6marks)


b) Highlight six objectives of accounting (6marks)
c) Briefly explain the following concepts as used in financial accounting (10marks)
i. Going concern
ii. Money measurement
iii. Business entity
iv. Prudence
v. Periodicity
d) Explain any four causes of depletion in fixed assets (8marks)
SECTION B – ANSWER ANY TWO QUESTIONS IN THIS SECTION
QUESTION TWO (20 MARKS)
a) The following trial balance is extracted from the books of Johan traders as at 31st December
2019.
Cr(Shs) Dr(Shs)
Sales 400,000
Purchase 350,000
Sales returns 5000

Purchases returns 6,200


Opening stock(1/1/2019) 100,000
Provision of bad debts 800
Wages and salaries 30,000
Rates 6,000
Telephone 1,000
Shop fitting(at cost0 40,000
Equipment(at cost) 30,000
Debtors 9,800
Creditors 7,000
Bad debts 200
Capital 179,000
Bank balance 3,000
Drawing 18,000
Total 593,0000 593,000
ADDITIONAL INFORMATION
Closing stock as at 31st December 2019 was Kshs 120,000
Accrued wages Kshs 5,000
Prepaid rates Kshs 500
Provision of bad debts to be increased to 10% of debtors
Telephone bill outstanding Kshs 220
Depreciate shop fitting at 10% per annum on cost
Depreciate equipment at 20% per annum on cost

2
REQUIRED
a) Income statement for year ending 31st December 2019 (10marks)
b) Statement of financial position as at 31st December 2019 (10marks)

QUESTION THREE (20 MARKS)


a) Enter the following details of the ledger including a two-column cash book, balance off the
accounts and extract a trial balance as at 31st may 2020
May 1-Stated the firm with capital cash 25,000
May 2- Brought goods on credit from delis 5400, Mendez Sh 8,700, Gibson 2,500, Book 7,600,
Lowe 6,400.
May 4- Sold goods on credit to Bailey 4300, Hughes 6,200, Spenser 17,600
May 6- Paid rent by cash Sh 1200
May 9- Bailey paid part of his debts by cheque Sh 4,300
May 10- Spencer paid part of his debts Sh 15,000
May 12- The business paid out of their debts by cheques as follows: Gibson, 2,500, Dellis 5,400,
May 15- Paid carriage by cash Sh 2,300
May 18- Bought goods on credit from Mendez Sh 4,300, Booths Sh 11,000
May 21- Sold goods on credit to Hughes Sh 6,700
May 31- Paid rent by cheque Sh 1,800

REQUIRED

Enter the above transaction in the recurrent ledger account including a two-column cash book
and extract a trial balance as at 31st may 2021. (14marks)
Explain the effects of the following errors using suitable illustrations.
i. Error of principle (2marks)
ii. Compensating error (2marks)
iii. Error in the book of original entity (2marks)

QUESTION FOUR (20 MARKS)


a) The trial Balance as at 31/4/2017 of timberly products did not balance. The difference on the trial
balance was Sh 2513 and was placed on the debit side of the trial balance. Subsequently
investigation revealed the following errors.
i. Discounts received of Sh 324 in January has been posted to the debit of the discounts
allowed account
ii. wages of Sh 2963 paid in February 2017 have not been posted from the cash book
iii. A remittance of Sh 940 received from Mitchell in November 2016 has been posted to the
credit of B.Mansell limited.
iv. In December 2016 the company purchased stationery at a bargain price of Sh 2,000. No
adjustment to reflect that stationery worth Sh 1500 was in stock as at 30th April ,2017
v. A pay out of Sh 341 to Jawing in January 2017 had been posted to his personal account
as Sh 143

3
vi. A remittance of Sh 3,000 received from D.Northern a credit customer in April 2017 had
been credited to sales
vii. Draft account for the year ended 30th April 2017 showed a net profit of Sh 24,760

REQUIRED

Show the necessary entries in the general journal to correct each of the above errors (7marks)

Show the summary of the account after the correction of the above errors (5marks)

b) Outline any four purposes of a trial balance ( 4marks)


c) With suitable illustration differentiate between capital expenditure and revenue expenditure
(4marks)

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