BSc.

(Hons) Banking and International Finance

Diploma in Public Administration and Management
& BSc.(Hons) Public Administration and Management
BSc.(Hons) Tourism and Hospitality Management
Cohort: BBIF/04/FT/PT - Year 1
Cohort: DPAM/BPAM/04/PT – Year 1
Cohort: BTHM/04/PT – Year 1
Resit Examinations for 2004 - 2005 / Semester 2
MODULE: FINANCIAL ACCOUNTING
MODULE CODE: ACCF1102

Duration: 2 Hours
Reading time : 10 Minutes

Instructions to Candidates:

1. This paper consists of Sections A and B.

2. Section A is compulsory.
3. Answer any two questions from Section B.
4. Always start a new question on a fresh page.
5. Total marks 100.

This question paper contains 4 questions and 6 pages.

Page 1 of 6
 SECTION A: COMPULSORY

QUESTION 1: (40 MARKS)

Mr.Kentish has been trading for some years as a Retailer. The following list of balances
has been extracted from his ledger as at 30 April 2004.
Rs
Capital 83,887
Sales 259,870
Creditors 19,840
Return Outwards 13,407
Provision for bad debts 512
Discount allowed 2,306
Discount received 1,750
Purchases 135,680
Return Inwards 5,624
Carriage outwards 4,562
Drawings 18,440
Carriage Inwards 11,830
Rent and rates and insurance 25,973
Heating and lighting 11,010
Postage and stationery and telephone 2,410
Advertising 5,980
Salaries and wages 38,521
Bad debts 2,008
Cash in hand 534
Cash at bank 4,440
Opening stock 15,654
Trade debtors 24,500
Fixtures and fittings 120,740
Accumulated depreciation on fixtures and fittings as on 30 April 2003 63,020
Depreciation 12,074

Page 2 of 6
The following additional information is provided::
1. Closing stock was Rs.17,750
2. Insurance has been prepaid Rs.1,120
3. Heating and lighting is due Rs.1360
4. The provision for bad debts is to be adjusted to 3% of trade debtors.

Required:
1. Prepare a Trading and Profit and Loss Account for the period ended 30 April
2004 and,
(11 marks)
2. A Balance Sheet as at 30 April 2004.
(7 marks)
3. Explain the following accounting concepts and give an example for each of
them.
¾ Entity concept
¾ Money measurement concept

¾ Going concern concept

¾ Cost concept

¾ Conservatism concept

¾ Dual aspect concept

(18 marks)
4. List four users of Financial Statements.
(4 marks)

SECTION B: ANSWER ANY 2 QUESTIONS

QUESTION 2: (30 MARKS)

The treasurer of the Chesterpool Sports Club has produced the following receipts
and payments account for the year ended 31 December 2004.

Page 3 of 6
 Receipts Rs Payments Rs
Balance at bank 1 January 1,398 Coffee supplies bought 1,456
2004.
Subscriptions received 3,790 Wages of attendants and 1,776
cleaners
Profits on dances 286 Rent of rooms 987
Profit on exhibition 112 New equipment bought 565
Coffee bar takings 3,798 Travelling expenses of teams 1,673
Sale of equipment 66 Balance at bank 31 Dec 2004. 2,993
9,450 9,450

Notes:

I. Coffee bar stocks were valued: 31 December 2003 Rs159, 31 December

2004 Rs203. There was nothing owing for coffee bar stocks on either of
these dates.
II. On 1 January 2004 the club’s equipment was valued at Rs2,788. Included
in this figure, valued at Rs77, was the equipment sold during the year for
Rs66.
III. The amount to be charged for depreciation of equipment for the year is
Rs279. This is in addition to the loss on equipment sold during the year.
IV. Subscriptions owing by members 31 December 2003 : nil, at December
2004 : Rs29.

Required:

a) Draw up the coffee bar trading account for the year ended 31 December 2004.
For this purpose Rs650 of the wages is to be charged to this account; the
remainder will be charged in the income and expenditure account.
(7 marks)
b) Calculate the accumulated fund as at 1 January 2004.
(4 marks)
c) Draw up the income and expenditure account for the year ended 31 December
2004, and a balance as at 31 December 2004.
(19 marks)

Page 4 of 6
QUESTION 3: (30 MARKS)

The following information has been extracted from the accounting records of John
Merchant, wholesaler, for the financial year ended 31 October, 2004:-
Rs

Credit purchases 79 209

Credit sales 101 473
Cash discount allowed 4 707
Cash discount received 2 571
Payments to suppliers 75 366
Return inwards 1 254
Receipts from credit customers 91 370
Cash sales 780
Increase in bad debts provision 512
Cash purchases 1 054
Return outwards 302
Bad debts written off 379

Balances in the purchases ledger set off against debit balances in the 716
sales ledger

A bill of exchange payable by a customer had not been credited to that 1 273
customer’s account. The bill amounted to Rs 1273.

A purchase invoice for Rs 340 from S. Sims had been entered in the 430
supplier’s account as Rs 430 and included as such in the credit
purchases of Rs 79 209 above.

Purchase ledger balances at 1 November 2003 : Debit 134

: Credit 11 107

Purchase ledger balance at 31 October 2004 : Debit 47

Sales ledger balances at 1 November 2003 : Debit 22 317

: Credit 254

Sales ledger balances at 31 October 2004 : Credit 206

Required:-
(a) The Purchases Ledger and Sales Ledger Control Accounts for the year ended
31 October 2004, after taking into account the above matters.
(20 marks)

Page 5 of 6
 (b) Explain six reasons for keeping control accounts.
(6 marks)
(c) State four book-keeping errors which are not revealed by control accounts.
(4 marks)

QUESTION 4: (30 MARKS)

A company maintains its fixed assets at cost. Depreciation provision accounts for each
asset are kept.
At 31 December 2002 the position was as follows:
Total cost Total Depreciation to date
Rs Rs
Machinery 52,590 25,670
Office furniture 2,860 1,490

The following additions were made during the financial year ended 31 December 2002;
Machinery Rs2,480 office furniture Rs320
Some old machine bought in 1999 for Rs2,800 were sold at Rs 800 during the year.

The rates of depreciation are:

Machinery 10% p.a, office furniture 5%p.a , using straight line method, calculated on
the assets in existence at the end of each financial year irrespective of date of
purchase.

Required:
(a) Show the assets account, accumulated depreciation account, disposal account and
a balance sheet extract.
(20 marks)
(b) Identify three possible causes of Depreciation
(3 marks)
(c) Using your own examples distinguish between reducing balance and straight line
methods of depreciation.
(7 marks)
***END OF QUESTION PAPER***
Page 6 of 6