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BA212/BAC102/W1003 - December 2009 - QP

Section A
[40 marks]
Answer ALL questions in this section.

A1. Choose the best answer from the choices (i), (ii), (iii) and (iv) given. [16]

(a) The reason for classifying an expense as prepayment is

(i) Under Matching concept Income and corresponding Expenses should be

matched in the same period.
(ii) Under Prudence concept expenses/costs should be recognized soonest.
(iii) Under Materiality concept material expenses should be recorded.
(iv) Under Business entity concept company expenses should be separated from
personal expenses.

(b) Amortization means

(i) Depreciation of Tangible assets

(ii) Depreciation of Intangible assets
(iii) Appreciation in value of Tangible assets
(iv) Appreciation in value of Intangible assets

(c) An asset sold for $2,000 on 31.03.09 with an original cost of $10,000 and an
accumulated depreciation to date of $8,200 shall record

(i) No loss, no gain

(ii) $200 loss
(iii) $200 profit
(iv) $1,800 loss

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(d) Which of the following is a Ledger Control account?

(i) Cash book

(ii) Petty Cash Book
(iii) Sales Day Book
(iv) Sales Ledger

(e) The purpose of petty cash book is to

(i) record all cash transaction

(ii) record minor cash transactions
(iii) record bank and cash transactions
(iv) record cash loans taken from creditors

(f) Which of the following is most likely an accrued liability?

(i) Depreciation
(ii) Interest
(iii) cost of goods sold
(iv) office supplies

(g) Prepaid expense is an expense:

(i) incurred before the cash is paid

(ii) incurred and paid
(iii) paid but not yet incurred
(iv) none of the above

(h) Which of the following adjusting entries creates a decrease in assets?

(i) Recording the earned portion of revenue collected in advance.

(ii) Recording depreciation expense.
(iii) Accruing unrecorded salaries expense.
(iv) Accruing unrecorded interest revenue.

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BA212/BAC102/W1003 - December 2009 - QP

A2. Causeway Enterprises, a business run by Mr. Tee, had arrears in wages that remained
unpaid as at 31/12/2007 amounting to $1,700. During 2008, Causeway Enterprises
paid $36,000 as wages. At the year end the outstanding wages that remained unpaid
amounted to $2,100.
Record the above transactions in the Wages Ledger Account as at 31.12.2008. [3]

A3. Explain Accrual Income with an example. [3]

A4. List any THREE causes for depreciation of an asset. [3]

A5. State the difference between Straight line and reducing balance methods of
depreciation. [3]

A6. State any THREE objectives of preparing Control accounts. [3]

A7. Name THREE efficiency ratios. [3]

A8. Explain different forms of partnership business establishments. [3]

A9. Name the components that go into Stock of finished goods. [3]

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BA212/BAC102/W1003 - December 2009 - QP

Section B
[60 marks]
Answer ANY TWO questions in this section.

B1. [30 marks]

The following list of balances at 31 December 20x9 has been taken from the accounting
records of Suvin.
$
Premises at cost at 1 January 2009 34,000
Equipment at 1 January 2009
- At cost 68,000
- Provision for depreciation – Equipment 19,200
Motor vans at 1 January 2009
- At cost 78,000
- Provision for depreciation – motor vans 37,200
Stock at cost at 1 January 2009 70,000
Purchases 373,400
Return outwards 3,000
Sales 569,600
Return inwards 9,600
Administrative expenses 101,600
Selling and distribution expenses 31,700
Drawings - Suvin 10,400
Debtors 71,600
Creditors 26,900
Bank 7,600
Capital - Suvin 200,000

Additional information:
1. Stock at cost on 31 December 20x9 was $60,000.
2. Administrative salaries outstanding $5,400.
3. Depreciation is to be provided on the straight line method at the following annual
rates:
Equipment 25%
Motor vans 20%

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BA212/BAC102/W1003 - December 2009 - QP

Required:
(a) Prepare a Trial balance as at 31 December 2009. [17]

(b) Prepare Trading and Profit and loss account for the year ended 31 December 2009. [11]

(c) Capital account for the year ended 31 December 2009. [2]

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BA212/BAC102/W1003 - December 2009 - QP

B2. [30 marks]

(a) What is the purpose of preparing a bank reconciliation statement? [5]

(b) Natupak’s Cash Book (Bank Columns only) for the month of October 20x4 was as
follows:

Dr ($) Cheque No. Cr ($)

20x4 20x4
Oct 1 Balance b/d 700 Oct 5 Douglas 10110 410
9 Cash 320 24 Kim 10111 290
31 John 720 30 Pumpa 10112 250
31 Balance c/d 790
1,740 1,740

He received the following statement from his Bank at the beginning of November
20x4:

20x4 Details Payments Receipts Balance

($) ($) ($)

Oct 1 Balance brought forward 700

7 Cheque – 10110 410 290
9 Cash 320 610
15 Banker’s Order – Insurance 140 470
30 Cheque – 10112 250 220
31 Deposit Interest 80 300

You are required to:

(i) Bring the Cash Book up to date, starting with the balance carried down of
$790 on 31 October 20x4. (Do not copy down the whole Cash Book as given
above) [10]

(ii) Prepare a Statement, under its proper title, to reconcile the difference between
your amended Cash Book balance and the balance in the Bank Statement on
31 October 20x4. [6]

(c) Cash Book is perhaps the most important Journal cum Ledger maintained to monitor
the affairs of the business enterprises. Explain how cash and Bank transactions are
dealt with in the cash Book and the importance of the above statement. [9]

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B3. [30 marks]

Describe the followings:

(a) Accrued expenses [5]

(b) Bad debts [5]
(c) Current Assets [5]
(d) Depreciation [5]
(e) Deferred Income [5]
(f) Debentures [5]

- END OF PAPER -

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