Bust 121

BUST 121
CHUKA UNIVERSITY
RESIT/ SPECIAL EXAMINATIONS

EXAMINATION FOR THE AWARD OF
BACHELOR OF
BUST 121: FUNDAMENTALS OF FINANCIAL ACCOUNTING
STREAMS: TIME: 2 HOURS
DAY/DATE: THURSDAY 26/07/2018 2.30 PM – 4.30 PM

INSTRUCTIONS:
Answer Questions One and any other Two
1. (a) Discuss any three users of accounting information. [10 marks]
(b) State the following concepts and principles of accounting
(i) Historical cost principle [4 marks]

(ii) Going concern assumption [4 marks]
(c) Outline four types of errors that do not affect the trial balance. [8 marks]
(d) Explain any four qualities of good accounting information. [4 marks]
Question Two
The following trial balance was extracted from the books of Angel, a sole trader in Chuka Town
as at 31.12.2010
Sh Sh
Capital 1.1.10 3,165,620
Purchase 923,600
Sales 1,968,160
Purchases return 5,600
Sales return 16,160
Discount allowed 18,200
Discount received 14,080
Wages and salaries 622,000
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BUST 121
Rent 49,000
Insurance 35,600
General expenses 81,200
Trade debtors 368,000
Trade creditors 322,400
Bank overdraft 80,400
Stock 1.1.10 122,000
Land and building at cost 1,700,000
Plant and machinery 1,230,000
Motor vehicle 562,000
Drawings 208,200
Cash in hand 40,200
Provision for depreciation, motor vehicle 112,400
Plant and machinery 307,500
________ _________
5,976,160 5,976,160
======== ========
Additional information
1. Stock in trade on 31.12.10 amounted to sh. 148,400

2. Rates paid in advance as at 31.12.10 allowed to sh. 7000
3. Outstanding electricity bill as at 31.12.10 (this included in general expenses) amounted to
sh 3580
4. Debtors include irrecoverable amount of sh 5600
5. A 5% provision for doubtful debts is to be made on the recoverable debtors.
6. Depreciation is to be provided on motor vehicles, plant and machinery at 20% and 25%
respectively on reducing balance method.
7. Included in wages and salaries is an amount of sh. 62,000 paid to domestic workers of
Angel.
8. Included in wages and salaries as at 31.12.10 amounted to sh. 24,800
Required:
(a) A trading, profit and loss account for the year ended 31.12.10 [12 marks]
(b) A balance sheet as at 31.12.10 [8 marks]
Question Three
The following figures were extracted from the books of ABC limited for the month of June 2004
Purchases ledger bal. 1st June
Purchases ledger bal. 1st June Dr 350

Cr 18,460
Sales ledger balances Dr 47,600
Cr 1,350
Page 2 of 4
BUST 121
Credit purchases 39,400

Credit sales 68,940
Cash purchases 20,600
Cash sales 4,400
Return inwards 2,500
Return outwards 800
Receipts from trade debtors 52,600
Payment to trade creditors 38,640
Discount received 4,750
Discount allowed 6,990
Bad debts written off 1,240
Interest charged to debtors 360
Debtors cheque dishonored 870
Purchases ledger credits transferred to sales 1,230
ledger
Purchases ledger balance 30th June Dr 480
th
Sales ledger balances 30 June Cr 1,690
Required:
(i) Purchases ledger control account. [10 marks]
(ii) Sales ledger control account [10 marks]
Question Four
On 30th April the cash book of Marima Traders showed a debit bank balance of sh 35,000. His
bank statement for April showed a credit balance of sh 41,750 the same day.
(i) The bank had deducted sh 1250 for ledger fees. Also the bank had paid his landlord for
office rent sh 10,000 and motor insurance standing order sh 8,750. These items dint
appear on Marima’s cash book.
(ii) On 15th April the bank credited his account with sh 2,500 being dividends on shares and
sh 2,500 being dividends on shares and sh 2,500 being interest on fixed deposit.
(iii) A debtor paid sh 5,000 directly in Marima’s bank account
(iv) The following cheques paid out to creditors did not apper on the bank statement cheque
No. 1 sh 25,000, cheque No 2 sh 27,500, cheque No 3 sh 4,250
(v) The following cheques deposited on 30 April did not appear on the bank statement sheet
ABC sh 10,000 and XYZ sh 30,000
Required:
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BUST 121
(a) Adjusted cash book [12 marks]
(b) Draw a bank reconciliation statement. [8 marks]

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BUST 121

RESIT/ SPECIAL EXAMINATIONS

BUST 121: FUNDAMENTALS OF FINANCIAL ACCOUNTING

STREAMS: TIME: 2 HOURS

DAY/DATE: THURSDAY 26/07/2018 2.30 PM – 4.30 PM

Answer Questions One and any other Two

1. (a) Discuss any three users of accounting information. [10 marks]

(b) State the following concepts and principles of accounting

(i) Historical cost principle [4 marks]

(d) Explain any four qualities of good accounting information. [4 marks]

1. Stock in trade on 31.12.10 amounted to sh. 148,400

(b) A balance sheet as at 31.12.10 [8 marks]

Purchases ledger bal. 1st June Dr 350

Credit purchases 39,400

(i) Purchases ledger control account. [10 marks]

(ii) Sales ledger control account [10 marks]

(a) Adjusted cash book [12 marks]

(b) Draw a bank reconciliation statement. [8 marks]

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