2002
SECTION A: (20 marks)
1. Which one of the following statements describes an account?
a) List of balances from the trial balance.
b) Statement showing balances in the journal.
c) Statement of the financial position of the business.
d) Record of transactions of an asset of a liability.
2. An accounting concept that forms the basis on which the trial balance and the balance sheet will always balance is
a) Matching concept
b) Double entry concept
c) Consistency concept
d) Money measurement concept.
3. Discounts received are deducted when
a) Goods are sold on credit
b) Cash is received from debtors
c) Cash is being paid to creditors
d) Goods are bought on credit.
4. Out of an imprest of shs400, 000, shs170, 000 remains as a balance at the end of a given period. How much will be reimbursed at the end of the period?
a) Shs170,000
b) Shs230,000
c) shs400,000
d) shs570,000
5. if the provision for bad debts is decreased, the accounting entries will be
a) Debit provision for bad debts A/C, credit profit and loss A/C.
b) Debit profit and loss A/C, credit provision for bad debts A/C.
c) Debit bad debts A/C, credit profit and loss A/C.
d) Debit bad debts A/C, credit provision for bad debts A/C.
6. Given the subscription during the year 2000 as shs1, 200,000. Subscriptions accrued as shs840, 000 and subscription prepaid as shs799, 000. What is the amount to be transferred to the income and expenditure account?
a) Shs1,159,000
b) Shs360,000
c) Shs439,100
d) Shs1,240,000
7. What source document is used compiling up a returns inwards journal?
a) Carbon copy of the invoice
b) Original copy of a credit note
c) Carbon copy of a credit note
d) Original copy of debit note.
8. Which one of the following items is added to gross profit in the profit and loss account?
a) Interest payable
b) Interest receivable
c) Interest income prepaid
d) Interest expenditure accrued.
9. Betty's account was not listed in the trial balance, the trial balance all the same balanced which one of the following is the most likely reason?
a) An error of omission was made.
b) The account had a debt balance.
c) The account had a credit balance.
d) The account had no balance.
10. If current assets are more than current liabilities, this will indicate
a) Working capital
b) Over-trading
c) Capital employed
d) Under trading.
11. When a partnership gets a loss, what entries are made in the books of accounts?
a) Debit appropriation A/C, credit current A/C.
b) Debit current A/C, credit appropriation A/C.
c) Debit current A/C, credit capital A/C.
d) Debit capital A/C, credit current A/C.
12. Which one of the following statements is correct as regards the order of liquidity?
a) The most permanent asset appears first.
b) The least permanent asset appears first.
c) Fixed assets appear before current assets.
d) Long term liabilities appear before current liabilities.
13. Which of the following errors is committed if machinery sold is erroneously entered in the sales A/C?
a) Original entry
b) Commission
c) Omission
d) Principle
14. When a separate provision for depreciation account is used, the book-keeping entries made are
a) Debit asset account; credit provision for depreciation account.
b) Debit profit and loss account; credit provision for depreciation account.
c) Debit asset account; credit depreciation account.
d) Debit depreciation; credit profit and loss.
15. The private ledger records all the accounts mentioned below except
a) Drawing account
b) Trading account
c) Wages account
d) Capital account.
16. Which one of the following statements is correct about the petty cash book?
a) The total amount in each column is posted to the appropriate nominal account in the ledger.
b) The impress is recorded on the credit side of the petty cash book.
c) It forms part of the double entry system.
d) The petty cashier is re-imbursed with the amount remaining not spent.
17. How will the difference in books appear as when the debit totals of a trial balance exceed the credit totals in the suspense account?
a) A debit entry
b) A credit entry
c) An asset
d) A liability.
18. Which of the following is not correct about provision for bad debts?
a) They are same as bad debts written off.
b) They match expenses with revenues.
c) They fluctuate with the level of debtors.
d) Provision for bad debts accounts always has a credit balance.
19. Returns inwards increase
a) Debtors
b) Sales
c) Profits
d) Stock
20. Which of the following errors in the trial balance cannot be detected?
a) Mistakes in balancing ledger account.
b) Entry of a balance from the ledger to the wrong side of the trial balance column.
c) A complete omission of a transaction.
d) Mistake in the addition of the trial balance totals.
21. The following are source documents except
a) The purchase book
b) A debt note
c) A sales invoice
d) A purchase invoice
SECTION B: (80 marks)
22. Patricia, Peninah and Penlope are in partnership. The balance on their capital accounts and current accounts were all credit balances as at January, 1, 1997, and were as follows:
CAPITAL A/C CURRENT A/C
Patricia shs320, 000 shs45, 000
Peninah shs320, 000 shs28, 000
Penlope shs160, 000 shs16, 500
The partners share profits and losses in the ratio of their fixed capital accounts. Penlope is entitled to an annual salary of shs145, 000.
During the year ended Dec.31, 1997, the net trading profit of the partnership was shs805, 000 before providing for interest on capital at 5% and partnership salary.
Private drawings by partners were:
Patricia shs300, 000
Peninah shs322, 400
Penlope shs218, 700
Required:
Prepare: a) Appropriation A/C of the partners.
b) The partners current A/Cs.
23. Jinja social club organizes seminars and lectures for its members. The following statement is a summary of club's receipts and payments for 1997 as prepaid by the treasurer.
Receipts and payments A/C
Dr. Cr.
Shs Shs
Bank balance 1,450,000 rent 900,000
Donations 732,000 salaries 2,810,000
Annual subscriptions5, 156,000 office equipment 200,000
Postage & stationery 320,000
Telephone 42,000
Lecture fees 705,000
Sundry expenses 506,000
Balance c/d 1,855,000
7,338,000 7,338,000
Additional information:
i. Salaries accrued at 31-12-96 shs270,000
At 31-12-97 shs240, 000
ii. At December, 31, 1996, shs250, 000 had been received in respect of annual subscriptions for 1997 and shs75, 000 of annual subscription accrued.
iii. Details of fixed assets at 31-12-1996 were as follows:
- Office equipment at cost shs2, 500,000.
- Provisions for depreciations on office equipment was shs500, 000.
- Annual depreciations on office equipment is charged at 10% per annum.
- Cost of plant and machinery shs12, 500,000.
iv. Prepaid annual subscriptions for 1998 is shs341, 000.
Required:
a) Prepare income and expenditure account for the period ended 31st Dec. 1997.
b) Draw up the balance sheet as at that date.
23. a) Give any three differences between a bank statement and bank reconciliation statement.
b)Green ltd an environment company received its bank statement from GEM BANK Ltd for the month of August, 1999. After a close examination of the statement of the statement and the cash book, the following differences were found out.
1) Balance per bank statement as at 31/8/99 was shs21, 960,000 and as per cash book was shs23, 812,000.
2) A late deposit on August 31st did not appear on the bank statement shs1, 900,000.
3) Cheques issued to customers but do not appear in the bank statement totaled to shs2, 200,000.
4) A treasury bill worth shs3, 000,000 was collected by the bank and credited to the company's account. The bank charged shs8, 000 as collection charges.
5) It was discovered that a cheque in the amount of shs468,000 had been recorded in to the cash book as shs684,000
6) Accrued interest credited by the bank in the firm's account of shs20,000 had not been notified to them
7) A cheque belonging to Greenhill ltd had been accidentally credited to green ltd worth shs1,000,000 by the bank
8) A cheque worth shs120, 000 received from Diana Adiamo and banked was returned with the bank statement marked NSF/RD.
9) A post dated cheque of shs6, 060,000 issued by the company was finally presented after maturity and paid by the bank. This cheque had been credited to suspense account pending transfer to the cash book.
10) A cheque from a customer in settlement of his account was recorded as shs848, 000 instead of shs648, 000.
Required:
a) Adjusted cash book.
b) Bank reconciliation statement as at 31 March, 1999 starting with the adjusted cash book balance.
24. The following trial balance was taken from the books of P.Nafuna on June, 30th 2001. Dr Cr
Shs shs
Drawings 200,000 900,000
Purchases & sales 7,132,000 9,230,000
Wages and salaries 423,000
Cash at bank 60,000
Cash in hand 7,000
Debtors and creditors 700,000 582,000
Capital 2,000,000
Stock 1.7.2000 533,000
Electricity & telephone 140,000
Premises at cost 1,000,000
Office expenses (including stationery 95,000
Provision for bad debts 1.7.2000 10,000
Rates and insurance 124,000
Bad debts written off 29,000
General expenses 144,000
Motor expenses 384,000
Motor vehicle at cost 480,000
Furniture & equipment at cost 450,000
Provision for depreciation on
Motor vehicle 39,000
Provision for depreciation on
Furniture &equipment 50,000
Returns inwards & outwards 230,000 100,000
12,071,000 12,071,000
Additional information:
a) Expenses accrued 30.6.2001 salaries shs36,000 and electricity shs22,000
b) Prepaid insurance amounted to shs31,000 and unused stationery shs16,000 on 30.6.2001
c) Provision for bad debts should be adjusted to 2% of debtors.
d) 20% depreciation should be provided on the cost of motor vehicles and 121/2% on the book value of furniture and equipment.
e) The stock on 30.6.2001 had a cost value of shs565,000
Required:
i. P.Nafuna's trading profit and loss account for the year ended 30, June 2001.
ii. Balance sheet as at 30, June 2001.
25. a) State four uses of a general journal.
b) The information below relates to the books of Nabuisu as at 30.6.2000. You are required to prepare to prepare journal entries to adjust and close the account involved. Show the extracts of the profit and loss account.
Note: Narration not required.
i. Wages and salaries paid amounted to shs212, 000 while additional shs8, 000 in respect of wages was still outstanding.
ii. Of rent and rates shs57, 200. Shs10, 000 related to the next period.
iii. A sub-tenant paid rent on 1.4.2000 for the next half year shs36,000
iv. Of the accumulated interest on the fixed deposit account shs9, 600, the bank had remitted only shs4, 800.
26. a) State procedures to be followed in tracing errors in the trial balance.
b) Prepare the journal entries necessary to correct the following errors:
i. Sales day book was overcast by shs100, 000
ii. Shs20, 000 cash discount allowed to total petrol station had been credited to their account, and credited to discount received account.
iii. Goods worth shs500, 000 purchased from S. Sande had been credited to M. Sande's A/C.
iv. Goods worth shs40, 000 taken by M. Mande for personal use were not recorded in the books.
v. A purchase of desk calculator for shs80, 000 was debited to office expense account.
SECTION A: (20 marks)
1. Which one of the following statements describes an account?
a) List of balances from the trial balance.
b) Statement showing balances in the journal.
c) Statement of the financial position of the business.
d) Record of transactions of an asset of a liability.
2. An accounting concept that forms the basis on which the trial balance and the balance sheet will always balance is
a) Matching concept
b) Double entry concept
c) Consistency concept
d) Money measurement concept.
3. Discounts received are deducted when
a) Goods are sold on credit
b) Cash is received from debtors
c) Cash is being paid to creditors
d) Goods are bought on credit.
4. Out of an imprest of shs400, 000, shs170, 000 remains as a balance at the end of a given period. How much will be reimbursed at the end of the period?
a) Shs170,000
b) Shs230,000
c) shs400,000
d) shs570,000
5. if the provision for bad debts is decreased, the accounting entries will be
a) Debit provision for bad debts A/C, credit profit and loss A/C.
b) Debit profit and loss A/C, credit provision for bad debts A/C.
c) Debit bad debts A/C, credit profit and loss A/C.
d) Debit bad debts A/C, credit provision for bad debts A/C.
6. Given the subscription during the year 2000 as shs1, 200,000. Subscriptions accrued as shs840, 000 and subscription prepaid as shs799, 000. What is the amount to be transferred to the income and expenditure account?
a) Shs1,159,000
b) Shs360,000
c) Shs439,100
d) Shs1,240,000
7. What source document is used compiling up a returns inwards journal?
a) Carbon copy of the invoice
b) Original copy of a credit note
c) Carbon copy of a credit note
d) Original copy of debit note.
8. Which one of the following items is added to gross profit in the profit and loss account?
a) Interest payable
b) Interest receivable
c) Interest income prepaid
d) Interest expenditure accrued.
9. Betty's account was not listed in the trial balance, the trial balance all the same balanced which one of the following is the most likely reason?
a) An error of omission was made.
b) The account had a debt balance.
c) The account had a credit balance.
d) The account had no balance.
10. If current assets are more than current liabilities, this will indicate
a) Working capital
b) Over-trading
c) Capital employed
d) Under trading.
11. When a partnership gets a loss, what entries are made in the books of accounts?
a) Debit appropriation A/C, credit current A/C.
b) Debit current A/C, credit appropriation A/C.
c) Debit current A/C, credit capital A/C.
d) Debit capital A/C, credit current A/C.
12. Which one of the following statements is correct as regards the order of liquidity?
a) The most permanent asset appears first.
b) The least permanent asset appears first.
c) Fixed assets appear before current assets.
d) Long term liabilities appear before current liabilities.
13. Which of the following errors is committed if machinery sold is erroneously entered in the sales A/C?
a) Original entry
b) Commission
c) Omission
d) Principle
14. When a separate provision for depreciation account is used, the book-keeping entries made are
a) Debit asset account; credit provision for depreciation account.
b) Debit profit and loss account; credit provision for depreciation account.
c) Debit asset account; credit depreciation account.
d) Debit depreciation; credit profit and loss.
15. The private ledger records all the accounts mentioned below except
a) Drawing account
b) Trading account
c) Wages account
d) Capital account.
16. Which one of the following statements is correct about the petty cash book?
a) The total amount in each column is posted to the appropriate nominal account in the ledger.
b) The impress is recorded on the credit side of the petty cash book.
c) It forms part of the double entry system.
d) The petty cashier is re-imbursed with the amount remaining not spent.
17. How will the difference in books appear as when the debit totals of a trial balance exceed the credit totals in the suspense account?
a) A debit entry
b) A credit entry
c) An asset
d) A liability.
18. Which of the following is not correct about provision for bad debts?
a) They are same as bad debts written off.
b) They match expenses with revenues.
c) They fluctuate with the level of debtors.
d) Provision for bad debts accounts always has a credit balance.
19. Returns inwards increase
a) Debtors
b) Sales
c) Profits
d) Stock
20. Which of the following errors in the trial balance cannot be detected?
a) Mistakes in balancing ledger account.
b) Entry of a balance from the ledger to the wrong side of the trial balance column.
c) A complete omission of a transaction.
d) Mistake in the addition of the trial balance totals.
21. The following are source documents except
a) The purchase book
b) A debt note
c) A sales invoice
d) A purchase invoice
SECTION B: (80 marks)
22. Patricia, Peninah and Penlope are in partnership. The balance on their capital accounts and current accounts were all credit balances as at January, 1, 1997, and were as follows:
CAPITAL A/C CURRENT A/C
Patricia shs320, 000 shs45, 000
Peninah shs320, 000 shs28, 000
Penlope shs160, 000 shs16, 500
The partners share profits and losses in the ratio of their fixed capital accounts. Penlope is entitled to an annual salary of shs145, 000.
During the year ended Dec.31, 1997, the net trading profit of the partnership was shs805, 000 before providing for interest on capital at 5% and partnership salary.
Private drawings by partners were:
Patricia shs300, 000
Peninah shs322, 400
Penlope shs218, 700
Required:
Prepare: a) Appropriation A/C of the partners.
b) The partners current A/Cs.
23. Jinja social club organizes seminars and lectures for its members. The following statement is a summary of club's receipts and payments for 1997 as prepaid by the treasurer.
Receipts and payments A/C
Dr. Cr.
Shs Shs
Bank balance 1,450,000 rent 900,000
Donations 732,000 salaries 2,810,000
Annual subscriptions5, 156,000 office equipment 200,000
Postage & stationery 320,000
Telephone 42,000
Lecture fees 705,000
Sundry expenses 506,000
Balance c/d 1,855,000
7,338,000 7,338,000
Additional information:
i. Salaries accrued at 31-12-96 shs270,000
At 31-12-97 shs240, 000
ii. At December, 31, 1996, shs250, 000 had been received in respect of annual subscriptions for 1997 and shs75, 000 of annual subscription accrued.
iii. Details of fixed assets at 31-12-1996 were as follows:
- Office equipment at cost shs2, 500,000.
- Provisions for depreciations on office equipment was shs500, 000.
- Annual depreciations on office equipment is charged at 10% per annum.
- Cost of plant and machinery shs12, 500,000.
iv. Prepaid annual subscriptions for 1998 is shs341, 000.
Required:
a) Prepare income and expenditure account for the period ended 31st Dec. 1997.
b) Draw up the balance sheet as at that date.
23. a) Give any three differences between a bank statement and bank reconciliation statement.
b)Green ltd an environment company received its bank statement from GEM BANK Ltd for the month of August, 1999. After a close examination of the statement of the statement and the cash book, the following differences were found out.
1) Balance per bank statement as at 31/8/99 was shs21, 960,000 and as per cash book was shs23, 812,000.
2) A late deposit on August 31st did not appear on the bank statement shs1, 900,000.
3) Cheques issued to customers but do not appear in the bank statement totaled to shs2, 200,000.
4) A treasury bill worth shs3, 000,000 was collected by the bank and credited to the company's account. The bank charged shs8, 000 as collection charges.
5) It was discovered that a cheque in the amount of shs468,000 had been recorded in to the cash book as shs684,000
6) Accrued interest credited by the bank in the firm's account of shs20,000 had not been notified to them
7) A cheque belonging to Greenhill ltd had been accidentally credited to green ltd worth shs1,000,000 by the bank
8) A cheque worth shs120, 000 received from Diana Adiamo and banked was returned with the bank statement marked NSF/RD.
9) A post dated cheque of shs6, 060,000 issued by the company was finally presented after maturity and paid by the bank. This cheque had been credited to suspense account pending transfer to the cash book.
10) A cheque from a customer in settlement of his account was recorded as shs848, 000 instead of shs648, 000.
Required:
a) Adjusted cash book.
b) Bank reconciliation statement as at 31 March, 1999 starting with the adjusted cash book balance.
24. The following trial balance was taken from the books of P.Nafuna on June, 30th 2001. Dr Cr
Shs shs
Drawings 200,000 900,000
Purchases & sales 7,132,000 9,230,000
Wages and salaries 423,000
Cash at bank 60,000
Cash in hand 7,000
Debtors and creditors 700,000 582,000
Capital 2,000,000
Stock 1.7.2000 533,000
Electricity & telephone 140,000
Premises at cost 1,000,000
Office expenses (including stationery 95,000
Provision for bad debts 1.7.2000 10,000
Rates and insurance 124,000
Bad debts written off 29,000
General expenses 144,000
Motor expenses 384,000
Motor vehicle at cost 480,000
Furniture & equipment at cost 450,000
Provision for depreciation on
Motor vehicle 39,000
Provision for depreciation on
Furniture &equipment 50,000
Returns inwards & outwards 230,000 100,000
12,071,000 12,071,000
Additional information:
a) Expenses accrued 30.6.2001 salaries shs36,000 and electricity shs22,000
b) Prepaid insurance amounted to shs31,000 and unused stationery shs16,000 on 30.6.2001
c) Provision for bad debts should be adjusted to 2% of debtors.
d) 20% depreciation should be provided on the cost of motor vehicles and 121/2% on the book value of furniture and equipment.
e) The stock on 30.6.2001 had a cost value of shs565,000
Required:
i. P.Nafuna's trading profit and loss account for the year ended 30, June 2001.
ii. Balance sheet as at 30, June 2001.
25. a) State four uses of a general journal.
b) The information below relates to the books of Nabuisu as at 30.6.2000. You are required to prepare to prepare journal entries to adjust and close the account involved. Show the extracts of the profit and loss account.
Note: Narration not required.
i. Wages and salaries paid amounted to shs212, 000 while additional shs8, 000 in respect of wages was still outstanding.
ii. Of rent and rates shs57, 200. Shs10, 000 related to the next period.
iii. A sub-tenant paid rent on 1.4.2000 for the next half year shs36,000
iv. Of the accumulated interest on the fixed deposit account shs9, 600, the bank had remitted only shs4, 800.
26. a) State procedures to be followed in tracing errors in the trial balance.
b) Prepare the journal entries necessary to correct the following errors:
i. Sales day book was overcast by shs100, 000
ii. Shs20, 000 cash discount allowed to total petrol station had been credited to their account, and credited to discount received account.
iii. Goods worth shs500, 000 purchased from S. Sande had been credited to M. Sande's A/C.
iv. Goods worth shs40, 000 taken by M. Mande for personal use were not recorded in the books.
v. A purchase of desk calculator for shs80, 000 was debited to office expense account.