SECTION A: (20 marks)
1. ...............is someone or an organization to whom the business owes money
2. Anything that a trader owes to an outsider is called
a) A liability
b) An asset
d) Returns outwards
3. Mukasa converted his vehicle to serve his business. What is the effect of this transaction?
a) It increases assets and reduces liabilities
b) It increases liabilities and reduces capital
c) It reduces liabilities and increases capital
d) It increases assets and capital
4. Given current asset of shs 200,000 and working capital ratio of 21/2: 1 determining the value of the working capital.
5. A firm which is unable to meet its day obligations is said to be
6. A transaction that does not change total assets, total liabilities and total capital is the one like:
a) Selling a liability with some other cash
b) Selling a typewriter at a price equal to its cost
c) The owner investing cash into the business
d) Receiving a loan from a bank
7. When a cheque received from a debtor is deposited in the bank, the banker, makes the following entries:
a) Dr. bank's cash book; Cr. Bank statement
b) Dr. bank statement; Cr. Bank's cash book
c) Dr. debtor's account; Cr. Bank statement
d) Dr. Customer's cash book; Cr. Debtor's account.
8. Which of the following transactions is not record in the journal proper?
a) A second hand furniture sold on credit for shs100,000
b) Purchase on credit of a bicycle for shs200, 000, for carrying charcoal for sale.
c) Goods sold to lubega for shs500,000 debited to lubanga's personal account
d) Purchase on credit of bicycles worth shs1, 200,000 for sale.
9. ..............................is a list of all balances extracted from the ledger.
a) A balance sheet
b) A trial balance
c) An income statement
d) A trading account
10. When initiating a commercial transaction the first document a buyer sends to a seller is called....
a) An order
b) An inquiry
c) An invoice
d) A statement of account
11. ...........is an accounting document that authorizes payment
a) An invoice
b) A receipt
c) A voucher
d) A purchase order
12. The accounting entries for closing stock are
a) Dr. trading account; Cr. Stock account
b) Dr. stock account; Cr. Trading account
c) Dr. trading account; Cr, profit and loss account
d) Dr. profit and loss account; Cr. Stock account
13. A ..................is both a ledger and a book of prime entry
a) Cash book
b) Sales book
c) Returns book
d) Purchases book
14. A cigarette dealer had the following terms of sales; a 10% trade discount, cash discounts of 5% within a week; 3% within two weeks and 1% within a month. If a buyer purchased cigarettes worth shs100,000, calculate how much money he paid, given that paid for them after 15 days
15. From the following particulars determine the cost of sales; sales shs100, 000. Goods available for sale shs 70,000 and closing stock shs20,000
16. Which of the following is an error of principle?
a) A sale of goods to kato entered in katono's account
b) A receipt of shs10,000 from a debtor entered on the credit side of the cash book
c) A payments of shs10,000 to a creditor entered in books as shs1,000
d) A purchase for personal use entered in the purchases account
17. Which of the following methods of depreciation is most appropriate for motor vans?
a) Reducing balance method
b) Percentage method
c) Straight line method
d) Equal installment method
18. From the following particulars, determine the amount to be transferred to the profit and loss account: on 1/1/94 debit balance in salaries account was shs500,000
Salaries paid during 1994 were shs9, 500,000. 31/12/94 salaries accrued shs400, 000.
19. Life membership fees in a social club are treated as:
a) Permanent receipts
b) Revenue receipts
c) Capital receipts
d) Temporary receipts
20. The accounting entries for partnership salary which is kept in business pending withdrawal are
a) Dr. partnership salary account; Cr. Cash book
b) Dr. partner's current account; Cr. Partnership salary account
c) Dr. profit and loss account; Cr. Partner's capital account
d) Dr. Partnership salary account; Cr. Partner's current account.
SECTION B: (80 marks)
21. a) Give any four uses of the journal proper.
b) The book-keeper of Abu-Automat prepared the balance sheet below:
BALANCE SHEET AS AT 31/12/94
Land and buildings 10,000,000
Prepaid income 3,000,000
Prepaid rates 1,000,000
Profit for 1994 6,000,000
Plant and machinery 8,000,000
U. C. B Loan (10 years)5,000,000
Re - write the above balance sheet showing the major features such as:
ii. long term liabilities
iii. fixed assets
iv. current assets
v. current liabilities
22. The following balance appeared in the books of yonga enterprises ltd on 1st January 1994.
Debtors: i) deni cheap stores 75,960
ii) sukisa & sons 65,540
Cash at bank 1,425,000
Creditor: star trading co. 156,000
During the year the enterprises transacted the following business:
Jan 2: bought 500 cartons of star soap from star trading co. on credit at shs13.120 per carton
Jan 5: Deni cheap stores settled its account by cheque
Jan 20: bought a pick up for business use on credit from General motors for shs 7,500,000
Jan 27: sold credit to sukisa & sons goods worth shs450, 000
Jan 28: paid by cheque star trading co. all that it owed it less 5% cash discount.
By the use of the general journal only
i. determine the amount of opening capital
ii. Journalize the above transactions.
23. Mukasa, Natukunda and Odipio are partnership. At the end of first year they had the following:
Capital: Mukasa 160,000
Gross profit 1,806,000
Rent payable 300,000
Salaries and wages 419,000
Rent receivable 254,000
Furniture and fittings 400,000
Drawings: Mukasa 170,000
Loan to the firm (Natukunda) 200,000
a) Depreciate buildings and furniture and fittings at 15% and 10% respectively.
b) There was no partnership agreement.
i. State any three provisions of the 1890 partnership act.
ii. Prepare profit and loss appropriate account
iii. Prepare the partners current accounts.
24. Karika sports club had the following assets and liabilities as at 1/1/1993:
Sports equipment 150,000
Bank deposit 100,000
Subscriptions in arrear 20,000
Subscription in advance 10,000
In addition the following is a summary of the receipts and payments accounts for the year ended 31.12.1993.
Subscription: 1993 200,000
Gate receipts 250,000
Matches expenses 50,000
Stationery & printing 70,000
Bank charges 15,000
Gratuities to officials 80,000
Deposit account 200,000
i. Interest on deposit account was shs15,000
ii. Charge depreciation on all fixed assets at a rate of 20% per annum.
iii. Insurance paid in advance amounted to shs5,000.
iv. Donations are to be capitalized.
v. Credit supplies for refreshments amounted to shs30,000
i. Work out the amount of accumulated fund of the club as at 1.1.1993.
ii. Prepare income and expenditure account of the club for the period ended 31.12.1993
iii. Prepare a balance sheet of the club as at 31. 12. 1993.
25. The totals of the trials balance of kasese emporium failed to agree and difference was posted to the suspense account. Later on the following errors were discovered:
i. The sale day book had been under added by shs100,000
ii. The bought day book had been under added by shs58,500
iii. discount worth shs2,700 received from one of the suppliers had been correctly entered in the cash book but not posted to the supplier's account
iv. Discount allowed column in the cash book had been under added by shs9,000
v. Some goods returned to general merchandize ltd had been recorded at a value of shs5,900 in the return's outward book when the value of the goods was actually shs9,500
vi. Wages of shs296,300 had not been posted from the cash book
Required to prepare:
i. Journal entries to show how the above errors would be corrected.
ii. The suspense account showing the original difference in books.
26. a) Distinguish between a reserve and provision
b) The management of Ruteera enterprises ltd maintains an accounting system in which a 5% provision for bad and doubtful debts is maintained on the figures of sundry debtors at any given point of time.
On 1/1/1994 the figure of sundry debtors stood at shs1, 500,000 and that of 31/12/1994 stood at shs2, 000,000. During the trading period the enterprise suffered a loss of shs250, 000 arising from bad debts.
Using the above information you are required to
i. Prepare the provision for bad debts account, bad debts written off account and profit and loss account.
ii. Show how the above would appear in the balance sheet
iii. Prepare debtors account for the year 1994 only.