SECTION A: (20, marks)
1. Which of the following transactions is likely to have an immediate effect on capital of the business?
a) A purchase of a motor van for business use worth shs10 million
b) A sale of office furniture worth shs200,000 for shs150,000
c) An issuing of a cheque to one of the business creditors.
d) A payment of a debt of the trade debtors.
2. The ledger in which you would find a drawing's account is
a) General ledger
b) Nominal ledger
c) Sales ledger
d) Private ledger
3. A debtor earned an allowance of shs2000 for settling a debt promptly. The correct accounting entries for the allowance given is
a) Debit cash book; credit debtor's account
b) Debit debtor's account; credit cash book
c) Debit discount allowed account' credit debtor's account
d) Debit debtor's account, credit discount allowed account.
4. ..............................is sent by a prospective customer to a seller in the initial stage of a credit transaction.
a) A dispatch note
b) An invoice
c) An inquiry
d) An order
5. Which of the following current assets appear in order of liquidity?
a) Debtors, stock, bank, cash
b) Stock, debtors, bank, cash
c) Cash, debtors, stock, bank
d) Cash, bank, debtors, stock
6. When there is an overdraft, a bank statement will show.......................
a) A debit balance
b) A credit balance
c) A debtor's balance
d) A creditor's balance
7. A weekly float cash of shs150, 000 is allowed. If shs125, 800 was spent during the course of the week, how much money will he reimbursed to the cashier?
8. From the following information, find the combinations that make up an income statement:
i. Balance sheet
ii. Trial balance
iii. Profit and loss account
iv. Trading account
v. Cash book
vi. Receipts and payments account.
a) (vi), (iv) and (i)
b) (ii), (iii) and (iv)
c) (i), (iii) and (iv)
d) (iii) and (iv)
9. Which of the following best describes a balance sheet?
a) A list of balances
b) A statement of liabilities
c) A list of closing entries
d) A trial balance after the last book keeping entry
10. A sales account is referred to as ..............account
a) An impersonal
b) A real
c) A nominal
d) A personal
11. Which of the following errors is likely to affect the agreement of the trial balance?
a) Error of principle
b) Omission of a balance
c) Omission of a transaction
d) Error of original entry
12. Given the following assets and liabilities of a business firm;
Debtors shs100, 000; creditors shs135,000
Premises shs300, 000; bank overdraft shs270,000
Stock shs 5,500; cash shs500, 000; and telephone bill shs150,00
The firm's working capital is
13. Debit balances in account represent:
a) Assets only
b) Assets expenses or losses
c) Losses only
d) Expenses only
14. A motor vehicle worth shs30, 000,000 with residential value of shs6, 000,000 is expected to last 5 years. Calculate the value of the vehicle after 3 years.
15. When a given expenditure is capitalized, it will be
a) Show in the profit and loss account
b) Shown as a balance sheet item
c) Shown both in the profit and loss account, and the balance sheet.
d) Shown both in the sales and profit, and loss account.
16. At the end of the financial year, the subscription account of a club showed a credit balance. This represents:
a) Subscriptions outstanding from members.
b) Subscriptions underpaid by members
c) Subscription paid in advance by members
d) Subscription not to be recovered from members.
17. Which of the following set of items constitute a loss to partners in a partnership firm:
i. Interest on capital
ii. Interest on drawings
iii. Partnership salaries
a) (i), (iii) and (iv)
b) (i) only
c) (ii) and (iv)
d) (i) and (iii)
18. John is to transfer journal entries into the ledger. The process is refered to as
19. A ........................... is used for depositing money onto a current account.
a) Pass book
20. When a trader experiences overcast in sales, his profit.............
c) Is un affected
SECTION B: (80 marks)
21. a) Give two reasons why it is necessary to prepare final accounts for any business organization.
b) Give below is a trial balance of Atok and sons as at 31st December, 1993:
ITEM DR. (SHS) CR. (SHS)
Food purchases/sales 785,400 1,117,000
Carriage inwards 4,300
Food stock (1.1.93) 165,300
Shop equipment 263,600
Discount allowed 12,800
Advertising charges 6,500
Market due 22,500
Lunch and tea expenses 20,000
Debtors/creditors 375,600 181,700
Loan from co-operative society 186,000
i. shs20, 000 in respect of interest on loan is due.
ii. Stock on 31st .12.93 was valued at shs261,700
iii. Atok had taken food worth shs50, 000 for his own consumption but no records had been made.
Prepare Atok and son's final accounts for the year ended 31st December, 1993.
22. a) State five uses of a general journal.
b) Below are transactions carried out by ABC Trading Enterprises? You are required to draft journal entries to record the transactions in the books of the enterprise.
i. Purchase of an office adding machine worth shs500,000 on credit from business machinery ltd
ii. Sale in cash of an old office desk no longer needed at shs120,000
iii. Moses a debtor owed shs200,000 unable to settle his debt in cash offers a machine for full settlement of the debt
iv. The declaration of Musa's inability to settle a debt worth shs20,000 due to the firm
v. Goods worth shs35,000 was taken by the proprietor of ABC trading enterprises for home use.
23. a) Explain the meaning of
i. A debit balance in stationery account.
ii. A credit in salary account.
b) The following information appeared in the books of "Monitor" during the year ended 31.12.1993
i. Wages account showed a credit balances of shs50,000
ii. Stock of unused amount of stationery was shs100,000
iii. Outstanding bill of electricity of shs15,000
During the year stationery worth shs100, 000 was bought, and wages amounting to shs500, 000 and electricity worth shs45, 000 was paid for on 31st December, 1993.
Shs15, 000 and shs25, 000 in respect of stationery and electricity respectively, were yet to be settled.
Amount of shs20, 000 had been made as an advance payment in respect of wages.
1) Show how the following accounts would appear in light of the above information.
2) Show the relevant entries in the profit and loss accounts as well as in the balance sheet.
(NB: journal entries are not required)
24. The treasure of owino football club, showed the following details related to the club's finances.
1st January, 1992 31st December, 1992
Fixed assets 500,000 550,000
Subscription in arrears 55,000 20,000
Cash balance 120,000 120,000
Food expenses 100,000 Nil
During the year the following took place:
Subscription received amounted to shs300, 000
Donations from sympathizers was shs200, 000
Football match proceeds was shs400, 000
Payment for food expenses was shs300, 000
Payment for players transport and remuneration was shs350, 000
Payment for coaches remuneration of shs150, 000
Purchase of new sports equipment was shs 100,000
Required to show:
i. Club's subscription account for the year 1992
ii. Income and expenditure account for the period ended 31st.12.92
iii. Club's balance sheet as at 31st-12-92.
25. a) Give two advantages of conducting business on partnership basis.
b) Musisi and Musoke are in partnership. Their capital contributions are shs.750, 000 and shs700, 000 respectively.
The partners agreed on the following terms:-
i. Interest to be allowed on capital is 10% per annum.
ii. Fixed capital accounts are to be maintained.
iii. Musoke is to receive a salary of shs100, 000 at the end of the trading period.
iv. Interest is to be charged on drawings at 10% per annum.
Partners drawings on January, 1994 were:
The partners' current accounts showed the following balances as at 1st January, 1994.
Musisi shs21, 000 (credit)
Musoke shs33, 700 (credit)
During the year ended December, 31st 1994, the partnership earned a net profit of shs855, 500.
1) Draw up the appropriation account for the ended December,
2) Prepare partners current accounts for the ended December 31st, 1994,
26. a) i) List any three ledgers.
ii) Define nominal and real accounts, giving two examples of each.
b) From the details given below, written up a three column cash book.
May 1: cash in hand 1,000,000
Cash at the bank 3,000,000
2: cash sales 2,000,000
3: banked cash received on may 2
4: withdrew from the bank for office use 1,000,000
6: paid rent by cash amounting to 100,000
7: paid wages by cash 200,000
10: received by cheque worth
From A.Kato, less 10% cash discount 500,000
12: paid Okuku by cheque worth
Less 10% cash discount 400,000
15: bought stationery by cheque of 400,000
18: paid U.R.C bill by cheque of 800,000
21: cash sales 1,200,000
25: banked cash of 1,000,000