SECTION A: (20 marks)
1. Wanyoto entered an invoice for shs7,300 in the purchase journal and purchases ledger as shs3,700. What error was made?
a) Error of original entry.
b) Error of principle.
c) Error of omission.
d) Error of commission.
2. Which one of the following documents is issued to a customer when a debt is settled in cash?
a) A voucher.
b) An invoice.
c) A receipt.
d) A debit note.
3. The following are assets and liabilities of a firm:
- Furniture and fixtures 300,000
- Prepaid rent income 50,000
- Equipment 500,000
- Accrued electricity bill 100,000
- Debtors 1,000,000
Calculate the capital.
4. The sum of opening stock and purchases is referred to as
a) Cost of sales.
b) Gross profit.
c) Net purchases.
d) Goods available for sale.
5. What is the effect of stock bought on credit on the balance sheet? It is
a) An increase in assets and a decrease in liabilities.
b) An increase in assets and an increase in liabilities.
c) A decrease in assets and a decrease in liabilities.
d) An increase in liabilities and a decrease in assets.
6. Subscription received in advance at the beginning of the year was shs50, 000. During the year, subscription received was shs180, 000, of which shs30, 000 was the next trading period. How much subscription should be transferred to the income & expenditure account?
7. The drawings account belongs to the class of accounts known as
a) Nominal accounts.
b) Personal accounts.
c) Private accounts.
d) Impersonal accounts.
8. Interest on a loan paid by a business is
a) Private expenditure.
b) Capital expenditure.
c) Nominal expenditure.
d) Revenue expenditure.
9. Carriage outwards will be
a) Debited in the trading account.
b) Credited in the trading account.
c) Debited in the profit and loss account.
d) Credited in the profit and loss account.
10. The following are subsidiary books of account except the
a) Creditors' ledger book.
b) Purchase book.
c) Returns inwards book.
d) Sales day book.
11. A balance sheet could be described as a
a) Statement showing net profit or net loss.
b) Statement showing net worth of the organization.
c) List of assets and claims against the organization.
d) List of cash payments and receipts for a given period.
12. On 1st January, 2003, the provision for doubtful debts was shs50,000. At 31st December,2003 it was increased to shs70,000. How much should be charged to the profit & loss account for the year?
13. Which one of the following will appear in the trading account of a firm?
a) The accountant's fee.
d) Carriage outwards.
14. An increase of the provision for bad debts by shs17,000 would be recorded in the ledger account as
a) Dr. Bad debts A/C and Cr.Profit & Loss A/C.
b) Dr. Provision for bad debts A/C and Cr. Profit & Loss A/C.
c) Dr. Profit & Loss A/C and Cr. Provision for bad debts A/C.
d) Dr. Profit & Loss A/C and Cr. Bad debts A/C.
15. A machine bought at shs1, 216,000 is estimated to last 20 years with a scrap value of shs115,000. Calculate its accumulated depreciation for 3 years.
16. The excess of cost sales over the sales is known as a
a) Gross profit.
b) Gross loss.
c) Net profit.
d) Net loss.
17. A debt balance in salaries account at the end of trading period represents
a) Salary paid in advance.
b) Salary due.
c) Salary paid for the year.
d) Non-payment of salary.
18. Arrange the following assets in order of permanence:
i. Cash balance
ii. Sundry debtors
iii. Plant and machines
a) (iv) , (iii) , (ii) and (i)
b) (iii) , (iv) , (i) and (ii)
c) (iii) , (iv) , (ii) and (i)
d) (iv) , (ii) , (iii) and (i).
19. Which one of the following transactions would be recorded in the sales day book?
a) Kato sold goods for cash worth shs100, 000.
b) Kato sold goods worth shs100, 000 to Ugandan prisons on credit.
c) Kato purchased goods from Madhvani sugar works on credit worth shs200,000
d) Kato purchased goods worth shs200, 000 by cash.
20. Which of the following will be credited to the debtors control account?
a) Discount received.
b) Dishonored cheque.
d) Discount allowed.
SECTION B: (80 marks)
21. The following information was extracted from the books of lugogo sports club on 31st March, 2003:
Members subscriptions 4,000,000
Donations received 2,425,000
Manager's wages 5,200,000
Loan from credit society 7,500,000
Repairs to premises 1,900,000
Sale of dance tickets 10,775,000
Rent paid 3,125,000
Purchase of furniture 7,500,000
Dance expenses 3,750,000
Incidental expenses 1,175,000
i. On 1st April, 2002 the club had cash amounting shs1,65,000
ii. Rent worth shs625, 000 is for the next trading period paid up to 30th June, 2003.
iii. Electricity paid includes shs475, 000 for the previous year and shs550, 000 is outstanding for current year.
iv. Incidental expenses include shs75, 000 relating to the previous year.
v. Subscriptions amounting to shs500, 000 had been recived during the previous year, shs375, 000 received during the current year relates to year ending 31st March, 2004.
vi. The club owned some equipment which was to be depreciated by shs1, 000,000.
a) Receipts & payments account.
b) Income & expenditure account for the year ending 31st March, 003.
22. a) Give advantages of keeping a Control account.
b) The following information was extracted from the books of a trading organization for the month of May, 2004. Shs
Sales ledger balances 1st May, Dr. 6,242,000
Purchases ledger balances 1st May Dr. 32,200
Receipts from credit customers 6,630,400
Payments to trade creditors 5,925,000
Credit sales 7,343,800
Credit purchases 4,355,200
Cash sales 2,520,400
Discount received 283,200
Debtor's cheque dishonored 63,000
Discount allowed 304,200
Returns inwards 156,400
Returns outwards 84,200
Bad debts written off 111,600
i. Debtor's ledger control account.
ii. Creditor's ledger control account.
23. The following information relates to Mr. Etomot's business. Prepare a trading, profit & loss account for the year ending 31st Dec. 2003 and a balance sheet as at that date.
Trial Balance 31st Dec. 2003
Details Dr. (shs) Cr. (shs)
General expenses 65,000
Stock 1st Jan. 1,725,000
Fixtures and fittings 120,000
Bad debt written off 12,000
Provision for bad debts
Debts 1st Jan. 75,000
Delivery vans 80,000
Cash at hand 5,000
Bank balances 349,000
Provide for the following:
a) Depreciation on Building shs50,000
Fixtures & fittings shs12, 000
Delivery van shs24, 000.
b) Rent accrued; shs15, 000.
c) Insurance paid in advance; shs12, 000.
d) Increase the bad debts provision to 5% of sundry debtors.
e) The stock at 31st December was valued at shs1, 600,000.
24. a) Give three uses of a trial balance.
b) The trial balance of quick service enterprises ltd. Failed to agree on 30th June, 2003. It was observed that the total debits were shs849, 000 and the total of the credits were shs796, 500.
The following errors were later discovered:
- The cash sales of shs65, 000 were recorded as shs56, 000 in the sales account.
- The returns outwards account of shs6, 500 was omitted in the trial balance.
- A direct payment to the bank account of shs25, 000 by lapiny had been credited to the account of Rapiny.
- A cash purchase of shs23, 000 had been recorded in the cash book only.
- An amount of shs30, 000 received from a debtor was debited to his account.
- The purchase of a typewriter for office of shs400, 000 was debited in the purchases account.
i. By use of a general journal, correct the above errors. (Narratives may be left out).
ii. Prepare a suspense account.
25. a) Give any two reasons why a cash book balance may differ from the bank statement balance.
b) Kintu's cash book showed an overdraft of shs1, 048,000 on 31.12.2003. On the same date, his bank statement showed a credit balance of shs380, 000.
The following differences were discovered on investigation:
- Cheques totaling shs306, 000 returned by his bank as 'Refer to Drawer' had not been entered in the cash book.
- Ledger fees shs180, 000 and cheque books charges shs24, 000 debited by the bank have not been entered in the cash book.
- Cheques totaling shs2, 610,000 received from debtors and lodged on 31.12.2003 were credited by the bank on 4.1.2004.
- Payments by cheques amounting to shs4, 938,000 to creditors made during December, 2003 were not reflected in the bank statement.
- Payments of shs600, 000 made by the bank as per standing order to the land-lord had not been recorded in the bank statement.
- Dividends amounting to shs210, 000 were received and credited by the bank but no entry was made in the cash book.
i. An adjusted cash book.
ii. A bank reconciliation statement as at 31st Dec. 2003.
26. Madina and Nambi were trading as partners sharing profits and losses in the ratio of 3:2
Their capital contributions were:
Madina shs800, 000
Nambi shs600, 000
Their partnership deed provided for:
i. Salary for madina shs18, 000 and shs20, 000 for Nambi.
ii. Interest of 6% p.a. on their capital accounts.
iii. To charge interest on drawings at 10% p.a.
During the year, Madina drew shs216, 000 while Nambi drew shs180, 000, all on 1.1.2003. Their net trading profit for the year ended 31st Dec.2003 was shs462, 000.
a) The partner's appropriation account.
b) The partners current accounts, given that the partners maintain fixed capital account.