SECTION A :( 80 marks)

1. Odongo Ivan borrows shs.300, 000 from Atim but he is able to pay only 75%. The 25% is referred to as

a) Provision for bad debt

b) Bad debt

c) Debtors

d) Creditors

2. Which of the following methods of depreciation is best for loose tools?

a) Percentage method

b) Fixed installation method

c) Revaluation method

d) Straight line method

3. Given that the cost of goods amounts to shs40,000, gross profit amounts to shs20,000, opening and closing stocks, were shs15,000 and shs10,000 respectively. What were the amounts of purchase and sales?

Purchases : sales

a) 55,000 : 70,000

b) 35,000 : 60,000

c) 45,000 : 80,000

d) 65,000 : 90,000

4. Which one of the following errors is of principle?

a) Sale of furniture to Walugo record in the personal account of wafula.

b) Repairs of furniture shs2,500 recorded in repairs and maintenance account as shs5,200

c) Sales on credit to poya record on credit side of poya's personal account.

d) Purchase of stationery for official; use record in purchase account.

5. Walusimbi a garage owner, purchases a welding unit for use in his garage. This can be regarded as

a) Revenue expenditure

b) Capital expenditure

c) Trading expense

d) Selling expense

6. In the receipts and payments account

a) Receipts are debited

b) Payments are debited

c) Income is credited

d) Expenses are debited

7. Why is carriage inwards debited to the trading account and carriage outwards in the profit and loss account and yet both are expenses?

a) Carriage inwards directly affects purchases while carriage outwards directly affects gross profit.

b) Carriage outwards directly affects purchases while carriage inwards directly affects gross profit

c) Carriage inwards is not an expense while carriage outwards is an expense.

d) Carriage inwards is part of the cost of goods sold while carriage outwards is part of selling expenses.

8. Which of the following serves both as prime book and a subsidiary book of entry?

a) Journal

b) Ledger

c) Cash book

d) Petty cash book

9. Which one of the following statements is not true about stock lost by accident?

a) Profits are reduced by same amount.

b) Stock destroyed is credited to stock account.

c) Stock destroyed is debited to stock account.

d) Stock destroyed is debited to profit and loss account.

10. Mugerwa's asset on 1st January, 1980 amounted to shs, 150,000 his liabilities were shs70,000. His capital should have been

a) Shs.220,000

b) Shs.80,000

c) Shs230,000

d) Shs.140,000

11. When a bank statement shows an overdraft

a) Money paid into the bank decreases the overdraft

b) Money drawn by the client reduces the overdraft

c) Additional charges made by the bank reduce the overdraft

d) Deposits into the bank by customer increase the overdraft.

12. What entries are made in books of accounts to write off bad debts?

a) Dr. bad debts expenses account; Cr. Profit and loss account.

b) Dr. Bad debt written off account; Cr. Debtors account.

c) Dr. bad debts written off account; provision for bad debts account.

d) Dr. profit and loss account; Cr, bad debts written off account.

13. Which one of the following is not affected by closing entries in an accounting period?

a) Prepaid insurance

b) Provision for depreciation

c) Creditors

d) Debtors

14. Opio's garage had tools worth shs.16, 000 at the beginning of the year. Additional tools worth shs.25, 000 were purchased in the course of the year, at the end of the year the tools were valued at shs34,000. Depreciation of the year amounted to

a) Shs18,000

b) Shs9,000

c) Shs25,000

d) Shs7,000

15. Which one of the following will be included among the firms current liabilities?

a) A debit balance in customers account.

b) A debit balance in insurance expenses account.

c) Credit balance in electricity account

d) A debit balance in firms cash account.

16. Drawings of cash by the proprietor for personal use is entered in the drawings account. At the end of the trading period,

a) The total is transferred to the debit side of the capital account.

b) The total is debited to the profit and loss account.

c) The capital account is credited with the total amount drawn

d) A new ledger account headed drawings account is opened.

17. Which of the following statements is true when a given expenditure is capitalized? It will be shown

a) In the profit and loss account

b) As a balance sheet item

c) Both in the profit and loss account and balance sheet.

d) In the profit and loss account and not in the balance sheet.

18. The source document to record return of goods is

a) Debit note

b) Delivery note

c) Invoice

d) Credit note

19. Given sales shs18, 400 opening stock shs1,400, closing stock shs1,000 purchase shs7,400, carriage inwards shs200, returns inwards shs300. What is the cost of sales?

a) Shs10,000

b) Shs7,700

c) Shs8,000

d) Shs4,000

20. Which one of these represents excess of current assets over current liabilities?

a) Cash at hand

b) Capital employed

c) Cash at bank

d) Working capital

SECTION B: (80 marks)

21. a) Enumerate the differences between a trial balance and a balance sheet.

b)Write up a three-column cash book from the following details, balance off the cash book and show the discount accounts in the general ledger on 30th June, 1994.

June 1. Balances brought forward:

Bank balance shs65,400

Cash balance 2,900

Debtors accounts:

Moruny 12,000

Apiany 28,000

Kiamy 4,000

Creditors accounts:

Ajok 6,000

Akech 44,000

Arach 10,000

June 2 moruny settles his accounts by cheque, having deducted 21/2% cash discount shs.300

Shs.11, 700

5 Arach was paid by cheque, deducting 5 percent cash discount shs500

Shs9, 500

10 withdraw cash from bank for business use shs10, 000

15 Apiany settles his account by cheque, deducting 21/2% discount shs700

Shs27, 300

20 paid wages in cash shs9, 200

26 Kiamy pays cash after having deducted 21/2% cash discount shs3,800

June 27 Ajok was paid by cheque less 5% cash discount shs300

Shs5, 700

28 Akech was paid by cheque less 2% cash discount shs1100

Shs42, 900

29 received cheques from: murony shs500; Apiany shs22, 000 and Kiamy shs10,000 each cheque bearing a 5% cash discount.

22. a) Distinguish between nominal accounts and real accounts. Give two examples in each case.

b)S. Okumu of kitgum General traders commenced business on 5th June, 1995 with a capital of shs20,000 and stock of goods worth shs8,700

Thereafter the following transactions took place.

June 6 bought shopping shs 17,000 cash

7 received a bank loan of 4,330,000 by cheque

8 bought pick up for use in the business for 840,000 by cheque

9 sold goods for cash to kalongo hospital 123,450 cash

10 purchased goods worth 540,000 by cheque

10 purchased goods for 330,000 by cash

(12,000/= cash discount was received)

12 cash sales were 11,230

15 bought by cheque a wheel barrow for

Delivering goods to customers 2,500

18 sold goods in cash 932,000 allowing 8,000 discount

20 paid general expenses 15,350

25 repaid part of his loan to the bank 86,500

Required:

Enter the above transactions in a cash book and post them to the ledger. Do not balance the ledger accounts.

23. Adukule kato has the following balance sheet as at 31st December, 1993.

Balance sheet 31/12/93

Shs shs

Equipment 10,000, 000 capital 20,000,000

Furniture 8,000, 000 loan 5,000,000

Stock 3,000, 000 creditors 3,000,000

Debtors 4,000, 000

Bank 3,000, 000

28, 000, 000 28,000, 000

The following transactions occurred after the above balance sheet date.

(1994)

June 1 paid creditors shs2, 000, 000

6 receipts from debtors 3,000,000

7 bought machinery on credit from mukwano 5,000,000

8 bought goods on credit 3,000,000

9 paid into bank 5,000,000 from personal resources.

Draw up a balance sheet on 9th Jan, 1994 after the above transactions have been taken into

ledger accounts.

24. a) An eager and aspiring young book-keeper was given permission to complete the trading, profit and loss account of his employer's Tornado express. He produced the following statements:

TRADING PROFIT AND LOSS ACCOUNT AS AT 31/12/94

Wages 230,000 stock (1/1/94) 230,000

Salaries 98,200 328,200 sales 1,250,000

Rent and rates 27,500 less purchases 690,000 560,000

General expenses 74,500 discount received 14,200

Depreciation (equip) 30,000 132,000 less discount allowed 11,000 3,200

Stock (31/12/94) 296,000 provision for bad debts

Returns in 10,000 (5% on sundry debtors) 10,000

Returns out 17,000 27,000

Carriage in 20,000

Less carriage out 18,200 2,200

Balance - net profit 17,800

803,200 803,200

b) He also prepared the following balance sheet from the same records.

BALANCE SHEET FOR THE YEAR ENDED 31/12/94

Equipment 100,000 land and buildings 200,000

Add depreciation 30,000 less prov. For bad debts 10,000

130,000 190,000

Drawings 80,000 capital 270,000

Debtors 120,000 motor vans 160,000

Stock 100,000 220,000

Net profit 127,400 cash 2,400

Creditors 226,000 add wages accrued4, 000 6,400

Bank overdraft 95,000

Suspense 62,000

783,000 783,000

The following adjustments were available:

i. depreciation was as follows;-

Depreciation on equipment 10,000

Depreciation on motor vans 20,000

ii. included in wages of 230,000 were wages accrued of 4,000

Required:

Re-write:

a) The trading profit and loss account in the manner recommended.

b) The balance sheet taking into account the adjustments.

25. a) Give four reasons that may make a principal cashier to transfer cash payments for small and numerous item of expenditure to a junior cashier.

b) Richard Muhira commented business on 1/09/95 with a capital of shs1,000,000 at Barclays bank. He instructs his accountant to maintain the cash book as well as a petty cash book. The petty cash book is to be analyzed into travelling; salaries and wages; postage and stationery; and sundry expense column.

The following transactions took place:

Sept 2 withdrew from bank for office petty cash shs200, 000

2 Bought from Bernard Onyango goods worth shs410, 000

3 purchased goods paying by cheque shs89, 100

7 sold goods for cash shs93, 110

8 paid wages in cash shs19, 100

10 paid for stamps and evelopes shs15, 000

12 sent a fax to Britain inquring on goods ordered last week shs25, 000

14 cash sale to date shs104, 460

14 paid Bernard Onyango by cheque shs210, 000

15 paid cash into bank shs104, 460

17 paid jumbo petrol station for fuel supplied shs35, 000

19 sold goods to Richard Aseku shs187, 100

21 paid wages in cash shs19, 100

21 cash sales shs82, 000

22 paid taxi hire shs11, 000

25 paid rent in cash shs20, 000

26 paid for display window repairs in cash shs 3,480

27 cash sales shs77, 600

27 paid cash into bank shs159, 600

28 paid wages in cash shs19, 100

30 paid salaries by cheque shs100, 000

Required:

a) Prepare Richard Muhira's two column cash book for the month of September.

b) Prepare his petty cash book for the month of September using the imprest system.

26. Apio, Buka and Chandy are in partnership saving profits and losses in their capital ratios. They agreed that:-

i) Withdrawal are to be as follows:-

Cash goods worth (shs)

Apio 10,000 15,000

Buka 12,000 8,000

Chandy 8,000 10,000

ii) Drawing to earn 2% interest.

iii) No interest to be charged on capital.

iv) Chandy and buka to get a salary shs12,400 and shs13,200 respectively

v) Capital contribution was:-

Apio shs60, 000

Buka 40,000

Chandy 30,000

iv) Current accounts balances:

Apio shs160, 000 cr

Buka 140,000 cr

Chandy 130,000 cr

During the year the firm made a net profit of shs120,000 before charging commission of shs16,400 given to the salesman.

You are required to:

a) Prepare the profit and loss appropriation account.

b) Show the current accounts of the partners.