BINDURA UNIVERSITY OF SCIENCE EDUCATION FACULTY OF COMMERCE ACCOUNTANCY DEPARTMENT © WOW 202: PROGRAMS, BACHELOR OF ACCOUNTING HONOURS DEGREE BACHELOR OF SCIENCE HONOURS DEGREE IN ECONOMICS BACHELOR OF SCIENCE HONORS DEGREE IN POLICE AND SECURITY STUDIES BACHELOR OF BUSINESS STUDIES HONOURS DEGREE IN MARKETING BACHELOR OF BUSINESS STUDIES HONOURS DEGREE IN BANKING AND FINANCE BACHELOR OF BUSINESS STUDIES HONOURS DEGREE IN HUMAN CAPITAL MANAGEMENT BACHELOR OF SCIENCE HONOURS DEGREE IN INFORMATION TECHNOLOGY BACHELOR OF SCIENCE EDUCATION IN FINANCIAL MATHEMATICS BACHELOR OF BUSINESS ADMINISTRATION, POLICE AND SECURITY STUDIES HONOURS DEGREE BACHELOR OF COMMERCE HONOURS DEGREE IN FINANCIAL INTELLIGENCE COURSE: FINANCIAL ACCOUNTING 1A (AC101) DURATION: 3 HOURS INSTRUCTIONS TO CANDIDATE. (i) Answer all questions. (ii) Only the use of non-programmable silent hand-held calculators is permitted. (iil) Cell phones are not allowed in the examination room. (iv) Answer section A questions on the grid provided, Indicate by crossing diagonals in the appropriate box as shown in the example Page 10f9SECTION A [30 MARKS, EACH QUESTION 2 MARKS] 1. Given figures showing: Sales $8 200, Motor Vehicles $1 300, Accounts Payable $900, Accounts Receivables $6 400, Cash $200, Capital is A. $6 800 B. $6 200 ¢. $7,000 D. Another figure Which statement best describes non-current assets? ‘A. Items bought to be used in the business B. Items which will not wear out quickly C. Expensive items bought for the business D, Items having a long life and not bought specifically for resale Carriage inwards is charged to the trading account because A. It is an expense connected with buying goods B. It should not go in the statement of financial position C. It is not part of motor expenses D. Carriage outwards goes in the profit and loss account Which of the following are personal accounts? (i) Buildings (ii) Wages (iii) Accounts receivable (iv) Accounts payable A (i) and (iv) only B. (if) and (iii) only C. (iii) and (iv) only D. (ii) and (iv) only A credit balance of $2 000 on the cash columns of the cash book would mean A, We have spent $2 000 more than we have received B, We have $2 000 cash in hand C. The bookkeeper has made a mistake D. Someone has stolen $2 000 cash Given a purchases invoice showing five items of $80 each, less a trade discount of 25 per cent and a cash discount of 5 per cent, if paid within the cash settlement period, your cheque would be made out for, A. $285 B. $280 C, $260 D. None of these Page 2 of 9Depreciation is ‘A. The amount spent to buy a non-current asset B. The salvage value of a non-current asset C. The part of the cost of the non-current asset consumed during its period of use by the firm D. The amount of money spent replacing non-current assets A firm bought a machine for $3 200. It is to be depreciated at a rate of 25 per cent using the reducing balance method. What would be the remaining book value after two years? A. $1 600 B. $2 400 Cc. $1 800 D. Some other figure At the date of the statement of financial position, the balance on the Accumulated Depreciation Account is ‘A. Transferred to the Depreciation account B, Transferred to Profit or Loss C. Simply deducted from the asset in the Statement of Financial Position D, Transferred to the Asset account ‘An Allowance for Doubtful Debts is created ‘A. When debtors become bankrupt B, When debtors cease to be in business C. To provide for possible bad debts D. To write-off bad debts When the financial statements are prepared, the Bad Debts Account is closed bya transfer to the A, Statement of Financial Position B, Profit or Loss Account C. Trading Account D. Allowance for Doubtful Debts Account Working Capital is a term meaning A. The amount of capital invested by the proprietor B, The excess of the current assets over the current liabilities C. The capital less drawings D. The total of Non-Current Assets - Current Assets If $1500 was shown added to Purchases instead of being added to a non- current asset ‘A. Net profit only would be understated B. Net profit only would be overstated C. It would not affect net profit D. Both gross profit and net profit would be understated Page 3 0f 9|. Which of the following do not affect trial balance agreement? (i) Sales $105 to A, Henry entered in P. Henry's account (ii) Cheque payment of $134 for Motor expenses entered only in Cash Book (iii) Purchases $440 from C. Browne entered in both accounts as £404 (iv) Wages account added up incorrectly, being totalled $10 too much A. (i) and (iv) B, (i) and (ii) C. (ii) and (iti) D. (ili) and (iv) A Bank Reconciliation Statement is a statement A, Sent by the bank when the account is overdrawn B. Drawn up by us to verify our cash book balance with the bank statement balance C. Drawn up by the bank to verify the cash book D. Sent by the bank when we have made an error Page 4 0f9SECTION B [70 MARKS] 16. Christian James has been trading for some years as a hardware merchant. The following list of balances has been extracted from his ledger as at 31 December 2022, the end of his most recent financial year. $ Capital 83 887 sales 259 870 Trade accounts payable 19 840 Returns out 13 407 Allowance for doubtful debts 512 Purchases 135 680 Returns inwards 5 624 Carriage outwards 4562 Drawings 18 440 Carriage inwards 11 830 Rent, rates and insurance 25 973 Heating and lighting 11010 Postage, stationery and telephone 2410 Advertising 5980 Salaries and wages 38521 Bad debts 2.008 Cash in hand 534 Cash at bank 4440 Inventory as at 1 January 2022 15.654 Trade accounts receivable 24500 Motor Vehicles - at cost 120740 Accumulated depreciation on fixtures and fittings - as at 34 December 2022 63.020 The following additional information as at 31 December 2022 is available: (a) Inventory at the close of business on 31 December 2022 was valued at $17 750. (b) Insurances included a payment of $1 120 to Old Mutual for vehicle insurance cover of §20 120 which was for the first quarter of 2023. (0) The invoice from ZESA showing electricity charges of $1 360 was received on 5 January 2023. (d) It is the policy of the company to depreciate non-current assets at 10% using the straight-line method. (d) A payment of $5 435 was in respect of rates for the month of January 2023. (e) The allowance for doubtful debts is to be adjusted so that it is 3% of trade accounts receivable. (f) The company received a 1.29% discount on purchases Page 5 of 9(g) The company allowed a discount of 0.8875% on sales Required: a. Discuss reliability and relevance qualitative characteristics of useful financial statements. (10 marks) b. Prepare Christian James’ statement of profit or loss for the year ending 31 December 2021 and a statement of financial position as at that date. (20 marks) [Total: 30 Marks] QUESTION 2 ‘The following is a summary of a cash book as presented by Klarna Ltd for the month of October 2022; $ $ a 1469 Balance b/d 761 = c/d _ 554 Payments ~ 1262 $< 2023) | 2023 All receipts are banked and all payments are made by cheque. On investigation you discover: a) Bank charges of $136 entered on the bank statement have not been entered in the cash book, b) Cheques drawn amounting to $267 had not been presented to the bank for payment. c) Cheques received totalling $762 had been entered in the cash book and paid into the bank, but had not been credited by the bank until 3 November. 4) A cheque for $22 for sundries had been entered in the cash book as a receipt instead of as a payment. e) A cheque received from K. Matoro for $80 had been returned by the bank and marked 'No funds available’. No adjustment has been made in the cash book, f)_A standing order for a business rates instalment of $150 on 30 October had not been entered in the cash book, Page 6 of 98) All dividends received are credited directly to the bank account. During October amounts totalling $62 were credited by the bank but no entries were made in the cash book. h) A cheque drawn for $66 for stationery had been incorrectly entered in the cash book as $60, i) The balance brought forward in the cash book should have been $711, not $761. Required: a. Show the adjustments required in the cash book. (15 Marks) b. Prepare a bank reconciliation statement as at 31 October 2022. (5 Marks) [Total 20 Marks] Page 7 of 9QUESTION 3 PAGUMBEZE (PVT) LTD started business on 1 January 2023. The following transactions took place in January 2023: Date ‘Transaction Started in business with $8 000 which was deposited in the bank. Bought goods on credit from: L. Famba $550; G. JP $540; P Bigman $610. Cash sales $510. Paid wages in cash $110, ‘Sold goods on credit to: J. Emerson $295; K. Jamanda $360; B. Rusemo $640. }9 | Bought goods for cash $120.” Bought goods on credit fror ‘JP $410; P. Bigman $1240, | Paid wages in cash $110. ~ Sold goods on credit to: K. Jamanda $610; B. Rusemo $205. ‘Bought shop fixtures on credit from Tsoko Ltd $740. Paid G. JP by cheque $700. We returned goods to P. Bigman $83. Paid Tsoko Ltd a cheque for $740. B. Rusemo paid us his account by cheque $845, We returned goods to L. Famba $18. G. Gorogonya lent us $1 000 by cash. Bought a van paying by cheque $6 250. Required: a. Enter the transactions above in PAGUMBEZE’s ledger accounts and extract a trial balance. (12 Marks) b. Discuss the following two assumptions in the International Accounting Standards Board (IASB) framework: i, Going concern (4 Marks) ii, Accruals (4 Marks) [Total Marks: 20] END OF PAPER... Page 8 of 9Student ID. Exam Date. Make sure you put your answer in line with the correct question number. A B c D Example: if Answer is D Page 9 of 9