Programme Cohort

BHRM/14/FT Aug
BHRM/14A/FT
BHRM/11B/FT B1
BSc (Hons) Human Resource Management BHRM/12B/FT B1
BHRM/10A/FT
BHRM/11A/FT
BHRM/12B/FT B2
BLTM/10B/PT +
BSc (Hons) Logistics and Transport
BLTM/13B/PT (TP)
Management
BLTM/12B/FT
Diploma in Human Resource Management DHRM/11A/PT
Examinations for 2014 – 2015 Semester I /
2014 Semester II

MODULE: FINANCIAL ACCOUNTING

MODULE CODE: ACCF 1102
Duration: 2 Hours
Reading time: 15 Minutes

Instructions to Candidates:

1. This question paper consists of Section A and Section B.

2. Section A is Compulsory.
3. Answer any two questions from Section B.
4. Always start a new question on a fresh page.
5. Total Marks: 100.
This Question Paper is printed on BOTH SIDES.

This Question Paper Contains 4 questions and 9 pages.

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 SECTION A: COMPULSORY

QUESTION 1: (40 MARKS)

PART A: (30 MARKS)

Mr.Bobby owns and operates a retail business in Beau Bassin. He has balanced off his
books of Accounts and extracted the following list of balances therefrom. They relate to
the Financial Year ending 31 July 2014.
TRIAL BALANCE AS AT 31 JULY 2014 Rs. Rs.
Inventory (01.08.2013) 17,250
Capital 250,000
12% Bank Loan 100,000
Sales 665,200
Purchases 184,220
V.A.T due to M.R.A 6,150
Returns Inwards/Outwards 5,215 3,925
Discount Allowed/Received 3,150 2,100
Carriage Inwards 12,620
Travelling Expenses 12,400
Carriage Outwards 2,850
Salaries and Wages 48,000
Rent & License Fee 33,000
Insurance 6,000
Electricity & Telephone Charges 27,600
Advertising Expenses 15,300
Sundry Expenses 1,725
Drawings 12,000
Bad Debts 4,500
Provision for Bad & Doubtful Debts 1,025
(01.08.2013)
Accounts Receivable 26,200
Accounts Payable 20,730

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 Bank 10,200
Cash 900
Land (Cost) 200,000
Buildings (Cost) 250,000
Furniture & Fixtures (Cost) 80,000
Delivery Vans (Cost) 175,000
Provision for Depreciation ( 01.08.2013)
Buildings 25,000
Furniture & Fixtures 24,000
Delivery Vans 30,000
1,128,130 1,128,130
The under mentioned information relating to the Year under review was brought to your
attention:
(i) The Closing Inventory was valued at Rs.21,340;
(ii) Mr.Rolo, a Debtor for Rs.1,000 has been declared bankrupt;
(iii) The Provision for Bad and Doubtful Debts is to be adjusted to 6% of Accounts
Receivable;
(iv) Mr.Bobby took goods costing Rs.4,500 for his personal use;
(v) The Insurance Policy is for one year. It was contracted on 1St November 2013;
(vi) The Bank Loan was disbursed in full on 1st November 2013 and is repayable in
10 equal annual instalments starting 1st November 2014;
(vii) Depreciation on Non-Current Assets is to be charged as indicated:
Buildings - 5% Straight Line Basis
Furniture & Fixtures - 15% on Cost
Delivery Vans - 20% on Carrying Value
(viii) Accruals and Prepayments at 31.07.2014 were:
Accruals Prepayment
Rs Rs
Rent 1,200
Electricity 800
Travelling Expenses 720

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Required:
(i) Mr.Bobby’s Income Statement for the Year ending 31.07.2014:
(20 marks)
(ii) His Statement of Financial Position as at 31.07.2014 (10 marks)

PART B: (6 MARKS)
With reference to the under mentioned accounting concepts, have you prepared the
Financial Statements of Mr Bobby, taking into consideration these concepts?
(i) Prudence Concept;
(ii) Matching Concept; and
(iii) Business Entity Concept
Illustrate your answer by two examples under each Concept.

PART C: (4 MARKS)
List four Users of Financial Statements.

SECTION B: ANSWER ANY TWO QUESTIONS

QUESTION 2: (30 MARKS)

PART A: (20 MARKS)

The following Financial Statements are in respect of two Sole Traders, Mr.Albert and
Mr.Bernard. Both businesses are of comparable size and deal in the same products.
These Financial Statements relate to the Financial Year ending 31.12.2013
ALBERT BERNARD
INCOME STATEMENT Rs.000 Rs.000 Rs.000 Rs.000
Sales 555 750
Less Cost of Sales
Opening Inventory 100 80
Purchases 200 320
300 400

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 Less Closing Inventory (60) 240 (70) 330
Gross Profit 315 420
Less Operating Expenses
Administrative 165 220
Selling & Distribution 45 35
Depreciation 5 215 15 270
Net Profit 100 150

ALBERT BERNARD
STATEMENT OF FINANCIAL POSITION Rs.000 Rs.000 Rs.000 Rs.000
Non-Current Assets
Equipment 10 70
Current Assets
Inventory 60 70
Accounts Receivable 125 100
Bank 25 210 12 182
220 252
Current Liabilities
Accounts Payable 104 100
116 152
Financed By:
Capital:
Opening Balance 76 72
Add Net Profit 100 150
176 222
Less Drawings (60) 116 (70) 152

Required:
Calculate the following Ratios for both businesses:
(i) Gross Profit Margin;
(ii) Net Profit Margin;
(iii) Operational Expenses as a % of Sales;
(iv) Inventory Turnover;
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 (v) Current Ratio;
(vi) Quick Ratio;
(vii)Accounts Receivable Collection Period; (Days)
(viii) Accounts Payable Payment Period; (Days)
(ix) Non-Current Assets Turnover;
(x) Return on Capital Employed (use Average Capital)

PART B: (6 MARKS)
Basing on the above calculated Ratios, which business seems to be more efficient?
Support your answer by three arguments.

PART C: (4 MARKS)
State the type of expenditure, Capital or Revenue, incurred in the following
transactions:
(i) Cost of building extension to factory;
(ii) Legal fees paid in connection with the factory extension;
(iii) Payment of Fire Insurance Premium;
(iv) Repainting extension to factory four years later.

QUESTION 3: (30 MARKS)

PART A: (20 MARKS)

Travel Ltd whose Financial Year ends on 31s December has acquired four Motor
Vehicles for its senior staff. The particulars of the vehicles are given hereunder:
Make & Model Date of Purchase Cost Expected Disposal
Value after five years
Rs. Rs.
BMW 320 01.01.2010 2,400,000 600,000
Nissan Juke 01.07.2011 1,200,000 350,000
Kia Rio 01.04.2012 800,000 200,000
Toyota Corolla 01.09.2013 900,000 250,000

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The Company has adopted the policy of depreciating its Motor Vehicles at the rate of
20% per annum under the Reducing Balance Method.

Required:
(a) The amount of Depreciation to be charged on each Motor Vehicle for each Year
2010 to 2013. (10 marks)
(b) The Total Accumulated Depreciation on each Motor Vehicle and their respective
Carrying Value as at 31st December 2013. (6 marks)
(c) The BMW Car was disposed of on 1st January 2014 for Rs.900,000. Prepare the
Disposal Ledger Account and show the amount of Profit or Loss realized on
disposal. (4 marks)

PART B: (8 MARKS)
The following is a summary of figures for the month of March 2014 concerning PLAZA
Ltd. a Retail business:
Rs.
March 1, 2014 Sales Ledger balancesDebit 15,185
Sales Ledger balances Credit 98
Totals for the Month to 31st March 2014
Credit Sales 76,762
Discount Allowed 1,320
DishonouredCheques 630
Returns Inwards 780
Amount settled by contra 3,100
Discount to customer disallowed 80
Bad Debts written off 350
Interest charged on overdue accounts 40
Cash &Cheques received from Credit customers 42,525
Amount refunded to Credit customer 80
Provision for Bad and Doubtful Debts 915
March 31, 2014 Sales Ledger balances - Credit 52

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Required:
Prepare the Sales Ledger Control Account for the Month of March 2014.

PART C: (2 MARKS)
In relation to a “Public Limited Company”, explain what do you understand by a “Bonus
Share”.

QUESTION 4: (30 MARKS)

PART A: (3 MARKS)
What do you understand by the term “Cash” and “Cash Equivalents” as per I A S 7
“Statements of cash Flows”.

PART B: (3 MARKS)
Users of Financial Statements need THREE important information (amongst others) on
entities. These information can be assessed by the preparation of Statements of Cash
Flows. What are they?

PART C:
The following is a summary of the “Receipts and Payments” of the Peacock Volleyball
Club during the year ended 31 July 2014
PEACOCK VOLLEYBALL CLUB
Rs. Rs.
Cash & Bank Balances b/d 630 Secretarial Expenses 488
Sales of Tickets 1,311 Rent 4,200
Members’ Subscription 5,960 Prizes for Competition 810
Donations 2,030 Stationery & Printing 540
Sundry Expenses 793
Balance c/d 3,100
9,931 9,931

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These additional information is also available:
31 July 31 July 2014
2013
Rs Rs
Equipment (Original Cost Rs.4,260) 2,925 2,340
Subscription in arrears 190 250
Subscription in advance 30 110
Owing for Prizes purchased 174 204
Inventory of Prizes 114 138

Required:
(i) Calculate the value of Accumulated Fund of the Peacock Volleyball Club
as at 1st August 2013; (4 marks)

(ii) Reconstruct the following Accounts for the Year ended 31 July 2014:
(a) The Subscription Account; (4 marks)

(b) The “Prizes” Account (4 marks)

(iii) Prepare the Income and Expenditure Account for the Year ended 31 July
2014 (6 marks)

(iv) The Club’s Balance Sheet as at 31 July 2014. (6 marks)

***END OF QUESTION PAPER***

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