MIDLANDS STATE UNIVERSITY FACULTY OF COMMERCE { DEPARTMENT OF ACCOUNTING FINANCIAL ACCOUNTING FOR BUSINESS 1A: ACCI05 FINAL EXAMINATION | MAY/ JUNE 2018 DURATION: 3 HOURS ONS Answer Section A and any THREE questions in Section B. Begin an answer to a new question on a new page. In order to earn marks, ALL workings must be shown This paper has a total of 100 marks org totsSECTION A - Compulsory question Question 1[40 marks} P Scott owns a small engineering firm in Gweru; the following balances have been extracted from his accounts as at 31 December 2017 ‘DR cR 3 $ [ Capital 72.100 Bank 13,690 | Carriage Inwards 640 a) Carriage Outwards 1,270 Discounts 1,510 2,190 | ‘Equipment © Atcost 77,360 © Provision for depreciation 16,840 | Drawings 10,740 2 Long-term Loan 20,000 Motor Expenses 16,740 Premises: © Atcost 60,000 * Provision for depreciation 10,000 Purchases and Sales 132,700 276,300 | Shop Expenses 21,380 Stock as at | January 2017 35,820 Debiors and Creditors 12,490 9.210 Wages 46.330 = Telephone and Insurance 1,750 Retums 1,300 1,700 Total 420,030 420.030 You have also becn given the following information: i) Stock as at 31 December 2017 was valued at $29,700. ii) Motor expenses paid in advance were $350. iii) Wages unpaid at year end amounted to $1,840. iv) Equipment is to be depreciated at 124% using the reducing balance method, v) Premises need to be depreciated using the straight-line method at 5%. Page 2 of 6You are required to prepare: a. A statement of profit or loss and other comprehensive income for the year ended 31 December 2017. (14 marks) b. A statement of financial position as at 31 December 2017, (13 marks) c. Statement of changes in Equity for the year ended 31 December 2017 (4 marks) d. Property, plant and Equipment note (9 marks) SECTION B Answer any THREE questions, Each question carries 20 marks. Question 2 [20 marks} ‘The following transactions during July 2017 relate to Chitova, a dentist in Gweru, Date Transactions 8 1] (i) Chitova deposited as opening capital 10,000.00 i) Obtained loan from ZG Bank 6,000.00 3 | Bought equipment on credit from Med Tech Lid 1,000.00 9 | Issued a cheque for an advertisement in a local newspaper 200,00, > 12 | Paid telephone account by cheque 75.00 13. | Received acheque from D Dlodlo for services rendered 500.00 17 | Chitova drew a cheque for private use 2,000.00 ‘AS an additional capital contribution, Chitova transferred his motor 24 | vehicle to the business 9,000.00 27 | Paid salaries for the month the by cheque 2,000.00 30 Issued a cheque to ZG Bank as a repayment on the loun 1,500.00 Page 3 of 6Required: Open the following ledger accounts and balance them off i) Bank (11 marks) ii) Loan GB marks) iii) Capital (2 marks) ivy Motor vehicles (2 marks) y) Med Tech Lid (1 mark vi) Advertisement (i mark) Question 3 (20 marks} a) A trainee in the accounting department has been taught that assets carry a debit balance and liabilities, a credit balance, she is however confused why a favourable bank balance is called a eredit balance, Explain this to her in point form, (4 marks) 'b)_ Identify six transactions that are recorded in the general journal (6 marks) €) Calculate the missing figure in the following cases: i) (2 marks) Machinery $4000 Vehicles $5 000 Accrued expenses | $1 000 | 7 ii) (@ marks) | Equipment $12 000 Debtors $2,000 Creditors $3 000 Income ree $3000 | Equity 7 Drawings $2000 Page 4 of 6(3 marks) Equipment $29 000 Bank 7 ‘Acerued expenses $1000 Capiial S15 000 Loan 35000 ii) (3 marks) Machinery 319000 Bank al ‘Accrued expenses S100 Capital $15 000 Loan $5000 Question 4 [20 marks} a) Indicate which statements are TRUE or FALSE by putting T or F against them: (9 marks) Transaction ‘Account Debi ‘Account Credit Motor Vehicle given to the business by the proprietor Motor Vehicle Capital Set off between creditors account and CreditorsiCreditors Debtors’ debtors debtors account control control ili | Received rent from tenant Bank Rent income iv |The owner took Stationery forher | Stationery Drawings Page 5 of 6own use V__ | Equipment bought for cash Equipment Bank vi_| Received a cheque from a debtor | Debtors/Debtors conirol__| Bank vi Bought stationery by cheque Bank Stationery viii | Debtor returned some goods Sales Inventory ix | Payment of cash to builders Buildings Bank ng an existing building b) Briefly explain the following accounting concepts: i Prudence ii) Realisation iit) Materiality iv) Substance over form Question 5 [20 marks} (3 marks) (3 marks) (2 marks) (3 marks) a) What are the main difference between financial accounting and management aecounting? (4 marks) b) Which information can be gleaned from the final accounts of a business that will assist the credit management in making a more informed decision? (6 marks) ) The trial balance can real some errors but not all, state which error the following statements identifies: 4) A transaetion occurs but is not captured in any book of accounts, ii) Where correct amounts are entered in wrong person’s account. iii) Motor vehicle expenses recorded as purchase of motor vehicle, iv) Capital introduced debited in capital account and credited in bank account ¥) Purchases of $2000, recorded as $200 on the purchases journal. “End of Examination’ (10 marks) Page 6 of 6