INDIVIDUAL ASSIGNMENT

DUE DATE 25 NOVEMBER 2021

NB-please note that every student should answer all the 10 questions and submit it for
marking. This should be hand written and please mind your handwriting

1 (a) briefly distinguish between revenue and capital expenditure (6 marks )

(b) For the business of Genka, a food merchant, classify the following between ‘capital’
and ‘revenue’ expenditure:

(a) Repairs to meat slicer.

(b) New tyre for van.

(c) Additional shop counter.

(d) Renewing signwriting on shop.
(e) Fitting partitions in shop.
(f) Roof repairs.
(g) Installing thief detection equipment.
(h) Wages of shop assistant.
(i) Carriage on returns outwards.
(j) New cash register.
(k) Repairs to office safe.
(l) Installing extra toilet (12 marks)

2 Enter the following in their relevant books of prime entry

Sept 1 Sales on credit to J Bee £520; T Day £630; J Soul £240.
Sept 2 Purchases on credit D Blue £390; F Rise £510; P Lee £280.
Sept 8 Sales on credit to T Day £640; L Hope £418.
Sept 10 Purchases on credit from F Rise £92; R James £870.
Sept 12 Returns inwards from J Soul £25; T Day £190.
Sept 17 we returned goods to F Rise £12; R James £84.
Sept 20 we paid D Blue by cheque £390.
Sept 24 J Bee paid us by cheque £400.
Sept 26 we paid R James by cheque £766.
Sept 28 J Bee paid us by cash £80.
Sept 30 L Hope pays us by cheque £418 (20 marks)

3 Enter the following transactions in their relevant books of prime entry

2021
May 1 Credit sales G Wood £310; K Hughes £42; F Dunn £1,100; M Lyons £309.
May 2 Credit purchases from T Sim £190; J Leech £63; P Tidy £210; F Rock £190.
May 8 Credit sales to K Hughes £161; F Dunn £224.
May 9 Credit purchases from J Leech £215; F Rock £164.
May 10 Goods returned to us by F Dunn £31; M Lyons £82.
May 12 Cash paid to us by M Lyons £227.
May 15 We returned goods to T Sim £15; F Rock £21.
May 19 We received cheques from F Dunn £750; G Wood £310.
May 21 We sold goods on credit to G Wood £90; K Hughes £430.
May 28 We paid by cheque the following: T Sim £175; F Rock £100; P Tidy £180.
May 31 We returned goods to F Rock £18. (20 marks)

4 (a) Explain the benefits of computerised accounting to family owned businesses (10 marks)

(b) Explain the importance of business entity concept in family owned businesses (10)

5 The following was extracted from the books of Chikonohono a sole trader on 30 June 2020.
Trial balance as at 30 June 2020
Purchases 210480
Sales 336864
Drawings 38100
Capital 72350
Inventory I July 2019 18854
Receivables 7680
Payables 10588
Value added tax payable 2984
Returns inwards 1950
Returns outwards 2474

Discount received 1032

Wages and salaries 61682
Motor vehicle expenses 2042
Rent and rates 17592
Heating and lighting 3680
General expenses 4214
Bad debt written off 170
Motor vehicle at cost 16000
Provision for depreciation on motor vehicles 7000
Shop fittings 12000
Provision for depreciation on shop fittings 4000
Allowance for credit losses 300
Bank 43148
Total 437592 437592
Notes as at 30 June 2020
1. Inventory was valued $16500
2. General expenses prepaid $90
3. Rent and rates owing $250
4. Allowance for credit losses to be increased by 200
5. Depreciate Motor vehicles at 25% using straight line method and shop fixtures 20%
using reducing balance method.
Required
To prepare for Chikonohono
(a) Statement of profit and loss and other comprehensive income for the year ended 30 June
2020 (10 marks)
(b) Statement of financial position as at 30 June 2020 (10 marks )
(c) Calculate the following ratios for Chikonohono based on the financial statements
prepared in (a) and (b) above
(i) Gross profit margin (2 marks)
(ii) Net profit ratio (2 marks)
(iii) Current ratio (2 marks)
(iv) Quick ratio (2 marks)
(v) Stock turnover ratio (2 marks)
(TOTAL: 30 MARKS)
6 The following are extracts from the cash book and the bank statement of Chiranga.
Cash Book
2021 2021 $
$ May 8 B Young
May 1 Balance b/d 462
3419 15 F Gray
7 F Lamb 21
101 28 T Errant
22 G Brock 209
44 31 Balance c/d
31 W Terry 3437
319 ……...
31 S Miller 4129
246
412
9

Bank Statement
20X9 DR CR Balance
Dec 1 Balance b/d 3419
7 Cheque 101 3520
11 B Young 462 3058
20 F Gray 21 3037
22 Cheque 44 3081
31 Credit transfer: T Morris 93 3174
31 Bank charges 47 3127
Required
(a) Write the cash book up to date, and state the new balance as on 31 May 2021 (10 marks)
(b) Draw up a bank reconciliation statement as on 31 May 2021 (10 marks)

7 Evaluate the usefulness of ratio analysis to stakeholders (25 marks)

8 J Shambo, a sole trader, extracted the following trial balance from his books at the close of
business on 31 December 2019.

Debit Credit
ZWL ZWL
Purchases and Sales 61 240 127 245
Inventory ( 1 January 2019) 7 940
Capital ( 1 January 2019) 25 200
Bank Balance 2 490
Cash 140
Discounts 2 480 62
Returns 3 486 1 356
Carriage outwards 3 210
Rent and Insurance 8 870
Allowance for credit losses 630
Office furniture 1 900
Motor Vehicles 5 600
Receivables and Payables 12 418 11 400
Drawings 21 400
Wages and Salaries 39 200
General office expenses 319
168 383 168 383

Additional notes:

 Inventory at 31 December 2019 ZWL 6 805

 Wages and salaries accrued at 31 December 2019 ZWL 3 500; Office expenses owing
ZWL 16.
 Rent prepaid 31 December 2019 ZWL 600.
 Increase the allowance for credit losses to ZWL 740
 Provide for depreciation as follows: Office furniture 10 % reducing balance method;
Motor Vehicles 25 % straight line.
Required

Use the above Trial balance and the accompanying notes to prepare:

i) The statement of profit and loss and other comprehensive income of the business for the
year ended 31 December 2019. (8 marks)

ii) The statement of financial position at the same date. (7 marks)

9 The purpose of financial accounting is to provide useful financial information to different users/
stakeholders.

Required: Identify any five users of financial accounting information and explain what each user
requires the information for. (20 marks)

10 With the aid of examples where appropriate, write short notes on the difference between the
following:

a) Trade payables and trade receivables (2marks)

b) Current assets and none-current assets (2marks)

c) Financial accounting and management accounting (2marks)

d) Distribution expenses and administrative expenses (2marks)