FACULTY OF BUSINESS

DEPARTMENT OF ACCOUNTING AND FINANCE

ACADEMIC YEAR 2023/24

Test 2
Course Code: ACC 311 Subject: ACCOUNTING
Title of Paper: INTRODUCTION TO COMPANY
ACCOUNTS

Semester: 1
Time Allowed: 90 MINUTES Reading Time:10 MINUTES Maximum Marks: 50

Examiner(s) Dr. J Josiah

INSTRUCTIONS TO CANDIDATES

1. This paper contains TWO (2) questions.

2. Answer BOTH the questions.
3. All relevant work should be written using a pen not pencil.
4. Begin a question on a new page.

DO NOT OPEN THIS PAGE UNTIL YOU HAVE BEEN TOLD TO DO SO

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NUMBER OF PAGES INCLUDING THE COVER 4 PAGE:

Question 1
1
 T Ltd Statement of Comprehensive Income for the year ended March 31, 2022
Notes P’000
Turnover 180 550 2
Cost of Sales 1 53 240 2
Gross Profit 127 310 2
Operating Expenses 43 600 2
Operating profit 83 710 2
Taxation 9 000 2
Profit for year 74 710 2

Note 1
Cost of Sales
Opening inventory 25 100
Purchases 66 640
Closing inventory (38 500)
53 240
Statement of Changes in Equity for the year ended March 31, 2019
Share CapitalShare Premium Retained Profit Total
P P P P
Balance at beginning 20 000 16 000 34 600 70 600 1
Profit for the year 74 710 74 710 1
Dividend paid (3 200) (3 200) 1
Balance at the end 20 000 16 000 106 110 142 110 1

Statement of Financial Position for the year ended March 31, 2019

Assets P P
Non-current Assets
Property Plant and Equipment 100 100 1
Current Assets
Inventory 38 500 1
Receivables 18 240 1
Bank 940 57 680 0 1
Total Assets 157 780

Equity and Liabilities

Capital 20 000 1
Retained Earnings 106 110 1
Share Premium 16 000 142 110 1
Current Liabilities
2
Taxation payable 9 000 1
Trade payables 5 850 1
Accruals 820 15 670 1
Total equity and Liabilities 157 780

Note 2
Non-current Assets
Property Plant and Equipment 144 600
Less depreciation PPE 44 500 100 100

d) IAS 1 Presentation of Financial Statements sets out the overall requirements for financial
statements, including how they should be structured, the minimum requirements for their content
and overriding concepts such as going concern, the accrual basis of accounting and the
current/non-current distinction. The standard requires a complete set of financial statements to
comprise a statement of financial position, a statement of profit or loss and other comprehensive
income, a statement of changes in equity and a statement of cash flows. 3 marks
(Total 31 marks)

Question 2
3
Cash flow statement for PL Ltd., year ended 31 December 2022
Operating profit P’000
Decrease in retained profits: (670-530) (140) 1
Taxation 190 1
Dividend 130 1
180 1
Adjustments for:
Depreciation (300-200) + (10) 110 1
Profit on sale of investment (25-10)-20) (5) 105 1
Operating cashflows before movements in working capital 285

Increase in inventory (700-400) (300) 1

Increase in Receivables ( 1 550-1 350) (200) 1
Increase in payables (920-800) 120 (380) 1
(95)
Cash generated from operations:
Taxes paid (230) 1
Net cash from operating activities (325)

Cash inflows from operating activities

Purchase of non-current assets ((650-(500-25)-(100-90) (175) 1
Receipts from sale of non-current assets 20 1
Receipts from sale of investments 150 (5) 1

Cash flows from financing activities:

Issue of new shares (750-500) 250 1
Share Premium (200-150) 50 300 1
Dividends paid (130) 170 1
Net decrease in cash and cash equivalents (160) 1

Reconciliation
Opening cash balance 100 1
Closing cash balance (188)+ (60+10) (60) 1
Increase in cash (160)
19 marks