THE TECHNICAL UNIVERSITY OF KENYA

FACULTY OF
SCHOOL OF
DEPARTMENT OF
COURSE CODE:
COURSE: BACHELOR OF INFORMATION TECHNOLOGY, COMPUTER
TECHNOLOGY AND COMPITER NETWORK
SUPPLEMRNTARY EXAM
CODE: UNIT NAME: FINANCIAL ACCOUNTING

INSTRUCTIONS: TIME: 2 hours

1. SECTION A IS COMPULSORY

2. DO ANY TWO QUESTIONS FROM SECTION B

SECTION A
QUESTION ONE
a) Explain briefly any four users of accounting information (8 marks)
b) Explain the following terms as used in accounting
i. Double entry concept
ii. Consistency concept
iii. Going concern concept (8 marks)
iv. Matching concept
c) The following trial balance relates to Wamlambez business as at 31/12/2017

Wamlambez trial balance as at 31/12/2017

DR CR
Sales 240,000
Return inwards 10,000
Opening stock 1/1/2017 92,000
Returns outwards 14,000
Purchases 68,000
Carriage inwards 6,000

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 Rent expenses 8,000
Furniture at cost 80,000
Motor vehicle at cost 50,000
Debtors 36,000
Creditors 34,000
Provision for doubtful debts 1/1/2017 2,400
Salary expense 16,000
Capital 75,600
366,000 366,000

Additional information
1. Closing stock as at 31/12/2017 was Shs 10,000
2. Bad debts to be written off Shs 3,000
3. Provision for doubtful debts is 10% of the remaining debtors
4. Prepaid rent expense Shs 2,000
5. Unpaid salary bills Shs 4,000
6. Depreciation rates are as follows:
Motor vehicle 8% p.a on cost
Furniture 5% p.a on cost
Required:
Prepare
a) Income statement for the year ended 31/12/2017
b) Statement of financial position as at 31/12/2017 (14 marks)

SECTION B
QUESTION TWO

i. The following information relates to M. Kariuki

2017
July 1 Balance b/d Cash Shs. 2,500
Bank Shs. 7,400

July 2 bought goods by cheque Shs. 2,000

July 3 Cash sales Shs, 1,800

July 5 Banked cash shs. 2,000

July 6 Paid by cheque in each casa cash discount received 3%, A. john shs. 1,500, H. Ochieng
shs. 3,000, D. Wamalwa Shs 1,400

July 7 Received by cheque in each case, discount allowed 5%, B. Rono shs. 4,000, R. Mulwa
Shs. 3,000. J. Muthoni shs. 3,200

July 10 Bought office furniture by cheque Shs. 3,000

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 July 15 Cash drawings shs. 500

July 20 Paid to B. Mwangi Shs. 800 cash less 3%

July 22 Received cash from M. Abuga shs, 1,500 less 4%

July 30 Paid wages in cash shs. 1,000

Required:
Prepare a three column cashbook and balance it off (20 marks)

QUESTION THREE
a) Name and briefly explain six errors which may not be disclosed with a trial balance (6
marks)
b) You are provided with the following information for the month of January 2018
2018
Jan 1 Credit purchases from: Rahab shs 3,000 David shs 3,500, Sheila Shs 1,500
Jan 2 Credit sales to: Denis Shs 5,800, Mirrel shs 6,700, Beryl shs. 2,500
Jan 5 Goods returned to Rahab shs 500 and Sheila shs 230
Jan 10 Goods returned by Dennis shs 500 and Beryl shs 350
Jan 15 Credit purchases from David shs 3,200
Jan 20 Credit sales to Abigael shs 2,500
Required
Enter the following entries in their relevant journal and post to personal accounts. (14 marks)

QUESTION FOUR

i. A cashier in Tree House Restaurant starts with Shs 20,000 in the month of March 2018.
In the following week the following payments are made.
Shs.
March 1 Bought stamps 800
March 2 Paid bus fare 1,200
March 2 Cleaning materials 2,400
March 3 Bought fuel 1,500

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March 3 Cleaning utensils 3,000
March 4 Bought stamps 2,000
March 4 Paid Kirwa (creditor) 4,000
March 5 Fuel costs 1,500

Required
Prepare a detailed petty cash book showing the balance to be carried forward to the next period.
(10 marks)
ii. Define depreciation and give the main causes of depreciation? (5 marks)
iii. Explain and differentiate the methods of calculating depreciation using an example (5
marks)

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