/ .
JOMO KENYATTA UNIVERSITY OF AGRIClULTURE AND TECHNOLOGY
UNIVERSITY EXAMINATIONS 2014/2015
YEAR I SEMESTER n
EXAMI1NATION FOR THE ]!)EGREE OF BACHELOR OF
COMMERCE
.
BPS 2103: FINANCIAL ACCOUNTING I
DATE: DECEMBER 2014 TIME: 2 HOURS
INSTRUCTIONS: ANSWER QUESTION ONE AND ANY OTHER TWO
QUESTIONS
QUESTION ONE (COMPULSORY - 30 MARKS)
(a) Accounting information should possess some qualitative characteristics in order to communicate the information required.
One of the characteristics is reliability.
Discuss reliability and the supporting factors that forms the building blocks of reliability.
[6 marks]
(b) Enumerate FOUR reasons for having professional accounting body in a County.
[8 marks]
(c) The following transaction relate to Kesho Traders for the month of November 2014:
November Ksh.
1. Commenced business with cash capital
2.
Deposited cash into bank
500,000
250,000
3 .
Bought goods from Tuha Traders in cash
4.
Sold goods to Neno Ltd on credit
6. Bought goods on credit from Rada
8. Paid wages in cash
10. Sold goods to Wino on credit
10. Bought goods from Tulia Traders on credit
12 Sold goods to Neno Ltd against a cheque
15 Paid wages in cash
16 Paid office expenses in cash
16 Paid Rada by cheque less 10,000 discount
18 Wino returned goods and a cheque issued
20 Received a cheque from Neno Ltd (Discount Sh.5000)
25 Paid rent in cash
28 Paid salaries for the month by cheque
30 Withdrew cash for home use
125 , 000
100,000
150,000
5 , 000
125,000
185,000
200,000
2,000
1,750
140,000
125,000
95,000
10,000
20,000
5,000
(i)
(ii)
Three column cash book to record the above transactions.
Post the transactions to the relevant ledger accounts
[8 marks]
[8 marks]
1

(a) Explain the reasons for accountants to prepare the following in the accounting process;
(i) Bank reconciliation statement
(ii) Three column cash book
(iii) Suspense account
(iv) Petty cash book [8 marks]
(b) The following transactions relates to Kanja Enterprises for month of October 2014
Date
Oct .
1
Particulars
Purchased goods oncredit from Matewa
Bought goods on credit: Sanga Mbele
Shs.
120,000
98,000
" 5
" 10
" 20
" 25
" 28
" 31
Hamisi
Matata
Bought goods on credit from Musa Enterprises
Returned goods to Musa Enterprises
Sold goods on credit to: Baraka
Nderitu
Sold goods to Basil on credit
Goods returned to Basil
114,000
100,000
15,000
3,000
97,000
120,000
20,000
1,500
Bought goods from Mwaka and was allowed 20%
Trade discount 30,000
Sold goods to Mkulima and allowed 10% trade discount 15,000
Required:
Post the above transaction in the books of original entries .
[12 marks]
The following trial balance was extracted from the books of Baraka at the close of business i n
31 March 2014
Shs .
'000'
Purchases
Carriage inwards
Shs. '000'
56,000
500
Sales
Returns
92,720
540
Salaries and wages
Furniture
960
14,640
1 , 640
13,600 Accounts receivable
Accounts payable
Motor vehicles
15,800
Rent
Bank balance
14,000
4,200
7,900
Cash in hand
Discounts
Equipment ' s
Sundry expenses
Inventory 1 April 2013
520
1,160
2 , 400
350
7,680
740
2

Motor vehicle expenses
Capital 1 April 2013
Drawings
1,630
11 , 400
138 .
580
28,780
138 .
580
Additional information:
1 .
Inventory as at 31 March 2014 was valued at Sh.l0,320,000
2.
Salaries of Sh.200,000 is to be accrued as at 31 March 2014
3 .
Depreciation is to be provided as follows based on the cost:
Assets
Furniture
Rate (%) per annum
10
Equipment
Motor vehicles
10
20
.
Required:
(i) Income statement for the year ended 31 March 2013 [2 marks]
(ii) Statement of financial position as at 31 March 2013 [8 marks ]
QUESTION FOUR
(a) Explain on the errors that does not affect the balancing of the trial balancing giving examples in each of them.
[10 marks]
(b) Describe the following accounting concepts:
(i) Matching concept
(ii) Conservation
(iii) Substance over from
(iv) .
Entity concept
(v) Materiality
[10 marks]
3