Monday 13th May, 2019
Financial Accounting 2 (Essay) – 09:30 a.m. – 12:00
noon
Financial Accounting 1 (Objective) – 12:00 noon –
1:00 p.m.
ACCOUNTING OBJ
1-10: BCABABBCCC
11-20: ACADBCBDDB
21-30: ACBCCACBAB
31-40: BDBADCCDAB
41-50: CBBBBBDCCB
ACCOUNTING THEORY
(2a)
Closing entries are journal entries made at the end of
an accounting period to transfer temporary accounts to
permanent accounts.
(2b)
(i)Branches are separated from the main organization
while Department are attached with the main organization
under a single roof
(ii)Branches are geographically separated while
Department are not separated rather exist under the same
roof
(iii)Allocation of branch common expenses does not arise
while allocation of departmental common expenses is a
tough job
(2c)
(Pick four)
(i)It enables the organization to determine the branch that
is making either profit or loss
(ii)It helps to determine the performance of the
organization as a whole
(iii)It allows proper control over the branch by the head
office
(iv)it also assists the organization to determine the
performance of a branch manager
(v)it prevent wastage and fraud from the staff
(Number 3)
(3b)
*•Accrued expenses:* These are expenses that have been
incurred before being paid for by the firm.
*•Prepaid expenses:* this is the prepayment for services in
advance of their use. Where the payment is made in
respect of a period beyond the date of account, it is
referred to as prepaid expenses.
*• Accrued income:* This is the revenue that has been
earned but for which cash has not yet been received*
(Number 4)
(4a)
*Pick only 3*
1. Insufficient Funds
Salaries sometimes reach late in accounts leaving
insufficient funds in your account which may lead to
bouncing of cheque. While writing a cheque, make sure
that you have sufficient funds in your bank account.
2. Irregular Signature
Bank will not honour a cheque if the signature of the
drawer on the cheque don’t match the specimen signature
available with the bank.
3. Alterations
Alterations on cheques are not allowed. Even if you sign
the alteration to verify it, the cheque will not be
considered as valid and will not be honoured by the bank.
4. Post-dated Cheque
A post-dated cheque is the one on which the date which
is mentioned is yet to come. Post-dated cheques are to
be presented to the banks on a future date. For instance, a
cheque written on 15th Jan 2016 bearing a date of 30th
Jan 2016, is a post-dated cheque. A cheque will be
dishonoured if it is presented to the bank before the date
mentioned on it.
5. Stale Cheque
If a cheque is presented to the bank for payment after
three months from the date mentioned on the cheque it is
called stale cheque. After expiry of that period, the cheque
will be dishounoured and no payment will be made by
banks against that cheque.
6. When Payment Is Stopped
If the drawer asks the bank to stop payment and not to
pay for a cheque already issued, in that case, the cheque
will not be honoured by the bank.
7. Frozen Account
If government or court has ordered that a person’s
account has to be frozen, in such case, the bank will
dishonour all the cheques bearing that account number.
4b
(iii) imprest system is a form of financial accounting
system. The most common imprest system is the petty
cash system. The base characteristic of an imprest
system is that a fixed amount is reserved, which after a
certain period of time or when circumstances require,
because money was spent, it will be replenished. This
replenishment will come from another account source,
e.g., petty cash will be replenished by cashing a cheque
drawn on a bank account.
(4c)
(i)Reduction in numbers of transactions: Many expenses
of small nature recorded in petty cash book, the number
of transactions is reduced in the cash.
(ii)Reduction of errors: As head cashier check the
accounts of previous month and gives advance for the
coming month, does, errors if any are reduced.
(iii)Savings of time and labour: As the petty expenses are
recorded by petty cashier at any time so that the chances
of misuse are minimised.
(Number 6)
(6a)
TABULATE
In the books of Ubochi and Hassanah
Profit and Loss appropriation account for the year ended
31/12/2015
DEBIT SIDE:
Int. on Capital:
U-8/100*300000=24000
H-8/100*250000=20000
Salary:
Hassanah: 10000
Share of profit:
U-3/5*247750=148650
H-2/5*247750=99100
TOTAL 301750
CREDIT SIDE:
Net profit:300000
Int. on drawing
U-5/100*2000=1000
H-5/100*15000=750
TOTAL=301750
(6b)
TABULATE
Patner’s current account
DEBIT SIDE: U|H
Drawing|20000|15000
Int on Drawing|10000|750
Bal c/d|151650|113350
CREDIT SIDE: U|H
Int. on cap|24000|20000
Salary|-|10000
Share of profit:|148600|99100
(Number 7)
(Number 9)
(9a)
Stock turnover Ratio = COGS/Avg stock
= 160,000/(3,0000 + 4,0000)/2)
= 200000 x 2/10000 = 11.43 times
(9b) Gross Profit Margin = Gross Profit/Sales x 100/1
= 160,000/360,000 x 100/1 = 44.44%
(9c) Net Profit Margin = Net Profit/Sales x 100/1
= 40,000/360,000 x 100/1 = 11.11%
(9d) Current Ratio = current Assets/Current Liabilities
Current Assets = 90,000/45,000 = 2:1
(9e) Acid Test Ratio = Current Assets – Stock / Current
Liabilities
= 90,000 – 40,000/45,000
= 50,000/45,000 = 10:9
