Principles of Accounting Questions

Principles of Accounting (ACCM2101)

Faculty of Economics and Management Science (FEMS)

Semester: First Semester

Level: 200

Year: 2019

Answers (200 )

THE UNIVERSITY OF BAMENDA/UNIVERSITE DE BAMENDA

FACULTY OF ECONOMICS AND MANAGEMENT SCIENCES DEPARTMENT OF ACCOUNTING

First Semester Examination for 2018/2019 Academic year Year: ONE

Course code and title: ACCM2101 Principles of Accounting Credit Value: 5 status: C

Course instructors: Dr. OMENGUELE Rene Guy / Mr. FAI Edward BERINYUY

Venue: PBA03, PBA04, PBA07, PBA08 Date: 06/03/2019 Time: 8:00-10:00

Instructions: Attempt all questions

SECTION A MCQ (20 MARKS)

Instructions: Write only the letter of the correct answer.

1. Companies not disclosing an immanent bankruptcy will violet the: a. business entity concept b. going

concern concept c. monetary unit assumption d. periodicity assumption

2. The assumption that states that business can divide their activities in to artificial time is: a. business

entity concept b. going concern concept c. prudence concept d. periodicity concept

3. Assets are recorded at their original purchase price according to: a. materiality principle b. historical

cost principle c. cost benefit principle d. consistency principle

4. When estimating unearned revenue, what principle applies: a. conservatism b. historical cost

c. full disclosure d. consistency

5. Which of the following does not measure relevance information? a. predictive value

b. feedback value c. timeliness d. reliability

6. What is not a value of accounting reliability? a. verifiability b. representational faithfulness

c. timeliness d. neutrality

7. Which of the following transactions will have no impact on stockholder’s equity? a. purchase of land

with proceeds of a bank loan b. dividends to stockholders c. net loss d. investment of cash by

stockholders

8. Which of the following appear in the income statement and balance sheet? a. account receivable

b. accounts payable c. sales d. accruals

9. The process of providing financial information to external decision makers is referred to as: a. public

accounting b. government accounting c. financial accounting d. managerial accounting

10. The investment of cash in a business result in a/an: a. increase in cash and decrease in capital

b. increase in cash and increase in capital c. decrease in cash and increase in capital d. increase in

fees earned and increase in capital

SECTION B: (50 MARKS)

Question 1 (20 marks)

Kingsway ltd carried out the following transactions during the month of December 2018.

Date

Transaction

000 FCFA

Dec. 1

Bought goods on credit

159,000

Cash sales banked immediately

100,000

Bought a motor van paid immediately as follows: one quarter in

cash and the balance by cheque.

3,000,000

Goods sold on credit to customers

400,000

Transferred cash from bank

10,000,000

Owner puts in cash to the business

1,000,000

Goods that cost 500,000 frs were sold to a customer in cash

650,000

Bought goods on credit

100,000

Customer paid his account by cheque

40,000

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Sold goods on credit

150,000

Received a cheque from customer in full settlement of the

transaction dated December 10

350,000

Required: Record the above transactions in a classical Journal.

QUESTION 2 30 marks)

The trial balance below was extracted from the books of Musa Enterprise as on 31

December 2017.

000FCFA

Capital

7,000

Premises

1,444

Machinery

5,880

Provision for depreciation on machinery

358

Stock in trade 31

December 2016

. 825

Purchases

14,500

Sales

25,000

Carnage inwards

305

Carriage outwards

215

Lighting expenses

411

Salaries

2,105

Wages

1,305

Rents and rates

800

Bad debts

560

Discount allowed and received

306

1,502

Drawings

800

Debtors

1,899

Sales returns

155

Purchases returns

906

Cash at bank -

3,050

Cash in hand

2,000

Provision for bad debts

Creditors

1,250

Bank overdraft'

509

36,560

Additional information:

a) Salaries paid in advance amounted to 56,000 FCFA

b) Lighting expenses owing amounted to 682,000 FFCFA

c) Provision for bad debts is to be increased to 55,000 FCFA

d) Rents and rates paid was only for 10 months of the year.

e) Stock at 31

December 2017 was 677,000 FCFA

f) Depreciation is to be charged on premises and machinery at 5% and 20% respectively.

Required: Prepare the statement of income for the year ended 31

December 2017 and the statement of

financial position as at that date (Vertical format only).

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