TEST

Food for thought 1:

A. Define accounting. Why is accounting often called the language of business?

B. Why are financial statements and reports produced periodically?

C. List main groups of users of accounting information.

D. What are the qualities of good accounting information?

E. What is the relationship between bookkeeping and accounting?

F. List any 10 accounting concepts you have read.

G. Give a brief description of each of the 10 concepts you have listed above.

H. What is an accounting system and what is it designed to achieve?

Food for thought 2:

A & J Enterprises, which sells office equipment and supplies, completed the following transactions
during August, 200X.

Aug 2 Sold goods to Mwereka Traders in the amount of shs. 850,000 on account,
invoice No. 331.

3 Sold goods to Pata Potea in the amount of shs. 145,000 for cash.

9 Sold goods on credit to Akika in the amount of shs. 4,350,000 invoice no.
332.

12 Collected amount due from Mwereka Traders.

15 Sold goods to Dalali Kombo on account for shs. 1,500,000 invoice no. 333.

18 Miscellaneous cash sales for the day amounted to shs. 333,000.

22 Collected amount due from Akika.

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25 Collected the amount due from Dalali Kombo.

27 Sold goods on credit to Chekanao Enterprises in the amount of shs.

4,000,000 invoice No. 334.

28 Sold goods on account to Tatunane Motors amounting to shs. 750,000

invoice no. 335.

Required:

Using a Sales Journal and a Cash Receipts Journal as illustrated in the chapter record the
preceding transactions for the month of August 200X; and post to the respective ledgers.

Food for thought 3:

As at December 31st, 200X the general ledger of Kajei Hoppers had the following balances:

Account
Balance
Cash 207,500

Debtors 106,500

Stocks 120,000

Office stationery stocks 6,000

Office Equipment 80,000

Trade Creditors 93,000

Other Creditors 3,500

Owners’ Equity 423,500

Transactions completed during January, 200X include:

Jan. 2 Paid the amount owing to Other Creditors.

4 Purchased goods on credit shs. 26,000.

5 Cash Sales shs. 40,000.

8 Borrowed cash from the bank in order to buy additional office equipment.
The Loan being shs. 150,000.

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9 Bought office equipment, paying cash shs. 150,000.

10 Collected shs. 50,000 from credit customers.

12 Sold goods to customers on credit shs. 75,000.

14 Received cash from a credit customer who owed shs. 20,000.

15 Cash Sales shs. 25,500.

20 Paid Salaries to employees shs. 20,000.

23 Paid creditors shs. 90,000.

25 Purchased goods for cash shs. 5,000.

27 Paid miscellaneous expenses shs. 1,300.

29 Collected from credit customers shs. 40,000.

31 Paid Insurance for office equipment shs. 2,500.

Required:

Using a general journal, journalize the transactions of Kajei Hoppers during the month of January,
200X.

Food for thought 4:

On 1 October 2019, the owner of the NDOVU Enterprise, PWAGU, decided that he will boldly
go and keep his records on a double entry system. His assets and liabilities at that date were:

TZS
Fixtures and equipment 20,000,000
Stock including weapons 15,000,000
Balance at CRDZ Bank 17,500,000
Cash 375,000
Creditors – Cleopatra 3,175,000
– Zingizi 200,000
– Mr.Mamba 500,000

PWAGU’s transactions during October were as follows:

1 October 2019, Sold faculty phasers, original cost TZS 500,000, to Ndovu Corp, for cash TZS

5,000,000

2 October 2019, Bought Photon Torpedoes (weapons), on credit from Makutupora Soldiers TZS

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2,500,000

3 October 2019, Sold Stocks to Mamba, original cost TZS 250,000, on credit, TZS 1,500,000

4 October 2019, Bought Cloaking Device (Fixture and Fittings) from Ndovu Corp TZS

3,500,000

5 October 2019, Paid the balance owed to Cleopatra at 1 October less a 5% cash discount

6 October 2019, Paid Makutupora Soldiers full amount due by cheque

7 October 2019, Received full amount due from Mamba by cheque

8 October 2019, Paid Ndovu Corp by cheque after deducting 20% cash discount

9 October 2019, Paid, by bankers order, TZS 10,000,000 for repairs to Enterprise following
disagreement over amount owing to Ndovu Corp and faculty phasers.

Required:

i. Record all the transactions into the ledgers for the month of October,2019
ii. Prepare a trial balance as at 31 October 2019.

Food for thought 5:

Show the journal entries necessary to correct the following errors:
(a) A sale of goods £412 to T More had been entered in T Mone’s account.
(b) The purchase of a machine on credit from J Frank for £619 had been completely omitted
from our books.
(c) The purchase of a computer for £550 had been entered in error in the Office Expenses
account.
(d) A sale of £120 to B Wood had been entered in the books, both debit and credit, as £102.
(e) Commission received £164 had been entered in error in the Sales account.
(f ) A receipt of cash from T Blair £68 had been entered on the credit side of the cash book and
the debit side of T Blair’s account.
(g) A purchase of goods £372 had been entered in error on the debit side of the Drawings
account.
(h) Discounts Allowed £48 had been entered in error on the debit side of the Discounts Received
account.

Food for thought 6:

Show the journal entries needed to correct the following errors:
(a) Purchases £1,410 on credit from A Ray had been entered in B Roy’s account.
(b) A cheque of £94 paid for printing had been entered in the cash column of the cash book
instead of in the bank column.
(c) Sale of goods £734 on credit to D Rolls had been entered in error in D Rollo’s account.
(d) Purchase of goods on credit L Hand £819 entered in the correct accounts in error as £891.

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(e) Cash paid to G Boyd £64 entered on the debit side of the cash book and the credit side of
G Boyd’s account.
(f ) A sale of fittings £320 had been entered in the Sales account.
(g) Cash withdrawn from bank £200 had been entered in the cash column on the credit side of
the cash book, and in the bank column on the debit side.
(h) Purchase of goods £1,182 has been entered in error in the Furnishings account.

Food for thought 7:

A. Briefly provide two reasons as to why preparers of accounting information’s always need to make
adjustments of elements found in the financial statement. (2 marks)
B. Mr. Exxon has been trading for some years as a wine merchant. The following list of balances has
been extracted from his ledger as at 30 April 2017, the end of his most recent financial year.
Tzs
Capital 83,887
Sales 259,870
Trade creditors 19,840
Returns out 13,407
Provision for doubtful debts 512
Discounts allowed 2,306
Discounts received 1,750
Purchases 135,680
Returns inwards 5,624
Carriage outwards 4,562
Drawings 18,440
Carriage inwards 11,830
Rent, rates and insurance 25,973
Heating and lighting 11,010
Postage, stationery and telephone 2,410
Advertising 5,980
Salaries and wages 38,521
Bad debts 2,008
Cash in hand 534
Cash at bank 4,440
Stock as at 1 May 2016 15,654
Trade debtors 24,500
Fixtures and fittings – at cost 120,740
Provision for depreciation on fixtures and fittings – as at 30 April 2017 63,020
Depreciation 12,074

The following additional information as at 30 April 2017 is available:

a) Stock at the close of business was valued atTzs17,750.
b) Heating and lighting is accrued byTzs1,360.
c) Rates have been prepaid byTzs5,435.

REQUIRED:

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Prepare Mr. Exxon’s trading and profit and loss account for the year ended 30 April 2017 and a
balance sheet as at that date.

Food for thought 8:

Control Accounts are used mainly for debtors and creditors.

i. Explain why it may be appropriate to use control accounts.

ii. Explain the advantages of using control accounts.

Food for thought 9:

Activities during the half-year to 31 December 20X9:
Payments to trade creditors 93,685
Cheques from credit customers 119,930
Purchases on credit 95,580
Sales on credit 124,600
Bad debts written off 204
Discounts allowed 3,480
Discounts received 2,850
Returns inwards 1,063
Returns outwards 240
Sales ledger credit balances at 31 December 20X9 37
Purchases ledger debit balances at 31 December 20X9 26 ‘
During the half year, debit balances in the sales ledger, amounting to £438, were transferred to
the purchases ledger.
Required:
Prepare the sales ledger control account and the purchases ledger control account for the half-
year to 31 December 20X9.

Food for thought 10:

From the following figures, draw up debtors ledger control and creditors ledger control accounts
for the month, and ascertain what the net balances of the respective ledgers should be on 31
January 2019.

Balances on 1 January 2019 Tzs

Debtors ledger – Dr 46,462
Cr 245
Creditors ledger –Dr 1,472
Cr 25,465
Total for the month to 31 January 2019 Tzs
Purchases 76,474
Sales 126,024
Purchase returns 2,154
Debtors accounts settled by contra accounts with creditors 455
Bad debt written off 1,253

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Discounts and allowances to customers 746

Cash received from customers 120,464
Cash discount received 1,942
Cash paid to creditors 70,476
Cash paid to customers 52

Food for thought 11:

You are required to prepare a sales ledger control account from the following for the
Month of November:
20X7 £
Nov 1 Sales ledger balances 23,220
Totals for November:
Sales journal 14,194
Returns inwards journal 826
Cheques and cash received from customers 17,918
Discounts allowed 312
Nov 30 Sales ledger balances 18,358

Food for thought 12:

For each of the following items indicate the required adjustment to correct the cash at bank account
by writing the word "increase" or "decrease" followed by the amount by which the cash balance
should be increased or decreased. If no adjustment is required, write the words "no entry".

a) A shs. 45,000 deposit was recorded in the books as shs. 54,000.

b) A shs. 60,000 deposit made on the last day of the month does not appear on the
Bank Statement.

c) A shs. 450 bank charges appears on the bank statement but has not been recorded in
the books.

d) A customer's cheque for shs. 8,500 that had been deposited was returned by the bank
marked "Refer to Drawer - Insufficient Funds".

e) Cheque No. 2037 of shs. 4,600 was not among cheques presented to the bank.

Food for thought 13:

In the draft accounts for the year ended 31 October 2019 of BENIO proprietor, the balance at bank
according to the cash book was TSHS 894,000. Bank statement printed on the same date shows a balance
of TSHS 2,320,000. Subsequently the following discoveries were made

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i. The recently received bank statement shows that a cheque for TSHS 249,000 received from
DM Andrews and banked on 9 th October 2019 has now been dishonored. The only entry in
the cash book for this cheque records its receipt on 8 October 2019.
ii. Cheque number 8162 for TSHS 150,000 in favor of a supplier has been entered twice in the
cash book.
iii. Amounts received in the last few days of October 2019 totaling TSHS 1,895,000 have not
been deposited in the bank until 2 November 2019.
iv. Cheque paid during October 2019 and totaling TSHS 3,960,000 were not presented for
payment to the bank until November 20219.
v. Customers’ direct credits totaling TSHS 210,000 have been credited in the bank statement on
26 October 2019.
vi. A standing order payment of TSHS 750,000 on 17 October 2019 to Country side Publications
has been recorded in the bank statement.

Required:

Prepare a bank reconciliation statement as at 31 October 2019 for BENIO proprietor.

Food for thought 14:

Read the following and answer the questions below.

o On 31 December 2018 the bank column of C Tench’s cash book showed a debit balance
of TZS1,500.
o The monthly bank statement written up to 31 December 2018 showed a credit balance of
TZS2,950.

On checking the cash book with the bank statement, it was discovered that the following transactions had
not been entered in the cash book:

o Dividends of TZS240 had been paid directly to the bank.

o A credit transfer – Customs and Excise VAT refund of TZS260 – had been collected by
the bank.
o Bank charges TZS30.
o A direct debit of TZS70 for the Union membership subscription had been paid by the
bank.
o A standing order of TZS200 for C Tench’s loan repayment had been paid by the bank.
o C Tench’s deposit account balance of TZS1,400 was transferred into his bank current
account.

A further check revealed the following items:

o Two cheques drawn in favour of T Cod TZS250 and F Haddock TZS290 had been
entered in the cashbook but had not been presented for payment.
o Cash and cheques amounting to TZS690 had been paid into the bank on 31 December
2018 but were not credited by the bank until 2 January 2019.

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Required:

(a) Starting with the debit balance of TZS1,500, bring the cash book (bank columns) up to date and
then balance the bank account.
(b) Prepare a bank reconciliation statement as at 31 December 2018.

Food for thought 15:

Below are the values of Inventory transactions relating to PESAKULANGA Business in the
month of November 2019. Applying the FIFO Method of inventory accounting; Calculate the
values in Dollars for Both Cost of goods sold and Closing inventory for the year ended

Food for thought 16:

(a) Differentiate between Stock Taking and Stock Control
(b) From the following Table calculate the closing inventory value in TZS in trade that
would be shown in the financial statements under a periodic method using FIFO system
at the end of the trading period.

Beginning Inventory were 10Units at a cost price of TZS 120 each

Transaction Type Number of Units Unit Cost

(TZS)

Purchased 60 1,350

Sold 40

Purchased 70 1,430

Sold 40

Sold 50

Purchased 60 1,510

………………………………BEST OF LUCK……………………………………

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