Mount Kenya University

SCHOOL OF LAW
DLW 1109: FUNDAMENTALS OF ACCOUNTING & BOOK-KEEPING
SEMESTER: Sept-Dec 2021
ASSIGNMENT
Due Date: 22nd October 2021

INSTRUCTIONS: Attempt all questions in groups of maximum 4 members

Avoid plagiarism

Offer detailed responses

QUESTION I

a) Describe the term source document, benefits associated with their use and explain the
various types of source documents
b) Discuss 5 types of books of original entry used in businesses
c) Organic Farm Ltd uses a three column cash book to record its cash and bank related
transactions. It engaged in the following transactions during the month of October 2020:

 Oct 01: Cash balance $1,450 (Dr.), bank balance $1,500 (Dr.).
 Oct 02: Paid Mark & Co. by check $120.
 Oct 04: Received from John & Co. a check amounting to $400.
 Oct 05: Deposited into bank the check received from John & Co. on March 04.
 Oct 08: Purchased stationary for cash, $25 and received a 10% discount
 Oct 12: Purchased merchandise for cash, $525 and was offered a 10% discount
 Oct 13: Sold merchandise for cash, $1,800 and offered a 5% discount
 Oct 15: Cash deposited into bank, $850.
 Oct 17: Withdrew from bank for personal expenses, $40.
 Oct 19: Issued a check for merchandise purchased, $630.
 Oct 20: Drew from bank for office use, $150.
 Oct 22: Received a check from Peter & Co. and deposited the same into bank
immediately, $880..

Required: Record the above transactions in a triple column cash book and post entries there
from into relevant ledger accounts

(Note: Don’t convert the dollars to Kes. Work as is)

QUESTION II

a) The following transactions took place in Green Farm Ltd during the month of September
2019
 September 01: Credit purchases of supplements from Agrovet Ltd $2000
 September 02: Credit purchases of animal feeds from Pioneer Feeds $3000
 September 03: Credit purchases of farm inputs from Simlaw Seeds $ 4500
 September 03: Credit sales to Tuskys $5000
 September 04: Credit sales to Zucchni $1000
 September 05: Credit sales to Carrefour $ 2500
 September 06: Tuskys returned goods worth $1800
 September 06: Return inwards from Carrefour $ 200
 September 07: Returned goods to Pioneer valued $750
 September 08: Return outwards to Simlaw Seeds &100
Required: Post the transactions in the books of original entry, post to personal accounts, and
show transfers to the general ledger.

QUESTION III

a) Explain the main reasons why accountants prepare the following books of account:
i. Bank reconciliation statement
ii. Three column cash book
iii. Suspense account
iv. Petty cash book
b) Explain 5 advantages of computerized accounting systems in an entity
c) Explain 5 disadvantages of computerized accounting systems in an entity