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ITA412S-INTRODUCATION TO ACCOUNTING-1ST OPP- NOV 2024 |
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nAmlBIA unlVERSITY
OF SCIEnCE Ano TECHn OLOGY
FACULTY OF COMMERCE, HUMAN SCIENCESAND EDUCATION
DEPARTMENT OF ECONOMICS, ACCOUNTING AND FINANCE
QUALIFICATION: BRIDGING PROGRAMME
QUALIFICATION CODE: 04NBR
COURSE CODE: ITA412S
LEVEL: 4
COURSE NAME: INTRODUCTION TO
ACCOUNTING
SESSION: NOVEMBER 2024
DURATION: 3 HOURS
PAPER: THEORY AND APPLICATION
MARKS: 100
FIRST OPPORTUNITY EXAMINATION QUESTION PAPER
EXAMINERS:
Kuhepa Tjondu
MODERATOR: Elvia Kangootui
INSTRUCTIONS
• This question paper is made up of THREE (3) questions.
• Answer ALL the questions and in blue or black ink.
• Start each question on a new page in your answer booklet & show all your workings
• Questions relating to this test may be raised in the initial 30 minutes after the start of the
paper. Thereafter, candidates must use their initiative to deal with any perceived error or
ambiguities & any assumption made by the candidate should be clearly stated.
• The names of people and businesses used throughout this test paper do not reflect the
reality and are purely coincidental.
PERMISSIBLE MATERIALS
Non-programmable calculator/financial calculator
THIS QUESTION PAPER CONSISTS OF 6 PAGES (Including this front page)
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Question 1
(40 marks)
You are provided with the following information for transactions that took place in the business
of Hospitable Air Conditioners, a business that install, buy, and sell air conditioners.
Transactions are for October 2024:
1. Ms. Nguapia, the owner, banked N$50 000 into the bank account of the business,
being additional capital contribution.
2. Ms. Nguapia bought a vehicle that she intends using in her business, total amount for
the vehicle cost is N$28 000, she paid N$5 000 by Electronic Funds Transfer (EFT)
and the remaining amount was still due to Auto House where she bought the vehicle.
3. Installed 2 air conditioners and received N$2 000 by direct deposit in the bank account
for each service done.
4. The employees of Hospitable Air Conditioners were paid their monthly salaries of
N$8000 by Blue Wallet.
5. Repaired a client's air conditioner and received N$3 500 cash.
6. Installed 5 air conditioners for a total amount of N$12 000 to Ms Kamburona's house
on account.
7. Received a telephone bill from Telecom and settled it on the same day by bank
transfer, N$650.
8. Ms. Nguapia made a payment of N$7 000 by EFT on the outstanding account balance
of Auto house.
9. Bought four new air conditioners to be installed at a client premises next week, on
account, N$8 000.
10. One was returned back to the supplier because it was not working properly, this was
valued at N$2 000.
Required:
a) Identify the source document for each of the transactions above. (Number each answer
appropriately).
(10 marks)
b) Name FIVE users of accounting information and explain the type of financial
information they are interested in.
(10 marks)
c) Name and explain FIVE characteristics of useful financial information. (10 marks)
d) Name and define the elements of the financial statements.
(10 marks)
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QUESTION 2
(50 marks)
Kudu Motel had the following balances in their records at the end of the reporting period, 31
October 2024.
Details
Debit (N$)
Credit (N$)
Land
1,000,000
Buildings
3,000,000
Motor vehicle-At cost
740,000
Machinery-At cost
2,000,000
Accumulated Depreciation-Machinery
500,000
Accumulated depreciation-Motor Vehicle
240,000
Receivables
1,450,000
Payables
630,000
Drawings
524,500
Capital
4,540,000
Cash and cash equivalents
349,000
Sales
9,898,000
Advertising
320,000
Carriage inwards
204,000
Fuel
473,000
Wages
1,048,000
Sales Returns
68,000
Purchases Return
50,000
Purchases
4,067,500
Insurance
60,000
Inventory (1/11/2023)
586,000
Commission
32,000
Total
15,890,000
15,890,000
Additional information:
1. Inventory on 31 October 2024 was valued at N$680,000.
2. Wages includes N$70,000 paid as advance to employees.
3. The insurance account was charged with N$40,000 which relates to advertising.
4. The insurance account includes a premium of N$9,000.00 for November 2024.
s. The vehicle was sold for proceeds of N$10,000 on 31 August 2024. The cost of the
motor vehicles sold was N$53, 100 and the depreciation to the date of disposal was
N$37,400. No entries in respect of this transaction has been recorded.
6. Provide for depreciation on Machinery at 10% per annum on the reducing balance
method and Motor vehicles 20% on the straight-line method.
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Required:
a) Journalise the above adjusting entries in the general journal of Kudu Motel.
(Journal narrations are NOT required).
(15 marks)
b) Prepare the Statement of Profit of Loss for incorporating adjustments the reporting
period ended 31 October 2024.
(19 marks)
c) Prepare the statement of financial position incorporating adjustments as at 31 October
2024.
(16 marks)
Question 3
(10 Marks)
Geises prepares ready-made meals and distributes them to various wholesalers and retailers.
It has recently subscribed to an inter-firm comparison service. Members submit accounting
ratios as specified by the operator of the service, and in return, members receive the average
figures for each of the specified ratios taken from all subscribing entities in the same sector.
The specified ratios and the average figures for Geises's sector are shown below.
Raf 10sof companies repo rfmga fuII year s resu Its for peri.o ds end"mg 30 Septem ber 2024
Return on capital employed
25.1%
Net asset turnover
1.6 times
Gross profit marqin
20%
Net profit (before tax) marqin
13.%
Current ratio
1.5:1
Quick ratio
0.7:1
Inventory days
36 days
Receivables days
35 days
Payables days
45 days
Debt to equity
50%
Geises's financial statements for the year to 30 September 2024 are
set out below:
Statement of profit or loss
$000
Revenue
2,425
Cost of sales
(1,870)
Gross profit
555
Other operating expenses
(215)
Profit from operations
340
Finance costs
(34)
Exceptional item (note (ii))
(120)
Profit before tax
186
Income tax expense
(90)
Profit for the year
96
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Extract from statement of chanQes in equity
Retained earnings - 1 October 2023
Profit for the year
Dividends paid (interim $60,000, final $30,000)
Retained earnings - 30 September 2024
$000
179
96
(90)
--
185
--
Statement of financial position
Non-current assets
$000
540
Current assets
Inventory
Receivables
Total Assets
Equity
Capital
Retained earnings
Non-current liabilities
8% loan notes
275
320
595
--
1,135
--
150
185
--
335
300
Current liabilities
Bank overdraft
Trade payables
Taxation
Total Equity and Liabilities
65
350
85
500
1,135
--
Notes:
(i) The details of non-current assets are:
Cost
At 30 September 2024
$000
3,600
Accumulated
depreciation
$000
3,060
Carrying
amount
$000
540
(ii) The exceptional item relates to losses on the sale of a batch of
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computers that had become worthless due to improvements in
microchip design.
(iii) The market price of Geises's shares throughout the year averaged $6
each.
Required:
a) Calculate the ratios for Geises which are equivalent to those provided by the
comparison service.
(10 marks)
--------------------End
of Examination-------------------------
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