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ITA412S- INTRODUCTION TO ACCOUNTING- 1ST OPP- NOV 2023 |
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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 2023
DURATION: 3 HOURS
PAPER: THEORY AND APPLICATION
MARKS: 100
FIRST OPPORTUNITY EXAMINATION QUESTION PAPER
EXAMINERS:
Kuhepa Tjondu
MODERATOR: Daniel Kamotho
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
(30 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 2023:
1. Mr Eliaser, the owner, banked N$50 000 into the bank account of the business, being
additional capital contribution.
2. Mr Eliaser bought a vehicle that he intends using in his business, total amount for the
vehicle cost is N$28 000, he paid N$5 000 by Electronic Funds Transfer (EFT) and the
remaining amount was still due to Auto House where he 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 Mr Hamalwa's house on
account.
7. Received a telephone bill from Telecom and settled it on the same day by bank
transfer, N$650.
8. Mr Eliaser 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$2 000.
Required:
a) Identify the source document for each of the transactions above. (Number each answer
appropriately).
(10 marks)
b) Name FIVE users of accounting information and explain the type of financial
information they are interested in.
(10 marks)
c) Name and explain FIVE characteristics of useful financial information. (10 marks)
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QUESTION 2
(50 marks)
Kamukaa Motel had the following balances in their records at the end of the reporting period,
31 October 2023.
Details
Land
Buildings
Motor vehicle-At cost
Machinery-At cost
Accumulated Depreciation-Machinery
Accumulated depreciation-Motor Vehicle
Debit (N$)
1,000,000
3,000,000
740,000
2,000,000
Credit (N$)
500,000
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
Purchases Return
68,000
50,000
Purchases
4,067,500
Insurance
Inventory (1/11/2022)
Commission
60,000
586,000
32,000
Total
15,890,000
15,890,000
Additional information:
1. .Inventory on 31 October 2023 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 2023.
s. The vehicle was sold for proceeds of N$10,000 on 31 August 2023. 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 Kamukaa (Pty) Ltd.
Journal narrations are NOT required.
(15 marks)
b) Prepare the Statement of Profit of Loss for incorporating adjustments the reporting
period ended 31 October 2023.
(19 marks)
c) Prepare the statement of financial position incorporating adjustments as at 31 October
2023.
(16 marks)
Question 3
(20 Marks)
Precious 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 Precious's sector are shown
below.
Rat1. 0s of companies reportina a full vear's results for periods endina 30 Seotember 2023:
Return on capital employed
22.1%
Net asset turnover
1.8 times
Gross profit marain
30%
Net profit (before tax) marain
12.5%
Current ratio
1.6:1
Quick ratio
0.9:1
Inventory days
46 days
Receivables days
45 davs
Payables days
55 davs
Debt to equity
40%
Precious's financial statements for the year to 30 September 2023 are
set out below:
Statement of profit or loss
$000
Revenue
Cost of sales
2,425
(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 changes in equity
Retained earnings - 1 October 2022
Profit for the year
Dividends paid (interim $60,000, final $30,000)
Retained earnings - 30 September 2023
$000
179
96
(90)
--
185
--
Statement of financial position
Non-current assets
$000
540
Current assets
Inventory
Receivables
Total Assets
Equity
Ordinary shares (25 cents each)
Retained earninqs
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 2023
$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 Precious's shares throughout the year averaged $6
each.
Required:
a) Calculate the ratios for Precious which are equivalent to those provided by the
comparison service.
(20 marks)
--------------------End
of Examination -------------------------
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