O LEVEL ACCOUNTING REVISION

TOPICS
1) Introduction to Principles of Accounting
2) The Accounting Cycle
3) Data Processing Methods – Manual, Electronic
4) Subsidiary Books and Source Documents
5) The Ledger
6) Trial Balance and Errors
7) Accounting Concepts
8) End of Year Financial Statements
9) End of Year Adjustments
10) Capital And Revenue Expenditure
11) Control Accounts
12) Bank Reconciliation
13) Accounting Ratios
14) Single entry and Incomplete records
15) Not for Profit Making Organisations (Non Trading Concerns)
16) Departmental Accounts
17) Manufacturing Accounts
18) Partnership Formation
19) Company Accounts
20) Business Ethics

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TOPIC : INTRODUCTION TO PRINCIPLES OF ACCOUNTING.
QUESTION 1
Define the following accounting terms
a) business,
b) accounting,
c) transaction,
d) bookkeeping,
e) capital,
f) assets,
g) liabilities,
h) income,
i) expenses and
j) profit.
k) Sales
l) Purchases
m) drawings
QUESTION 2
Explain the following types of businesses
a) Manufacturing
b) Partnership
c) Sole proprietor
d) Limited companies

QUESTION 3
a) State the users of accounting.
b) Write down an accounting equation
c) Explain 5 objectives/importance of accounting
d) Explain 5 users of accounting
e) Write down the golden rule in accounting

TOPIC: ACCOUNTING CYCLE

Explain the stages involved in the accounting cycle.

TOPIC: DATA PROCESSING METHODS

a) Defining data processing terms.
b) Naming the methods of processing data.
c) Comparing manual and electronic methods of data processing.
d) Stating merits and demerits of each method.

TOPIC: SUBSIDIARY/PRIME/ORIGINAL BOOKS

QUESTION 1.
Explain seven subsidiary books of accounts and state their source documents.

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QUESTION 2
For each of the following transactions given below, name the subsidiary book used, the
account debited, the account credited and the source document.
Your answer should be in the form of a table as given below. An example has been done for
you
Example: Bought a motor van for $200 on credit from J.J.Motors

Subsidiary book A/c Debited A/c Credited Source Document

e.g Journal Proper Motor van J.J.Motor Invoice
i. Bought goods for $5 600 on credit from P. Poshai
ii. Gumai Transport Operators charged the business $600 for carriage on purchases
iii. Paid for stationery of $1 500 out of petty cash
iv. Paid $5600 by cheque to P.Poshai
v. Sold goods on credit to B.Banda for $6 000
vi. Withdrew $10 000 from the bank for private use
vii. A cheque of $8 000 received from T.Thandiwe, a debtor, was dishonored by the bank
viii. Sold an old typewriter for $5 000 on credit to J.Jamela
ix. Received spoiled goods from B.Banda $2 000 in respect of goods sold to him on (v)
above
x. Sold goods on credit to Khumalo for $800 000 less 10 % trade discount.

QUESTION 2
For each of the following transactions of J.John‟s business given below,name the source
document,subsidiary book,the account to be debited and credited
Use the heading Source document,Subsidiary book,Account debited and Account credited
(i) J.Johns paid $50 000 for his rent using business petty cash
(ii) Sold goods on credit to Khumalo fo $800 less 10% trade discount
(iii)Purchased a table and a chair for office use,on credit from Zim Furnishers for $1 500
(iv) Khumalo returned damaged goods worth $1 000 net
(v) Received a document from Zim Furnishers for an uncharge of $200
(vi) Bought goods on credit from Rufaro Wholesalers for $1 400
(vii) Received cash $600 from Khumalo
(viii) J.Johns allowed Khumalo a discount of $200

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TOPIC : LEDGERS
QUESTION 1
a) define the ledger
b) state the types of ledgers
c) classify ledger accounts

QUESTION 2
State whether the following accounts have a DEBIT OR CREDIT balance
i. Motor van
ii. Purchases
iii. Goodwill
iv. Capital
v. Bank with overdraft
vi. Sales
vii. Discount received
viii. Discount allowed
ix. Returns inwards
x. Returns outwards

QUESTION 3
For each of the following transactions state the account to be debited and the account to
be credited.
i. Bought office furniture from Z furnishers for $1000
ii. Paid S.Ncube by cheque $140
iii. Bought paper, pins and pencils from Ezo stationers for $110
iv. Sold goods to J.Piggy for $1800
v. Sold old furniture to H. Lim for $500
vi. Bought Delivery Van for $7000 from Fax motors
vii. J.Peg returned unsatisfactory goods worth $140
viii. An amount of $350 owed by a debtor R Clemence was written off as irrecoverable
ix. Paid rent by cheque $150
x. Charged P.Sithole a debtor interest on an overdue account of $70

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QUESTION 4
The following accounts appeared in the ledger of T.Zone on 1 June 2004
M.Kudzai $600 –CR C.Sibanda $720-DR
During the month of June the following transactions took place
1) June 2 C.Sibanda settled her account in full less 2 1/2 % discount
2) June 4 sold goods to C.Sibanda $1200 less 20 % trade discount
3) June 6 sent a cheque to M.Kudzai for $550 in full settlement of balance owing on 1
June
4) June 9 C.Sibanda returned unsatisfactory goods worth $200 from consignment of 4
June
5) June 12 Bought goods on credit from M.Kudzai for $2 600 less 30% trade discount
6) June 14 sold further goods to C.Sibanda for $1 850-net
7) June 17 returned unsatisfactory goods worth $ 200 from consignment of June 12
8) June 19 Sibanda‟s cheque was returned by the bank marked “Refer to Drawer”
9) June 23 Sent a cheque to M.Kudzai for $800 less 5% cash discount
10) June 26 Sibanda paid cash $ 1960.

Required
Record the above transactions in the accounts of M.Kudzai and C.Sibanda, balance the
accounts at 30 June 2004 and State the ledgers in which you will find M.Kudzai and
C.Sibanda.

QUESTION 5
PACKING MATERIALS ACCOUNT
2006 $ 2006 $
January 1 Bal b/d 120 000 June 30 Trading Account430 000
March 30 Grand Suppliers 240 000 30 Balance c/d 60 000
June 25 Bank 130 000
490 000 490 000
July 1 Bal b/d 60 000
(v) What does the balance of $120 000 represent?
(vi) Give the transaction relating to March 30
(vii) What is the value of the packing materials used during the half year?

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 (viii) Where exactly in the Balance Sheet does the balance of $60 000 appear

QUESTION 6

Required
(a) Describe the transactions or information represented by each of the entries (i) to (x)
[10
(b) In which ledger would you find Bax Account?
(c) Where exactly in the Balance Sheet would you find the balance of the insurance
account?

QUESTION 7
State the effect if any on the working capital on each of the following transactions.
Write down increase, decrease or no effect as your answer
a) New equipment was bought by cheque for $18 000
b) Tatenda bought stock on credit for $5 500
c) Bad debts of $1 200 were written off
d) A further long term-long of $15 000 was obtained and funds put into the bank
e) The loan interest in the Balance Sheet was paid off
f) Stock at book value of $6 000 was sold for $9000 cash
g) Trade creditors were paid $3 500
h) Tatenda sold her private car and paid the proceeds of $12 500 into the business bank
account
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 i) Equipment was depreciated by $ 2000
j) A former customer whose debt of $1 500 had been written off in 2003, unexpectedly
paid the amount he owed

QUESTION 8
Give the information represented by each of the following balances after the preparation of
final accounts.
a) A debit balance in the Motor Vehicles Account
b) A credit balance in the Salaries Account
c) A debit balance in the Subscriptions Account
d) A credit balance in the Bank Account
e) A credit balance in the Interest Received Account
f) A debit balance in the Stationery Account [6]
b) State whether each of the following is a Real Account or Nominal Account
a) Furniture for office use
b) Goods bought for resale
c) Stationery for office use

QUESTION 9
B.Siwela is a retailer. The following are her business transactions for the month of July 2007
(i) Paid $100 000 by cheque to trade creditors.
(ii) Bought office equipment on credit for $550 000
(iii) Siwela withdrew $90 000 from the business bank account to pay for her daughter‟s
school fees.
(iv) Siwela received a credit note for $150 000 in respect of goods she had returned to the
supplier.
(v) Customers owing $110 000 had their accounts written off as irrecoverable
(vi) Siwela brought her private motor vehicle valued $1 200 000 into the business.
Copy the following format for your answer:

Item number Effect of capital Effect on working capital

(i)
(ii)
(iii)

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TOPIC: TRIAL BALANCE AND ERRORS
QUESTION 1
a) Define a trial balance
b) State the purposes of a trial balance
c) Explain six errors which do not affect the balancing of a trial balance
d) Explain the errors which are revealed by a trial balance.

QUESTION 2
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.

QUESTION 3
Correct the following errors
(a) Extra capital of £5,000 paid into the bank had been credited to Sales account.
(b) Goods taken for own use £72 had been debited to Sundry Expenses.
(c) Private rent £191 had been debited to the Rent account.
(d) A purchase of goods from D Pine £246 had been entered in the books as £426.
(e) Cash banked £410 had been credited to the bank column and debited to the cash column
in the cash book.
(f ) Cash drawings of £120 had been credited to the bank column of the cash book.
(g) Returns inwards £195 from G Will had been entered in error in T Young‟s account.
(h) A sale of a printer for £100 had been credited to Office Expenses.

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QUESTION 4
Your bookkeeper extracted a trial balance on 31 December 2005 which failed to agree by
£210, a shortage on the credit side of the trial balance. A suspense account was opened for
the difference.
In January 2006 the following errors made in 2005 were found:
(i) Sales day book had been undercast by £200.
(ii) Sales of £610 to T Vantuira had been debited in error to T Ventura‟s account.
(iii) Rent account had been undercast by £90.
(iv) Discounts Allowed account had been overcast by £100.
(v) The sale of a computer at net book value had been credited in error to the Sales account
£230.

You are required to:

(a) Show the journal entries necessary to correct the errors.
(b) Draw up the suspense account after the errors described have been corrected.
(c) If the net profit had previously been calculated at £31,400 for the year ending 31
December 2005, show the calculations of the corrected net profit.

QUESTION 5
D.Nyambare prepared a trial balance on 31 December whose totals disagrred,credits
exceeding debits by $34 200. The net profit for the year amounted to $589 000.
The following errors were discovered after the preparation of year-end final accounts.
(i) The purchases book had been undercast by $21 200
(ii) The purchases returns balance was calculated as $19 400 instead of $29 400
(iii) Repairs of office equipment amounting to $52 000 had been debited to Office
Equipment Account.
(iv) The sale of goods on credit to R. Patel for $60 000 had been omitted from the
books.
(v) Included in the sundry expenses balance of $81 000 is a payment of $20 000 for
Nyambare‟s private telephone bill.
(vi) Discounts allowed of $115 000 had been credited to Discount Received Account.
You are required to prepare:
(a) Journal entries necessary to correct the above errors.
(b) A statement of corrected Net Profit for the year.

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QUESTION 6
R Taona prepared the following Trial Balance on 31 March 2004

DEBIT CREDIT
$ $
Delivery vehicles 114 000
Inventory 1 April 2003 25 150
Trade receivables 33 750
Bank 21 600
Trade payables 27 320
Purchases 151 250
Sales 204 250
Discount allowed 4 570
Rates 14 000
Capital 1 April 2003 160 000
Drawings 30 000
Sundry expenses 12 500
Suspense 15 250
406 820 406 820

Subsequently, the following errors were discovered and when the necessary amendments had
been made in the accounts, the Suspense Account balance was eliminated:
i. The sales Day Book had been undercast by $15 200
ii. A sale of goods to T. Shrub for $1 240 had been posted to the wrong side of T.
Shrub‟s Account.
iii. Discount allowed to a debtor, S. Forest, correctly entered in the Cash Book as $680
had been posted to her account as $860.
iv. A rates payment of $2 710 had been debited twice in the Rates Account.
v. A purchase of delivery scooter for $40 000 had been entered in the Purchases
Account.
You are required to:
(a) Draw up the Suspense Account.
(b) Rewrite the Trial Balance as it would appear after the correction of the errors.

(c) State any two errors not revealed by a Trial Balance.

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QUESTION 7
T. Tsuro prepared the following Trial Balance from her Ledger balances on 30 June 2004.
Unfortunately, the totals disagreed and she opened a Suspense Account for the difference.

Subsequently, investigations were carried out and the following errors were discovered:
i. A sale to M. Muleya of $394 was correctly entered in the sales day book but wrongly
posted to M. Muleya account at $349.
ii. Tsuro‟s private expenses $600 had been debited to General Expenses Account.
iii. A standing order for $300 for payment of electricity bill had been posted to the wrong
side of the bank account but correctly to the general expenses account.
iv. The purchases day book had been undercast by $400.
v. A purchases ledger credit balance of $360 for Z. Zano had been omitted from the trial
balance figure.
You are required to prepare the:
(a) Journal entries to correct the above errors. (Narratives not required)
(b) Suspense Account starting with the difference from the Trial Balance.
(c) Trial balance as it would appear after the correction of all errors.

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QUESTION 8
S. Moyo prepared the following Trial Balance on 31 May 2004. The totals did not agree and
a suspense account was opened for the difference.

After investigation, the following errors were discovered:

i. A cheque of $235 from a debtor was entered in the books as $325.
ii. A payment of $360 was made to a creditor. The bank and the creditor‟s accounts were
credited with this amount.
iii. S. Moyo had taken goods valued at $620 (cost price) from the business for her own
use but no entries had been made in the books.
iv. The Purchases Day Book had been undercast by $260.
v. Sales to A. Mafu for $500 had been completely omitted from the books.
You are required to:
(a) Draft journal entries to correct the above errors. (Narrations are not required)
(b) Show the entries in the suspense account .
(c) Re-write the Trial Balance after the errors have been corrected.

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QUESTION 9

The following errors and omissions were subsequently discovered:

i. No record had been made for a delivery van worth $900 000 brought in by the
owner on February 1.
ii. A purchase of shop fittings $50 000 had been debited to Purchases Account.
iii. Included in the general expense is $60 000 used by Lunga to pay her private
telephone bill.
iv. A sales invoice of $40 000 entered in the sales day book had not been posted to
the customer‟s personal account.
v. The purchases day book was undercast by $70 000.
vi. A credit note for $10 000 issued by Lunga to a customer had been completely
omitted from the Trial Balance.
You are required to:
(a) Show the journal entries necessary to correct the above errors. Narrations are not
required.
(b) Write a corrected Trial Balance as at 31 December 2005.

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QUESTION 10

The Trial Balance totals did not agree and a suspense account was opened for the difference.
Investigations later revealed the following errors:
i. The purchases of additional fixtures and fittings for $30 000 had been debited to the
Purchases Account.
ii. The purchases Day Book had been undercast by $10 000.
iii. Purchases of $19 800 from S. Moyo had been correctly entered in the Purchases
Journal but were posted to his account as $18 900.
iv. An item of $5 100 had been debited twice to the sundry expenses account.
v. The sale of goods to D. Nkomo $12 000 had been posted to the wrong side of her
account.
vi. Discount received amounting to $500 was debited to the discount allowed account.
You are required to:
(a) how Journal entries necessary to correct the above errors.
(b) Prepare the suspense account.

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QUESTION 11

The following errors and omissions were subsequently discovered:

i. No record had been made for a delivery van worth $900 000 brought in by the
owner on February 1.
ii. A purchase of shop fittings $50 000 had been debited to Purchases Account.
iii. Included in the general expenses is $60 000 used by Lunga to pay her private
telephone bill.
iv. A sales invoice of $40 000 entered in the sales day book had not been posted to
the customer‟s personal account.
v. The purchases day book was undercast by $70 000.
vi. A credit note for $10 000 issued by Lunga to a customer had been completely
omitted from the books.
vii. A credit balance of $110 000 in the purchases ledger had been omitted from
the trial balance.
You are required to:
(a) show the journal entries necessary to correct the above errors. Narrations are not
required
(b) write a corrected Trial Balance as at 31 December 2005.

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QUESTION 12
B. Wiseman prepared a trial balance for his business on 30 June 2010 and the totals failed to
agree. He opened a suspense account with a debit balance of $260. The following errors were
later discovered:
i. Purchases day book had been undercast by $200
ii. An invoice to P. Panashe for $400 had been correctly entered in the sales day
book, but had been omitted in the debtor‟s account.
iii. Wiseman‟s private rent of $100 had been debited to rent account.
iv. An amount of $150 for damaged goods returned to T. Peters, a creditor, had been
correctly entered in the supplier‟s account but entered on the wrong side of the
returns outwards account.
v. Cash discount received from a supplier of $20 had been debited to the Discount
Allowed.
You are required to:
(a) prepare journal entries to correct the above errors,

(b) complete the suspense account,

(c) calculate the correct net profit for the half year ended 30 June 2010 after correction of
the above errors. Original net profit was $5 500.

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QUESTION 13

The following errors were discovered and, when the necessary corrections were done, the
suspense account balance was eliminated.
i. Sinyoro‟s private expenses of $2 400 had been debited to Sundry Expenses.
ii. A sale to D. Dennis of $1 576 was entered correctly in the Sales Day Book but
was wrongly posted to Dennis‟ account as $1 432.
iii. A banker‟s order (standing order) for $1 200 for payment of an insurance
premium had been posted to the wrong side of the bank account but correctly
posted to the insurance account.
iv. The purchases day book had been undercast by $1 600.
v. A purchases ledger credit balance of $1 440 for W. Wedzera had been omitted
from the Trial Balance figure.
You are required to:
(a) prepare the suspense account,
(b) prepare the Trial Balance as it would appear after the correction of all the above
errors.
(c) state any three errors which are not revealed by a trial balance.

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QUESTION 14
(a) The trial balance for K.Jaison prepared by an inexperienced accounts clerk at 31
December 2010 was as follows:
Trial Balance as at 31 December 2010.
Debit Credit
$ $
Capital 14 500
Drawings 900
Furniture and fittings 11 000
Trade receivables and payables 5 200 8 360
Sales 18 400
Purchases 15 600
Purchases returns 500
Sales returns 100
General expenses 2 440
Carriage on purchases 360
Carriage on sales 200
Inventory on 1 January 2010 4 480
Cash at bank 1 600
Suspense 120
41 880 41 880

Investigations revealed the following:

1. Purchase of office chairs and tables for $3 000 was recorded in the purchases
account.
2. The purchases Day Book had been undercast by $700
3. Goods worth $40 returned by K.Sithole, a debtor were correctly recorded in the
personal account but posted to the retruns outwards account.
4. No record was made in respect of bank charges of $60.
5. Credit sales to K.Kalenge for $1 000 was recorded correctly in the sales ledger but
posted to the sales account as $100.
(a) You are required to prepare
(i) The Journal entries necessary to correct the revealed errors.[Narrations are not
required ]
(ii) The Suspense Account

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TOPIC :YEAR END ADJUSTMENTS
QUESTION 1
Bad debts, Provision for bad debts, Depreciation and disposal of fixed assets
On 1 January 2006, A. Kamunhu bought a motor vehicle for $800 000 paying by cheque. On
30 September 2006, she bought another vehicle on credit from Ndou Motors for $600 000.
She sold the vehicle bought on 1 January 2006 for $700 000 cash on 31 December 2007, after
providing for the year‟s depreciation. Kamunhu depreciated her vehicles at 20% per annum
on cost for each month of ownership
Her financial year ends on 31 December.

Required
a) The Motor Vehicles account for the years 2006 and 2007
b) The Provision for Depreciation Account for the years 2006 and 2007
c) Disposal Account.

QUESTION 2
A machine is bought on 1 January 2008 for $1000 and another one on 1 October 2009 for
$1200. The first machine is sold on 30 June 2010 for $720. The business‟ financial year ends
on 31 December. The machinery is to be depreciated at 10%, using the straight line method.
Machinery in existence at the end of each year is to be depreciated for a full year. No
depreciation is to be charged on any machinery disposed of during the year.

QUESTION 3
DD Ltd purchased a delivery van on 01/01/1990 for $20 000. They decided to depreciate it
by 20% per annum using straight line method. On 1st July 1992, they decided to sell it for
$9 200 cash to enable them to buy a bigger truck.

Required.
(a) Delivery account
(b) Provision for depreciation for 3 years
(c) Disposal account.

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QUESTION 4
A firm had the following debtors at the end of each of the past five years
2003 $18 000
2004 $14 500
2005 $17 200
2006 $24 100
2007 $20 900
On 31 December 2003 the firm created a provision for bad debts equal to 5% of debtors and
maintained that rate for every year.

Required
a) The provision for bad debts account for the five years
b) Show the Balance Sheet extracts for each of the five years.

QUESTION 5
In a new business during the year ended 31 December 2013 the following debts are found to
be bad debts and are written –off on the dates shown:
31 May 2013 S.Gill &Son $600
30 September 2013 H. Black Ltd $400
30 November 2013 A Thom $200
On 31 December 2013 the schedule of remaining accounts receivable totalling $15 000 is
examined and it is decided to make an allowance for doubtful debts of $500.

Required
a) The Bad Debts Account and Allowance for Doubtful Debts Account.
b) The charge to the income statement
c) The relevant extracts from the statement of Financial Position as at 31 December
2013.

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QUESTION 6
T.Kuda had the following balances in the ledger on 1 July 2017:
Commission received $1 200 Cr
Insurance $ 50 Cr
The following transactions were recorded during the six months ended 31 December 2017:
$
August 31 Received commission by cheque 1 000
September 30 Paid cash for insurance 1 200
October 30 Received cash for commission 1 000
December 31 Paid insurance by cheque 900
A commission of $6 000 is receivable annually and insurance premiums of $4 00 are owing
on 31 December 2017
Prepare
(i) the commission received
(ii) the insurance account

QUESTION 7
S.Mhlanga maintains a provision for doubtful debts of 6% on debtors at the end of the
financial period. The year ends on 31 December.
- On 1 January 2007,the provision for bad debts amounted to $400
- On 31 December 2007 bad debts of $850 were written off
- The schedule of trade receivables was as follows:
Year $
2007 10 850
2008 8 000
2009 12 000
You are required to prepare:
a) Bad debts account showing the transfer to Profit and Loss Account.
b) The Provision for Bad Debts Account for the three years ended 31 December
2007,2008 and 2009 paying special attention to dates and details.
c) The Income Statement extracts for 2007 and 2008

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QUESTION 8
On 1 January 2010,S Tawana had the following balances in her nominal ledger :
Rent received $ 5 000 Cr
Stationery $12 000 Dr
S.Tawana sublets part of her business premises at an annual rental of $30 000.
During the year, the following transactions took place:
2010 Received cash of $12 500 for rent
March 31 Bought stationery by cheque of $35 000
April 2 Purchased stationery worth $20 000 on credit from Takunda Books
June 5 Returned damaged stationery worth $8 000 to Takunda Books.
June 30 Received a cheque of $6 000 for rent
September 30 Received $9 000 rent in cash.
On 31 December 2010,the stock of unused stationery was valued at $4 000. S.Tawana‟s
financial year ends on 31 December.
You are required to prepare:
(a) (i) the Rent Received Account
(ii ) the stationery account
Pay special attention to dates.
(b) State where exactly in the Statement of financial position of S.Tawana would the
balances in the following accounts on 31 December 2010 be found:
(i) The Rent Received Account
(ii) The Stationery Account

QUESTION 9
The following schedule of trade receivables appeared in the books of Cherly Florist on
31December for three years.
2006 2007 2008
$90 000 $110 000 $85 000
Cherly maintained a provision for bad debts of 5% of Sundry trade receivables.
On 31 December 2008,Cherly created a provision for discounts allowable of 4% on trade
receivables
You are required to prepare the
(a) Provision for Bad Debts Account for 2006,2007 and 2008.

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 (b) The Provision for Discounts Allowable Account on 31 December 2008.
(c) The statement of financial position extract as at 31 December 2008.

QUESTION 10
On 1 January 2016,Martins Motor Vehicle Account had a balance of $10 000 and $1 000 in
the Provision for Depreciation Account.
On 30 June 2016, a Motor Vehicle was bought by cheque $15 000
On 31 December 2017 the vehicle bought on 30 June 2016 was sold for $14 000 to Dan
Motors.
The provision for depreciation is calculated at 10% per annum on cost for each month of
ownership.

QUESTION 11
The following information relates the business of Kwanza who owns a driving school.
1 Jan 2003 bought two motor vehicles at $750 000 each in cash
30 Sept 2004 Purchases one motor van at $900 000 by cheque
One of the motor vehicle bought on 1 Jan 2003 was sold for $500 000 cash on 30 Sept 2004
Depreciation is at 20% per annum on cost for each month of ownership

Required:
1. Motor Vehicle Account and Provisions for Depreciation Account and Motor vehicle
Disposal Account
2. Write up the Balance Sheet extracts as at 31 December 2003 and 2004
3. state any 4 causes of physical deterioration of fixed assets
4. state five methods of calculating depreciation
5. state 3 causes of bad debts
6. what is the difference between bad debts and Allowance for doubtful debts

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QUESTION 12
The following balances appeared in the books of A Tengawada on 1 January 2018
Motor vehicles at cost $240 000
Provision for depreciation of vehicles $ 95 000
Additional information:
1. On 1 January 2018 one vehicle was sold for $30 000 cash.
2. The vehicle sold was bought on 1 January 2016 for $40 000
3. On 31 March 2018 a new motor vehicle was bought on credit from B.I.T. Cars for
$60 000.
4. Depreciation is charged on vehicles at 10% per annum on cost in full in the year of
purchase.
5. The financial year ends on 31 December.
Prepare
a) The Motor Vehicle Account
b) Provision for Depreciation Account
c) Vehicles Disposal Account

TOPIC: CAPITAL AND REVENUE EXPENDITURE

QUESTION 1
(a) Distinguish between capital expenditure and revenue expenditure.
(b) State which of the following are capital and revenue expenditure for a furniture
making business:
i. Purchase of wood cutting machine for the workshop.
ii. Purchase of replacement headlights for the delivery van.
iii. Cost of repairing damaged workshop roof.
iv. Wages paid to workers making furniture for resale.
v. Cost of making desk for the workshop.
vi. Payment of municipal rates.
vii. Cost of extending the furniture workshop
viii. Installation of an air conditioning system in the manager‟s office.
ix. Payment of office salaries.

QUESTION 2
(a) Distinguish between Capital Expenditure and Revenue Expenditure.
(b) State which of the following are Capital Expenditure and Revenue Expenditure.
i. Purchase of packing materials on credit from Ndonga Ltd.
ii. Payment by cheque of adapting existing machinery to improve its
manufacturing performance.
iii. Import duty on machinery parts needed for item (ii) above, paid by cheque.

24 | P a g e
 iv. Payment in cash for carriage on purchases.
v. Purchase of fuel for business vehicles on credit from Mpopoma Motors.
(c) State the account to be debited and the one to be credited in each of the transactions
(i) to (v) in part (b) above.

QUESTION 3
(a) An accounting clerk has produced two lists of expenditures for a textiles
manufacturing company which he has categorised into capital and revenue. Unfortunately,
the lists are not all correct.
List A: Revenue Expenditure List B: Capital Expenditure
Carriage inwards Carriage outwards
Filing cabinet Office equipment
Insurance Advertising
Packing materials Payment of dividends
Petty cash for stamp Delivery van
Office desk Factory machinery
Extension to premises Replacement of light bulbs
Salaries and wages New front tyres for new delivery van
License fees for the new delivery van Raw materials
You are required to rewrite the two lists correctly.

QUESTION 4
From the following transactions you are required to determine whether the transaction is
capital or revenue expenditure.
(a) The purchase of a motor vehicle
(b) Purchases of goods for resale
(c) Painting of a motor vehicle
(d) Insurance premium for 1 year of the motor vehicle
(e) Motor vehicle fuel for the whole year.
(f) Installation of a car radio
(g) General repairs to the motor vehicle
(h) Renovation of a building
(i) Road tax of the motor vehicle for one year.
(j) General repairs to the building
(k) The installation of electricity cables to the building
(l) Electricity charges for one year
(m) The payment of wages and salaries
(n) Bank interest charged by a commercial bank.

25 | P a g e
TOPIC: BANK RECONCILIATION
QUESTION 1

K. Kondo a hairdresser, received her bank statement on 1 May 2005 with the following
details:

$
Balance as on 30 April 2005 275 000
Bank charges 10 000
Standing order: Insurance 29 500
Credit transfer: Dividends 67 300
Dishonoured cheques R/D 13 700
Direct debit: ZESA 18 450
Interest earned 9 550
The following information was also made available:
The balance brought down in the cash book was $249 800
Unpresented cheques $65 000
Bank deposits entered in the cash book but not on the bank statement $70 000
On analysis of the bank statement, Kondo discovered that she had been incorrectly credited
with $25 000 belonging to R. Kondo by the bank.
You are required to prepare:
(a) An amended cash book
(b) The bank reconciliation statement as on 1 May 2005

26 | P a g e
QUESTION 2
On 31 July 2004, C. Flint‟s cash book showed a debit balance of $1 500 at the bank. The
monthly bank statement showed a credit balance of $2 850 on the same date.
On comparing the cash book with the bank statement, it was discovered that the following
transactions were not entered in the cash book:
i. Dividends of $500 were paid directly into the bank account.
ii. A standing order of $820 for Development Bank loan repayment was paid by the
bank.
A further check also revealed the following:
i. The bank had incorrectly credited C. Flint account with a deposit of $600 from
another client, J. Flint
ii. Cheques drawn amounting to $1 940 had been entered in the cash book but not yet
presented for payment at the bank.
iii. Cash and cheques amounting to $690 paid into the bank on 30 July had been
recorded in the cash book but not yet credited by the bank.
iv. A cheque payment of $310, correctly entered on the bank statement, had been
recorded in the cash book as $130.
You are required to prepare:
(a) C Flint‟s updated cash book for the month of July 2004.
(b) The bank reconciliation statement on 31 July 2004

QUESTION 3
The cash book of A. Alma showed a debit balance of $82 500 at the bank on 31 July 2006.
The following details were made available;
Unpresented cheques 16 950
Deposits not credited by the bank 33 750
A standing order for insurance paid by the bank 1 800
A credit transfer received by the bank 5 250
Bank charges on the bank statement 2 700
Balance as per bank statement 64 950
A cheque for $12 000 from a debtor was incorrectly entered as $13 500 in the cash book.
You are required to prepare:
(a) An updated Cash Book and A bank reconciliation statement as at 31 July 2006

27 | P a g e
QUESTION 4
The following are extracts from the Cash Book and the Bank Statement of Batanai
Supermarket

You are required to:

(a) update the Cash Book
(b) draw up the Bank Reconciliation Statement on 31 October 2008

28 | P a g e
QUESTION 5
G. Moyo‟s cash book at 30 September 2009 had a debit balance of $83 000. On the same date
the bank statement had a credit balance of $64 000.
After checking the cash book against the bank statement the following differences were
found:
(a) The bank had paid a standing order for insurance of $17 000
(ii) The bank had received by credit transfer the sum of $8 500 from Y. Mwayera.
(iii) Cheques issued for $7 000 had not been presented for payment.
(iv) An amount of $18 000 paid into the bank by Moyo did not appear on the bank
statement.
(v) A cheque of $33 500 issued by Moyo had been entered wrongly as $33 300 in the
cash book but had been recorded correctly on the bank statement
You are required to:
(a) update the cash book
(b) prepare a bank reconciliation statement on 30 September 2009.

QUESTION 6
The cash book of Rugare Stores showed a credit balance of $8 600 on 31 January 2010. The
bank statement received for the month of January reflected an overdraft of $2 500 on 31
January 2010.
Comparison of bank statement and cash book revealed the following matters:
Entries not entered in the cash book:
1. Bank charges 3 340
2. Credit transfer 14 000
3. Standing order- City Council 2 000
4. Interest on overdraft 2 260
Entries not entered in the bank statement:
1. Deposits amounting to $1 800 had not been cleared and credited by the bank.
2. Cheques drawn and sent to Creditors amounting to $1 500 had not been presented to
the bank.
You are required to
(i) Write up a Cash Book update,
(ii) Prepare a Bank Reconciliation Statement as at 31 January 2010.

29 | P a g e
QUESTION 7
The following information relates to the business of Khumalo Advertising Agents.

You are required to prepare:

(a) The updated cash book
(b) The bank reconciliation statement as on 31 March 2006.

QUESTION 8

Give the information represented by entries (i) to (vi) in the cash book.

30 | P a g e
QUESTION 9
The following is G.Gamba‟s cash and bank statement for the month of March 2018.

a) Prepare an updated cash book

b) Prepare a bank reconciliation statement as at 31 March 2018

31 | P a g e
TOPIC: CONTROL ACCOUNTS
QUESTION 1
The following details were obtained from the books of N. Nido for the month of May 2010:
2010 $
May 1 Debit balances in the Sales Ledger 22 000
Credit balances in the sales ledger 1 800
Credit balances in the purchases ledger 35 000
Debit balances in the purchases ledger 1 400
31Credit purchases 62 000
Credit sales 100 000
Goods returned to suppliers 8 000
Goods returned by customers 5 000
Discount allowed 950
Discount received 1 200
Cheques paid to suppliers 58 000
Cash received from customers 89 500
Petty cash payments to suppliers 1 600
Debtors ‟cheques dishonoured 3 000
Bad debts written off 1 250
Purchases ledger balances set off against sales ledger balances 2 500
There were no debit balances in the Purchases Ledger and credit balances in the Sales Ledger
on 31 May 2010.
You are required to Prepare
(i) The sales ledger control account
(ii) The sales ledger control account.
(a) Calculate the following, given that the margin for Nido‟s business is 25%:
(i) Gross profit
(ii) Mark-up.
(c) State the meaning of the following balances in the books of NIdo:
(i) Credit balance in the bank balance

32 | P a g e
 (ii) Debit balance in the rent received account
(iii)Debit balance in the stationery account
(iv) Credit balance in C. Moyo‟s account in the purchases ledger.

QUESTION 2
The following information was obtained from the books of G. Ngulube for August 2010:

2010 August 1 Trade receivables balance 5 600 Dr

Trade payables balance 1 700 Cr
2010 August 31 Credit sales 40 000
Credit purchases 24 000
Cash purchases 7 000
Returns outwards 200
Returns inwards 100
Cheques and cash received from debtors 37 000
Cheques paid to creditors 16 000
Customers‟ cheques dishonoured 2 500
Discount allowed 400
Discount received 350
Interest charged to customers on overdue accounts 130
Amounts settled by contra 2 300
Cash refund from suppliers for overpayments 60
Bad debts written off 800
Provision for bad debts 1 610
Debit balances in the purchases ledger 40
Credit balances in the sales ledger 70
(a) You are required to prepare for the month of August 2010:
i. Sales Ledger Control Account,
ii. Purchases Ledger Control Account.
(iii)State two advantages of preparing control accounts

33 | P a g e
QUESTION 3
The following information appeared in the books of P.Phiri:
$
i. Creditors at 1 November 2004 14 100
ii. Interest charged on overdue accounts 2 115
iii. Cash and cheques paid to creditors 33 910
iv. Discounts received 2 205
v. Credit purchases for November 34 200
vi. Goods returned to creditors 1 130
vii. Cash refund from a creditor 120
You are required to:
(a) Prepare and balance the Purchases Ledger Control account for the month of November
2004.
(b) Name the book of original entry from which each of the entries (i) to (vi) would be
obtained

34 | P a g e
QUESTION 4
The following information was extracted from the books of C. Choto for the month of
September 2004:
2004 $
Sept 1 Purchases Ledger debit balances 600
Purchases Ledger credit balances 9 300
Sales Ledger debit balances 32 350
Sales Ledger credit balances 1 450
30 Credit purchases for the month 66 300
Credit sales for the month 130 400
Returns inwards 6 400
Cash and cheques paid to suppliers 58 300
Cash received from customers 116 700
Returns outwards 4 000
Discount received 2 100
Customers‟ cheques dishonoured 1 200
Bad debts written off 1 900
Discount allowed 4 700
Amounts settled by contra 3 900
Cash refund to a customer 400
Interest on customer‟s overdue account 200
Debit balances in the Purchases Ledger accounts 900
Credit balances in the sales ledger 1 200
You are required to prepare for the month of September 2004 the:
i. Sales Ledger Control Account
ii. Purchases Ledger Control Account
(iii)Give one reason for preparing Control Accounts
(iv) How does a credit balance arise in the Sales ledger control Account.

35 | P a g e
QUESTION 5
The following details were extracted from the books of Millet (Pvt).Ltd

Opening balances 1 January 2000

Sales ledger balance $18 000
Purchases ledger balance $14 000

Transactions during the period

Credit sales ?
Cash sales $23 000
Credit purchases ?
Cash purchases $14 900
Interest on overdue Debtors accounts $ 520
Sales returns $5 000
Bad debts $2 000
Purchases returns $2 200
Discount allowed $7 000
Discount received $850
Cheque from Debtors $27 000
Cash paid to Credit suppliers $15 000
Set-off between sales and purchases ledger $3 000

Closing balances 31 December 2000

Sales ledger balances $11 710
Purchases ledger balance $21 750

Required
Prepare a sales ledger control account and a purchases ledger control account showing clearly
the amounts of credit sales and credit purchases
State the subsidiary books and source documents of the following:
(i) Credit sales (ii) Credit purchases (iii) Bad debts (iv) Sales returns (v) Purchases
returns (vi) Discount allowed (vii) Discount received.

36 | P a g e
QUESTION

(a) You are required to calculate, showing clearly your working, T. Tatenda „ s working
capital as at 31 March 2004. [3]
(b) State the effect, if any on the working capital on each of the following transactions. Write
down increase, decrease or no effect as your answer.
i. New equipment was bought by cheque for $18 000
ii. Tatenda bought stock on credit for $5 500
iii. Bad debts of $1 200 were written off.
iv. A further long term loan of $15 000 was obtained and the funds put into the bank
account.
v. The loan interest in the balance sheet was paid off.
vi. Stock at book value of $6 000 was sold for $9 000 cash.
vii. Trade creditors were paid $3 500 by cheque.
viii. Tatenda sold her private car and paid the proceeds of $12 500 into the business
bank account.
ix. A former customer, whose debt of $1 500 had been written off in 2003,
unexpectedly paid the amount he owed.
x. Equipment was depreciated by $2 000.

37 | P a g e
TOPIC : ACCOUNTING RATIOS
QUESTION 1
D. Dingani operates a business as a retailer. During the year ended 31 March 2005, the
business made a gross profit of 33% on turnover of $930 000. The net profit was 15% of
turnover. Her rate of stock turnover was 10 times. The opening stock was $60 000.
Calculate for the year the:
(a) Gross profit
(b) Cost of sales
(c) Closing stock
(d) Purchases
(e) Expenses
(f) Mark-up
QUESTION 2
M. Mambo operates a small business as a retailer. The following information is found in her
records at the end of the financial year ended 31 December 2005:
$
Purchases 456 000
Sales 609 000
Opening stock 21 000
Closing stock 39 000
Sales returns 9 000
Purchases returns 3 000
Customs duty 15 000
You are required to calculate the:
(a) Turnover for the year
(b) Cost of goods sold
(c) Gross profit
(d) Mark-up
(e) Margin
(f) Rate of stock- turn

38 | P a g e
QUESTION 3
The following information relates to the business of A. Mukwa (Pvt) Ltd on 1 July 2004:
$
Sales 200 000
Gross profit 50 000
Fixed assets 500 000
Current assets 90 000
Current liabilities 36 000
Opening stock 14 000
Stock turnover is 6 times.
You are required to calculate, showing all workings, the:
(a) Cost of goods sold
(b) Mark-up
(c) Margin
(d) Closing stock
(e) Working capital ratio
(f) Quick ratio

QUESTION 4
The following is a Trading Account of S. Pamire for the year ended 30 June 2011:

$ $
Opening inventory 1 200 Sales 20 000
Purchases 13 600
Carriage inwards 2 000
Closing inventory ?
Cost of sales ?
Gross profit 5 000
You are required to calculate of the year ended 30 June 2011
(i) Cost of sales
(ii) Closing inventory
(iii) Rate of stockturn

39 | P a g e
TOPIC : INCOME STATEMENT
QUESTION 1
The following trial balance was extracted from the books of B.Boss as at 31st March 2007

Additional Information
1. At 31st March 2007
a. Inventory(stock) was valued at $10 200
b. Wages outstanding amounted to $1 080
c. Insurance prepaid amounted to $210
2. During the year ended 31st March 2007 Boss took goods costing $300 for his own use.
No entries had been in the accounting records.
3. The provision for doubtful debts is to be maintained at 2% of the debtors
4. Motor vehicles are to be depreciated at 20% per annum using the reducing balance
method.
5. Fixtures and equipment were valued at $2 800 0n 31st March 2007. No fixtures and
equipment were bought or sold during the year 31st March ended 2007

Required
a) Income statement ( Trading and Profit and Loss Account) for the year ended 31st
March 2007 (12 marks)
b) Statement of Financial Position (Balance Sheet) as at 31st March 2007 (13 marks

40 | P a g e
QUESTION 2
F.Sithole is in business operating a grocery shop. The following trial balance was extracted
from her books on 31 December 2004

Additional information:
a) Stock on 31 December 2004 was valued at $12 600
b) Goods worth $6 500 were taken by the owner for her own use. No entry had been
made in the books.
c) Stock of stationery on 31 December 2004 was $880
d) Interest on the loan is at the rate of 5% per annum
e) Insurance prepaid on 31 December 2004 was $180
f) Office furniture is to be depreciated at the rate of 10% per annum using the reducing
(diminishing) balance method.
g) The provision for bad debts is to be increased to $960
h) One quarter of wages was for staff employed in making extensions to the building

You are required to prepare

(a) the Trading and Profit and Loss Account for the year ended 31 December 2004 [13]
(b) the Statement of Financial Position as at 31 December 2004 [13]

41 | P a g e
QUESTION 3
S.Kamwendo, a sole trader, extracted the following trial balance from his books on 31
December 2009

The following information is also available on 31 December 2009:

(i) Stock (Inventory) was valued at $18 200
(ii) A credit note received from a supplier for goods worth $2 500 returned by the
business had not been entered in the books of account
(iii) Motor expenses due totalled $260
(iv) Insurance in advance amounted to $120
(v) Sundry expenses include $150 for a private telephone bill
(vi) The provision for bad debts is to be adjusted to 5% of debtors/accounts
receivables
(vii) Motor vehicles are to be depreciated by 20% per annum on cost and equipment by
10% per annum using diminishing balance method

You are required to prepare

(a) the Trading and Profit and Loss Account (Income Statement) for the year ended
31December 2009(12)
(b) the Statement of Financial Position (Balance Sheet) for the year ending 31 December
2009.(13)

42 | P a g e
QUESTION 4
D.Midzi is a small –scale trader who buys and sells furniture. On 30 September 2001, she
extracted the following trial balance from her books.
Trial balance as at 30 September 2001

The following information is available on 30 September 2001:

(i) Stock was valued at $57 000
(ii) A sales invoice of $2 500 for goods sold to T.Dube was not recorded in the books
(iii) Depreciation is provided as follows:
Motor vehicles: 25% per annum on the reducing balance method
Fixtures and fittings 10 % per annum on cost
(iv) The provision for bad debts is to be adjusted to 5% of debtors
(v) Insurance prepaid amounted to $400
(vi) The loan carries an interest of 10% per annum and the interest is outstanding.

43 | P a g e
Required:
(a) D.Midzi‟s trading and Profit and Loss Account for the year ended 30 September
2001 [14]
(b) the Statement of Financial Position as at 30 September 2001 [13]

TOPIC : MANUFACTURING ACCOUNT

QUESTION 1
Tsovani Manufacturing Company provides you with the following information on 31 March
2007.
$
Stocks 1 April 2006: Raw materials 15 500
Work in progress 18 100
Finished goods 19 300
Raw materials purchased 55 000
Returns on raw materials 7 500
Depreciation of plant and machinery 6 100
Royalties 10 800
Carriage on purchases 9 600
Manufacturing wages 36 000
Factory wages 10 000
Repairs on plant and machinery 13 200
Rent and rates 24 000
Factory power 16 900
Administrative expenses 22 000
Patent fees 24 500
Selling expenses 32 800
Stocks 31 March 2007: Raw materials 17 700
Work in progress 20 800
Finished goods 21 200
Additional information:
i. Factory wages amounting to $6 800 were owing at the end of the year.

44 | P a g e
 ii. Rent and rates are to be shared: factory ⁄ and office ⁄

You are required to prepare Tsovani‟s Manufacturing Account for the year ended 31 March
2007.

QUESTION 2
On 31 December 2004, the following balances were extracted from the books of Tanaka
Products.
$
Stocks at January 2004: Raw materials 16 200
Work in progress 14 700
Finished goods 21 600
Sales 207 000
Purchases of raw materials 49 500
Purchases of finished goods 10 000
Manufacturing wages 57 300
Carriage on raw materials 2 000
Depreciation of plant 12 800
Factory rent 40 000
Royalties 8 400
Carriage on sales 4 000
Depreciation of office equipment 1 500
Stocks at 31 December 2004: Raw materials 17 700
Work in progress 15 600
Finished goods 23 850
You are required to prepare the:
(a) Manufacturing Account for the year ended 31 December 2004, showing clearly within
the account the cost of raw materials consumed, the prime cost and the production
cost of finished goods.
(b) Trading Account for the year ended 31 December 2004.

45 | P a g e
QUESTION 4
H. Hassan owned a small factory. The following balances were extracted from his books on
31 December 2004.
Stocks (1 January 2004): Raw materials 50 000
Finished goods 75 000
Work in progress 30 000
Purchases of raw materials 505 000
Sales of finished goods 1 900 000
Factory direct wages 150 000
Factory overheads 260 000
Patent fees 70 000
Stocks (31 December 2004): Raw materials 40 000
Finished goods 60 000
Work in progress 20 000
Selling and administration 21 000
Carriage outwards 19 000
(a) Manufacturing Account for the year ended 31 December 2004.

(b) Trading and Profit and Loss Account for the year ended 31 December 2004.

46 | P a g e
QUESTION 3
S. Samanyika Toy Products Private Limited Company is engaged in manufacturing toys. The
following balances were extracted from the business books on 31 December 2009.
$
Inventory at 1 January 2009:
Raw materials 11 400
Work in progress 4 000
Purchase of raw materials 54 000
Supervisor‟s wages 5 000
Direct wages 29 000
Royalties 600
Salesman‟s salaries and wages 7 000
Depreciation of factory machinery 1 200
Inventory at 31 December 2009: Raw materials 1 400
Work in progress 11 500
You are required to prepare the Manufacturing Account for the year ended 31 December
2009, showing clearly Cost of Raw materials consumed, Prime Cost and Total
production.

47 | P a g e
QUESTION 4
M. Mushava is a manufacturer. On 31 December 2004 the following balances were extracted
from her books after the preparation of the manufacturing account for the year ended 31
December 2004:
Cost of goods manufactured 635 000
Sales 996 000
Stock of finished goods at 1 January 45 800
Stock at 31 December 2004: Finished goods 59 400
Raw materials 89 600
Work in progress 85 200
Factory wages outstanding 13 400
Office salaries 55 800
Office rates and insurance 22 800
Motor expenses 27 400
Debtors 83 000
Creditors 70 600
Plant and machinery, at cost 447 000
Motor vehicles, at cost 424 000
Furniture and fittings, at cost 88 000
Cash at bank 47 800
Provision for bad debts at 1 January 2004 3 000
Provision for depreciation at 1 January2004: Motor vehicles 84 800
Drawings 46 800
Capital at 1 January 2004 800 000
Long term loans from Midas Finance (obtained 30 September) 98 000
The following additional information is to be taken into account:
i. Depreciation of plant and machinery is $33 000
ii. Depreciation of furniture and fittings is 10% per annum on cost and on motor vehicles
is 20% per annum on the reduced value.
iii. A debt of $3 000 is to be written off as irrecoverable and a provision for bad debts is
to be adjusted to 5% of debtors.

48 | P a g e
 iv. Loan interest at 20% per annum is owing.
v. Prepaid insurance amounted to $3 200 and $400 was due on rates.
vi. Amount of $200 was owing for office salaries.
(a) Trading and Profit and loss Accounts for the year ended 31 December 2004.
(b) Statement of financial position as at 31 December 2004

TOPIC: INCOMPLETE RECORDS

QUESTION 1
On 1 January 2005, E. Mwase started business with $500 000 in a business bank account. On
the same day, he brought into the business his personal furniture worth $100 000. Mwase
does not maintain proper accounting records.
The following information is made available on 31 December 2005:
$
Motor vehicle at cost 200 000
Furniture, at cost 100 000
Stock 110 000
Debtors 90 000
Bank 70 000
Cash 35 000
Creditors 80 000
Prepaid expenses 9 500
Accrued expenses 5 000
Additional information:
i. During the year, Mwase withdrew $50 000 cash and goods worth $15 000 from
the business for personal use.
ii. Fixed assets are to be depreciated as follows:
Motor vehicles 20% on cost
Furniture 10% on cost
iii. Bad debts of $2 000 are to be written off, and a provision for doubtful debts of 2%
of debtors is to be created.
You are required to prepare a balance sheet as at 31 December 2005, showing clearly the net
profit or loss for the year.

49 | P a g e
QUESTION 2
The following assets and liabilities relate to the business of P. Pepukai on 1 July 2003:
$
Premises 250 000
Tools and equipment at cost 100 000
Motor vans at cost 150 000
Stock 45 000
Trade debtors 60 000
Bank 27 000
Trade creditors 42 000
The following information was available on 30 June 2004:
i. Tools and equipment were valued at $90 000 at the close of business.
ii. Motor vans were depreciated at the rate of 20% on cost per annum.
iii. Trade debtors owed a total of $75 000
iv. An amount of $5 000 was written off as bad debts
v. It was decided to create a provision for doubtful debts of 5% on
outstanding debts.
vi. The business owed $30 000 to trade creditors.
vii. There was no record of a cheque payment of $8 000 to a creditor.
viii. Drawings from stock worth $12 000 at cost price had not been recorded.
ix. The closing stock was valued at $35 000.
You are required to:
(a) Calculate the capital on 1 July 2003.

(b) Prepare the balance sheet as at 30 June 2004, showing clearly the profit or loss for the
year.

50 | P a g e
QUESTION 3
M. Maushe a retailer did not keep his books on the double entry principle but his valuation of
assets and liabilities on the dates shown were as follows:

You are required to prepare a statement showing:

(a) Maushe‟s capital on 1 January 2004
[3]
(b) Clearly Maushe‟s net profit or loss for the year ended 31 December 2004, taking
into account the following additional information obtained from Maushe on 31
December 2004:
i. $5 600 of the debts are to be written off as irrecoverable.
ii. Depreciate motor vehicles by 10% and fixtures by 5%
iii. Maushe had withdrawn $15 750 from the bank for private purposes during
the year.
During the year Maushe sold his private vehicle for $28 000and deposited the amount into
the business bank account.

QUESTION 4
S. Zimba, who owns Gwanda Grocery Shop, provided a qualified bookkeeper with the
following details of his financial position.

The following information was made available:

i. During 2005, Zimba withdrew $100 000 in cash every month for personal use and
goods worth $50 000 every two months.

51 | P a g e
 ii. Depreciation on equipment is at the rate of 20% per annum on he written down value.
iii. Equipment was bought on 1 January 2004.
You are required to prepare a statement of affairs at 31 December
(a) 2004
(b) 2005, showing clearly the net profit for the year.

QUESTION 5

(iv) Trade debtors paid $15 000 by cheque which was immediately deposited into the
bank.
(v) Muller brought into the business a lorry valued at $100 000.
(vii) Paid half of the mortgage loan by cheque.
You are required to prepare on 1 January 2004 the:
(a) Capital account

(b) Statement of financial position

52 | P a g e
QUESTION 6
The following information relates to the business of M. Chihuyo for the year ended 31
December 2006.
Sales $762 500
Returns inwards $ 12 500
Closing stock $200 000
Mark-up 25%

Net profit as a percentage of turnover is 7 ⁄ %. The rate of stock turnover is 4 times.

Calculate, showing all your workings:

(a) turnover
(b) gross profit margin,
(c) cost of goods sold,
(d) net profit for the year,
(e) expenses charged to the profit and loss account,
(f) opening stock.

QUESTION 7

T. Tsungai operates a hair salon in Kwekwe. Her business made a gross profit of 33 % on
the net sales of $750 000 during the financial year which ended on 31 December 2010. The
net profit was 15% of net sales. The rate of stock turnover was 10 times. The opening stock
was $60 000.
Calculate, for the year,
(a) the gross profit,
(b) cost of sales,
(c) the mark-up,
(d) the closing stock,
(e) purchases,
(f) Expenses

53 | P a g e
QUESTION 8
The following Balance Sheet appeared in the books of Rudo Fashion Boutique.
Balance Sheet as at 31 March 2006

The following information was available:

i. Sales amounted to $600 000
ii. The margin(gross profit to sales percentage) was 25%
iii. Total purchases amounted to $390 000
Calculate:
(a) the percentage of net profit to sales
(b) the gross profit,
(c) the cost of sales
(d) the mark-up,
(e) the rate of stock-turn,
(f) the working capital,
(g) the current ratio

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QUESTION 9
M. Mambo operates a business as a retailer. The following information is found in her
records at the end of the financial year ended 31 December 2005:
$
Purchases 456 000
Sales 609 000
Opening stock 21 000
Closing stock 39 000
Sales returns 9 000
Purchases returns 3 000
Customs duty 15 000
You are required to calculate
(a) the turnover for the year,
(b) the cost of goods sold,
(c) the gross profit,
(d) the mark-up,
(e) the margin,
(f) the rate of stock-turn.

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QUESTION 11
On 1 January 2005, E. Mwase started a business with $500 000 in a business bank account.
On the same day he brought into the business his personal furniture worth $100 000. Mwase
does not maintain proper accounting records.
The following information is made available on 31 December 2005:
$
Motor vehicles, at cost 200 000
Furniture, at cost 100 000
Stock 110 000
Debtors 90 000
Bank 70 000
Cash 35 000
Creditors 80 000
Prepaid expenses 9 500
Accrued expenses 5 000
Additional information.
i. During the year, Mwase withdrew $50 000 cash and goods worth $15 000 from
the business for personal use.
ii. Fixed assets are to be depreciated as follows:
Motor vehicles 20% on cost,
Furniture 10% on cost.
iii. Bad debts of $2 000 are to be written off, and a provision for doubtful debts of 2%
of debtors is to be created.
You are required to prepare a Balance Sheet as at 31 December 2005, showing clearly the net
profit or net loss for the year

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QUESTION 12
Thandiwe Dube, a trader, did not keep her books on the double entry system. However, she is
able to provide the following information about her financial position at 1 January 2009:
$
Motor vehicles at cost 60 000
Shop fittings at cost 30 000
Inventory 25 500
Trade receivables 18 700
Trade payables 12 800
Electricity owing 600
She has also provided the following summary of her bank account for the year ended 31
December 2009:

All cash and cheques received were immediately deposited into the bank account.

The following information was also available on 31 December 2009:

(i) Inventory was valued at $28 000.
(ii) Depreciation on the motor vehicles is 10% per annum on cost.
(iii)Shop fittings were valued at $27 500.
(iv) Insurance prepaid amounted to $1 700 and rent owing $1 500.
(v) Discounts received from creditors amounted to $800.
(vi) Receivables totalled $16 800 and payables amounted to $10 900.
You are required to
(a) Calculate capital on 1 January 2009
(b) Draw up the total receivables and total payables accounts to show credit sales and
purchases respectively. [4]
(c) Prepare the Income statement for the year ended 31 December 2009
(d) Draw up the statement of financial position as at December 2009

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QUESTION 13
D. Dhaka is a sole proprietor who does not keep proper books of accounts.
The following information was taken from his books:
1 January 2010 31 December 2010
$ $
Accounts receivables 26 430 40 120
Accounts payables 15 980 24 450
Inventory 32 100 40 630
Motor vehicles at cost 51 000 ?
Shop fittings at cost 42 000 ?
His summary of the bank account for the year ended 31 December 2010 was as follows:

All cash and cheques received were immediately banked.

The following information was also available and must be taken into account:
1. The loan was taken on 1 July 2010 and is payable in 2015.
2. Depreciation is calculated on cost as follows:
Motor vehicles at 20% per annum
Shop fittings at 10% per annum
3. At 31 December 2010, insurance paid in advance was $1 770.
4. Included in the amount of shop fittings is a table and a chair worth $7 500 which
Dhaka took to use at his house.
5. K. Kondo, a debtor owing $200, was declared bankrupt. The amount was written off
as a bad debt. This amount was not included in the debtor‟s figure on 31 December
2010.

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You are required to prepare:
(a) The Total Receivables Account to calculate the figure for credit sales.
(b) TheTotal Payables Account to calculate the figure for credit purchases.
(c) The Income Statement for the year ended 31 December 2010.
(d) The Statement of Financial Position as at 31 December 2010.

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QUESTION 14
S. Mukanya who runs a small business, does not keep a complete set of records. She provides
the following information:
Balance Sheet as at 1 January 2005

Mukanya makes all her purchases on credit and all sales on cash basis.

All cash received was immediately banked except cash used to pay:
Stationery $50 000
Drawings $35 000
Cash receipts from sales for the year amounted to $1 200 000.
$
Payments by cheque were: rent 90 000
Wages 125 000
Stationery 45 000
Fixtures 80 000
Creditors 650 000
Additional information available at 31 December 2005:
i. Stock in trade was worth $210 000.
ii. Stock of unused stationery was valued at $20 000
iii. Trade creditors amounted to $120 000.
iv. Discount received from creditors for the year totalled $15 000.
v. Depreciate motor vans by10% of book value and fixtures by $56 000.
You are required to prepare:
(a) the Total Creditors Account clearly showing the purchases for the year,
(b) the Bank Account balanced at 31 December 2005,
(c) the Trading , Profit and Loss Account for the year ended 31 December 2005,
(d) Mukanya‟s Balance sheet as at 31 December 2005.

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TOPIC: NON PROFIT MAKING ORGANISATION/ACCOUNTS OF CLUBS AND
SOCIETIES
QUESTION 1
Rufaro Social Club had the following assets and liabilities on 1 January 2005.
$
Subscription paid in advance 8 000
Subscriptions due but unpaid ` 12 000
Stock of stationery 2 000
Clubhouse at cost 2 000 000
Furniture at cost 150 000
Stock of refreshments 380 000
Creditors for refreshments supplies 200 000
Prepaid electricity 10 000
The following information relates to the club‟s affairs for the year ended 31 December 2005.

Additional information on 31 December 2005 was as follows:

i. Subscriptions owing amounted to $40 000
ii. Subscriptions prepaid amounted to $16 000
iii. Stock of refreshments were valued at $480 000.
iv. Creditors for refreshments supplies totalled $150 000.
v. Clubhouse was valued at $3 000 000. No depreciation was charged on the clubhouse.
vi. Depreciation on office furniture is to be 10% per annum on cost for each month of
ownership.
You are required to:
(a) Calculate the accumulated fund at 1 January 2 005.

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 (b) Prepare the refreshments trading account for the year ended 31 December 2005.
(c) Prepare the Income and Expenditure Account for the year ended 31 December 2005
(d) Prepare the balance sheet as at 31 December 2005.

QUESTION 2
The Balance Sheet of Nyameni Social Club as at 31 December 2006 was as follows:

Given below is a summary of receipts and payments during the year ended 31 December
2007. $
Subscriptions received 67 200
Bar sales 200 000
Payments to bar suppliers 150 000
Rates and water 22 600
Electricity 25 300
General expenses 33 800
Insurance 18 000
The following additional information was available on 31 December 2007.
i. Arrears of subscriptions shown in the last balance sheet have all been received
ii. Subscriptions in arrears at the end of the year amounted to $1 900.
iii. Cash at bank was $31 300.
iv. Bar stocks were valued at $16 800.
v. Bar creditors amounted to $21 000
vi. Equipment is to be depreciated by $15 000
vii. Amount owing for electricity was $9 000.
You are required to prepare:
(a) the Bar Trading Account for the year ended 31 December 2007,
(b) the Income and Expenditure Account for the year ended 31 December 2007

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QUESTION 3
Kuwirirana Social Club was formed on 1 January 2010. On 31 December 2010, the treasurer
presented the following Receipts and Payments Account:

The treasurer reported that:

i. subscriptions owing from members at 31 December 2010 amounted to $1
900,
ii. insurance is charged at $150 per month,
iii. furniture is to be depreciated by 10%
Prepare the Income and Expenditure Account for the year ended 31 December 2010.

QUESTION 4
On 1 January 2009, Mpumelelo Social Club had the following assets and liabilities:
$
Clubhouse 50 000
Furniture 15 000
Bar inventory 6 000
Subscriptions in advance 400
Subscriptions in arrears 1 000
Sundry expenses accrued 200
Cash at bank 7 000
Bar creditors 1 600
On 31 December 2009, the treasurer presented a list of receipts and payments as follows:

Receipts $
Subscriptions received 32 000
Bar sales 40 400
Dance collections 900

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Payments
Payments to bar creditors 15 600
Sundry expenses 2 400
Secretary expenses 11 500
New furniture 3 000
Water and electricity 1 700
Dance expenses 500
The following additional information was available on 31 December 2009:
(i) Bar inventory was valued at $4 000.
(ii) Bar creditors amounted to $5 400.
(iii)Outstanding water bill was $300.
(iv) Furniture is to be depreciated by 10%.
(v) Subscriptions received in advance amounted to $800. There were no subscriptions in
arrears.
You are required to
(i) Calculate the Accumulated Fund at 1 January 2009
(ii) Prepare the bar trading account for the year ended 31 December 2009
(iii)Prepare the Income and expenditure for the year ended 31 December 2009.

QUESTION 5
Free choice is a club with members who subscribe annually for a fee of $400. On 1 Jan 2000
the beginning of their financial year, there were members who had not paid their previous
subscriptions amounting to $4 800 whilst some had already paid the 2000 subscriptions in
advance for $5 600. During the year 2000, $20 400 was received from members in respect of
subscriptions.
At the end of the year the following balances remained:
Subscriptions in advance $6 000
Subscriptions in arrears $4 400

Required:
Prepare a subscription account showing clearly the amount to be transferred to the Income
and Expenditure Account.

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QUESTION 6
The following figures were taken from the records of Young Musicians Association for the
Year end 31 July 2007

RECEIPTS $
Members Subscriptions 26 000
Sale of refreshments 42 000
Donations 20 000
Annual grant 16 000
Gate takings (live shows) 54 000
Sale of disco tickets 36 000

PAYMENTS
Suppliers of refreshments 11 500
Purchase of refreshments 9 000
Refreshments sales person‟s wages 8 400
Hire of hall 13 600
Disco expenses 17 200
Repair to musical instrument 6 600
Furniture 21 000
Insurance 910
Electricity and water 4 500

Note: All receipts and payments were processed through the club’s bank account
ADDITIONAL INFORMATION
(i) Subscription on 1 August 2006:
In arrears $3 700
In advance $2 400
Subscriptions on 31 July 2007
In arrears $980
In advance $400

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(ii) Stocks: refreshments on 1 August 2006 $740
Refreshment on 31 July 2007 $2 800
Disco tickets on 31July 2007 $2 200
(iii) Amount outstanding to creditors:
1 August 2006 $1 550
31July 2007 $ 860
(iv) Insurance prepaid $110 on 31 July 2007
Electricity and Water owing $1 000 on 31 July 2007
(v) Assets on 1 August 2006
Furniture $50 000 at cost
Musical Instruments $40 000 at cost
Cash at Bank $45 000
(vi) Depreciation is provided as follows
Furniture 10% on cost
Musical instruments 20% per annum on cost

Required to:
a) Calculate the Accumulated Fund as at 1 August 2006
b) Write the Receipts and Payments Account for the year ended 31 July 2007
c) Prepare the Refreshment Trading Account for the year ended 31 July 2007
d) Prepare the Income and Expenditure Account for the year ended 31 July 2007
e) Prepare the Balance Sheet as at 31 July 2007
f) State two limitations of Receipts and Payments Account
g) State two difference between Receipts and Payments Account and Income and
Expenditure Account.

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TOPIC: DEPARTMENTAL ACCOUNTS
QUESTION 1
Muwami Stores has two departments,Electrical and Clothing. The following information was
available for the year ended 31 December 2012.
Electrical Clothing
$ $
Inventory on 1 January 2012 6 000 1 600
31 December 2012 2 500 2 400
Purchases 20 000 8 500
Customs duty 1 000
Railage inwards 500 300
Sales 35 000 12 000
You are required to:
(i) Prepare the Departmental Trading Account for the year ended 31 December 2012 in
columnar form,showing clearly the gross profit or loss for each department.
(ii) Calculate the percentage mark up for each department.
(iii)Calculate the rate of turnover for Clothing department.

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QUESTION 2
(a) M.Mhute opened a pharmacy on 1 January 2016 with two departments;Cosmetics and
Drugs. The following information was taken from her books on 31 December 2016.
$
Sales: Cosmetics 300 000
Drugs 360 000
Fixtures and fittings at cost 145 000
Purchases: Cosmetics 134 850
Drugs 183 250
Freight charges on imported drugs 40 000
Trade receivables 29 500
Drawings 40 050
Trade payables 13 400
Insurance 11 000
Motor vans at cost 350 000
Salaries and wages 112 000
Returns outwards: Cosmetics 2 500
Drugs 3 500
Cash 10 800
Bank 24 050
Capital 390 000
Interest earned 10 100
The following additional information was available on 31 December 2016.
1. Closing inventory: Cosmetics $34 850
Drugs $23 250
2.A bad debt of $2 500 was written off.
3. A provisiion for doubtful debts equal to 5% of net trade receivables was created.
4.Mhute took some drugs which had cost $500,for her family but no record was made.
5.Salaries and wages amounting to $7 900 were owing
6.Insurance prepaid amounted to $1 000

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7.Motor vans are to be depreciated at the rate of 25% per annum on cost
8.Fixtures and fittings are to be valaued at $100 000
9.An amount of $1 400 was accrued for interest earned.
Prepare
(i) The Departmental Trading Account for the year ended 31 December 2016 in
columnar form,showing clearly the gross profit for each department.
(ii) A combined Profit and Loss Account for the year ended 31 December 2016.

QUESTION 3
Munyati‟s business in divided into two departments, furniture and electrical. The following
balances were extracted from his books on 30 June 2017.

(a) Prepare a Departmental Trading Account for the year ended 30 June 2017
(b) For each of the two departments,calculate
(i) Gross profit margin
(ii) Rate of inventory turnover

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QUESTION 4
James Gulabs runs a business with two departments,Bricks and Tiles. The following
information was extracted from his books on 31 December 2012 after the preparation of the
Departmental trading Account.
$
Gross Profit Bricks 112 000
Tiles 188 000
Capital 720 000
Drawings 60 000
Premises 500 000
Equipment at cost 75 000
Motor vehicles (book value) 95 000
10% Mortgage loan 100 000
Trade receivables 26 000
Trade payables 20 000
Salaries and wages 135 000
Rates and insurance 10 000
Mortgage interest paid 5 000
Cash at bank 22 000
The following information is also available on 31 December 2012:
(i) Inventory was valued as follows:
1. Bricks $81 000
2. Tiles $126 000
(ii) Provide depreciation on motor vehicles at 20% per annum on book value and 10% per
annum on equipment using the straight-line method.
(iii)Purchases in Bricks Department include $5 000 for Bricks for extension of premises.
The Purchases figure was corrected but no other entry was made.
(iv) Wages owing amounted to $5 000 and $3 000 was prepaid for insurance.
(v) A provision for doubtful debts equal to 5% of the trade receivables is to be created.
(vi) 10% Mortgage loan was acquired on 1 January 2012
(vii) No record was made in the books for bank charges amounting to $2 000.
Prepare
(a) The combined Profit and Loss Account for the year ended 31 December 2012.
(b) The Satement of Financial Position as at 31 December 2012.

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QUESTION 5
Mahari Trading Stores has two departments,Groceries and Clothing. The following balances
were extracted from the books on 3o June 2009.
Groceries Clothing
$ $
Inventory : 1 July 2008 4 000 8 000
30 June 2009 8 000 12 000
Purchases for the year 27 000 37 000
Sales 36 000 40 000
Customs duty - 400
Carriage inwards 1 000 2 000
Additional information:
During the year,the owner took some clothing worth $5400 for private use but this was not
recorded in the books of account.
(a) You are required to prepare a Departmental Trading Account,in columnar form, for
the year ended 30 June 2009.
(b) For each the two departmental calculate the
(i) Margin
(ii) Mark
(iii)Rate of stock turnover

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QUESTION 6
C. Dube , a chemist, opened a pharmacy on 1 January 2004 which has two departments,
Cosmetics and Drugs. The following is a list of balances extracted from her books on 31
December 2004.

Dr Cr
$ $
Capital 800 200
Fixtures and fittings 290 000
Sales: Cosmetics 600 000
Drugs 720 000
Purchases: Cosmetics 250 700
Drugs 350 000
Customs duty on imported drugs 80 000
Debtors 59 000
Creditors 26 800
Electricity and water 67 000
Drawings 50 000
Rent and rates 30 100
Insurance 22 000
Motor vans at cost 700 000
Carriage inwards: Cosmetics 19 000
Drugs 16 500
Salaries and wages 150 000
Cash 14 600
Bank 48 100
2 147 000 2 147 000
The following information is available on 31 December 2004.
i. Stock is valued at $69 700 for Cosmetics and $46 500 for drugs.
ii. An amount of $5000 is to be written off against debtors as bad debts.
iii. A provision for doubtful debts equal to 5% of debtors is to be created.

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 iv. Wages owing on 31 December 2004 amount to $15 800.
v. Motor vans are to be depreciated at the rate of 15% per annum on cost.
vi. Fixtures and fittings are to be valued at $200 000 on 31 December 2004.
You are required to prepare the:
(a) Departmental Trading Account for the year ended 31 December 2004, in columnar
form, showing clearly the gross profit for each department.

(b) Combined Profit and Loss Account for the year ended 31 December 2004.

(c) Statement of Financial Position for the business as at 31 December 2004.

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QUESTION 7
S. Kawondera runs a retail shop with two departments, the Furniture and Clothing. The
following Trial Balance was extracted from his books on 31 December 2006:
Trial Balance as at 31 December 2006
Debit Credit
$ $
Purchases: Furniture 80 000
Clothing 132 000
Sales: Furniture 350 000
Clothing 410 000
Stock at January 2006: Furniture 15 600
Clothing 33 100
Carriage inwards on furniture 1 300
Returns inwards: Clothing 3 000
Discounts-allowed and received 700 1 850
Insurance 1 500
Bad debts 420
Carriage on sales 1 600
Debtors and creditors 6 000 2 000
Bank 1 800
Fixtures and fittings, at cost 400 000
Provision for depreciation on fixtures and fittings, 1 January 2006 50 000
Land and buildings 800 000
Drawings 2 700
Capital 662 270
1 477 920 1 477 920

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The following information is to be taken into account:
i. Stocks at 31 December 2006:
Furniture 20 000
Clothing 35 000
ii. Bank charges amounting to $100 were not recorded in the books.
iii. A provision for bad debts of 5% on debtors is to be created.
iv. Insurance paid covers 15 months to 31 March 2007.
v. Fixtures and fittings are to be depreciated at 10% per annum using the diminishing
balance method. There is no depreciation on land and buildings.
You are required to prepare the:
(a) Departmental Trading Account, in columnar form, for the year ended 31 December
2006.
(b) Combined Profit and Loss Account for the year ended 31 December 2006.

(c) Statement of Financial Position as at 31 December 2006.

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TOPIC : PARTNERSHIP FORMATION
QUESTION 1
A. Mpala and W. Nkomo are in a partnership and their agreement has the following:

 Profits and losses are to be shared between Mpala and Nkomo in the ratio 3:2
respectively.

 Interest on capital is to be allowed at 10% per annum.

 Mpala is to receive an annual salary of $36 000.

 Interest on drawings is to be charged at 5% per annum.

 Capital accounts are to be maintained.

The following balances were extracted from the partnership books on 31 December 2005
after the preparation of the Trading Account.

i. Interest on loan at the rate of 10% per annum is owing on 31 December 2005.
ii. Furniture is to e depreciated by 15% per annum on the reducing balance method.
iii. A telephone bill of $350 is owing on 31 December 2005. Telephone is included in
general expenses.
You are required to prepare the:
(a) Partnership Profit and Loss and Appropriation Accounts for the year ended 31 December
2005.
(b) Statement of Financial Position as at 31 December 2005.

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QUESTION 2
Shiri and Patai are trading as equal partners. Their partnership deed has the following:
i. Interest on capital is allowed at the rate of 10% per annum.
ii. Interest is charged on drawings at 5% per annum.
iii. Shiri is entitled to an annual salary of $20 000.
The following information was extracted from the books of the partnership on 31 December
2005 after the preparation of the trading account $
Capitals, 1 January 2005 Shiri 60 000
Patai 90 000
Current accounts, 1 January 2005: Shiri 8 600 Dr
Patai 3 600 Cr
Drawings: Shiri 15 000
Patai 18 000
Gross profit for the year 238 610
Trade debtors 64 390
Salary paid to Shiri 16 000
Trade expenses 136 060
Motor van 120 000
Trade creditors 43 000
Cash at bank 5 760
Rent 12 000
Stock 39 400
Additional information
i. Trade expenses owing $700
ii. Prepaid trade expenses $300
iii. Shiri introduced a personal computer valued at $30 000 on 1 October 2005. No entry
has been made in the books in respect of this transaction.
iv. Motor van is to be depreciated by 15% of the book value and the computer by 10%.
You are required to prepare the:
(a) Partnership Profit and Loss and Appropriation Accounts for the year ended 31 December
2005.
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QUESTION 3
Thandeka and Jabulani are in partnership. Their financial year ends on 31 December.
Their partnership agreement provides for the following:
(i) Interest on drawings is allowed at 5% per annum
(ii) Interest on capital is allowed at 10% per annum
(iii)Thandeka is entitled to a monthly salary of $1 000
(iv) Profits and losses are to be shared in the ratios of Thandeka 2/3 and Jabulani 1/3
The following was their trial balances as at 31 December after the preparation of the Income
Statement for the year.

Debit Credit
$ $
Capital: Thandeka 50 000
Jabulani 30 000
Drawings: Thandeka 5 000
Jabulani 3 000
Current accounts: Thandeka 500
Jabulani 1 500
Salary paid to Thandeka 7 000
Trade receivables 9 500
Trade payables 7 500
Net profit 25 600
Inventory at 31 December 2012 6 000
Cash in hand 1 200
Vehicles at cost 10 000
Land and buildings at cost 60 000
Equipment at cost 20 000
Prepaid expenses 800
Provision for depreciation on: Vehicles 2 500
Equipment 6 000
124 000 124 000

You are required to prepare

(a) The Profit and Loss Appropriation Account for the year year ended 31 December
2012.
(b) The Statement bof Fianncial Position as at 31 December 2012.
(c) Show the details of the current accounts either within the Statement of Financial
Position or in separate ledger accounts with the Final balances shown in the Statement
of Financial Position.

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QUESTION 4
Charles and Don are trading as partners. The following information was available from their
books on 31 December 2017.
$
Net profit for the year 25 000
Land and buildings at cost 40 000
Fixtures and fittings at cost 35 000
Motor van at valuation 12 000
Provision for depreciation: Fixtures and fittings 01/01/2017 10 000
Trade receivables 14 000
Trade payables 9 000
Provision for doubtful debts 500
Inventory 7 200
Cash at bank 2 300
Prepaid Insurance 200
Accrued wages 700
Capital accounts 1 Jan 2017: Charles 33 000
Don 22000

The following current accounts were also given on 31 December 2017

The partnership depreciates fixtures and fittings at 20% per annum on net book value
The motor van was brought into the business by Charles on 31 December 2017 as an
additional capital.
(a) Prepare the partnership appropriation account for the year ended 31 December 2017
(b) Prepare a statement of financial position as at 31 December 2017

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Calculate the partnerships
(i) Profit sharing ratio
(ii) Interest on drawings ratio
(iii) Interest on capital accounts ratio

TOPIC: COMPANY ACCOUNTS

QUESTION 1
Nehanda Distributors Ltd had the following balances after the preparation of the Income
Statement on 31 December 2020.
Issued Share Capital $
100 000 ordinary shares of $1 each 100 000
200 000,10% preference shares of $2 each 400 000
Non-Current assets 500 000
5% Debentures 100 000
Profit for the year ended 31 December 2020 70 000
Profit and Loss Account,31 December 2019 85 000
Interim preference dividends paid 20 000
General reserve,31 December 2019 30 000
The following is information is also available:
(i) Authorised share capital $
150 000 Ordinary shares of $1 each 150 000
200 000,10% Preference shares of $2 each 400 000
(ii) On 31 December 2020,the directors:
Paid the remainder of preference shares dividend for the year.
Paid a dividend of $0,10 per share on ordinary shares
Transferred $2 500 to the General reserve
(a) Prepare a Statement of Changes in Equity for the year ended 31 December 2020.
(b) Prepare the statement of Financial Position extract as at 31 December 2020 showing
the capital structure.

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QUESTION 2
The following information relates to Gava Ltd.

Authorised capital
200 000 Ordinary shares of $1 each
50 000 8% Preference Shares of $2 each

Issued capital
150 000 Ordinary shares of $1 each
50 000 8% Preference shares of $2 each
General reserve, 1 January 2017 $15 000
Retained income,1 January 2017 $ 3 500
The following additional information was provided:
- Net profit before debenture interest was $40 000
- Interim dividend to ordinary shares of 5% was paid
- 1 000,3% Debentures of $50 each
- General reserve be increased to $20 000
- Ordinary shares to receive a final dividend of 10c per share.
- Preference shares be paid their dividends in full.
Prepare the
(a) Statement of changes in Equity for the year ended 31 December 2017
(b) Statement of financial position ( Capital structure extract) as at 31 December 2017

TOPICS: BUSINESS ETHICS

(a) Identifying the professional ethics in accounting.
(b) Explain the importance of ethics in business.

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