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INTRODUCTION
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This Revision kit (Questions and Answers) contains kasneb past examination past papers and their suggested answers as provided by a team of lecturers who are experts in their area of training. The book is intended to help the learner do enough practice on how to handle exam questions and this makes it easy to pass kasneb exams.
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PAPER NO. 1 FINANCIAL ACCOUNTING
UNIT DESCRIPTION
This paper is intended to introduce the candidate to the overall purpose of accounting, applicable regulations, the accounting treatment and presentation of basic transactions and preparation and analysis of financial statements.
LEARNING OUTCOMES
A candidate who passes this paper should be able to:
- Prepare books of original entry and basic ledger accounts under the double entry system
- Prepare basic financial statements of sole traders, partnerships, companies, manufacturing entities and not for profit organisations
- Comply with the regulatory framework in the accounting field
- Analyse financial statements by use of ratios and statement of cash flows
- Demonstrate basic understanding of public sector accounting framework
CONTENT
- Introduction to Accounting
- Nature and Purpose of Accounting
- The objective of Financial Accounting
- The Elements of Financial Statements
- The Accounting Equation
- The Users of Accounting Information
- The Accounting Process and Systems
- The Source documents such as receipts and invoices
- The Books of Prime entry/Original Entry from the journals, cashbooks, Petty cash books and registers
- The Ledger and the concept of double entry
- The Trial Balance
- The Financial Statements
- Regulation and other principles guiding the accounting profession
- The legal sources of regulation
- The professional sources of regulation (local and international bodies) and ethical requirements
- Accounting Standards
- Common accounting principles/concepts
- Qualities of useful financial information
- Accounting for Assets and Liabilities
- Property, Plant and Equipment (depreciation, acquisition, disposal, exchange, excluding revaluations)
- Intangible Assets
- Financial Assets and Financial Liabilities (Definition, Examples and Classification only)
- Inventory
- Cash in hand and cash at bank (bank reconciliation statements)
- Trade Receivables (Measurement and credit Losses)
- Trade payables
- Accrued Incomes/Expenses and Prepaid Incomes/Expenses
- Financial Statements of a sole trader
- Statement of Profit or Loss
- Statement of Financial Position
- Financial Statements of a partnership
- The partnership deed/agreement
- The statement of Profit or Loss and appropriation
- Partners’ capital and current accounts
- The statement of financial position
- Accounting treatment and presentation when there is a change in profit/loss sharing ratio, admission/retirement of a partner, dissolution of a partnership
- Financial Statements of a company
- Important concepts of a company (Ordinary and Preference share capital, issuing new shares by way of full market price, bonus shares and rights issue, Reserves, retained profits and corporation tax)
- Statement of Profit or Loss
- Other comprehensive incomes
- Statement of Financial Position
- Statement of Cash flows
- Financial Statements of a manufacturing entity
- Manufacturing Statement of production
- Statement of Profit or Loss
- Statement of Financial Position
- Statements of a not-for-profit entity
- Objectives of Not-for-profit organisations
- Statement of Income and Expenditure
- Statement of Financial Position
- Correction of errors and preparing financial statements with incomplete records
- Types and causes of errors
- Correcting errors in source documents, the books of prime entry, the ledger, the trial balance and financial statements
- Reasons for incomplete information
- Preparation of financial statements from incomplete information
- Analyzing Financial Statements
- The objective of analysing financial statements
- Analysing financial statements using financial ratios (Liquidity, Profitability, Solvency, Efficiency, Investor/Value and Cash Flow categories)
- Accounting in the Public Sector
- Features of public sector entities (as compared to private sector)
- Structure of the public sector (National and county governments, State Corporations, Departments and Agencies)
- Regulation and oversight (International Public Sector Accounting Standards Board, Director of Accounting Services, National Treasury, Parliamentary Committees, Accounting Officers at national and county levels)
- Objectives of public sector financial statements and Standards (IPSAS)
- Accounting techniques in public sector such as budgeting, cash, accrual, commitment and fund accounting)
PART A
SAMPLE QUESTIONS
TOPIC 1
INTRODUCTION TO ACCOUNTING
QUESTION 1
April 2022 Question One A
Highlight five elements of financial statements. (5 marks)
QUESTION 2
December 2021 Pilot Paper Question One B
Accountants prepare and maintain financial records for firms and other institutions and extract financial statements as guided by various International Accounting Standards and other statutory regulations.
Required:
Identify and explain any six users of financial information, indicating clearly the area of interest for each. (12 marks)
QUESTION 3
November 2018 Question One A
In the context of the International Accounting Standards Board’s Conceptual Framework for Financial Reporting, explain the five elements of financial statements. (10 marks)
QUESTION 4
November 2016 Question Three A
Highlight five roles of the accountant general in your country. (5 marks)
SAMPLE WORK
Complete copy of CPA FINANCIAL ACCOUNTING Revision Kit is available in SOFT copy (Reading using our MASOMO MSINGI PUBLISHERS APP) and in HARD copy
Phone: 0728 776 317
Email: info@masomomsingi.com
TOPIC 2
THE ACCOUNTING PROCESS AND SYSTEMS
QUESTION 1
December 2021 Question Three A
Identify four books of original entry used in accounting. (4 marks)
QUESTION 2
May 2021 Question Five A
Highlight four uses of the general journal. (4 marks)
QUESTION 3
November 2020 Question Five C
Outline six challenges that might be faced by an organisation that is switching from a manual accounting system to a computerised accounting system. (6 marks)
QUESTION 4
November 2019 Question Five A
Highlight five factors that an organisation might consider when sourcing for accounting software. (5 marks)
QUESTION 5
May 2018 Question Two A
Highlight six uses of the general journal. (6 marks)
QUESTION 6
November 2016 Question Five D
Discuss four advantages of computerised accounting systems. (8 marks)
PART B
SAMPLE ANSWERS
TOPIC 1
INTRODUCTION TO ACCOUNTING
QUESTION 1
April 2022 Question One A
Element of financial statement
- Income statement
- Statement of changes in Equity
- Statement of financial position
- Statement of cashflows
- Notes to the financial accounts
QUESTION 2
December 2021 Pilot Paper Question One B
Users of financial information and there are of interest
- Shareholders – they require accounting information in order to know the profit generated by entity for them to know whether to invest in entity for them to know whether to invest in the entity.
- Financial institutions (lenders and creditors): They require accounting information in order to determine whether the company can pay loans when granted and the value of assets in the business which can be used as a security for loan.
- Management – They require financial information in order to make decisions which are sufficient for operation of the business.
- Government – They require accounting information in orders to determine the tax payable by the business and the profitability of such business in order to determine the level of economic growth.
- Employees – The require accounting information to be able to negotiate for better terms of employment and to evaluate future of employment.
- Customers – they require accounting information so as to determine the reliability of the business.
- General public – They require accounting information so as to determine how the company supports the public in corporate social responsibility.
QUESTION 3
November 2018 Question One A
Explanation of five elements of financial statement
Elements – are the classes of items contained in the financial statements. the element include
- Assets – Are resources owned by the company
- Liabilities – Are obligations of a company
- Expenses –Are cost incurred on something
- Revenue – Money earned for providing services or selling expenses
- Gain – An increase in resources / wealth
QUESTION 4
November 2016 Question Three A
Roles of the accountant general
- To prepare asset liability and capital entries by compiling and analyzing account information
- To document financial transactions by entering account information
- To recommend financial actions by analyzing accounting options
- Maintain accounting controls by preparing and recommending policies and procedures
- To report to management regarding financial activity of the company
SAMPLE WORK
Complete copy of CPA FINANCIAL ACCOUNTING Revision Kit is available in SOFT copy (Reading using our MASOMO MSINGI PUBLISHERS APP) and in HARD copy
Phone: 0728 776 317
Email: info@masomomsingi.com
TOPIC 2
THE ACCOUNTING PROCESS AND SYSTEMS
QUESTION 1
December 2021 Question Three A
Books of original entry used in accounting
- Sales journal – To record sales invoices issued by the firm when selling goods on credit
- Purchases journal – to record purchases invoices received by the business from suppliers, when buying goods on credit
- Return inwards journal – To record sales return from customers
- Return outwards journal – to record purchases returns to suppliers
QUESTION 2
May 2021 Question Five A
Uses of general journals
- To record opening notes
- To record purchase and sale of fixed assets on credit
- To record possession of the asset
- To record transfer of records
- To record correction of errors
- To record closing entries
QUESTION 3
November 2020 Question Five C
Challenges that might be faced by an organization that is switching from manual accounting system to a computerized system
- Heavy cost of installation
- Cost of training the staffs
- Fear of employment for staff members
- They may system failure
- Disruption of work
- Time consuming
- Unanticipated errors mot known may occur
QUESTION 4
November 2019 Question Five A
Factors to consider when sourcing TV accounting software
- User friendly software – The ease of use should be a major consideration
- Initial cost – whether the firm can be able to afford the initial asking in terms of cost Resources needed to build, deploy and maintain the software
- Competitive advantage – whether the software can give the organization an additional advantage in terms of cost saving
- Flexibility – whether the software can accommodate other business events
QUESTION 5
May 2018 Question Two A
Uses of general journals
- To record opening notes
- To record purchase and sale of fixed assets on credit
- To record possession of the asset
- To record transfer of records
- To record correction of errors
- To record closing entries
QUESTION 6
November 2016 Question Five D
Advantages of computerized accounting systems
- Automation-it reduces paper work
- Data access – it is easier and give easier access to data files when needed.
- Accuracy – it completely accurate and data is automatically processed
- Security – the data can be password protected.
- Spread – it is easier to access the data.
TOPIC 3
REGULATION AND OTHER PRINCIPLES GUIDING THE ACCOUNTING PROFESSION
QUESTION 1
December 2021 Question Five C
SAMPLE WORK
Complete copy of CPA FINANCIAL ACCOUNTING Revision Kit is available in SOFT copy (Reading using our MASOMO MSINGI PUBLISHERS APP) and in HARD copy
Phone: 0728 776 317
Email: info@masomomsingi.com
