UNIVERSITY EXAMINATIONS: 2018/2019
ORDINARY EXAMINATION FOR THE DIPLOMA IN
INFORMATION TECHNOLOGY/ DIPLOMA IN
BUSINESS INFORMATION TECHNOLOGY
DIT 302: FINANCIAL MANAGEMENT
DBIT 106: FUNDAMENTALS ACCOUNTING
FULLTIME/PARTIME
DATE: NOVEMBER, 2018 TIME: 2 HOURS
INSTRUCTIONS: Answer Question One and Any Two Questions.
QUESTION ONE
i) The following transactions are extracted from the books of Wali enterprises for the month
ended 31 October 2018.
March
1 Started in business with Kshs.800,000 in the bank and Ksh. 500,00 in cash
2 Bought goods for sale Ksh. 145,000 paying by a cheque.
5 Cash sales Kshs 500,000
6 Paid wages in cash Kshs 100,000
7 Sold goods by cheque Kshs 300,000.
9 Bought goods for cash Kshs 120, 000
10 Bought goods on credit Ksh. 200,000 from Victoria Ventures
12 Paid wages in cash Kshs.100, 000
13 Sold goods on credit Kshs.80,000 to Lions investment
15 Bought shop fixtures on credit from Mbao Ltd Kshs.74,000
17 Paid Victoria Furnitures by cheque Kshs.150,000
21 Paid Mbao Ltd Kshs.74, 000 in cash
24 Lions Investment paid us his account by cheque Kshs.64,500
30 Pauline lent us Kshs.100,000 by cash
31 Bought a motor van paying by cheque Kshs 625,000
Required
a) Enter the transactions in the relevant ledger accounts in the books of Wali Enterprises.
(12 Marks)
b) Balance off the ledger accounts and extract a trial balance for the months of October 2018
(8 Marks)
c) Explain FIVE reasons why accounting is so critical to any organization, use an example of
an organization of your choice. (10 Marks)
QUESTION TWO
a) Accounting is universally applicable irrespective of the type of business and or organization,
Identify and explain FIVE accounting principles that ensures standardization in the accounting
practice. (10 Marks)
Ii) Explain FIVE users of accounting information and how the information influences their
decision making in the organization. (10 Marks)
QUESTION THREE
The following trial balance of XYZ LTD, presents information for the year ending 31 st October 2018, Use it
to answer the questions below:
Required:
I) Draw up a trading, profit and loss account for the year ended 30 September 2018 (10 Marks)
Ii) Prepare a statement of financial position as at that date 30 September 2018. (10 Marks)
QUESTION FOUR
a) Discuss FIVE accounting errors and how they can be corrected
in the pursuit of ensuring accuracy in accounting information
(10 Marks)
b) Explain the following terms as used in accounting (10 Marks)
i) Asset
ii) Liability
iii) Capital
iv) Expense
v) Income
QUESTION FIVE
The following information was gathered from the books of ABC ltd for the month of January
2018 use the information to answer the following questions.
January 2018
1 Balances brought forward: Cash Sh.230; Bank Sh.4,756.
“ 2 The following paid their accounts by cheque, in each case deducting 5
percent discounts: R Burton Sh.140; E Taylor Sh.220; R Harris Sh.800.
“ 4 Paid rent by cheque Sh.120.
“ 6 J Cotton lent us Sh.1, 000 paying by cheque.
“ 8 We paid the following accounts by cheque in each case deducting a 5 per cent
cash discount: N Black Sh.360; P Towers Sh.480; C Rowse Sh.800.
“ 10 Paid motor expenses in cash Sh.44.
“ 12 H Hankins pays his account of Sh.77, by cheque Sh.74, deducting Sh.3 cash
discount.
“ 15 Paid wages in cash Sh.160.
“ 18 The following paid their accounts by cheque, in each case deducting 5 per cent
cash discount: C Winston Sh.260; R Wilson & Son Sh.340; H Winter Sh.460.
“ 21 Cash withdrawn from the bank Sh.350 for business use.
“ 24 Cash Drawings Sh.120.
“ 25 Paid T Briers his account of Sh.140, by cash Sh.133, having deducted Sh.7 cash
discount.
“ 29 Bought fixtures paying by cheque Sh.650.
“ 31 Received commission by cheque Sh.88.
Required
i) Prepare a three column cashbook for the month of January in the books of ABC ltd
(20 Marks)
