Course :ACC 111 INTRODUCTORY ACCOUNTING
TEST ONE (MARKING SCHEME)
Date : 8 December 2018
Question one
Briefly explain the
following elements of reliably as one quantitative characteristics of financial
statements
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a. Substance over form
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The financial
statement to be reliable events and transaction should be reported in economic
reality and not merely their legal form.
Substance
over form requires that if substance of transaction differs from its legal
form than such transaction should be accounted for in accordance with its
substance and economic reality.
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b. Prudence
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The
financial statement to be reliable accountants should exercise a degree of
caution when judgements needed in making the estimates required under
conditions of uncertainty, such that assets or income are not overstated and
liabilities or expenses are not understated.
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c. faithfulness
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To be
reliable, information must represent faithfully the transactions and other
events it either purports to represent or could reasonably be expected to
represent. Thus, for example, a balance sheet should represent faithfully the
transactions and other events that result in assets, liabilities and equity
of the enterprise at the reporting date which meet the recognition criteria.
Faithfull
representation requires that transactions and events should be accounted for
in a manner that represent their true economic substance rather than the mere
legal form
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d. completeness
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To be reliable, the
information in financial statements must be complete within the bounds of
materiality and cost. An omission can cause information to be false or
misleading and thus unreliable and deficient in terms of its relevance.
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e. Neutrality
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To be
reliable, the information contained in financial statements must be neutral,
that is, free from bias. Financial statements are not neutral if, by the
selection or presentation of information, they influence the making of a
decision or judgement in order to achieve a pre-determined result or outcome.
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Question two:
Record
the following transactions in three column cash book of Miss Agrippina the
trader
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date
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details
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1st Nov.2018
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She started business with loan
1,000/= USD in his business bank account
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2nd Nov.2018
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she withdraw for office use
500/=USD
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3rd Nov.2018
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she injected additional capital
400/= USD
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4th Nov.2018
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she made puchases paying cheque
405/= USD gived cash discount 10%.
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5th Nov.2018
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she made credit sales of 200/= USD
to Agriper General trader allowing him
trade discount 10%
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6th Nov.2018
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she make sales of good worth
300/=USD, giving trade discount 6% and cash discount 2%
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7th Nov.2018
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she made credit sales of 200/= USD
to Tipper ltd.
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8th Nov.2018
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she withdraw for private use
50/=USD from bank
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9th Nov.2018
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she made cash sales 450/= USD cash
discount 10%
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10th Nov.2018
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she deposited cash 150/= USD into
bank
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11th Nov.2018
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she received a chaque from tipper
ltd paying whole of his debt allowing 5% cash discount
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12th Nov.2018
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Agriper General trader paid his
account in full by cheque allowing him 5% cash discount
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13th Nov.2018
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Paid Agrypnia 10/= USD
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14th Nov.2018
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she deposited cheque received from
tipper ltd together with cash 30/= USD
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15th Nov.2018
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paid rent 5/= USD, Rates 2/= USD,
Electricty 4/= USD by chaque
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20th Nov.2018
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A cheque from Agriper General
trader was dishonoured by the bank, charging disturbance fees 6/= USD
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30th nov.2018
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5% of all sales she made made was
paid as tax in cash
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ANSWERS
| AGRIPINA CASH BOOK (THREE COLUNM ) | ||||||||||||
| FOR THE MONTH OF NOVEMBER 2018 | ||||||||||||
| DATE | DETAILS | LF | D.ALL | CASH | BANK | DATE | DETAILS | LF | D.REC | CASH | BANK | |
| 1st Nov.2018 | BANK LOAN | 1,000.00 | 2nd Nov.2018 | CASH | C | 500.00 | ||||||
| 2nd Nov.2018 | BANK | C | 500.00 | 4th Nov.2018 | PURCHASES | 45.00 | 405.00 | |||||
| 3rd Nov.2018 | CAPITAL | 400.00 | 8th Nov.2018 | DRAWINGS | 50.00 | |||||||
| 6th Nov.2018 | SALES | 5.64 | 276.36 | 10th Nov.2018 | BANK | C | 150.00 | |||||
| 9th Nov.2018 | SALES | 45.00 | 405.00 | 13th Nov.2018 | AGRYPNIA | 10.00 | ||||||
| 10th Nov.2018 | CASH | C | 150.00 | 14th Nov.2018 | BANK | C | 190.00 | |||||
| 11th Nov.2018 | TIPPER LTD | 10.00 | 190.00 | 14th Nov.2018 | BANK | C | 30.00 | |||||
| 12th Nov.2018 | AGRIPER G T | 9.00 | 171.00 | 15th Nov.2018 | ||||||||
| 14th Nov.2018 | CASH | C | 190.00 | 15th Nov.2018 | RENT | 5.00 | ||||||
| 15th Nov.2018 | CASH | C | 30.00 | 15th Nov.2018 | RATES | 2.00 | ||||||
| 20th Nov.2018 | AGRIPER G T | (9.00) | 15th Nov.2018 | ELECTRICITY | 4.00 | |||||||
| 20th Nov.2018 | AGRIPER G T | 171.00 | ||||||||||
| 20th Nov.2018 | BANK CHARGE | 6.00 | ||||||||||
| 30th Nov.2018 | 30th Nov.2018 | TAX | 47.5 | |||||||||
| 30th Nov.2018 | BALANCE C/D | 1,343.86 | 398.00 | |||||||||
| 60.64 | 1,771.36 | 1,541.00 | 45.00 | 1771.36 | 1,541.00 | |||||||
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