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Signature ……………………………………………………….

810/1
Principles of Accounts
2½hours
2017

ACEITEKA JOINT MOCK EXAMINATIONS 2017

UGANDA CERTIFICATE OF EDUCATION
PRINCIPLES OF ACCOUNTS
TIME: 2½ HOURS

Instructions:
This paper consists of two sections A and B
Answer all questions in section A and any other four questions in section B
All questions in section B carry equal marks

For examiner’s use

QTN MARKS
SEC A
21
22
23
24
25
26
TOTA
L

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 SECTION A: (20 MARKS)

1. Which of the following are liabilities?

(i) Interest receivable
(ii) Rent due
(iii) Unused stationery
(iv) Commission received in advance

A: (i) and (iii) B:( i) and (ii) C: (iii) and (iv) D: (ii) and (iv)

2. Which one of the following accounts appear in the purchases ledger?

A: debtors’ personal accounts B: capital account
C: Creditors’ personal accounts D: Otim’s account

3. Determine the cost of sales given opening stock shs 950,000 withdraw of goods shs 140,000
purchases shs 1,900,000, Returns inwards shs 150,000 and closing stock shs 1,210,000
A: shs 1,500,000 B: shs 1,350,000 C: shs 1,650,000 D: shs 1,630,000

4. What is the effect on the Balance Sheet if the owner of the business pays a creditor from personal
resources?
A: liabilities decrease; capital increases B: both liabilities and capital decrease
C: liabilities increase; capital decreases D: both liabilities and capital increase

5. Which account records the debit entry when goods are sold on credit?
A: Sales account B: Purchases account
C: Cash account D: Debtors’ personal account

6. Determine circulating capital given stock shs 2,000,000 debtors shs 1,200,000 Bank shs
5,000,000 and cash shs 1,800,000
A: shs 10,000,000 B: shs 8,000,000 C: shs 6,000,000 D: shs 3,600,000

7. What is the double entry for discount received?

A: Dr: Discount received account Cr: Cash book
B: Dr: Cash book , Cr: Discount received account
C: Dr: Discount received account Cr: Creditors’ personal account
D: Dr: Creditors’ personal account, Cr: Discount received account

8. Given credit purchases amounting to shs 1,400,000 subject to 5% cash discount if payment is
made within one month, and 2 ½ % within two months. How much was paid if the debtor paid
after two months?
A: Shs 1,330,000 B: shs 1,365,000 C: shs 1,400,000 D: shs 1,295,000

9. A firm bought a motorvan for shs 6,400,000 on January 1st 2013. If depreciation is charged at a
rate of 25% using the declining balance method, determine the book value of the asset as at
December 31st 2014.
A: shs 3,200,000 B: shs 3,600,000 C: shs 4,000,000 D: shs 4,800,000

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10. Which of the following describe the Income and Expenditure account?
(i) It is a real account
(ii) It records only revenue items
(iii) It reveals a surplus or deficit
(iv)Income is debited to this account.

A: (i) and (iv) B: (ii) and (iv) C: (ii) and (iii) D: (i) and (ii)

11. The amount of money value that the business owes the investors is referred to as
A: drawings B: liability C: capital D: assets

12. Determine the Bank statement balance given cash deposits shs 6,000,000 withdraws shs
1,500,000 , cheques banked shs 2,000,000 and bank charges shs 100,000.
A: shs 6,400,000Cr B: shs 6,400,000Dr
C: shs 5,600,000Dr D: shs 5,600,000Cr

13. Determine the amount to be transferred to the profit and loss account given that on 1/1/2015
debit balance in salaries account shs 500,000 salaries paid during the year shs 9,500,000 and
salaries accrued at the end of the year shs 400,000.
A: shs 8,600,000 B: shs 9,600,000 C: shs 10,000,000 D: 10,400,000

14. In case discount allowed is undervalued, what effect will this have on the affairs of the business?
A: Net profit will be understated B: Gross profit will be understated
C: Net profit will be overstated D: Gross profit will be overstated

15. Which one of the following provides information to be recorded in the purchases journal?
A: duplicate copies of invoices received B: original copies of invoices issued
C: duplicate copies of invoices issued D: original copies of invoices received

16. What are the correcting entries if shs 200,000 received from Kirabo was debited to her account?
A: Dr: Suspense Account shs 200,000 , Cr: Kirabo’s account shs 200,000
B: Dr :Cash book shs 200,000 Cr: Kirabo’s account shs 200,000
C: Dr: Suspense Account shs 400,000 Cr: Kirabo’s account shs 400,000
D: Dr: Cash book shs 400,000 , Cr: Kirabo’s account shs 400,000

17. What is Male’s share of profits if he is in partnership with Maria given;

- Profit sharing ratio 3:2
- Capital contributions: Male shs 8,000,000,
Maria shs 5,000,000
- Interest on capital 5%
- Net profit for the year shs 1,440,000
A: shs 474,000 B: shs 790,000 C: shs 316,000 D: shs 650,000

18. Which one of the following accounts is prepared to determine a surplus or deficit?
A: Receipts and Payments account B: Subscriptions account
C: Accumulated fund account D: Income and Expenditure account

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19. Which one of the following is debited to Income and Expenditure account?
A: Donations received B: Interest received on bank deposits
C: Subscriptions received D: Payment of salaries

20. How much should be posted to the suspense account if payment of cash shs 400,000 to a creditor
was debited to cash book?
A: shs 800,000Cr B: shs 400,0000Cr
C: shs 800,000Dr D: shs 400,000Dr

SECTION B: (80 MARKS)

21. a) State the fundamental accounting equation. (01 mark)
b)The following transactions were obtained from the books of MULONGO ENTERPRISES for
the month of May 2017

May 1st Commenced business with cash at bank shs 40,000,000

3rd Bought goods on credit from Kikuubo Traders for shs 8,000,000
5th Returned goods valued at shs 2,00,000 to Kikuubo traders
8th Sold goods on credit to Asiimwe stores shs 3,000,000
10th Asiimwe stores returned goods valued at shs 700,000
13th Received a cheque for shs 2,300,000, from Asiimwe stores
16th Paid Kikuubo Traders by cheque shs 6,000,000
18th Purchases by cheque shs 4,500,000
19th Sold goods for shs 3,800,000 and received a cheque.
22nd Introduced a personal vehicle valued at shs 9,000,000 into the business.
24th Sold goods on credit to Nanteza for shs 1,500,000
27th Nanteza returned goods valued at shs 500,000.
30th Received a cheque from Nanteza for the amount due

Required:

Post the above transactions to the relevant ledger accounts, balance off the accounts and extract a
Trial Balance. (19 marks)

22. (a) State any four (4) causes of depreciation. (04 marks)
(b) KIKU TRANSPORTERS LTD who are dealers in second hand motor vehicles bought a
motor vehicle on Jan 1st 2013 at a cost of shs 12,000,000 and another on April 1st, 2014 at shs
8,000,000 all paying by cheque.
The policy of the firm is to maintain one motor vehicle account and depreciate all motor vehicles
at a rate of 10% pa using the straight line method.
If the accounting year ends every December 31st , prepare the following accounts and extracts for
the first three years.
(i) Motor vehicle account (04 marks)
(ii) Provision for depreciation account (05 marks)
(iii) Profit and loss account extract (02 marks)

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 (iv) Balance sheet extract (05 marks)
23. The trial balance below was extracted from the books of NABIMANYA RETAILERS as at
December 31st 2016.

NABIMANYA RETAILERS
TRIAL BALANCE
AS AT DECEMBEER 31st 2016
PARTICULARS DR (SHS) CR(SHS)
Purchases and sales 7,950,000 14,550,000
Stock Jan 1st, 2016 2,550,000
Returns 300,000 450,000
Drawings 600,000
Motor vehicle 12,000,000
Furniture 3,000,000
Motor expenses 900,000
Debtors and creditors 4,500,000 6,750,000
Electricity 450,000
Discounts 540,000 660,000
Bad debts written off 360,000
Commission received 1,050,000
Provision for bad debts 390,000
Cash balance 3,750,000
Bank balance 3,000,000
Capital 10,050,000
36,900,000 36,900,000

Additional Notes:
(i) Closing stock was valued at shs 1,900,000
(ii) Commission income due and not yet received shs 150,000
(iii) Charge a provision of 3% on debtors for bad and doubtful debts.
(iv) Depreciate all fixed assets by 10% on cost

Required:

(a) Trading, Profit and Loss account for the year ended using the Vertical format.(11 marks)
(b) Balance sheet as at that date. (09 marks)

24. (a) State any 2 errors which do not affect the agreement of the trial balance. (02 marks)
(b) The trial balance of MUTOORO INVESTMENTS prepared on June 30th 2015 failed to agree
with an amount of shs 390,000 appearing as a shortage in the debit column.
The book-keeper posted the difference to the suspense account; and thereafter prepared an
Income Statement which revealed a Net profit of shs 5,900,000. On investigation, the
following errors were discovered.

(i) The sales journal had been overvalued by shs 500,000

(ii) Credit purchases from Okello of shs 150,000 had been credited to Akello in error
(iii) Discount allowed account had been understated by shs 90,000.
(iv)Interest received account had been undercast by shs 200,000
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 (v) A sale of old furniture for shs 600,000 cash had been credited to the sales account.
Required:

(i) Pass journal entries to correct the above errors (Ignore narration) (05 marks)
(ii) Prepare the suspense account (04 marks)
(iii) Show the effect of each error on the reported Net profit, and prepare a statement of
revised net profit. (09 marks)

25. A firm makes a provision for bad debts and discount allowed at a rate of 10% and 5% of debtors
respectively. The debtors balances as at December 31st were as follows;

Year Amount (Shs)

2014 1,500,000
2015 900,000
2016 3,000,000

Prepare the following accounts and extracts for the years 2014, 2015 and 2016

(i) Provision for Bad debts account (04 ½ marks)

(ii) Provision for discount allowed account (04 ½ marks)
(iii) Extract of profit and loss account (03 ½
marks)
(iv)Extract of the Balance sheet (07 ½ marks)

26. (a) Give any three reasons why there is need to prepare Control accounts (03 marks)
(b) The following balances were obtained from the books of MITI AND SONS for the year 2012

2012 SHS
July Balance on purchases ledger 2,065,200
1st Balance on sales ledger 2,902,800
1st Purchases during the year 24,093,100
30th Sales during the year 25,075,000
30th Purchases returns 24,700
30th Sales returns 47,300
30th Cash paid to suppliers 22,903,500
30th Cash received from customers 33,917,900
30th Discount received 476,300
30th Discount allowed 593,200
30th Bad debts w/o 27,800
30th Purchases ledger transferred to sales ledger
30th Closing balances : 383,700
30th Purchases ledger balance 2,370,100
30th sales ledger balance 3,009,200

Required:
(i) Purchases ledger control Account (07½ marks)
(ii) Sales ledger control Account (09½ marks)
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End