CPA FOUNDATION LEVEL
CIFA FOUNDATION LEVEL
FINANCIAL ACCOUNTING
MONDAY: 1 August 2022. Morning paper. Time Allowed: 3 hours.
Answer ALL questions. Marks allocated to each question are shown at the end of the question. Show ALL your workings.
Do NOT write anything on this paper.
QUESTION ONE
(a) The finance manager of Wali Traders has provided you with the following information:
Sh. “000”
Cost of sales 22,000
Gross profit 9,500
Interest expense 3,000
Tax expense 1,116
Net profit after tax 4,464
Required:
(i) Interest coverage ratio. (3 marks)
(ii) Gross profit margin ratio. (2 marks)
(b) Grace Solo is a sole trader who runs a commercial bakery. She does not maintain proper records, but has provided
you with the following information.
31 December 2020 31 December 2021
Sh. “000” Sh. “000”
Factory building (at cost) 425,000 425,000
Motor vehicles (at cost) 93,000 ?
Furniture and fittings (at cost) 13,500 13,500
Inventories 13,700 14,930
Accounts receivable 11,450 11,570
Accounts payable 15,460 16,800
Loan 19,500 ?
Salaries and wages due 8,420 8,250
Prepaid rates 7,750 7,860
Rent received in advance 7,900 8,180
Capital 502,320 ?
Accumulated depreciation:
• Factory building 8,500 17,000
• Motor vehicles 2,580 5,422
• Furniture and fittings 1,600 3,200
CA11 & CF11 Page 1
Out of 5
, Additional information:
1. Grace Solo’s cash summary is provided as follows:
Cash summary
Sh. “000” Sh. “000”
Balance brought forward 1,880 Accounts payable 57,760
Accounts receivable 98,810 Cash purchases 15,640
Cash sales 28,860 Salaries and wages 15,820
Rent 13,700 Rates 9,140
Capital 72,250 Motor vehicle expenses 10,320
Bank charges 7,650
General expenses 4,770
Loan interest 800
Loan repayment 17,500
Motor vehicle 10,500
Drawings 11,100
- Balance carried forward 54,500
215,500 215,500
2. During the year ended 31 December 2021, discounts allowed amounted to Sh.873,000 while discounts
received amounted to Sh.886,000.
3. During the year ended 31 December 2021, Grace Solo took goods valued at Sh.800,000 for her personal
use.
Required:
(i) Statement of profit or loss for the year ended 31 December 2021. (10 marks)
(ii) Statement of financial position as at 31 December 2021. (5 marks)
(Total: 20 marks)
QUESTION TWO
(a) Outline four objectives of accounting regulatory bodies. (4 marks)
(b) The following are the statements of financial position of Sabuni Ltd., a soap manufacturing company for year
ended 30 June 2022 and 30 June 2021:
Sabuni Ltd.
Statements of financial position as at 30 June:
2022 2021
Sh. “000” Sh. “000”
Non-current assets:
Property, plant and equipment 48,080 37,460
Current assets:
Inventories 13,420 11,980
Accounts receivable 6,020 5,120
Cash and cash equivalents 450 1,008
Total current assets 19,890 18,108
Total Assets 67,970 55,568
Equity and liabilities:
Share capital 4,160 3,800
Share premium 540 450
Retained earnings 34,182 21,618
Revaluation reserve 1,080 720
Total equity 39,962 26,588
Non-current liabilities:
Long-term loan 13,500 14,400
Total non-current liabilities. 13,500 14,400
Current liabilities:
Accounts payable 12,448 12,700
Accrued expenses 800 800
Bank overdraft 360 540
Current tax 900 540
Total current liabilities 14,508 14,580
Total equity and liabilities 67,970 55,568
CA11 & CF11 Page 2
Out of 5
CIFA FOUNDATION LEVEL
FINANCIAL ACCOUNTING
MONDAY: 1 August 2022. Morning paper. Time Allowed: 3 hours.
Answer ALL questions. Marks allocated to each question are shown at the end of the question. Show ALL your workings.
Do NOT write anything on this paper.
QUESTION ONE
(a) The finance manager of Wali Traders has provided you with the following information:
Sh. “000”
Cost of sales 22,000
Gross profit 9,500
Interest expense 3,000
Tax expense 1,116
Net profit after tax 4,464
Required:
(i) Interest coverage ratio. (3 marks)
(ii) Gross profit margin ratio. (2 marks)
(b) Grace Solo is a sole trader who runs a commercial bakery. She does not maintain proper records, but has provided
you with the following information.
31 December 2020 31 December 2021
Sh. “000” Sh. “000”
Factory building (at cost) 425,000 425,000
Motor vehicles (at cost) 93,000 ?
Furniture and fittings (at cost) 13,500 13,500
Inventories 13,700 14,930
Accounts receivable 11,450 11,570
Accounts payable 15,460 16,800
Loan 19,500 ?
Salaries and wages due 8,420 8,250
Prepaid rates 7,750 7,860
Rent received in advance 7,900 8,180
Capital 502,320 ?
Accumulated depreciation:
• Factory building 8,500 17,000
• Motor vehicles 2,580 5,422
• Furniture and fittings 1,600 3,200
CA11 & CF11 Page 1
Out of 5
, Additional information:
1. Grace Solo’s cash summary is provided as follows:
Cash summary
Sh. “000” Sh. “000”
Balance brought forward 1,880 Accounts payable 57,760
Accounts receivable 98,810 Cash purchases 15,640
Cash sales 28,860 Salaries and wages 15,820
Rent 13,700 Rates 9,140
Capital 72,250 Motor vehicle expenses 10,320
Bank charges 7,650
General expenses 4,770
Loan interest 800
Loan repayment 17,500
Motor vehicle 10,500
Drawings 11,100
- Balance carried forward 54,500
215,500 215,500
2. During the year ended 31 December 2021, discounts allowed amounted to Sh.873,000 while discounts
received amounted to Sh.886,000.
3. During the year ended 31 December 2021, Grace Solo took goods valued at Sh.800,000 for her personal
use.
Required:
(i) Statement of profit or loss for the year ended 31 December 2021. (10 marks)
(ii) Statement of financial position as at 31 December 2021. (5 marks)
(Total: 20 marks)
QUESTION TWO
(a) Outline four objectives of accounting regulatory bodies. (4 marks)
(b) The following are the statements of financial position of Sabuni Ltd., a soap manufacturing company for year
ended 30 June 2022 and 30 June 2021:
Sabuni Ltd.
Statements of financial position as at 30 June:
2022 2021
Sh. “000” Sh. “000”
Non-current assets:
Property, plant and equipment 48,080 37,460
Current assets:
Inventories 13,420 11,980
Accounts receivable 6,020 5,120
Cash and cash equivalents 450 1,008
Total current assets 19,890 18,108
Total Assets 67,970 55,568
Equity and liabilities:
Share capital 4,160 3,800
Share premium 540 450
Retained earnings 34,182 21,618
Revaluation reserve 1,080 720
Total equity 39,962 26,588
Non-current liabilities:
Long-term loan 13,500 14,400
Total non-current liabilities. 13,500 14,400
Current liabilities:
Accounts payable 12,448 12,700
Accrued expenses 800 800
Bank overdraft 360 540
Current tax 900 540
Total current liabilities 14,508 14,580
Total equity and liabilities 67,970 55,568
CA11 & CF11 Page 2
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