ATD LEVEL I
PILOT PAPER
INTRODUCTION TO FINANCIAL ACCOUNTING
December 2021. Time Allowed: 3 hours.
Answer ALL questions. Marks allocated to each question are shown at the end of the question. Show ALL your workings.
QUESTION ONE
(a) Highlight four source documents used in accounting. (4 marks)
(b) Describe three external users of accounting information indicating the information needs for each user. (6 marks)
(c) Discuss five disadvantages of a sole proprietorship as a form of business. (10 marks)
(Total: 20 marks)
QUESTION TWO
The following balances were extracted from the books of Mzalendo Ltd as at 31 December 2020:
Debit Credit
Sh.“000” Sh.“000”
Trade receivables and trade payables 4,500 3,960
General reserves (I January 2020) 3,800
Gross profit for the period 9,500
Inventories (31 December 2020) 3,200
Ordinary share capital 7,000
10% preference capital 2,000
Bad debts written off 120
Salaries and wages 2,940
Furniture and fittings (Cost Sh.7million) 5,600
Land at cost 13,695
Revenue reserves (I January 2020) 2,100
Directors fees 900
Cash balance 150
12% Debentures 3,000
Discounts Allowed and Discounts received 170 85
Allowance for doubtful debts 400
Debenture interest paid 300
Rental income 800
Interim preference dividends paid 180
Interim ordinary dividends paid 130
Corporation tax paid 410
Prepaid director fees 150
Accrued rental income 200
32,645 32,645
Additional information:
1. Provisions as at 31 December 2020 are to be made as follows:
Audit fees Sh.360,000
Outstanding debenture interest.
2. Included in the salaries and wages is Sh.140,000 which relates to the month of January 2021.
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PILOT PAPER
INTRODUCTION TO FINANCIAL ACCOUNTING
December 2021. Time Allowed: 3 hours.
Answer ALL questions. Marks allocated to each question are shown at the end of the question. Show ALL your workings.
QUESTION ONE
(a) Highlight four source documents used in accounting. (4 marks)
(b) Describe three external users of accounting information indicating the information needs for each user. (6 marks)
(c) Discuss five disadvantages of a sole proprietorship as a form of business. (10 marks)
(Total: 20 marks)
QUESTION TWO
The following balances were extracted from the books of Mzalendo Ltd as at 31 December 2020:
Debit Credit
Sh.“000” Sh.“000”
Trade receivables and trade payables 4,500 3,960
General reserves (I January 2020) 3,800
Gross profit for the period 9,500
Inventories (31 December 2020) 3,200
Ordinary share capital 7,000
10% preference capital 2,000
Bad debts written off 120
Salaries and wages 2,940
Furniture and fittings (Cost Sh.7million) 5,600
Land at cost 13,695
Revenue reserves (I January 2020) 2,100
Directors fees 900
Cash balance 150
12% Debentures 3,000
Discounts Allowed and Discounts received 170 85
Allowance for doubtful debts 400
Debenture interest paid 300
Rental income 800
Interim preference dividends paid 180
Interim ordinary dividends paid 130
Corporation tax paid 410
Prepaid director fees 150
Accrued rental income 200
32,645 32,645
Additional information:
1. Provisions as at 31 December 2020 are to be made as follows:
Audit fees Sh.360,000
Outstanding debenture interest.
2. Included in the salaries and wages is Sh.140,000 which relates to the month of January 2021.
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