14/16, AHMADU BELLO WAY, VICTORIA ISLAND, LAGOS

SCHOOL OF MANAGEMENT SCIENCES

MARCH, 2014 EXAMINATIONS

Course Code: BHM 724 Credit Unit: 3

Course Title: Financial Accounting

Time Allowed: 2 1/2 Hours

Instructions:

1. Attempt question number one (1) and any other three (3).

2. Question number 1 is compulsory and carries 25 marks while the other 3 questions carry 15 marks

each.

3. Present all your points in coherent and orderly manner.

1(a) Island Sports Club was formally established on January 1, 2009, and was granted the free use of

a clubhouse at Greenland. The following are its financial transactions for the year ended

December 31, 2009 as recorded in the treasurer’s only financial record, the cash book:

Dr Receipts and Payments Account Cr

You are required to prepare a statement of receipts and payments for the year ended December 31, 2009. (15 marks)

(b) Write short notes on the following:

(i) Manufacturing costs (5 marks)

(ii) Basic principles in valuing closing stock of manufacture (5 marks)

2(a) What is ‘financial statement’. (3 marks)

(b) Name and discuss the main components of the financial statement. (9 marks)

(c) Explain the double entry system of recording transactions. (3 marks)

3. The following are extracted from the trial balance of Nicgara Nigeria Limited, a manufacturing concern, in respect of the year ended 30th September, 2008:

N

Opening stock:

Raw materials 12,500

Work-in-progress 8,600

Finished goods 14,800

Purchase of raw materials 68,200

Carriage inwards 3,410

Factory wages 18,390

Rent of factory 4,800

Factory general expenses 8,360

Salaries of factory supervisors 8,740

Salaries of salesmen and office staff 22,570

Rent of office 5,400

Insurance of factory equipment 2,840

Bad debts 960

Office general expenses 12,930

Depreciation:

Factory equipment 16,280

Office and distribution equipment 14,880

Sales less returns 215,000

Power and lighting (factory) 5,610

Power and lighting (general) 3,200

Closing stocks were valued at the following amounts at year end:

Raw materials 14,480

Work-in-progress 10,250

Finished goods 18,390

Work-in-progress is normally valued in this firm at prime cost plus a portion of factory overheads.

Required:

Prepare the manufacturing, trading, and profit and loss accounts as at end of year.

(15 marks)

4(a) Why would a sole proprietor be interested in having an idea of profits earned? (5 marks)

(b) What are the tax implications for a sole proprietor? (4 marks)

(c) Explain ‘contra entry’. (3 marks)

(d) What do you understand by the Imprest system? (3 marks)

5(a) What is ‘goodwill’?. (3 marks)

(b) The estimated future accrued profits of the partnership (less partners’ remuneration of N25,000)

is N75,000. If the yield at 10% per annum is expected and the value of the tangible assets is

N500,000, what is the value of the goodwill? (5 marks)

(c) Discuss the features of non-profit organizations. (7 marks)

6. (a) Enumerate and explain five accounting concepts. (10 marks)

(b) Tunde and Haruna, being partners in business, share profits and losses in the ratio of 60:40.

The partners agreed to admit Eze to a 25% interest. What is the new profit sharing ratio of

the partners? (5 marks)

For the 2015 – till date past questions for this course CLICK HERE

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