a] Outline four activities that accountants normally undertake within business organisations.

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Donald Hudson
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1 QUESTION 1 a] Outline four activities that accountants normally undertake within business organisations. (8 marks) b] Financial Accounting and Management Accounting are two different branches of accounting that have developed over time to meet the information requirements of the users of financial information. Provide an appropriate definition of financial accounting and management accounting. (4 marks) Outline four differences between management accounting and financial accounting. (8 marks) QUESTION 2 Your client, Visionrich Ltd, has given you a copy of its latest financial statements for the year ended 31 December, Statement of Financial position as at 31 December, 2013 Non-Current Assets Cost Dep. NBV Cost Dep NBV GHS GHS GHS GHS GHS GHS Motor vehicles 120,000 63,000 57,000 95,000 49,000 46,000 Long term investments , ,000 Current Assets 120,000 63,000 97,000 95,000 49, ,000 Inventories 82,000 58,000 Receivables 36,000 24,000 Cash in hand & at bank 8,000 73, , ,000 Page 1 of 6

2 Less current liabilities Payables 46,750 35,500 Taxation 9,000 13,000 Dividends Payables 5,250 61,000 13,500 65,000 62,000 93, , ,000 Less long term Liabilities 15% PW loan - (50,000) Net Assets 162, ,000 Stated Capital 110, ,000 Income Surplus 52,000 34,000 Equity 162, ,000 Summarised Income Statement for the year ended 31 December, GHS GHS Turnover 246, ,000 Trading Profit 36,000 55,000 Loan Interest (3,750) (7,500) Profit before taxation 32,250 47,500 Taxation (9.000) (13,000) 23,250 34,500 Dividends declared by the directors in 2013 and 2012 were GH 5,250 and GH 13,500 respectively. Required: Prepare a Statement of Cash Flows for the year ended 31 December, 2013 in accordance with IAS 7, Statement of Cash Flows. (20 marks) Page 2 of 6

3 QUESTION 3 a] Write short notes on the following: {iii} Accounting Concepts Debit Note Purchase Order (9 marks) b] Agyeiwaah Enterprise has been in business since The following information relating to Accounts Receivable has been presented to you. GHS 31 st December, , st December, , st December, ,000 After discussion with Agyeiwaah, the owner, she agreed that he following amount should be written off as Bad debt. GHS 31 st December, , st December, , st December, ,000 Allowance for doubtful debt is at the rate of 5% on the Net Accounts Receivables. The balance on Allowance for doubtful debts at the beginning of 2009 was GHS35,000. Required Prepare: Bad Debt Account (2 marks) Allowance for Doubtful Debts (3 marks) {iii} Income Statement Extracts (3 marks) {iv} Statement of Financial Position Extracts (3 marks) Page 3 of 6

4 QUESTION 4 Kekeli owns a Second hand clothing business at Kokomlemle. At 31 st December, 2013 the following balances appeared in her books. Dr GH Cr GH Capital (1/1/2013) 128,000 Property, Plant & Equipment (PPE) at cost 120,000 Accumulated Depreciation on PPE at 1/1/ ,000 Inventory 20,000 Purchases and Sales 75,000 Returns 4,500 2,000 Carriage outwards 8,000 Carriage inwards 3,400 Trade Receivables 35,000 Trade Payables 40,000 Allowance for doubtful debts 15,000 Bad debts 10,000 Staff costs 45,000 Discounts 9,000 15,000 Advertising 22,000 Electricity & Water Bills 27,000 15% Loan Note 26,800 Rent & Rates 15,000 Sundry Expenses 18,000 Cash 15,000 Bank 48,900 Personal Drawings 15, , ,800 Page 4 of 6

5 The following additional information was made available: a] Inventory at 31 st December, 2013 was valued at GH 18,500. b] Depreciation at the rate of 20% on cost is to be provided on property, plant and equipment. c] An amount of GH 5,000 is outstanding in respect of staff cost at 31 st December, d] Allowance for doubtful debts is to be adjusted to GH 10,000 at 31 st December, 2013 as a result of improvement in debt recovery efforts. You are required to prepare: a] The Income Statement for the year ended 31 st December, (10 marks) b] A statement of financial position as at 31 st December, (10 marks) QUESTION 5 Agbeli, Anagote and Abolo have been in partnership sharing profit and loss in the ratio 3:2:1 respectively. As a result of a prolonged disagreement between the partners, they decided to dissolve the partnership as at 1 st January, The statement of financial position as at 31 st December, 2013 was as follows: GH Freehold Premises 120,000 Motor Vehicles 150,000 Equipment 120,000 Stocks 180,000 Debtors 120,000 Bank 30, ,000 Capital Accounts Agbeli 240,000 Anagote 200,000 Abolo 130,000 Current Accounts Agbeli 40,000 Anagote 12,000 Abolo 8,000 Creditors 90, ,000 Page 5 of 6

6 Additional information Freehold Premises was disposed off at GH 84,000. Equipment was sold at GH 180,000 {iii} Inventory realised on amount ofgh 114,000. {iv} Creditors were paid in full less a cash discount of 3%. {v} The Motor vehicle was taken over by Agbeli for GH 132,000. {vi} During the winding up, liquidation related expenses of GH 12,000 were paid. {vii} Debtors realised GH 110,000. Required Prepare the following accounts to close the books of the firm: {iii} Realisation Account Partners Capital Account (in columnar form) Bank Account. Page 6 of 6

SOLUTION: FINANCIAL ACCOUNTING FUNDAMENTAL, MAY (a) The role of the accountant in an organization can be analyzed as follows:

SOLUTION: FINANCIAL ACCOUNTING FUNDAMENTAL, MAY (a) The role of the accountant in an organization can be analyzed as follows: SOLUTION 1 (a) The role of the accountant in an organization can be analyzed as follows: - Preparation and presentation of timely accurate financial/management accounts to manage to help management interpret