EXAMINATION NO.
______________________
2021 EXAMINATIONS
ACCOUNTING TECHNICIAN PROGRAMME
T1.1 - ACCOUNTING/1
THURSDAY, 2 DECEMBER 2021 TIME ALLOWED: 3 HOURS
9:00 AM – 12:00 NOON
INSTRUCTIONS
1. You are allowed 15 minutes reading time before the examination begins during which you
should read the question paper and, if you wish, make annotations on the question paper.
However, you are not allowed, under any circumstances, to open the answer book and start
writing or use your calculator during this reading time.
2. This paper is divided into two sections.
3. Section A – This ONE question is compulsory and MUST be attempted. The question
carries 40 marks.
4. Section B – Has FOUR questions each carrying 20 marks. Candidates should attempt any
THREE questions from this section.
5. All workings must be shown.
6. Begin each answer on a fresh page.
7. DO NOT OPEN THIS PAPER UNTIL YOU ARE INSTRUCTED BY THE
INVIGILATOR.
This question paper contains 7 pages
This question paper must not be removed from the examination hall.
SECTION A (40 Marks)
This question is compulsory and must be attempted.
1 (a) (i) Define the following accounting terms:
(1) Statement of financial position. 2 Marks
(2) Statement of profit or loss. 2 Marks
(ii) List any five users of accounting information. 5 Marks
(iii) Describe the following types of accounting:
(1) Financial accounting 2 Marks
(2) Management accounting 2 Marks
(iv) Describe the role of the International Accounting Standards Board.
2 Marks
(b) Mphatso Kale Limited supplies fresh farm produce to main retail chain stores
across Malawi. The assistant accountant has extracted the following balances
from the books of accounts as at 30 June 2021.
K K
Debit balance Rent and rates 81,200
Dividend 435,000 Discount allowed 43,500
Goodwill 870,000 Cash at bank 725,000
Land & Buildings 1,740,000 Cash in hand 11,600
Plant & Machinery 1,160,000 Repairs 52,200
Loose tools 87,000 Printing & Stationery 15,950
Trade receivables 1,537,000 Bad debts 92,800
Opening inventory–1/07/2020 1,160,000 Advertisement 971,500
Purchases 1,479,000
Wages 580,000 Credit balances
Carriage inwards 29,000 Sales 3,480,000
Carriage outwards 11,600 Provision for bad debts 84,100
Electricity 168,200 Loan at 6% interest 580,000
Sales returns 58,000 Payables 1,490,310
Furniture & fixtures 34,800 Purchase returns 72,500
General expenses 152,250 Discount received 43,500
Interest loan 17,400 Commission received 58,000
Salaries 145,000 Capital 5,849,590
Additional information
1 Closing inventory as at 30 June 2021 was K2,269,830.
2 Depreciation should be provided as follows:
(a) Plant and machinery at 5% on straight line method.
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(b) Furniture & fixtures at 20% on straight line method.
3 Provision for doubtful debts at 5% on trade receivables balance.
4 Accrued expenses as at 30 June 2021 were as follows:
(a) Wages K29,000
(b) Rent & rates K14,500
5 Interest on loan has been paid for six months only.
6 Sales Manager is entitled to commission of 2% on sales and has to be
provided for.
Required
(i) Prepare Mphatso Kale Ltd’s statement of profit or loss for the year
ended 30 June 2021. 14½ Marks
(ii) Prepare Mphatso Kale Ltd’s statement of financial position as at 30
June 2021. 10½ Marks
(TOTAL: 40 MARKS)
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SECTION B (60 Marks)
Answer any three questions from this section.
2 (a) (i) Define capital expenditure. 2 Marks
(ii) Define revenue expenditure. 2 Marks
(iii) List four business documents that form part of source documents.
2 Marks
(iv) List six types of items found in a cash book. 3 Marks
(b) Gibson Mzilwa provides engineering services and he has recorded the following
transactions in the month of August 2021;
August 1 Started business with K85,000 in the bank and K17,000 cash in
hand
August 3 Bought goods on credit from Chipiku for K35,700 for business
use
August 5 Paid rent by cash for K4,930
August 9 Provided engineering services to Mpico Ltd on credit for
K10,710
August 11 Returned goods worth K9,350 to Chipiku
August 15 Received a cheque from Mpico Ltd of K6,800
August 18 Paid wages by cash of K3,570
August 20 Provided engineering services to PCL on cash basis of K10,965
August 22 Paid K2,125 by cheque to Chipiku
August 30 Mpico Ltd closed and the balance of K3,910 was declared as a
bad debt
Required
Prepare double entries (not T-accounts) for Gibson Mzilwa transactions for the
month of August 2021. 11 Marks
(TOTAL: 20 MARKS)
3 (a) (i) Describe the accounting equation. 2½ Marks
(ii) List any four types of coding used in accounts when processing
financial transactions. 2 Marks
(iii) Define a trial balance. 2 Marks
(iv) List any four types of errors that are disclosed by extracting a trial
balance. 2 Marks
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(b) Alinuswe Chikafa who is an agent for Premier Bet does not keep proper books
of accounts. He has provided the following information about his business, as
at 1 July 2020;
K
Cash in hand 3,570
Bank balance 79,900
Motor vehicle (valuation) 115,600
Furniture 47,600
Receivables 452,200
Payables 215,900
Stocks of betting tickets 309,400
(i) During the year to 30 June 2021 Alinuswe made drawings of K547,400.
(ii) Cash of K129,200 was put into the business.
(iii) Additional furniture worth K15,300 was bought.
(iv) At 30 June 2021 he had the following assets and liabilities.
(1) Bank overdraft K30,770
(2) Prepayments of expenses of K7,820
(3) Receivables of K499,800
(4) Payables of K154,700
(5) Motor vehicle should be valued at K92,480
(6) Furniture to be depreciated for K6,290
(7) Accrued expenses of K5,440
(8) Stocks of betting tickets of K406,300
(9) Cash in hand of K3,230
Required
Compute the profit or loss made by Alinuswe Chikafa for the year ended 30
June 2021. 11½ Marks
TOTAL: 20 MARKS)
4 (a) (i) List six types of depreciation methods. 3 Marks
(ii) Describe how appreciation of value of fixed assets is treated in the books
of the business. 2 Marks
(iii) Define gross profit. 2 Marks
(iv) Differentiate useful life from residual value of fixed assets. 2 Marks
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(b) Jane and Lusibilo are in partnership business of buying and selling second hand
items. They have provided the following information for the year ended 30
September 2021;
(1) Interest on capital; Jane – K51,000 and Lusubilo – K59,000
(2) Salaries to be paid: Jane – K340,000 and Lusubilo – K425,000
(3) Net profit for the year of K1,888,700
(4) Drawings; Jane – K663,000 and Lusubilo – K746,300
(5) Interest on drawings; Jane – K6,800 and Lusubilo – K8,500
(6) Profit or loss to be shared: Jane – 70% and Lusubilo – 30%
(7) Current accounts balances brought down: Jane – K316,200 (Cr) and
Lusubilo – K300,220(Cr)
(8) Capital accounts balances brought down: Jane – K1,700,000 (Cr) and
Lusubilo – K1,272,000(Cr)
Required
(i) Prepare profit or loss and appropriation account for the year ended 30
September 2021. 4 Marks
(ii) Prepare statement of financial position extract as at 30 September 2021.
7 Marks
(TOTAL: 20 MARKS)
5 (a) (i) Describe the following types of errors:
(1) Error of ommission 1 Mark
(2) Transposition error 1 Mark
(3) Compensation errors 1 Mark
(4) Complete reversal of entries 1 Mark
(ii) List six ledger accounts that are used for recording the disposal of a non
current asset. 3 Marks
(iii) List any six items found in partnership profit or loss and appropriation
accounts. 3 Marks
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(b) Maynard Mengo operates a computer spares shop and has presented the
following financial information for his business as at 1 July 2021.
Inventory K131,250
Trade payables
- IT centre 787,500
- Blockbuster 21,875
Cash balance at hand 17,500(DR)
Recievables
- Winston 437,500
- Lucy 157,500
- Wezi 43,750
During the month of July 2021, the following transactions occurred;
(1) Wezi paid her balance in full.
(2) Maynard paid all creditors. IT Centre provided a 10% discount for quick
settlement of the balance.
(3) Lucy was declared bankrupt during the month and no payment is
anticipated in respect of her debt.
(4) Winston settled his account earlier and he was given a 15% cash
discount.
Required
(i) Prepare a two column cash book account. 4 Marks
(ii) Prepare a trade receivables account. 3½ Marks
(iii) Prepare a trade payables account. 2½ Marks
(TOTAL: 20 MARKS)
END
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