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Lesson 4 – Revision Questions with emphasis on ledger entries, the Cashbook and Trial Balance,
Income Statement and Statement of Financial Position.

At this point, students should practice as many questions as possible and be able to answer the
following questions.

Question 1 – Ledger entries and trial balance

Question 2 – TWO COLUMN CASHBOOK

Question 3 – THREE COLUMN CASHBOOK

Question 4 – From Trial balance to Financial Statements (without additional information)

In addition to attempting the questions in Frankwood on the above topics, use the following links for
practice questions.

https://www.accountancyknowledge.com/general-ledger-problems-and-solutions/

https://www.futureaccountant.com/accounting-process/problems-solutions/ledger.php

https://www.accountancyknowledge.com/three-column-cash-book-problems-and-solutions/

Also attempt the following;

SECTION A: Multiple Choice - 1 Mark Each

1. Winn Ltd has opening trade payables of K24,183 and closing trade payables of K34,655.
Purchases for the period totaled K254,192 (K31,590 relating to cash purchases). Total
payments recorded in the payables ledger for the period were

A K212,130
B K233,074
C K243,720
D K264,664

2. Which of the following documents is not a component of financial statements according

to I.A.S. 1 “Presentation of Financial statements”
A The Balance Sheet.
B The Annual Budget.
C The Cash Flow Statement.
D The Income Statement.
3. According to IAS 1 (revised) Presentation of Financial Statements which TWO of the
following are objectives of financial statements?

A To show the results of management’s stewardship of the resources entrusted to it

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B To provide a basis for valuing the entity

C To provide information about the financial position, financial performance and cash
flows of
an entity that is useful to a wide range of users in making economic decisions
D To facilitate comparison of financial performance between entities operating in
different
industries
E To assist management and those charged with governance in making timely
economic
decisions about deployment of the entity’s resources
4. Listed below are some comments on accounting conventions.
1. According to the Conceptual Framework for Financial Reporting, financial information
must
be either relevant or faithfully represented if it is to be useful.
2. Materiality means that only items having a physical existence may be recognised as
assets.
3. The substance over form convention means that the legal interpretation of a
transaction must
always be shown in financial statements, even if this differs from the commercial effect.

Which, if any, of these comments is correct?

A 1 only
B 2 only
C 3 only
D None of them
5. The accounting equation can be written as:

A Assets + profits – drawings – liabilities = closing capital

B Assets – liabilities – drawings = opening capital + profit
C Assets – liabilities – opening capital + drawings = profit
D Opening capital + profit – drawings – liabilities = assets
6. The capital of a sole trader would change as a result of

A A credit customer paying by cheque

B Raw materials being purchased on credit
C Non-current assets being purchased on credit
D Personal petrol being paid for out of the business's petty cash
7. A sole trader is K5,000 overdrawn at her bank and receives K1,000 from a credit
customer in

respect of its account. Which elements of the accounting equation will change due to this
transaction?

A Assets and liabilities only

B Liabilities only
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C Assets only
D Assets, liabilities and capital
8. A sole trader borrows K10,000 from a bank.
Which elements of the accounting equation will change due to this transaction?

A Assets and liabilities

B Assets and capital
C Capital and liabilities
D Assets only

9. A sole trader sells goods for cash for K500 which had cost K300.
Which elements of the accounting equation will change due to this transaction?

A Assets and liabilities

B Assets and capital
C Capital and liabilities
D Assets only
10. G purchases goods on credit from H for K1,000. K100 of these goods are defective and G
returns
them to H. What document would H issue to G in respect of the returned goods?

A Invoice
B Remittance advice
C Credit note
D Delivery note
11. Which TWO of the following are source documents that are recorded in an entity's
books of
original entry?

A Goods received note

B Invoice to a customer
C Purchase order to a supplier
D Cheque to a supplier
E Delivery note to a customer

12. What transaction is represented by the entries: debit rent, credit landlord?

A The receipt of rental income by the business

B The issue of an invoice for rent to a tenant
C The receipt of an invoice for rent payable by the business
D The payment of rent by the business
13. A sole trader had receivables of K2,700 at 1 May and during May made cash sales of
K7,200, credit sales of K16,500 and received K15,300 from his customers. The balance
on his receivables account at the end of May was
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A K1,500
B K3,900
C K8,700
D K11,100

14. In double-entry bookkeeping, which of the following statements is true?

A Credit entries decrease liabilities and increase income

B Debit entries decrease income and increase assets
C Credit entries decrease expenses and increase assets
D Debit entries decrease expenses and increase assets
15. The double entry to record a settlement or cash discount granted by a supplier is

A Debit Payables, Credit Discounts allowed

B Debit Payables, Credit Discounts received
C Debit Discounts received, Credit Payables
D Debit Discounts allowed, Credit Payables

SECTION B

QUESTION ONE
Clinton Habasimbi started business on 1 January 2016. On this same date, she got a personal
loan in her name of K40, 000 from Zanaco which she was given in form of cash and then she
put this in her business.
The following is a list of her transactions for her first month of trading.
2.1.16 She realized that the financial basis of the business was not strong enough, she
decided to obtain a loan of K30, 000 in the company’s name with which she
opened a business bank account with INDO bank (the lender).
2.1.16 Clinton realized that she needed a place to trade from and decided to change
ownership of one of her buildings worth K50,000 from being hers to belonging
to the business.
2.1.16 Paid one month’s insurance of 5% of the cost of the building was paid by
cheque.
3.1.16 Bought goods costing K10, 000 for cash from PEP.
4.1.16 Purchased motor car costing K20, 000 from M.O.B General Dealers paying cash.
For this prompt payment, Clinton received a cash discount of 2%.
5.1.16 Purchased goods costing K6, 000 on credit from Jambo.
6.1.16 Clinton brought in one of his personal computers worth K5, 000 into the
business to be used for business operations from his home.
10.1.16 Made cash sales of K8, 000 for goods that cost her K4, 000.
15.1.16 Goods costing K15, 000 purchased from Mubotu on credit.
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9.1.16 Clinton met the Mubotu at a workshop on financial issues and took advantage
of the occasion to pay the K 4,000 she owed Mubotu which she got from her
own cash in her purse.
20.1.16 Sold goods that had cost her K3, 000 to Kafwembe for K8, 000 on credit
terms.
21.1.16 Clinton paid her child’s school fees of K3000 by cheque from the business’
bank account.
22.1.16 Clinton Returned K2, 000 worth of goods to Jambo as they were of wrong
quality and Kafwembe returned K1, 000 worth of goods which were of wrong
color.
25.1.16 Clinton withdrew K2, 000 Cash from the bank to pay her private expenses (for
the maid and garden boy working at her home of residence).
26.1.16 Kafwembe settled his bill for goods bought and was also allowed a cash
discount of K500.
30.1.16 Cash paid to Mubotu of K5, 000, and settled bill with Jambo receiving cash
discounts of 10% for prompt payment.
Required
Enter the above transactions in Clinton’s ledger accounts for January 2016, balance off the
accounts and show the closing balances in Clinton’s Trial Balance of as of 1 February 2016.
[Total Marks = 35]

QUESTION TWO

Mr Mugape started business with a capital of K75, 000 cash which was a personal loan got in
his name from Barclays Bank two weeks before the start of business. On the first of July he
realized that the capital was not enough financing for the business, he then applied for a loan
from Zanaco Bank Plc of K100, 000 in the name of the business as it was fully registered with
PACRA as Mugape & Sons sole traders. He has the following transactions in the month of
July.

Mugape buys a building to operate from costing K50, 000 on credit from NAPSA
July
: agreeing to pay the cost in installments of K10, 000 per year at the end of each year
1st
for the next five years without interest.
1st :
Purchased goods from Zanu Ltd on credit K25, 000
80% of the Zanaco loan applied for above was approved and paid by crediting it into
2nd : a bank account opened specifically for the business. Bought Motor Van for K20, 000
paying by cheque.
3rd :
Purchased goods from Grace Enterprises on credit costing K15,000
4th :
Sold goods to General Plc on credit for K16,000
5th :
Goods of wrong colour costing K2,000 were returned to Grace Enterprises
th
6 :
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Brought furniture worth K5, 000 from his personal assets at home to be used for
business operations.
7th :
Bought goods from Kimbabwe for K12, 000 on Credit.

8th : Mugape Settled the bill with Kimbabwe by cash and was granted a 10% discount for
prompt payment.
9th :
K 1,000 worth of goods Sold goods to General Plc was returned.

10th : Mugape took out cash of K500 from the cash box to pay DSTV subscription for his
home.
11th :
Cash received from General Plc K5, 000.

12th : Paid 1% of the cost of the Building bought on 1st July as the first installment of the
total insurance premiums on the said Building paying by cheque.
13th :
Sold goods on credit to Impeach Plc for K18,000
th
14 : Cheque payment of K12,000 made to Zanu Ltd

15th : Received cash payment in full from Impeach Plc and allowed a discount of 5% for
prompt payment.
th
18 : Paid wages to his office manager K5000 by cheque.
20th : Cash paid for the purchase of bicycle for Mugape's son 1,500
24th : Cash sales to Harari Investments for K40,000
30th : Purchases from Robert & sons for K13,500 and immediate payment by cheque

Required

a) Record the above transactions in their ledgers and balance off the accounts.

b) Extract a Trial balance.

c) From your trial balance extract the Income Statement and the statement of financial
position for the month assuming closing stock as at 31st July of K10, 000.

40 Marks
QUESTION THREE
On 1 January, Roberts starts a business with K8, 500 in the bank and K10, 500 cash. The
following transactions occur:

02/10 He buys goods on credit for K700 from Martin.

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03/01 He sells goods which had cost him K150 for K300 on credit to Goddard.

04/01 He returns damaged goods worth K100 to Martin.

07/01 He sells goods which had cost him K300 for K600 to Lemon on credit.

08/01 Lemon returns goods of wrong quality to Robert worth K200.

12/01 He buys equipment for K3, 000 paying by cheque.

13/01 He buys stock worth K500 from Shoprite on credit.

18/01 He pays wages of K150 by cheque.

20/01 He buys goods for K350 paying by cheque.

20/01 He takes K100 from the cash box for personal use.

21/01 He sells goods K800 on credit to Chipo.

28/01 He settles his bill with Shoprite and receives a cash discount of 2%.

29/01 He pays Martin K250 by cheque.

30/01 He receives payment in full from Chipo who he decides to offer a discount of 5% for
prompt payment.

Required:
Prepare ledger entries and a trial balance for the above transactions.

QUESTION FOUR
Mr Trump Dundumwezi runs a very successful business in farming selling maize to
Zimbabwe. At the end of 31st December 2015.His book keeper Mrs Kudyabwino avails you
with the following balances
K
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Capital 1,516,769,000
Bank charges 56,387,000
Short term loan 94,378,000
Stationery and postages 29,857,000
Bank savings interest 37,809,000
Commission received 53,426,000
Electricity 35,201,000
Carriage outwards 31,075,000
Carriage inwards 45,234,000
Loan interest 50,789,000
Long term loan 298,671,000
Salaries 97,435,000
Wages 127,056,000
Other receivables 45,279,000
Other expenses 32,856,000
Trade receivables 345,768,000
Other payables 45,270,000
Trade payables 201,978,000
Bad debts 53,879,000
Discount allowed 23,867,000
Van running expenses 27,456,000
Premises 76,345,000
Rent 34,568,000
Motor van 745,690,000
Discount received 168,573,000
Purchases 165,368,000
Drawings 21,879,000
Sales 276,442,000
Office furniture 572,234,000
Inventory at 1 Jan 2015 31,020,000
Returns outwards 21,037,000
Returns inwards 14,576,000
Cash at bank 50,534,000
Cash in hand 45,772,000

Mr Dundumwezi after learning that you are an accounting student, he has informed you that
the closing inventory amounted to K47,392,000 for the year ending 31 December 2015, he
has also asked you to assist him construct the following from the above balances:

a) Trial balance as at 31 December 2015

b) The income statement for the year ending 31 December 2015
c) The statement of financial position as at 31st December 2015
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QUESTION FIVE
Lineo is a sole trader who has been running his business for several years. His accounting
record balances at 28th February, 2023 were as follows:

Purchases and Sales K92,370 and K163,920 respectively, Inventory at 1/03/22 K13,350,
Returns inwards K4,760, Returns Outwards K3,220, Carriage inwards K1,840, Carriage
outwards K2,955, Bank loan (5 years loan) K15,000, Insurance K3,580, Staff costs K20,976,
Electricity bills K5,015, Business rates and rent K6,710, Debentures K39,000. General
expenses K4,140, Bad debts written off K778, Furniture and Equipment at cost K18,400, Motor
van at cost K16,000, Trade receivables K10,000, Trade payables K8,575, Bank and Cash
K37,490, Drawings K27,330, Capital K27,864, Discounts allowed K2,375, Discounts received
K9,475 and Commission received K1,015.

The following information whose “double-entry” has not yet been done is also available:
1) The cost of the inventory on 28th February 2023 was K14, 890 and the net realisable value
was K16, 000 and financial statements are produced on a going concern assumption.
2) The purchases figure shown in the trial balance includes K3, 400 for goods that Lineo took
home for his own personal use.
3) Interest on Bank loan and Debenture is 10% and 20% on the opening balances of the loans
respectively. This is owing at the end of the year as it has not yet been paid.
4) During the last month of the year, Lineo made a repayment by cheque of K5,000 towards
his bank loan and K9,000 towards his debenture loan that has not yet been accounted for in
his books.

Required:

Prepare a Trial Balance for the account balances given before additional information above and
the Income Statement for the year to 28th February 2023 and the Statement of Financial Position
as at 28th February, 2023.
20 Marks