TANZANIA HEADS OF ISLAMIC SCHOOLS COUNCIL

FORM SIX INTER ISLAMIC MOCK EXAMINATION

ACCOUNTANCY 1
153/1
(For both School and Private candidates)

Time: 3 Hours Wednesday 6th March, 2024 p.m.

Instructions

1. This paper consists of sections A and B with a total of eight (8) questions.
2. Answer all questions in section A and three (3) questions from section B.
3. Each question in section A carries ten (10) marks and in section B twenty (20) marks.
4. Workings must be shown clearly and submitted.
5. Non programmable calculators may be used.
6. Cellular phones and any unauthorized materials are not allowed in the Examination
Room.
7. Write your Examination Number on every page of your answer booklet(s).

DYAMPAYE.CO.TZ

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 SECTION A (40 Marks)
Answer all questions from this section
1. Accounting information is important in providing valuable inputs for one to make
informed decisions in different business environment.
Required: Explain different types of decisions reflecting the real world of business by
considereing the following users of accounting information.
(i) Lenders/Bankers
(ii) Investors
(iii) Business owners
(iv) Accountants

2. With the help of the following ratios related to Kauthar cosmetic shop, prepare the
business statement of financial position as at 31st May 2021
Current ratio .............................................................................................. 2.50
Liquidity ratio ........................................................................................... 1.50
Net working capital .....................................................................TZS 300,000
Stock turnover ratio (cost of sales/closing stock )………………......... 6 times
Gross profit ratio ...........................................................................20%
Fixed assets turnover ratio (on cost of sales) ........................... 2 times
Debt collection period ............................................................2 months
Fixed assets to shareholders equity ............................................... 0.80
Retained earning to share capital ................................................... 0.50
Capital gearing ratio (long term debts/share capital) ................................. 0.30
Note: Balance of current assets represents cash at bank

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3. Dar es Salaam computing centre provided the following information relating to
computers in service at 30th September, 2019.

Computer Brand HP Dell Accer Lenovo Toshiba

Year ended 30th September 2015 2016 2017 2018 2019

Original costs 370,000 410,000 390,000 450,000 455,000

Installation costs 30,000 20,000 30,000 25,000 35,000

Up to 30th September 2019 the center had depreciated its computers by 20% p.a on the
diminishing balance. In the same year each computer was incuring window repair cost
of TZS 15,000. From 1st October 2019 it was decided to adopt a straight line method of
estimated residual value of TZS 10,000 each over an estimated life of 5 years.
The center wishes to adjust the accrued depreciation on existing computers in line with
this policy.
During the year ended 30th September 2020 the centre purchased a used Apple
Computer for TZS 460,000, additional instillation cost of TZS 20,000 was paid and
Dell Computer was sold for TZS 30,000 (Assume the transaction took place at the
beginning of the year). A whole year depreciation is provided for every computer on
hand at the end of any accounting period.
Required: Prepare the following accounts for the year ended 30th September 2020
(i) Computers account
(ii) Provision for depreciation account
(iii) Computer disposal account
4. Mbasha meat supplies offer generous credit terms to its customers. Provision is made
for doubtful debts at a varying percentage based on the level of debtors at the balance
sheet date and assessment of general economic conditions. Data for the last three
accounting periods were as follows:

Year ending 31st December 2017 2018 2019

Trade debtors (before allowing for bad debts) 933,400 706,000 1,681,000
Bad debts 8400 6000 81,000
Provision doubtful debts 10% 12.5% 15%
The provision for doubtful debts at 1st January 2017 was TZS 65,000.

Required:
Prepare provisions for doubtful debts for each of the three years 31st December 2017,
2018 and 2019 and the statement of financial position as at that date.

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 SECTION B (60 Marks)
Answer three (3) questions in this section
5. Bahrain Ltd with the head office in Tanga has a branch in Tabora. All goods are
purchased by the head office, and those invoiced to the branch are sent at a price
determined to yield a profit margin of 20% which is also a selling price for the
branch. All records for the branch are maintained in Tanga.
The following are the data related to branch on 1st January 2020
Branch stock at cost 33,720
Branch debtors 9,640
Branch Bank 5,340
Transactions during the year
Goods sent to branch at selling price 131,400
Goods returned to Head office by branch at selling price 3,120
Returns of goods to branch by debtors at selling price 1,740
Cash sales 50,000
Credit sales 85,240
Expenses paid by Head office 16,440
Discount allowed to debtors 2,500
Bad debts 1,700
Reduction in selling price authorized by head office 900
Cash remittance to Head office 124,000
On 31st December 2020, branch stock at selling price 33,220
Additions notes:
The firm assumes that 1% of goods sent to branch has normal loss.
Required:
(i) Branch stock account.
(ii) Branch debtors account.
(iii) Branch income statement.

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6. Ilham Ltd is an Investment Company making up its account to 31st December in each
year. The following transactions have been extracted from the company’s records for
2019.
1st January: Purchased 100,000 ordinary shares of 0.25 each in Riam Ltd at 1.75
per share.
12th January : Purchased TZS 200,000 ordinary stock in Alpha Ltd for TZS 150,000.
1st March : Received a dividend of 20% on shares in Riam Ltd.
24th April : Received dividend of 2 ½ % on ordinary stock in Alpha Ltd.
2nd May : Riam Ltd made a bonus issue of one share for every four held.

10th May : Riam Ltd announced a right issue of two ordinary shares for every five
held on the date at TZS 1.25 per share. Rights sold on the market for 0.5
per share.
1st August : Applied for TZS 500,000, 7 ¼ % loan stock in Alpha Ltd issued at 98%
and payable half on application and the balance in two equal
instalments on 1st October and 1st December. The application was
successful.
16th September: Received dividend of 30% on shares in Riam Ltd.
1st October: Paid installment on loan stock in Alpha Ltd.
20th November: Received a dividend of 3% on ordinary stock in Alpha Ltd.
1st December: Paid installment on loan stock in Alpha Ltd.

Required:
Write up account for investment in Riam Ltd and Alpha Ltd as they would appear in the
books of Il-ham Ltd for the year ended 31st December 2019, bring down the balances as
on that date (Ignore stamp duty, brokerage & taxation)

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7. When the Manager of Milanzi Insurance Company extracted a trial balance as at 30 th
June, 2022, he found that balances did not agree. He opened a suspense account,
income statement and statement of financial position.
Milanzi Insurance Company’s statement of financial position as at 30th June 2022.

TZS TZS
FIXED ASSETS
Shop fittings 1,200,000
Less: depreciation ………………………………… 240,000 960,000
Wheel barrow…………………………………….. 2,560,000
Less: depreciation ………………………………… 640,000 1,920,000
2,880,000
CURRENT ASSETS
Stock ……………………………………………… 2,333,600
Sundry debtor ……………………………………. 1,723,200
Cash at bank ……………………………………… 876,000
Cash in hand …………………………………….. 102,000 5,035,200
7,915,600
OWNER EQUITY
Capital at 1st May 2021 …………………………… 6,000,000
Add: profit ……………………………………….. 4,397,600
Less: drawings ……………………………………. 4,000,000 397,600
6,397,600
CURRENT LIABILITIES
Sundry creditor ……………………………………. 1,510,400
Suspense account …………………………………. 7,200 1,517,600
7,915,200

In the investigation process the following errors were later discovered:

(a) A cheque for TZS 208,000 for the purchase of new display stand on 1st June had
been recorded in cash book correctly but had been entered in the shop fittings
account as TZS 160,000/=.
(b) A credit note from Asma suppliers for TZS 48,000 had been entered correctly in the
purchases return account but posted to Alima suppliers as TZS 52,800.

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 (c) Bank charges of TZS 16,800 appeared in the cash book but had not been posted to
the ledger.
(d) An invoice of TZS 111,200 for goods sold to Hizah had been correctly entered in
the sales day book but has been posted to the personal account as 154,400.
(e) A debit balance of TZS 24,000 on Khira’s account was counted and recorded twice
and included in the trial balance at that figure.
Required:
(i) Suspense account
(ii) General Journal to correct the above errors.
(iii) Statement of revised net profit.
(iv) Corrected statement of financial position.
8. Mr. Abdullah, a retail Jeweler, extracted the following trial balance for his business as
at 31st May, 2023.

DETAILS DR CR
TZS (000) TZS (000)
Sales of Jewelery 324,650
Sales return 1,250
Cost of goods sold 174,840
Stock 27,580
Discount received 690
Discount allowed 1,820
Insurance expenses 5,900
Assistance wages expenses 33,100
Telephone and email expenses 5,200
Lighting and heating expenses 6,230
Security guard’s wages expenses 12,400
Repair to premises expenses 3,970
Accumulated depreciation of premises 1st June 2022 18,000
Accumulated depreciation of equipment 1st June 2022 4,800
Accumulated depreciation of shop fittings 1st June 2022 10,200
Rent and rates 17,000
Sundry expense 3,940

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 Premises at cost 60,000
Equipment at cost 12,000
Shop fittings at cost 34,000
Debtor s 3,400
Creditors 18,950
5% debentures 720
Bank overdraft 2325
Cash in hand 520
Provision for doubtful debts 1st June 2022 55
Website maintenance expenses 1,430
Publicity and advertising expense 9,740
Mr. Abdullah’s capital 1st June 2022 58,630
Mr. Abdullah’s drawings 24,700
TOTAL 439,020 439,020

Notes:
(a) Security guards were owed TZS 400,000 wages at 31st May 2023 and TZS 200,000
was owing for telephone and email expenses.
(b) TZS 900,000 of charge for maintaining the website was paid on 1st January 2023
cover a year from the date.
(c) The debenture is dated 1st May 2023 and it will mature on 30th June 2023.
(d) Mr. Abdullah gave his daughter a jewelery costing TZS 300,000 as present on 20th
May 2023 and record has been made in the books of accounts.
(e) Provide provision for doubtful debts of 1% of the debtors.
(f) Depreciation is to be provided as follows.
(i) Premises are depreciated in equal instalment over 20 years period.
(ii) Equipment is depreciation at 40% per annum by reducing balance method.
(iii) Shop fittings are depreciated at 10% per annum by straight line method
assuming no residual value
Required:
Prepare Mr. Abdullah’s Income statement for the year ending 31st May 2023 and the
statement of financial position as at 31st May 2023.

Wabillah Tawfiiq

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DYAMPAYE.CO.TZ