NATIONAL OPEN UNIVERSITY OF NIGERIA

UNIVERSITY VILLAGE, PLOT 91, CASDASTRAL ZONE, NNAMDI AZIKIWE EXPRESS WAY, JABI, ABUJA.
FACULTY OF MANAGEMENT SCIENCES
JULY 2018 EXAMINATION

COURSE CODE:      ACC 812                                                        

CREDIT UNIT: 3

COURSE TITLE:     INTRODUCTION TO ACCOUNTING

TIME ALLOWED:   2½HOURS

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 questions carry 15 marks each

1. Alaskan Enterprise is a dealer in special traditional medicine for female piles. He sometimes imports similar medicines from China whenever there is shortage in the local market. The Trial Balance of the enterprise as at 31st December 2015 is detailed below:

The following additional information is relevant;

1. The inventories as at 31^st December, 2015 were recorded at N950,000
2. The enterprise depreciates its non-current assets on cost as follows;

1. Motor vehicles                        20%
2. Building                                    2%
3. Office equipment                    15%
4. Furniture and fitting               10%

3. Other administrative expenses include rent of N250,000. This forms rent for the period of 1^st July, 2015 to 31^st May 2016
4. The enterprise is to make a provision of N345,000 in respect of Personal Income Tax for 2015 accounting year
5. Provision for bad debt is N500,000
6. Amount owing in respect of electricity and vehicle running expenses are N55,000 and N75,000 respectively

Required: Prepare Statements of Income and that of Financial Position as at 31 December, 2015                                                                                                                             25marks

2. Briefly explain the following;

1. Going concern concept                                                                                   2½marks
2. Accounting policies                                                                                        2½marks
3. Accounting bases                                                                                            2½marks
4. Accounting method                                                                                        2½marks
5. Matching concept                                                                                           2½marks
6. Fundamental accounting concept                                                                   2½marks

3a. List five methods of depreciation of non-current assets      5marks

3b. Mention five causes of depreciation       5marks

3c. Microtel Ltd bought a new machine at a cost of N8million. The machine is expected to be used for 100,000 hours. The machine is expected to have N1million scrap value.

In the first 4 years the machine used the following hours;

Year                                      Hours Consumed

2005                                             15,000

2006                                             18,000                                           

2007                                             20,000

2008                                             22,000

Determine annual depreciation charge for the four years above                                         5marks

4a The information below is in respect of Peters Limited;

2015                2016             2017

         N’million           N’million      N’million 

Inventory                                            130                  240                  225

Trade Receivables                              245                  312                  400

Cash                                                    100                    54                   23

Total Current Assets                           475                  606                  648

Current Liabilities(Less)                    200                  300                  450

Net Current Assets                              275                  306                  198                                        

            Sales                                                      ---                  1500               1350

            Cost of Sales                                       ---                    1120               1200

Required: assess the company liquidity using liquidity ratio for 2016 and 2017.                   4marks

4b. List six source documents     6marks

4c. List five users of financial statement       5marks

5a. State five uses of journal proper   5marks

5b. Mention and define five books of prime entry    5 marks

5c. Mrs. Folake started business on 1/6/2009 and brought in cash of N4, 000,000 as capital into the business. On 4/6/2009 she offered the business her building that is valued at N6, 000,000. The value of the building was taken as an additional capital. The business banked N3,500,000 on 5/6/2009 and on 8/6/2009, the business bought furniture worth N100,000 from Abu. On 10/6/2009, N80,000 cash was paid to Abu.

Required: Journalize above transactions in the book of Folake.                                                                                                                                                                                     5marks     

6a. State five objectives of auditing         7½marks

6b. Enumerate five of the qualities of an auditor    7½marks