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FORM TWO MIDTERM EXAMINATION MARCH 2020

062 BOOK KEEPING

TIME 2 HOURS Thursday 26th March 2020 Pm

INSTRUCTIONS
Attempts all question below.

SECTION A
1. Choose the correct answer among the choices.
(i) An art of recording financial business transactions in a set of books and in terms of
money or money’s worth is known as:
A. Closing entries B. A list of assets and liabilities
C. book – keeping D. Classification of business transactions

(ii) Which one of the following statements is not correct?

A. Assets – capital = liabilities B. Liabilities + Assets = Capital
C. Assets – Liabilities = Capital D. Liabilities + Capital = Assets

(iii) Credit transaction are:

A. Entries recorded on the credit side of an account
B. Creditors’ transactions
C. Transactions made for future payments
D. Transaction for credit note

(iv) A business transaction is:

A. Information related to buying and selling of goods
B. The art of keeping books of accounts
C. The movement of money or money’s worth from one person to another
D. None of the above

(v) Which of the following accounting concepts distinguishes the business from the
owner?
A. The cost concepts B. The dual aspect concepts
C.The business entity concepts D. The money measurement concepts

(vi) Which of the following is not a Non – current Assets?

A. Premises B. Bank balance
C.Land D. Motor vans
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(vii) Which of the following is a liability?

A. Office furniture B. Creditor
C. Debtor D. Cash at the bank

(viii) Which one of the documents may not contain full information to make recording
possible in the books f original entry?
A. Receipts B. Counterfoils
C.Delivery note D. Bank pay – in – slips

(ix) Debit note is:

A. Due from a creditor
B. The amount due from a debtor
C. Prepared to increase the amount in the income statement
D. Prepared to increase the amount in the expenses account
(x) A document which shows the evidence that the goods dispatched to an organization
are received in good condition and meet the specifications is:
A. Goods received note B. Delivery note
C.Receipts D. Purchase order

2. Match the items in Column A with the responses in Column B by writing the letter
of the correct response below the item number in the table provided.
Column A Column B
(i) The amount of resources invested in the business by the owner. A Tangible assets
(ii) The property belonging to the business. B Bank balance
(iii) The property acquired or created and held permanently in the business. C Current assets
(iv) The property that one can touch and see. D Revenue receipts
(v) A statement of the financial position of an enterprise as at a given date. E Fixed assets
(vi) The property belonging to a business which is of a temporary nature. F Current liabilities
(vii) Activities involving transfer of money or goods from one person to G Business
another. H Capital
(viii) A schedule of balances, both credit and debit, extracted from the accounts I Cash balance
in the ledger. J Trial balance
(ix) The claims for which must be paid I full, within a short period. K Credit purchases
(x) The business owner reduces the business resources for personal use. L Assets
M Drawings
N Transactions
O Balance sheet
ANSWERS
Column A (i) (ii) (iii) (iv) (v) (vi) (vii (viii (ix) (x)

Column B

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SECTION B
3. (a) Mention the book of prime entries
(i) …………………………………….
(ii) …………………………………….
(iii) …………………………………….
(iv) …………………………………….
(v) …………………………………….

(b) Mention any ten (10) sources documents.

(i) ____________________ (ii) ______________________ (iii) _________________
(iv) ___________________ (v) _______________________ (vi) ________________
(vii)__________________ (viii) ______________________ (ix)_________________
(x) ___________________

4. Explain any five objectives of book – keeping

(i)_______________________ (ii)______________________
(iii)______________________ (iv)_____________________
(V)______________________

SETION C
5. Identify the account affected by the following transaction and show action to take in
recording the account in the double entry system.

Transaction Account to be Account to be

debited credited
(i) Owner put cash into business
(ii) Bought goods for cash
(iii) Sold goods for cash
(iv) Received cash for rent
(v) Owner withdraws cash from
business for personal use

6. Mussa started business on 1st January, 2014 having transferred sh. 96,000 from his
private bank account to the business office. During the month of January he carried out the following
transactions:

2014
January 1 paid sh. 4,800 for rent for the month and made purchase of sh. 38,300.
2 paid sh. 3,800 for stationery and sh. 1,920 for stamps.
4 cash sales sh. 17,280 and purchased goods for cash sh. 60,000.
7 paid sh. 2,880 wages to the bank.
13 Bought a used pick-up for sh. 92,160 from karanga against sh. 19,200
deposit
to the bank
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15 receive cheque of sh. 4000 from juma
19 cash sales sh.42,240
20 paid wages for two weeks, sh 5,760
21 cash sales sh. 40,000
29 Drew sh. 28, 800 for private use.
30 cash sales sh. 26, 880
31 paid another sh. 57,600 off pick – up account.
Required open two column cash book and post to the ledger account

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7. From the following particulars extracted from the books of a trader, prepare trading
account for the year ending 30th December, 2013.
Transaction sh.
Sales 155,000
Sales returns 8,000
Purchases 140,000
Purchases returns 18,500
Carriage inwards 12,000
Warehouse wages 10,000
st
Opening stock 1 January, 2013 55,000
st
Closing stock 31 December, 2013 85,000

********************ALL THE BEST**************************

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