THE UNITED REPUBLIC OF TANZANIA NATIONAL EXAMINATIONS COUNCIL CERTIFICATE OF SECONDARY EDUCATION EXAMINATION 062 BOOK KEEPING (For Both School and Private Candidates) Time: 3 Hours Friday, 06 th November 2015 p.m. Instructions 1. This paper consists of sections A, B and C. 2. Answer all questions. 3. Calculators and cellular phones are not allowed in the examination room. 4. Write your Examination Number on every page of your answer booklet(s).

SECTION A (20 Marks) Answer all questions in this section. 1. For each of the items (i) - (x), choose the correct answer from among the given alternatives and write its letter beside the item number in your answer booklet. (i) A cash discount is described as a reduction in the sum to be paid if the payment is made A for cash only B by cash, not cheque C either by cash or cheque D for cash, not for credit E within a previously agreed period. (ii) What is meant by the term salvage value? A Cash paid when asset is disposed. B Estimated disposal value. C Selling price of the assets. D Cost price of the assets. E Cash received when lift of the assets end. (iii) Suppliers’ personal accounts are found in the A nominal ledger B general ledger C sales ledger D returns ledger E purchase ledger. (iv) The total of the Returns Outwards Journal is transferred to the A credit side of the returns outwards account B debit side of the returns outwards account C credit side of the returns outwards book D debit side of the purchases returns book E debit side of the sales returns book. (v) If an accumulated provision for depreciation account is in the use, the entries for the year’s depreciation would be A debit asset account, credit profit and loss account B credit provision for depreciation account, debit profit and loss account C credit asset account, debit provision for depreciation account D credit profit and loss account, debit provision for depreciation account E debit profit and loss account, credit asset account. (vi) In the trading account, the wages expenses should be A added to cost of goods sold B deducted from purchases C deducted from sales D added to drawings E added to purchases. (vii) A receipts and payments account does not show A cheques paid out during the year B the accumulated fund C receipts from sales of assets D bank balances E assets bought during the year.

(viii) Which of these errors would be disclosed by the trial balance? A A purchase of sh. 2500 was omitted entirely from the books. B Selling expenses were debited to Sales account. C Credit sales of sh. 3000 entered in both accounts as sh. 300. D Cheque sh. 9500 from Kagoma entered in Kagoma’s account as sh. 5900. E Sh. 5500 paid for motor expenses debited to motor vehicle account. (ix) Given last year’s capital was sh. 745,000, closing capital is sh. 462,000 and drawings of sh. 134,000, then A profit for the year was sh. 149,000 B loss for the year was sh. 228,000 C loss for the year was 417,000 D loss for the year was sh. 149,000 E profit for the year was sh. 417,000. (x) The sales day book does not contain A Credit sales made without deduction of trade discount B Cash purchases made to overseas customers C Cash sales made to customers D Credit sales which eventually turn out to be bad debts E Credit sales made to local customers. 2. Match the items in Column A with the responses in Column B by writing the letter of the correct response beside the item number in your answer booklet. Column A Column B (i) The profits of the company expressed as a percentage of the owners investment. A B Working capital ratio Acid test ratio (ii) The gross and net earnings expressed as a percentage of sales. C Inventory ratio (iii) Current assets compared to current liabilities. D Earnings per share ratio (iv) Very liquid assets compared to immediate liabilities. E F Payables ratio Dividend cover ratio (v) The number of days of sales held in stock. G Inventory turnover ratio (vi) The number of days of purchases represented by creditors. H I Gross profit ratio Equity ratio (vii) The number of days of sales represented by debtors. (viii) The ratio of fixed interest capital to equity capital. (ix) Compares the amount of profit earned per ordinary share with the amount of surplus paid. J K L M Receivables ratio Gearing ratio Return on capital employed ratio Profit margin ratio (x) The ratio of prior charge capital to ordinary share capital and reserve. N O Debt ratio Capital gearing ratio

SECTION B (20 Marks) Answer all questions in this section. 3. (a) Identify the accounts in which entries should be made to record each of the following transactions: Transactions Dr Cr (i) Bought stock on credit from Omondi. (ii) Sold goods on credit to Muita (iii) Bought a motor vehicle in cash. (iv) Paid for electricity by cheque. (v) Returned goods to a supplier, Nkatha. (b) Identify five errors that may be revealed by a Trial Balance. 4. (a) (i) Prepaid rent at the beginning of the period was sh. 40,000 and sh. 20,000 was not paid last year. During the year payments of sh. 320,000 was made with respect to rent. It was established that at the end of the period prepaid rent should be sh. 60,000. Without using T-account compute the amount of rent expenses to be transferred to profit and loss account. (ii) Accrued wages at the beginning of the month was sh. 240,000. At the end of the month sh. 690,000 was transferred to profit and loss account and sh. 10,000 was prepaid. Sh. 320,000 of wages was accrued but not yet paid during the month. Without using T-account compute the amount of wages paid during the year. (b) Outline five importance of a profit and loss account.

SECTION C (60 Marks) Answer all questions in this section. 5. (a) Majura and Majuni enter a joint venture to share profits or losses equally resulting from dealings in second-hand digital TVs. Both parties take an active role in the business, each recording his own transactions. They have no joint banking account or separate set of books. 2011 July 1 Majura buys four TVs for a total of sh. 110,000. 3 Majura pays for repairs sh. 84,000. 4 Majuni pays office rent sh. 30,000 and advertising expenses sh. 9,000. 6 Majuni pays for packaging materials sh. 3,400. 7 Majuni buys for a TV in excellent condition for sh. 60,000. 31 Majura sells the five TVs to various customers, the sales being completed on this data and totalling sh. 310,000. Show the relevant accounts in the books of both joint venturers. (b) On 31 st December, 2008 the bank column of Tengeneza’s cash book showed a debit balance of sh. 15,000. The monthly bank statement written up to 31 st December, 2008 showed a credit balance of sh. 29,500. On checking the cash book with the bank statement it was discovered that the following transactions had not been entered in the cash book: Dividends of sh. 2,400 had been paid directly to the bank. A credit transfer - TRA and Customs VAT refund of sh. 2,600 had been collected by the bank. Bank charges sh. 300. A direct debit of sh. 700 for the Charity subscription had been paid by the bank. A standing order of sh. 2,000 for Tengeneza’s loan repayment had been paid by the bank. Tengeneza’s deposit account balance of sh. 14,000 was transferred into his bank current account. A further check revealed the following items: Two cheques drawn in favour of Tamale sh. 2,500 and Fadiga sh. 2,900 had been entered in the cash book but had not been presented for payment. Cash and cheques amounting to sh. 6,90 had been paid into the bank on 31 st December, 2008 but were not credited by the bank until 2 nd January, 2009. (i) Bring the cash book (bank column) up to date, starting with the debit balance of sh. 15,000, and then balance the bank account. (ii) Prepare a bank reconciliation statement as at 31 st December, 2008.

6. The following receipts and payments account were extracted from Msongola Charitable Club for the year ending 31 st December, 2009. Msongola Charitable Club Receipts and Payments Account for the year ending 31 st December, 2009 Receipts Amount Payments Amount Bank balance at 1.1.2009 52,400 Payment for bar supplies Wages: Grounds man and assistant Barman Bar expenses Repairs to stand Ground upkeep Secretary’s expenses Transport costs Bank balance 31.12.2009 3,862,00 Subscriptions received for 2008 (arrears) 140,000 1,993,900 2009 1,435,000 862,400 2010 (in advance) 120,000 23,400 Bar sales 6,128,000 74,000 Donations received 80,000 182,900 93,800 242,000 621,000 7,955,400 7,055,400 Additional information: 31.12.2008 31.12.2009 Sh. Sh. (a) Inventory in the bar - at cost 449,600 555,800 Owing for bar supplies 329,400 434,000 Bar expenses owing 22,500 33,600 Transport costs - 26,500 (b) The land and football stands were valued at 31 st December, 2008 at land sh. 4,000,000; football stands sh. 2,000,000; the stands are to be depreciated by 10 percent per annum. (c) The equipment at 31 st December, 2008 was valued at sh. 250,000, and is to be depreciated at 20 per cent per annum. (d) Subscriptions owing by members amounted to sh. 140,000 on 31 st December, 2008 and sh. 175,000 on 31 st December, 2009. From the information given above, prepare income and expenditure account subscriptions, account, bar trading account, transport cost account, purchases control account as well as bar expenses account.

7. (a) From the following information, prepare a sales ledger control account for the month of August 2012. 2012 August 1 Sales ledger - debit balances 381,600 1 Sales ledger - credit balances 2,200 31 Transactions for the month: Cash received 10,400 Cheque received 623,900 Bills received 300,000 Sales 709,000 Bad debts written off 30,600 Discount allowed 29,800 Returns inwards 66,400 Cash refunded to a customer who had overpaid 3,700 Dishonoured cheques 2,900 Dishonoured bills 1,500 Interest charged by us on overdue debt Balance in the sales ledger set off against balance in the purchases ledger 5,000 7,000 At the end of the month: Sales ledger - debit balances 342,900 Sales ledger - credit balances 4,000 (b) Machinery is bought on 1 st January, 2005 for sh. 100,000 and another one on 1 st October, 2006 for sh. 120,000. The first machinery is sold on 30 th June, 2007 for sh. 72,000. The business’s financial year ends on 31 st December. The machinery is to be depreciated at 10 per cent per annum, using the straight line method. Machinery in existence at the end of each year is to be depreciated for a full year. No depreciation is to be charged on any machinery disposed of during the year. From the given information, draw up accumulated provision for depreciation account for three years.

(c) The following Trial Balance was extracted by Ms. Matokeo from her books as at 30 th June, 2011. She is unable to get the totals to agree. Trial Balance as at 30 th June, 2011 Dr Cr Sh. Sh. Sales 870,500 Purchases 624,000 Discount allowed and received 3,050 4,100 Salaries and wages 31,680 General expenses 5,950 Fixtures 100,000 Stock 1 st July, 2010 124,900 Debtors and creditors 81,200 50,450 Bank 67,900 Drawings 45,200 Capital 170,170 Suspense 11,340 1,095,200 1,095,220 The following errors are found: (i) Sales day book overcast by sh. 3,500. (ii) Discount allowed under cast by sh. 1,000. (iii) Fixtures, bought for sh. 8,500, have been entered in the cash book but not in the fixtures account. (iv) Credit purchases of sh. 1,660 were entered in the purchases day book only, but not in the creditor’s account. (v) Cheque payment to a creditor of sh. 4,900 had been debited to the drawings account in error. Redraft the trial balance after all corrections have been made.