Accounting and Control July 2013 Past Paper – KNEC Diploma

Accounting and Control July 2013 Past Examination Question Paper – KNEC

This Past Paper examination was examined by the Kenya National Examination Council (KNEC) and it applies to the following Certificate courses

  • Diploma in Personnel Management

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Name:__________________________________ – Index No:_______________
Candidate’s Signature:
July 2013
Time: 3 hours

3 hours

Write your name and index number in the spaces provided above.
Sign and write the date of the examination in the spaces provided above.
This paper consists of SEVEN questions.
Answer any FIVE questions in the spaces provided in this paper.
Show all your workings.
All questions carry equal marks.
Candidates should answer the questions in English.

For Examiner’s Use Only

Question 1 2 3 4 5 6 7 Total Score

This paper consists of 30 printed pages.
Candidates should check the question paper to ascertain that all the
pages are printed as indicated and that no questions are missing.
© 2013 The Kenya National Examinations Council.
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  • investment centre;
  • profit centre;
  • revenue centre;
  • cost centre.

(b) Dania Traders has not been keeping proper books of account. The following information relates to the year ended 31 December 2012.

Cash sales 680,000
Trade debtors 30,000
Cash purchases 420,000
Trade creditors 22,000
Equipment 30,000
General expenses 57,000
Additional information:
Balances as at 31 December 2011 2012
Ksh Ksh
Inventory 24,000 36,000
Motor vehicles 460,000 440,000
Equipment 140,000 160,000
Accounts payable 11,000 5,000
Accounts receivable 6,500 4,200
2.       (a) The following are the financial statements of Votex Limited for the year ended 31

December 2012. Ksh Ksh
Sales 36,000,000
Less Cost of sales:
Opening inventory ‘ 1,450,000
Purchases 10,850,000
Closing inventory .(800,000) 11-500.000
Gross profit 24,500,000
Less Expenses: Repairs 120,000
Depreciation 480,000
Salaries and wages 11,350,000
Rent and rates 1.950.000 13.900.000
Net profit before tax 10,600,000
Corporation tax (30%) 3.180.000
Net profit after tax 7,420,000
Preference dividend 500,000
Ordinary dividend 1.000.000 1.500.000
Retained earnings c/fwd 5.920.000

Statement of financial position
as at 31 December 2012

Ksh Ksh Ksh
Non current assets 16,600,000
Less: ‘Accumulated depreciation _136Q,QQQ 14,640,000
Current assets:
Inventory 800,000
Trade receivables 4330,000
Cash at bank 4,870,000
Cash in hand 280.000
Current liabilities:
Trade payables 100,000
Provision for corporation tax 3,180,000
Proposed dividends 1300,000
4,780,000 5.700.000
Ordinary share capital (Ksh 5 each) 10,000,000
20% preference share capital (Ksh 2.50 each) 2300,000
Retained earnings: 7.840.000
20 340,000

Additional information:

The market price of each ordinary share was ksh 10.

Calculate each of the following ratios:

  • current ratio;
  • net profit margin;
  • dividend yield;
  • return on capital employed.

(9 marks)
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(b)     Pong Enterprises remunerates its employees on time rate basis. Employees are paid a
bonus of 75% on time saved. The following information relates to three employees Kadenge, Grace and Ali for the month of June 2012.

Kadenge Grace Ali
Rate per hour (Ksh) 80 100 75
Units produced 6,000 8,000 7,500
Hours allowed per 1000 units 6 4t 8
Time taken (Hours) 32 36 65

For each employee, calculate:

  • Basic pay;
  • Bonus pay;
  • Gross earnings.

(11 marks)

  • error of omission;
  • error of commission;
  • error of principle;
  • error of original entry.

(8 marks)

(b) The following information relates to the production department of Jogoo Manufacturers for the month of May 2012.

Direct materials 1,600,000
Direct labour 800,000
Indirect labour 750,000
Depreciation 900,000
Repairs and maintenance 800,000

Additional information:

  • 1,000 units were produced during the month.
  • Repairs and maintenance has a fixed cost of Ksh 200,000.
  • 90% of indirect labour is variable.

Using the inspection of accounts method, determine the:

  • variable cost per unit;
  • fixed costs for the month;
  • estimated total cost of producing 1,200 units.

(12 marks)
(a) Nasaka Limited manufactures three products F, G and H. The following are the estimates for each product for the coming year.
Selling price per unit
Raw material (1 kg @ Ksh 10)
Variable overheads Demand per annum (units)
Additional information:

– Ksh Ksh Ksh
‘1,800 1,400 1,650
160 200 125
300 200 500
540 400 470
4,000 5,000 3,000

Due to drought forecasted by the meteorological department, raw materials will be limited to 200,000 kgs only.

  • Calculate:
  • contribution for each product;
  • contribution per kg of raw material for each product.

Advise the management on the appropriate product mix in order to maximize profit.
(12 marks)
(b) Mali Wholesalers had the following transactions during the month of May 2012.
Bought goods for Ksh 280,000 on credit from Sivlim Enterprises Sold goods on credit to:
Batik Traders Ksh 78,500 Zoro Limited Ksh 110,200.
Bought goods on credit from Timex Manufacturers Ksh 320,000 and received a trade discount of 10%
Zoro Limited returned goods worth Ksh 6,400 Returned goods to Silim Enterprises worth Ksh 13,000 Sold goods on credit to Peter Traders of Ksh 189,000 Batik Traders returned goods worth Ksh 14,500
Prepare each of the following books:

  • purchases journal;
  • sales journal;
  • returns inwards journal;
  • returns outwards journal.

(8 marks)
(a) The following information was obtained from the financial records of Karam Enterprises for the month of June 2012.

Cash at hand 60,000
Cash in bank 430,000
Debtor’s accounts:
G.Polot 8,000
B. Abdi 45,000
Creditor’s accounts:
H. Tindo 12,000
A. Muta 25,000

Transactions during the month:
June 4 B. Abdi settled his account by cheque deducting a discount of 5%
June 12 Withdrew Ksh 32,000 from the bank for business use
June 17 Paid H. Tindo the amount due to her by cheque after deducting a discount of Ksh 500
June 20 Bought stationery worth Ksh 2,000 by cash
June 24 Settled A. Muta’s account after deducting a discount of 2t%
June 26 Paid rent Ksh 16,000 by cheque June 30 Paid salaries Ksh 80,000 by cheque
Prepare a three column cash book for the month of June 2012.       (8 marks)
(b) The following estimates have been made by Silver Enterprises for the last four months of the year 2013.
Additional information:

  • All sales are made on credit. 80% of the sales is received during the month of sale and the balance in the following month.
  • Purchases are settled in the following month.
  • Salaries are paid monthly.
  • Rent is payable quarterly in advance.
  • Furniture worth Ksh 200,000 will be purchased in October and payment made in December.
  • The cash balance on 1 October 2013 is expected to be Ksh 750,000.

Prepare a cash budget for the months of October, November and December 2013. (12 marks)
Tagax Limited has three production departments Pr P2 and P3 and two service departments Sf and S2. The following are the forecasted overheads for the year ending 31 December 2013.

Departments Overheads
P, 2,400,000
P2 5,000,000
P3 8,000,000
S, 3,000,000
s2 4,000,000

Service departments provide services to other departments as per the following percentages:

p, p2 P3 s, s2
40% 32% 20% 8%
35% 30% 25% 10%
  • Reapportion the service department overheads to production departments.
  • Determine the total overheads in each production department.

(9 marks)
(b) The following information relates to Tajiri Social club.
Income and Expenditure Account
for the year ended 31 December 2012

Ksh Ksh
Rates and rent 65,000 Subscriptions 145,000
Depreciation on equipment 11,000 Donations 120,000
Maintenance expenses 12,500
Depreciation on furniture 3,500
Loss on disposal of furniture 4,000
Surplus 169.000
265.000 265.000

The furniture disposed had a net book value of ksh 12,000.
Prepare a receipts and payments account for the year ended 31 December 2012.
(11 marks)

  1. (a) Explain four advantages of cost accounting to the management.

The following trial balance was extracted from the records of Kalulu Traders as at 31 December 2012.

Ksh Ksh
Purchases 750,000 453,000
Capital 800,000
Drawings 80,000
Rent and rates 145,000
Salaries and wages 22,000
Accounts receivable 40,000
Cash at bank 112,000
Cash in hand 8,000
Accounts payable 56,000
Inventory (1 January 2012) 40,000
Equipment at cost 140.000 28.000
Accumulated depreciation – Equipment 1.337.000 1.337.000

Additional information:

  • Inventory was valued at Ksh 36,000 as at 31 December 2012.
  • On 31 December 2012, rates prepaid amounted to Ksh 10,000 while rent accrued was Ksh 5,000
  • Depreciation on equipment is charged at 5% per annum on cost.


  • An income statement for the year ended 31 December 2012.
  • Statement of financial position as at 31 December 2012.

(12 marks)

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