1. a) Differentiate between cash transactions and credit transaction. (4 marks)
b) Explain three uses of ledger accounts in business. (6 marks)
c) Briefly describe functions of accounting information to a Business Enterptise. (10 marks)
2. a) Explain five errors that may cause a trial balance not to balance. (10 marks)
b) Describe briefly the purpose for the following ledger accounts.
i. sales ledger (2 marks)
ii. Purchases ledger (2 marks)
iii. Cash book (2 marks)
iv. Nominal Ledger (2 marks)
v. Private ledger (2 marks)
3. a) Define the term contra entry. (2 marks)
b) Explain three reasons why cash and bank accounts are ussually kept in a separate ledger from other accounts. (3 mark)
c) Kamau started business in 1st January 2011 with sh 150,000 in bank and cash in hand sh 40,000. His transactions for the month of January were as follows:
Jan 1 Bought stock worth sh 50,000 by cheque
2 Purchased office equipment by cheque sh 30,000
4 Withdrew sh 25,000 from bank and kept it in the office to be used in making minor payments when necessary.
7 Purchased stationery sh 600 in cash
12 Sold goods worth sh 8,000 to Ondiek on credit
18 Bought stock woth sh 32,000 on credit from Tuju
25 Received a cheque of sh 4,500 from Ondiek
27 Purchased stationery sh 200 in cash
30 Received cash sh 2,000 from Ondiek
Required:
i) Record the above transactions in the relevant ledger accounts and balance them off as st 31st January 2011. (10 marks)
ii) Extract a trial balance as at that date. (5 marks)
4. a) Define a petty cash book. (2 marks)
b) Explain four uses of subsidiary books. (8 marks)
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