Certificate in Purchasing and Supply Management Examinations For 2005
Certificate in Purchasing and Supply Management Examinations For 2005
Certificate in Purchasing and Supply Management Examinations For 2005
Instructions to Candidates:
Page 1 of 10
SECTION A: COMPULSORY
Dr Cr
Rs Rs
Sales 422,656
Returns Inward 2,248
Purchases 271,538
Returns Outward 922
st
Stock at 1 July 2004 11,669
Wages 37,010
Rent 11,800
Machinery repairs 1,249
Advertising 7,228
Electricity and Telephone 7,385
Stationery and postage 1,256
Motor Expenses 5,576
Insurance 4,285
Web site costs 1,870
Fixed Assets at Cost :
Machinery 210,500
Motor Vehicles 105,000
Provision for Depreciation at 1st July 2004
Machinery 83,270
Motor Vehicles 51,450
Trade Debtors 47,825
st
Provision for Doubtful Debts at 1 July 2004 2,200
Bank Account 2,278
Trade Creditors 51,742
st
Capital Account as at 1 July 2004 138,477
Drawings 22,000
750,717 750,717
(Continued)…
Page 2 of 10
Question 1 (continued)
(1) Depreciate Machinery at the rate of 10% per annum on cost and Motor
Vehicles at 20% per annum on the reducing balance basis.
(3) Debts of Rs825 are to be written off, and the provision for doubtful debts is to
be adjusted to 5% of trade debtors.
(4) During 2005 the owner withdrew goods at Rs1,350 from the business stock
for his own use. No entry had been made in the books for the withdrawal of
these goods.
(5) Insurance includes a payment of Rs500 for the half year ended
30th September 2005.
(6) One quarter of the wage costs was for staff repackaging the goods for sale.
(7) The telephone bill of Rs385 for the month of June was received in July and
paid in August 2005.
Required:
(a) Prepare the trading and profit and loss account for the year ended 31 March
2003. (15 marks)
(c) Identify four external users of accounts who might be interested in the
accounts of Arnold Baker and briefly explain their information needs.
(10 marks)
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SECTION B: ANSWER ANY TWO QUESTIONS
(i) State with reasons whether the following statements are true or false:
(c) Legal costs incurred for the acquisition of Land and Building is a revenue
expenditure;
(d) Amounts written off from the cost of the fixed assets is capital expenditure;
Required:
Explain briefly the above four terms of costs, giving an appropriate example for each
term. You may use diagram to support your answer. (8 marks)
(Continued)…
Page 4 of 10
Question 2 (continued)
(iii) The details below relate to the level of activity for the quarter ended
31 March 2005 at the General stores of the Ministry of Health
The charge out rate for the services provided is Rs 10 per issue note raised.
Required:
a) Calculate the:
Variable cost per unit; (2 marks)
Fixed costs for the period; (2 marks)
Contribution/Sales ratio; (2 marks)
Breakeven point in units and value (3 marks)
(iv) Your departmental head has asked your views as to the contracting out of the
services presently carried out by the maintenance department.
Required:
List some of the qualitative factors that may influence the decision. (6 marks)
Page 5 of 10
QUESTION 3: (30 MARKS)
PART A
(i) A cheque paid to CEB for Rs7,500 had been entered in the cash book as
Rs7,050.
(ii) A receipt of Rs1,760 shown in the bank statement had not been entered in
the cash book.
(iii) Cheques for the amount of Rs195,520 had not been paid into the bank.
(iv) The credit side of the cash book for the month of May 2005 had been
overstated by Rs10,000.
(v) Bank charges and interest of Rs7,000 do not appear in the cash book.
(vi) Receipts of Rs53,500 paid into the bank on 30 May 2005 do not appear in
the bank statement until 2 June 2005.
(vii) A direct debit payment of Rs23,910 for telephone charges had not been
entered in the cash book.
(ix) Cheques amounting to Rs152,240 have not yet presented for payment.
Required:
(a) Prepare the amended cash book for the month of May 2005. (7 marks)
(b) Prepare a statement to reconcile the bank statement balance with the
amended cash book balance. (5 marks)
(c) Distinguish between a direct debit and a standing order payment. (6 marks)
(Continued)…
Page 6 of 10
Question 3 (continued)
PART B
Mr Jean Jacques, the owner of a Sport Shop, is disturbed to observe that the draft
final accounts you have prepared for the year ended 30th September 2005 show a
net loss of Rs150,000, which is in sharp contrast to a long record of stable profits.
After a thorough examination of the accounts, the owner suggests the following
amendments:
(i) “There is no doubt that we have over-depreciated in the past as both the
premises and equipment are worth a lot more to us than the book values
in the balance sheet. I suggest we don’t charge any depreciation this
year”.
(ii) “I have been looking into the repairs and maintenance item (Rs60,000)
and find that Rs40,000 relates to the painting of premises and replacement
of tyres for the car. Let’s treat this as capital expenditure and remove it
from the profit and loss account”.
(iv) “We have a team of very competent managers and a skilled and highly
dedicated workforce. Why not include the monetary value as part of the
assets and in any way they contribute to the bottom line results”.
Required:
Page 7 of 10
QUESTION 4: (30 MARKS)
Pit and Zap each carry on business as wholesalers of the same product. Their
respective accounts for the year ended 31 December 1994 are as follows:
Profit and Loss Accounts for the year ended 31 December 2004
Pit Zap
Rs000 Rs000
120,000 120,000
(Continued)…
Page 8 of 10
Question 4 (continued)
PIT ZAP
Fixed assets 53,750 33,840
Current assets
69,750 27,360
Current liabilities
16,640 31,700
106,860 29,500
Financed by:
Capital 105,000 28,500
106,860 29,500
(Continued)…
Page 9 of 10
Question 4 (continued)
Required:
Return on equity
Current ratio
Stock turnover
Assets turnover
(20 marks)
(b) Comment briefly on the performance of the two companies as indicated by the
ratios you have calculated in part (a). (10 marks)
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