INSTITUTION OF ACCOUNTANCY ARUSHA

INDIVIDUAL ASSIGNMENT

NAME : JANE LEONARD KINGODI

REG NO : BAF-01-0014-2023

PROGRAM : BAF I

MODULE : FINANCIAL ACCOUNTING

MODULE CODE :

FACILITATOR :

SEMESTER : TWO

ACADEMIC YEAR : 2023/2024

QUESTION ONE:
A. State 10 accounting concepts, and explain how each one contributes to fair presentation in
the financial statements.
Accounting concepts: Are the fundamental principles and guidelines that govern the
preparations of financial statement. These concepts provide a framework for accountants to
follow when recording, summarizing and reporting financial information.
The following are the accounting concepts:-

 Going concern concept: This concept assumes that the firm or business will proceed to
operate in the foreseeable future, it ensures that the asset and liabilities are valued based
on their continued use rather than their liquidation value.

 Accrual concept: In this concept explain that revenue and expenses are recognized when
they are earned or incurred, regardless of when cash is received or paid this enable
financial statements to have proper information according to daily transactions. Example
when the firm provide some services for their customers and they did not receive any
payment concern the services then the firm just recognize that as revenue in their books.

 Consistency concept: Where by requires that accounting method and practices should be
consistent from one period to another, this promotes comparability between financial
statement of different periods, leading to fair presentation.

 Materiality concept: Any information that concern the firm should be disclosed if its
omissions or misstatement could influence the economic decisions of financial users, by
focusing on material items that are more important in the firm, financial statement
provide a fair and relevant representation of the entity’s financial position.

 Entity concept: This concept shows that separates the affairs of the business from those
of its owners/ shareholder, it ensures that personal transactions of owners are not mixed
with the business transaction, contributing to a clear and fair presentation of the firm’s
financial statements.

 Historical Cost Concept: The accounting concept records assets at their original
purchase price, providing an objective and verifiable basis for valuation enable to
prevents the inclusion of misstatement of gains or losses in the financial statements,
ensuring a fair presentation.

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  Prudence concept: This concept shows that cautions should be exercised in recognizing
revenues and gains, it helps to prevent overstatement or misunderstand of asset or
income, contributing to a conservative and fair presentation of financial statement.

 Matching concept: In this concept explain that expenses should be recognized in the
same period as the revenue they help generate, by matching expenses with related
revenues, this concept ensures a fair presentation of the entity’s profitability.

 Objective concept: This accounting concept states that financial statement should be
based on objectives evidence and should be free from bias or personal judgment, this
means that financial information should be supported by verifiable data and facts rather
than subjective opinions, it helps to ensure that financial statement is reliable, consistent
and trustworthy for user to make informed decisions.

 Money measurement concept: This concept in accounting explains that only

transactions and events that can be measured in monetary terms should be recorded in the
financial statements. It implies that any non-monetary transactions or events that are not
recorded in the financial statement, this concept helps in maintain consistency and
comparability in financial reporting.

Therefore, as we have seen how accounting concept it ensures that financial statement is
prepared in consistent, reliable and understandable manner, allowing users to make informed
decisions based on the information presented.

B. Working: Sales
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 DR Debtors control a/c CR
Opening balance 9,200,000 Cash 1,540,000
Sales 97,940,000 Receipt 94,200,000
Closing balance 11,400,000
107,140,000 107,140,000

Working: Purchase
DR Creditor control a/c CR
Bank 63,400,000 Opening balance 7,300,000
Payment(cash) 1,310,000 Purchase 65,510,000
Closing balance 8,100,000
72,810,000 72,810,000

Working: Capital
Asset= Capital + Liabilities
ASSET: Bank 920,000
Cash 194,000
Debtor 9,200,000
Stock 24,200,000
Van 5,500,000
Insurance paid in advance 340,000
TOTAL ASSET 40,354, 000
LESS: LIABILITIES
Trade creditors ( 7,300,000)

Capital 33,054,000
Working:

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 DR CASH BOOK CR
DETAILS CASH BANK DETAILS CASH BANK

Balance b/d 194,000 920,000 Cash - 12,600,000

Receipt from debtor - Trade creditor 1,310,000 63,400,000

94,200,000
Cash sales 1,540,000 - Rent - 3,200,000

Loan from F. Tung - 2,500,000 Insurance - 1,900,000

Bank 12,600,000 Drawing - 11,400,000

Sundry expenses 180,000 820,000

Balance c/d 12,844,000 4,300,000

14,334,000 97,620,000 14,334,000 97,620,00

Working: Drawings
1310 + 180 + 272 + D = 14334
1762 + D = 14334
D = 14334-1762
D = 12,572.
Cash Drawings is TZS. 12,572/=

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 KIZITO
TRADING AND PROFIT OR LOSS ACCOUNT FOR THE ENDED YEAR
31. DECEMBER.2022
DETAILS AMOUNT AMOUNT

Sale 97,940

Less: cost of goods sold

Opening stock 24,200

Add: Purchases 65,510

89,710

Less: Closing stock (27,100) (62,610)

Gross profit 35,330

Less: Operating expenses

Rent ( 3,200+ 360) 3,560

Insurances (1,900+340-400) 1,840

Sundry expenses (820+180) 1,000

Van (5,500-4,600) 900 (7,300)

Net profit 28,030

KIZITO

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 BALANCE SHEET AS AT 31. DECEMBER.2022
DETAILS AMOUNT AMOUNT
ASSETS
NON-CURRENT ASSETS
Van 4,600 4,600
CURRENT ASSETS
Stock 27,100
Trade Debtors 11,400
Cash at bank 4,300
Cash in hand 272
Insurances prepaid 400 43,472
Total assets 48,072
LIABILITIES
NON-CURRENT LIABILITIES
Loan from F. Fung 2,500
CURRENT LIABILITIES
Trade creditors 8,100
Rent owing 360 (10,960)
37,112
CAPITAL
Balance at 1january 2022 33,054
Add; net profit 28,030
61,084
Less; drawings 12,572+11,400 (23,972)
37,112

QUESTION TWO:

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 (i) Prepare the adjusted debtors ledger control account
ADJUSTED DEBTORS CONTROL ACCOUNT
DETAILS TZS DETAILS TZS
“000” “000”
Balance b/d 27,000 Balance b/d 650

Interest (65-59) 6 Discount allowed 330

Sales return 15 Contra 280

Balance c/d 25,761

27,021 27,021

Balance b/d 25,761

DR CR

(ii) Prepare the adjusted schedule of debtors showing the original balance.

DEBTOR ORIGINAL BALANCE.

TZS”000” TZS”000”
Balance b/d 25,396
Add: Sales 2,200
27,596
Less: Discount allowed 120
Interest 30
Contra 550
Bill received 1,120
Sales return 15 (1,835)
Net balance as per adjusted control account 25,761

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 (iii) Give two reasons for preparing debtors accounts and explain two limitations of using
control accounts.

Reasons behind to why we prepare debtors accounts:-

 It used to assess credit risk: By preparing debtors account enable different debtors in
the business to assess the credit risk associated with each debtor, help them to make
informed decision about extending credit or taking steps to minimize bad debt in the firm.

 It used to manage cashflow: By monitoring debtors account enable the firm to effective
management their cashflow by identifying potential delays in payment and taking
proactive measure to maintain a good financial position and meet every obligation in the
firm.

Limitations of using Control accounts:-

 It does not identify errors: It insufficient to quickly identify errors in the control
accounts and also their manual errors when recording transactions can lead to
discrepancies and inaccurate in the financial records.

 It is complexity: When maintain control accounts of the firms that have large sum
number of debtors where it requires effective record-keeping and reconciliation processes
which can be time-consuming.