BAF$1101$ FINANCIAL ACCOUNTING CATQUESTION ONEThe trial balance of Nam Oyiech Ltd$.$ as at $3$I December $1999$ was as follows:Sh$.$Sh$.$Share capital $(10,000$ Sh$\mathrm{.}20$ Ordinary shares$)200,000$Purchases and Sales$1,220,0002,000,000$Debtors and Creditors$400,000140,000$Profit and loss $1$ January $1999380,000$Sales returns$40,000$Buildings at cost$800,000$Plant at cost$1,000,000$Provision for depreciation:Plant$400,000$Buildings$40,000$Purchases returns$80,000$Selling expenses$140,000$Bank$160,00010\%$ Debentures$600,000$Stock $1$ January $1999300,000$Provision for bad debts$20,000$Operating expenses$180,000$Administrative expenses$140,000$Suspense account$\_\_\_\_\_\_\_200,0004,220,0004,220,000$Additional information:Stock at $31$ December $1999$ was Sh$\mathrm{.}360,000.$Sales returns of Sh$\mathrm{.}20,000$ have been entered in the sales day book as if they were sales. When this error was discovered, the debtors account had been corrected but the sales figure was not rectified$\mathrm{.}5000$ new shares were issued during the year at Sh$\mathrm{.}32.$ The proceeds have been credited to the suspense account.A fully depreciated plant which cost Sh$\mathrm{.}200,000$ was sold during the year. No other entries except bank have been made. The remaining balance on the suspense account after $(2$ and $3)$ above represents the sale proceeds. A debtor of Sh$\mathrm{.}20,000$ has been declared bankrupt. A general provision is required at $5\%$ of debtors.Rates of Sh$\mathrm{.}30,000$ paid in December covering half year to $31$ March $2000$ have not been entered in the books. Debenture interest has not been paid.viii$)$Depreciation on plant is at $10\%$ on cost and buildings at $2\%$ on cost$.$The directors propose to pay a dividend of Sh$\mathrm{.}2$ per share and transfer Sh$\mathrm{.}20,000$ to the general reserve.Corporation tax at a rate of $32\text{'}/2\%$ on profits is estimated to be Sh$\mathrm{.}90,000.$Required:Suspense account for the year ended $3$I December $1999.(6$ Marks$)$ Trading, profit and loss account for the year ended $31$December$1999.(14$ Marks$)$ Balance sheet as at $31$ December $1999.(10$ Marks$)$QUESTION TWODifferentiate between:Accruals and PrepaymentsWorking Capital and Capital EmployedRevenue and Capital ExpenditureMateriality and Historical Cost Concept Carriage inwards and Carriage outwards$(10$ Marks$)$On July $31,2021,$ the cash book showed a balance at hand of $52.$ The bank statement showed a CR balance of $134.$On comparing the two, the following were discoveredCheques drawn by the Blyth during the month of July amounting to $356,1732$ & $196$ had been entered in the cash book but not presented at the bank at the end of the monthBlyth had forgotten to enter in the cash book a standing order of $50$ relating to trade subscriptionsThe bank had incorrectly credited Blyths A$/$c with a dividend receipt of $25$ relating to another customerThe bank charges of $105$ shown on the bank shown on the bank statement had not been entered in the cashbookCheques received from customers amounting $1211$ were entered in the cashbook on $31$ July but but not credited in the bank statement on $3$rd July.There were direct Cr of $180$ and $31$The payment side of the cashbook for the month of July had been under cast by $1000$viii$)$The bank statement showed an item, returned cheques $72.$ This had not been accounted in the cashbookRequired:Prepare a bank reconciliation statement for the month of July $2021.(10$ Marks$)($Total: $20$ marks$)$QUESTION THREEAccounting is a process that begins at a point and ends at another. Explain the statement using a diagram. $(8$ Marks$)$Explain the term errors and the errors that affect a trial balance. $(7$ Marks$)$State five importances of generally accepted accounting principles $($GAAPS$).(5$ Marks$)($Total: $20$ marks$)$