Question One

1. What do you mean by accounting concepts? Distinguish between going concern concept and dual-aspect concept.
2. Big show has a business that has been trading for some time. You are given the following information as at 31 December 2006.

USD

Buildings 11,000

Motor vehicles 5,800

Furniture and fittings 5,500

Debtors 5,600

Stock 8,500

Cash at bank 1,500

Cash in hand 400

Creditors 2,500

Capital 30,000

Loan 5,000

Required:

Prepare a statement of financial position (Balance sheet) as at 31/12/2006.

3. Explain the benefits of maintaining control accounts.

4. Mr. Jeremiah balance of debtors as at 31^st December 2004 is Sh. 2,000,000. Mr. Jeremiah observed that 5% of the debtors are doubtful. At the close of the previous accounting year on 31^st December 2003 the debtors stood at Sh. 1,500,000 and the bad and doubtful debts were believed to be 3%.

Required:

Draw the provision for bad and doubtful debts account.