Kalamuka Maize Millers Limited purchased a building on 1 January 2005, for Sh.4,000,000. It was brought into use on the same day. The sellers construction cost comprised: Sh. Land Architects fees Leveling land Construction (including offices sh.160,000) 200,000 40,000 60,000 1,700,000 2,000,000 B.B. Ltd. purchased the whole of the Kalamuka […]

Because of economic conditions, a firm reports that 30 percent of its accounts receivables from other business firms are overdue. The firm’s policy is that if an accountant takes a random sample of five such accounts and finds that exactly 20 percent of the accounts are overdue 10 percent of […]

(a) What is meant by the term qualifying expenditure? ( 2 marks) (b) Name and briefly explain items which may be included in the qualifying expenditure for the purposes of investment deductions. ( 8 marks)

Mia Shillings Department Stores has compiled the following data concerning its daily sales. The sales for each day of the week are normally distributed with the following parameters: Day Mean (μ) in Sh. Standard deviations (σ) in Sh. Monday Tuesday Wednesday Thursday Friday Saturday 120,000 100,000 100,000 120,000 140,000 160,000 […]

Mia Shillings Department Stores is planning to open a store in Washington DC. It has asked the Superior Marketing Company (SMC) to do a market study of randomly selected families within a five kilometer radius of the store. Among the questions is wishes SMC to ask each home owner are […]

The table below reports the annual net salary amounts for an accountant who began employment with an auditing firm in 1995. In addition, the value of the Consumer Price Index (CPI) for 1995 through 1999 is shown. Year Salary (Sh.) CPI 1995 360,000 130.7 1996 1997 1998 1999 370,000 390,000 […]

SAF is a manufacturer of military hardware. Shown below is a simplified projected income statement for its small arms division. SAF Small Arms Division Income Statement Revenue: Sales (100,000 units at Sh. 600 per unit) Cost of goods sold: Cost (100,000 units at Sh. 250 per unit) Operating expenses: Variable […]

Saika Co. Ltd. a manufacturer, purchases raw materials at Sh.1,000,000. The company then incurs conversion costs which are estimated at 40% of material cost. The profit mark-up is 20% of total cost. The completed product is sold to Chemuka Wholesalers who then incur conversion costs of 50% on cost. The […]

(i) Give a brief definition of value added tax (VAT). ( 2 marks) (ii) Explain in numbered paragraph the case for and against VAT in your country. ( 8 marks)