Manage Financial Operations July/Aug 2023
INSTRUCTIONS TO CANDIDATES 1. This paper has three sections A, B and C. 2. You are provided with a separate answer booklet. 3. Marks for each question are as indicated. 4. Do not write on the question paper. This paper consists of FIVE (5) printed pages Candidates should check the question paper to ascertain that all pages are printed as indicated and that no questions are missing SECTION A: (40 MARKS) Answer all questions from this section. 1. Ratio analysis is a quantitative method of gaining insight into a company’s liquidity, operational efficiency, and profitability by studying its financial statements. Highlight FOUR limitations of ratio analysis in business. (4 marks) 2. Outline FOUR possible causes of Labour rate variance. (4 marks) 3. Control accounts provide a summary of transactions recorded in various subsidiary ledger. Highlight FOUR reasons for maintaining control accounts. (4 marks) 4. State THREE disadvantages of using a standard costing system. (3 marks) 5. When it comes to investments, there are several motives for holding assets. List THREE motives for holding cash by organizations. (3 marks) 6. Outline FIVE desirable characteristics of accounting reports. (5 marks) 7. Corporate governance encompasses the relationships among various stakeholders, including shareholders, the board of directors, management, employees, and other relevant parties. Highlight FOUR roles of corporate governance. (4 marks) 8. Audited financial statements refer to financial reports that have undergone an examination and verification process. List FOUR parties interested in an organization’s audited financial statements. (4 marks) 9. State FIVE benefits of preparing budgets in a business. (5 marks) 10. One role on an accountant is to prepare and present financial reports to the management at the end of an accounting period. Outline FOUR objectives of financial reporting to a business enterprise. (4 marks) SECTION B: (60 MARKS) Candidate to answer any Three Questions from this section. 11. The following is list of balances was extracted from the books of Mary following the preparation of her Statement of Comprehensive Income for the year ended 31 March 2022: Required: Prepare Mary’s Statement of Financial Position as at 31 March 2022. (20 Marks) 12. The following information was extracted from a company’s standard cost card. The material standard for one unit of product Z is 3 Kg at Sh. 5 per Kg. 14,000 Kg were used at a cost of Sh. 84,000 and 6,000 units were produced. The standard rate per hour was Sh. 10 and the standard time per unit is 1.5 hours while the total time worked is 9,500 hours for Ksh.80,750. Required: Calculate, a) Material price variance (4 Marks) b) Material usage variance (4 Marks) c) Labour rate variance (4 Marks) d) Labour efficiency variance (4 Marks) e) Labour cost variance (4 Marks) 13. a) Explain five types of budget that can be used in business. (10 Marks) b) Discuss five limitations of relying solely on budgeting without considering long term financial strategies. (10 Marks) 14. ABC Ltd has extracted the following information from its final accounts for the year ended 31 March 2023: Required: a) Gross profit margin (4 Marks) b) Mark-up (4 Marks) c) Net profit margin (4 Marks) d) Current ratio (4 Marks) e) Liquidity (acid test) ratio (4 Marks)
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