UGANDA ADVANCED CERTIFICATE OF EDUCATION
ENTREPRENEURSHIP EDUCATION SCENARIO ITEMS
ITEM 1
SCENARIO: "KAMPALA AGRO-TECH SOLUTIONS (KATS) LTD"
KATS Ltd is a medium-sized enterprise in Kampala that manufactures solar-powered
irrigation pumps. As the newly appointed Financial Controller, you are required to
assist the board in evaluating the company's performance for the year
ended December 31, 2025, and planning for the first quarter of 2026.
Extract from the Ledger as of December 31, 2025 (Figures in UGX '000):
Sales Revenue: 850,000
Cost of Sales: 480,000
Administrative Expenses: 120,000
Selling & Distribution Costs: 65,000
Interest Expense: 15,000
Machinery (Net Book Value): 400,000
Inventory (Dec 31): 90,000
Trade Receivables: 110,000
Cash at Bank: 45,000
Trade Payables: 75,000
Long-term Loan: 150,000
Ordinary Share Capital: 300,000
Retained Earnings (Opening): 120,000
Task:
a) Using the ledger extract provided above:
i. Prepare the Statement of Comprehensive Income (Income Statement) for KATS
Ltd for the year ended December 31, 2025.
ii. Calculate the Net Profit Margin and briefly explain what it indicates about the
company’s operational efficiency.
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b) Prepare a Statement of Financial Position (Balance Sheet) for KATS Ltd as of
December 31, 2025.
c) Verify the Fundamental Accounting Equation (Assets = Liabilities + Equity)
using your totals.
ITEM 2:
The board expects a 20% increase in sales for January 2026.
Forecasted Sales: UGX 100,000,000 (60% cash, 40% credit collected in 30 days).
Planned Expenses: Wages (UGX 12,000,000), Rent (UGX 5,000,000), and Raw
Materials (UGX 40,000,000—all paid in cash).
Opening Cash Balance (Jan 1): UGX 45,000,000.
Task:
a) Prepare a Cash Budget for KATS Ltd for the month of January 2026.
b) Based on your budget, advise the board on whether they should seek a short-term
bank overdraft for January.
c) Explain three benefits of budgeting for a growing Ugandan business like KATS
Ltd.
ITEM 3:
Read the scenario below carefully and complete the tasks that follow.
Entity: "Mwebaze Value-Add Grains Ltd" (MVGL)
MVGL is a grain processing plant located in Matugga. After a successful 2024, the
Managing Director, Mr. Mwebaze, needs to finalize the year-end reports and plan for
a warehouse expansion in Quarter 1 of 2025.
Financial Data as of 31st December 2024 (All figures in UGX ‘000):
Sales Revenue: 450,000
Cost of Sales: 210,000
Operating Expenses (Rent, Salaries, Electricity): 85,000
Interest on Bank Loan: 5,000
Machinery & Equipment (NBV): 320,000
Inventory (31/12/2024): 45,000
Trade Receivables (Debtors): 30,000
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Cash at Bank: 12,000
Trade Payables (Creditors): 22,000
10% Long-term Bank Loan: 100,000
Share Capital: 250,000
Retained Earnings (1st Jan 2024): 50,000
Task:
a) Prepare the Statement of Comprehensive Income (Income Statement) for
MVGL for the year ended 31st December 2024.
b) Calculate the Gross Profit Margin and Net Profit Margin.
c) Comment on the profitability of the business based on your calculations.
d) Prepare a Statement of Financial Position (Balance Sheet) for MVGL as of
31st December 2024.
ITEM 4:
The opening cash balance on 1st January 2024 was UGX 15,000,000. During the year,
the company:
Purchased a new milling machine for UGX 40,000,000.
Paid dividends to shareholders totaling UGX 10,000,000.
Generated UGX 52,000,000 from operating activities (after adjustments).
Task:
a) Prepare a Statement of Cash Flows for the year ended 31st December 2024 using
the headings: Operating, Investing, and Financing Activities.
b) Explain why a business can report a high profit but still have very little cash in the
bank.
ITEM 5:
Mr. Mwebaze expects the following for the first three months of 2025:
Sales Forecast: Jan: 50,000; Feb: 60,000; March: 70,000. (40% of sales are cash;
60% are credit collected in the following month).
Purchases: UGX 30,000 per month (Paid in cash).
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Expansion Cost: A new warehouse payment of UGX 25,000 is due in February.
Monthly Expenses: UGX 8,000 (Paid in cash).
Opening Cash Balance (1st Jan 2025): Use the closing bank balance from Task
2.
Task:
a) Prepare a Cash Budget for the period January to March 2025.
b) Identify which month MVGL will face a cash deficit and suggest two ways
they can manage it.
c) Distinguish between a Cash Budget and an Income Statement.
ITEM 6:
THE CASE STUDY
Read the scenario below and answer the tasks that follow.
Entity: "Pearl High-Tech Ltd" (PHTL)
PHTL is a local firm in Namanve industrial park that assembles low-cost smartphones.
After a turbulent 2024 due to fluctuating exchange rates, the Managing Director, Ms.
Akello, wants to evaluate the firm’s health before committing to a new assembly line
in 2025.
Financial Data as of 31st December 2024 (Figures in UGX ‘000):
Sales Revenue: 800,000
Cost of Sales: 440,000
Operating Expenses (Salaries, Rent, Power): 120,000
Interest Expense: 10,000
Plant & Machinery (Net Book Value): 500,000
Closing Inventory (31/12/2024): 60,000
Trade Receivables (Debtors): 80,000
Cash at Bank: 25,000
Trade Payables (Creditors): 45,000
Long-term Bank Loan: 200,000
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Share Capital: 350,000
Retained Earnings (1st Jan 2024): 70,000
Task:
a) Prepare the Statement of Comprehensive Income (Income Statement) for PHTL
for the year ended 31st December 2024.
b) Prepare the Statement of Financial Position (Balance Sheet) as of 31st
December 2024. (Note: Calculate the new Retained Earnings by adding the year's
Net Profit).
c) Using the statements prepared above, calculate and interpret the following:
i. Gross Profit Margin and Net Profit Margin.
ii. Current Ratio and Acid Test (Quick) Ratio.
iii. Inventory Turnover Period (Days).
iv. Advice: Based on the Current Ratio, advise Ms. Akello on whether the
company can comfortably pay its short-term debts.
ITEM 7:
The opening cash balance on 1st Jan 2024 was UGX 15,000,000. During the year:
PHTL purchased new testing equipment for UGX 60,000,000.
The company took an additional small loan of UGX 30,000,000.
Net cash generated from operations was UGX 40,000,000.
Task:
Prepare a Statement of Cash Flows for 2024 showing Operating, Investing, and
Financing activities.
ITEM 8:
For the first quarter of 2025 (Jan–March), the following is projected:
Sales: Jan: UGX 100,000, Feb: UGX 120,000, March: UGX 150,000 (50%
Cash, 50% Credit collected in 30 days).
Purchases: UGX 60,000 per month (all cash).
Tax Payment: UGX 15,000 due in March.
Fixed Costs: Salaries and rent of UGX 20,000 per month.
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Opening Cash: Use the 31st Dec 2024 UGX 130,000
Task:
a) Prepare a Cash Budget
b) Identify any month with a cash shortage and suggest two ways to fix it.
ITEM 9:
THE START-UP SCENARIO
Instructions: Read the case study below and complete the four budgeting tasks.
Entity: "Elgon Nutri-Flour Ltd" (ENFL)
ENFL is a new start-up based in Mbale planning to produce fortified maize
flour. The entrepreneur, Mr. Mugisha, has secured a production site and intends to
launch operations in January 2026. He has gathered the following data to prepare
his master plan:
i. Start-up Costs: Factory renovation (UGX 15m), Machinery purchase (UGX
45m), Legal & Registration (UGX 2m), and Initial Insurance (UGX 1m).
ii. Sales & Production Goal: The target is to produce and sell 10,000 bags (5kg
each) in the first month.
iii. Manufacturing Costs: Each bag requires raw maize costing UGX 4,000 and
packaging material costing UGX 500.
iv. Marketing Plan: Mr. Mugisha plans to launch on radio (UGX 1.5m), print 2,000
flyers at UGX 500 each, and hire two brand ambassadors at UGX 400,000 each.
v. Monthly Operations: Rent (UGX 1.2m), Factory electricity/water (UGX
800,000), and Administrative salaries (UGX 3.5m).
TASK:
a) Before the first bag of flour is sold, ENFL must incur specific "sunk costs."
Prepare a Pre-Operational Budget for ENFL.
b) Prepare a Production Budget for the month of January 2026, showing the total
cost of Raw Materials and Packaging.
c) The success of the launch depends on visibility in the Mbale region.
Prepare a Marketing Budget for ENFL’s launch month.
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d) Why is it important for a start-up in Uganda to allocate funds to a marketing budget
rather than relying solely on word-of-mouth?
e) Prepare an Operating Expenses Budget for January 2026.
f) If the price of electricity increases by 15% due to new UMEME tariffs, calculate the
new total for operating expenses.
g) Briefly explain the difference between a Cash Budget and an Operating Expenses
Budget.