Helps in detection of errors especially where the control account balance differs with the ledger balance.
Debtors and creditors balance can be obtained at a short time.
Facilitates the preparation of the final accounts since the preparation of debtors and creditors schedule may take time.
John okuku answered the question on March 16, 2018 at 10:59
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a. Briefly explain two practical circumstances when the auditor may be liable for damages arising from material misstatements in published financial statements on which the auditors...
(Solved)
a. Briefly explain two practical circumstances when the auditor may be liable for damages arising from material misstatements in published financial statements on which the auditors have expressed an audit opinion.
b. List the classes of persons who may make a successful legal action against the auditors negligence.
c. Explain how an audit firm can minimise its potential legal liability for professional negligence.
Date posted:
March 14, 2018
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Answers (1)
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a. Explain why auditors carry out circularisation of debtors
b. Distinguish between ‘positive’ and ‘negative’ debtors circularisation procedures
c. Describe in...
(Solved)
a. Explain why auditors carry out circularisation of debtors
b. Distinguish between ‘positive’ and ‘negative’ debtors circularisation procedures
c. Describe in detail the work you would carry out in scrutinising the replies tothedebtors circularisation and in confirming whether the debtors balances are collectable in the following situations:
• Where the debtor does not agree with the balance and states a difference;
• Where the debtor reports that he cannot confirm the balance;
• Where no reply is received from the debtor
Date posted:
March 14, 2018
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Answers (1)
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a) Describe the reasons for maintaining proper audit working papers.
b) The documents, records and related information listed below are normally maintained in ‘permanent’ audit...
(Solved)
a) Describe the reasons for maintaining proper audit working papers.
b) The documents, records and related information listed below are normally maintained in ‘permanent’ audit file.
In each case indicate the importance of maintaining the respective document, record and
information.
• Memorandum and articles of association:
• Principal activities and locations;
• Specific legislation and regulations
• History including summary of results;
• Key staff;
• Description of accounting systems and internal control
• Organisation charts;
• Copy of letter of engagement
Date posted:
March 14, 2018
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Answers (1)
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Your firm has been approached by the directors of UB Bank Ltd. a newly formed commercial bank to undertake the audit for its first complete...
(Solved)
Your firm has been approached by the directors of UB Bank Ltd. a newly formed commercial bank to undertake the audit for its first complete financial year ended 31 December 1996. Your manager has assigned you the responsibility for leading the team. You have had various discussions with the directors about the timetable and the respective responsibilities of management and the auditor. You have drafted a letter of engagement and have sent it to the managing director for approval and acceptance but the management has not yet responded to your letter.
Required:
a) Explain why a letter of engagement is sent before any new audit appointment is accepted.
b) Set out the main contents of a letter of engagement.
c) Itemise the actions you would take in response to the non-reply by the management to your draft engagement letter.
d) State when it might be necessary to re-draft an engagement letter and have it re-affirmed by the client’s management.
Date posted:
March 14, 2018
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Answers (1)
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Why is an external audit necessary for companies registered under the companies act?
(Solved)
Accounting, principles of auditing for bachelor of commerce
Date posted:
March 6, 2018
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Answers (1)
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Explain the matters that have to be considered in respect of a system of internal control for cash sales in a service station that sells...
(Solved)
Accounting
Date posted:
March 5, 2018
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Answers (1)
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What are the disadvantages of rigidly adhering to a system of internal control?
(Solved)
What are the disadvantages of rigidly adhering to a system of internal control?
Date posted:
March 5, 2018
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Answers (1)
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Outline the basic elements of an unqualified audit report
(Solved)
Financial accounting, audit reports
Date posted:
March 5, 2018
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Answers (1)
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List the principal matters which auditors consider when forming an opinion on the financial statements
(Solved)
List the principal matters which auditors consider when forming an opinion on the financial statements
Date posted:
March 5, 2018
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Answers (1)
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List and briefly explain the qualifications available to the auditor in drafting his audit report stating the circumstance in which each qualification is appropriate. Give...
(Solved)
Financial accounting, auditing
Date posted:
March 5, 2018
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Answers (1)
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Explain key differences between financial accounting and cost accounting
(Solved)
Introduction to Financial accounting
Date posted:
March 5, 2018
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Answers (1)
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Define accounting and explain six users of accounting information
(Solved)
Define accounting and explain six users of accounting information.
Date posted:
March 2, 2018
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Answers (1)
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Define the following concepts in accounting(a) Money measurement concept(b) Separate valuation concept(c) Separate entity concept
(Solved)
Define the following concepts in accounting (a) Money measurement concept (b) Separate valuation concept (c) Separate entity concept
Date posted:
February 21, 2018
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Answers (1)
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Outline the circumstances under which a person may cease to be a member of a cooperative society
(Solved)
Outline the circumstances under which a person may cease to be a member of a cooperative society
Date posted:
January 15, 2018
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Answers (1)
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Define the following investment rules. In your definition state the criteria for accepting or rejecting an investment. (a) Payback period (b) Internal rate of return
(Solved)
Define the following investment rules. In your definition state the criteria for accepting or rejecting an investment.
a) Payback period
b) Internal rate of return
c) Profitability index
Date posted:
December 27, 2017
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Answers (1)
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Write brief notes on( i) Hire purchase (ii) Credit sale (iii) Effects of goods repossessed on hire purchase transactions
(Solved)
a) Write brief notes on
i) Hire purchase
ii) Credit sale
iii) Effects of goods repossessed on hire purchase transactions
b) Fiona Limited bought Motor Vehicle on hire purchase terms. The transactions involved
the following:
i) The cash price Sh.800,000
ii) Hire purchase interest 25%
iii) Deposit 20% of cash price
iv) 5 annual equal installments.
The purchase was effected on 1st January 2015.All payments were made. Depreciation is at a rate of 10% per annum on straight line.
Required:
Asset account (3marks)
Hire purchase company account (4 marks)
Hire purchase interest account (3marks)
C In relation to investment accounting , distinguish the following terms
i) Cum – dividend and Ex – dividend (2 Marks)
ii) Bonus issue and Rights issue (2Marks)
d) ABC Ltd bought sh. 60,000, 10% loan stock of Expo ltd on 1st March 2008 at 90 cum- interest. Interest is payable half yearly on 30th June and 31st December.
Required:
Show the entries in ABC Ltd’s ledger for the year ended 31st December 2008. Ignore income tax. (6 Marks)
Date posted:
November 24, 2017
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Answers (1)
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State and explain examples of financial risk.
(Solved)
State and explain examples of financial risk.
Date posted:
November 14, 2017
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Answers (1)
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State and explain the concepts and principles of accounting
(Solved)
State and explain the concepts and principles of accounting
Date posted:
October 27, 2017
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Answers (1)
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Ways on how tax policy can be used to promote the growth of small and medium Enterprises (SMEs)
(Solved)
Taxation
Date posted:
October 26, 2017
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Answers (1)
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Differentiate between private limited companies and public limited companies.
(Solved)
Differentiate between private limited companies and public limited companies.
Date posted:
October 26, 2017
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Answers (1)