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Distinguish between Accrual concept and Prudence concept
Accrual concept states the revenues and costs are accrued and recognized as they are earned or incurred(and not as money is received or paid) and recorded in financial statement on the period on which they incur while Prudence concept states that uncertainties inevitable surrounds many transactions and revenues and profits should not be unanticipated but recognized only when they are are received in form of cash or other assets which can be treated as cash.
Kalis answered the question on March 23, 2018 at 07:51
- Explain the following concepts a).Depreciationb) Amortizationc) Depletion(Solved)
Explain the following
a) Depreciation
b) Amortization
c) Depletion
Date posted: March 23, 2018. Answers (1)
- The auditing guideline on ‘recording’ requires audit working papers to be sufficient complete and detailed so that an experienced auditor who has no previous connection...(Solved)
The auditing guideline on ‘recording’ requires audit working papers to be sufficient complete and detailed so that an experienced auditor who has no previous connection with the audit is able to subsequently ascertain from working papers the work performed and to further support the conclusions reached thereon.
Required:
(a) State four benefits that the auditor will obtain from the working papers that meet the above requirements.
(b) Outline the contents of a typical:
(i) Current audit file;
(ii) Permanent audit file.
Date posted: March 22, 2018. Answers (1)
- You are the audit manager in charge of Car Alarms Ltd. Whose financial year ended on 31 March 1993. Due to the tight schedule...(Solved)
You are the audit manager in charge of Car Alarms Ltd. Whose financial year ended on 31 March 1993. Due to the tight schedule of your programmes you are unable to devote anytime at the client‟s premises. Therefore you have delegated the responsibility to the audit senior.
(a) State the procedures you would follow to control the audit up to completion stage.
(b) Explain the matters you would pay attention to in order to achieve you firm‟s quality control targets.
Date posted: March 22, 2018. Answers (1)
- Give four examples of internal audit work that may be used by the external auditor (Solved)
Give four examples of internal audit work that may be used by the external auditor
Date posted: March 22, 2018. Answers (1)
- Explain the matters you would consider and the work you would perform to enable you assess the extent to which you would rely on the...(Solved)
Explain the matters you would consider and the work you would perform to enable you assess the extent to which you would rely on the work of the internal audit department of your client
Date posted: March 22, 2018. Answers (1)
- Distinguish between internal audit and internal check ...(Solved)
Distinguish between internal audit and internal check
Date posted: March 22, 2018. Answers (1)
- What are the similarities between internal and external audits? (Solved)
What are the similarities between internal and external audits?
Date posted: March 22, 2018. Answers (1)
- Describe the following types of Audits:
i. Statutory Audits;
ii. Internal Audits;
iii. Private Audits;
iv. Management Audits;
(Solved)
Describe the following types of Audits:
i. Statutory Audits;
ii. Internal Audits;
iii. Private Audits;
iv. Management Audits;
Date posted: March 22, 2018. Answers (1)
- In addition to shareholders, many different parties are interested in the audited accounts of a company. Name FOUR such parties and state the significance...(Solved)
In addition to shareholders, many different parties are interested in the audited accounts of a company. Name FOUR such parties and state the significance of audited accounts to each one of them.
Date posted: March 22, 2018. Answers (1)
- Discuss the 4 main methods of determining depreciation(Solved)
Discuss the 4 main methods of determining depreciation.
Date posted: March 22, 2018. Answers (1)
- (a) Define control accounts (b) State the two main types of control accounts (c) State the purpose of control account(Solved)
(a) Define control accounts (b) State the two main types of control accounts (c) State the purpose of control account
Date posted: March 21, 2018. Answers (1)
- “Action must be specifically taken to prevent the occurrence of frauds involving the assets of the company”, Finance Director of Food All Limited addressing accounting...(Solved)
“Action must be specifically taken to prevent the occurrence of frauds involving the assets of the company”, Finance Director of Food All Limited addressing accounting staff of the company. Of particular interest to the directors are:
1. The safety of unclaimed wages
2. The receipt of cash from customers.
3. The company’s cheque books
4. Issue of credit notes to debtors.
Required:
a. For each of the above, explain how a fraud can occur in the area.
b. What controls should be in place to prevent the occurrence of each of the frauds described in (a) above?
Date posted: March 16, 2018. Answers (1)
- The Companies Act (Cap.486) sets out the duties of the auditors for a company in respect of his report and other matters.
Required:
a. State four situations under...(Solved)
The Companies Act (Cap.486) sets out the duties of the auditors for a company in respect of his report and other matters.
Required:
a. State four situations under which the Act requires auditors to qualify their report.
b. State two circumstances in which the auditors may qualify their report owing to inherent uncertainty.
c. State four types of circumstances in which the auditors may qualify their report as a result of disagreement with the directors
Date posted: March 16, 2018. Answers (1)
- The principle objective of the verification of liabilities, commitments and contingencies is to form an opinion as to their completeness, existence, valuation and presentation in...(Solved)
The principle objective of the verification of liabilities, commitments and contingencies is to form an opinion as to their completeness, existence, valuation and presentation in the financial statements.
Required:
a. Why does the auditor examine statements received from suppliers of goods and services?
b. How would the auditor ensure that at the year end all goods received by a client were included in both inventories and creditor balances?
c. How would the auditor ensure that the amounts accrued for wages and salaries due but unpaid were properly calculated and recorded in the books?
d. What tests would the auditor need to undertake in order to ensure that capital commitments at the year end were fairly stated in the books?
Date posted: March 16, 2018. Answers (1)
- The auditing guideline on ‘planning, controlling and recording’ contains the following statement with regard to working papers: ‘audit working papers should always be sufficiently complete...(Solved)
The auditing guideline on ‘planning, controlling and recording’ contains the following statement with regard to working papers: ‘audit working papers should always be sufficiently complete and detailed to enable an experience auditor with no previous connection with the audit subsequently to ascertain from them what work was performed and to support the conclusions reached.’
Required:
a) Describe four benefits that the auditor will obtain from working papers that meet the above requirement.
b) If the auditor has discovered that a claim for damages is a significant item requiring exercise of judgement in the financial statements, show what type of evidence on the matter the auditor must record in the current file. Give reasons for the inclusion of such evidence in the current file.
c) List three types of information which is normally retained in the audit file and state why such information should be available for reference in the course of an audit.
d) Comment on the desirability of using standardised working papers and give an example of such working paper and its use.
Date posted: March 16, 2018. Answers (1)
- a. The external auditor of a company uses the system of internal control to determine the nature, extent and timing of his audit tests.
Required:
• Whose responsibility is...(Solved)
a. The external auditor of a company uses the system of internal control to determine the nature, extent and timing of his audit tests.
Required:
• Whose responsibility is it to ensure the existence of a strong system of internal controls?
• What value does a client obtain from the external auditor with respect to internal controls? Explain how the auditor provides that value.
b.
• What is the main role of the internal auditor with respect to internal controls?
• How does the external auditor assure himself that internal audit is effective?
Date posted: March 16, 2018. Answers (1)
- Three important aspects of an audit which must be planned for well in advance are:
a. Audit staffing requirements;
b. The timing of the audit field visits;
c. Clients use of...(Solved)
Three important aspects of an audit which must be planned for well in advance are:
a. Audit staffing requirements;
b. The timing of the audit field visits;
c. Clients use of computerised systems.
Required:
a. Explain the importance of each of the above matters for the successful conduct and completion of the audit.
b. Identify and list in point form the inputs to the planning process in respect of each of the three items stated above.
Date posted: March 16, 2018. Answers (1)
- Integrated Consulting Engineers Ltd. has undergone a period of substantial growth since its establishment ten years ago. Due to lack of accounting expertise within the...(Solved)
Integrated Consulting Engineers Ltd. has undergone a period of substantial growth since its establishment ten years ago. Due to lack of accounting expertise within the company, it has traditionally instructed its auditors, Shah & Company (CPA) to perform the two functions of accountancy and auditing. Shah & Company have also provided consultancy services to the company.
Arising from these responsibilities, Shah & Company earn 20% of their gross fees from Integrated Consulting Engineers Ltd.
Required:
a) Discuss the acceptability and desirability of Shah & Company continuing to act as accountants, auditors and consultants for the company.
b) If, despite having been re-elected as the company’s auditors, Shah & Company decide to resign during the year, state the procedures they should follow.
c) What action should Integrated Consulting Engineers Ltd. take on receipt of the letter of resignation from Shah & Company?
Date posted: March 16, 2018. Answers (1)
- Circumstances under which wages are treated as a capital expenditure(Solved)
Circumstances under which wages are treated as a capital expenditure.
Date posted: March 16, 2018. Answers (1)
- Advantages of maintaining control accounts(Solved)
Advantages of maintaining control accounts.
Date posted: March 16, 2018. Answers (1)