Questions and answers: Accounting

Q&A Categories


Do you have Q&A pairs? Post them here

206 Questions  View: All | Solved | Unsolved

Search Results...
  • Prepare a report for the managing director of your company explaining how costs may be classified by their behaviour, with particular reference...

    OUESTION ONE (a) Prepare a report for the managing director of your company explaining how costs may be classified by their behaviour, with particular reference to the effects both on total and on unit costs. Your report should: i) Say why it is necessary t classify costs by their behaviour (ii) Be illustrated by sketch graphs within the body of the report. (15 Marks)

    Date posted: February 12, 2019.  

  • Discuss the implications of Generation Z to Human resource practitioners

    Discuss the implications of Generation Z to Human resource practitioners

    Date posted: January 24, 2019.  

  • Zainab is an accountant at Samitsi Ltd. During the year ended 30th December 2014, she prepared a trial balance which did not balance. The debit...

    Zainab is an accountant at Samitsi Ltd. During the year ended 30th December 2014, she prepared a trial balance which did not balance. The debit side was lesser with sh 2240. She posted the difference to a suspense account. She then prepared the financial statements for the year. Net profit was 105,000 Upon investigating, the following errors were later discovered Purchases day book had been under cast by sh 3 million Cash sh 1560,000 received from a debtor had only been recorded in the cash book Discount received sh 150,000 had been recorded on the wrong side of the creditors account Closing stock had been under cast by sh 10 million Salary expense sh 850,000 had not been recorded Cash account balance was under cast by sh 500,000 An amount of sh 850,000 for private expense by the business owner had been debited to sundry expense account Required; Journal entries to correct the above errors; Suspense account; Statement of corrected net profit. (13 marks)

    Date posted: January 11, 2019.  

  • Show the journal entries necessary to record the following items: 2003 May 1 bought a motor vehicle on credit from Motors Ltd for Sh.6, 790. 2003...(Solved)

    Show the journal entries necessary to record the following items: 2003 May 1 bought a motor vehicle on credit from Motors Ltd for Sh.6, 790. 2003 May 3 A debt of Sh.34 owing from N Smart was written off as a bad debt. 2003 May 8 Furniture bought by us for Sh.490 was returned to the supplier Wood Offices, as it was unsuitable. Full allowance will be given. 2003 May 12 we are owed Sh.150 by W Hayes. He is declared bankrupt and we received Sh.39 in full settlement of the debt. 2003 May 14 we take Sh.45 goods out of the business stock without paying for them. 2003 May 28 Some time ago we paid an insurance bill thinking that it was all in respect Of the business. We now discover that Sh.76 of the amount paid was in fact Insurance of our private house. 2003 May 28 Bought Machinery Sh.980 on credit from Xerox Machines Ltd.

    Date posted: December 14, 2018.  Answers (1)

  • On august 1 2005, airbus Ltd. (a company that records adjusting entries only once per year) issued bonds with the following characteristics: Sh.50, 000 total face...(Solved)

    On august 1 2005, airbus Ltd. (a company that records adjusting entries only once per year) issued bonds with the following characteristics: Sh.50, 000 total face value. 12% stated rate. 16% yield rate. Interest dates are February 1, May 1, August 1, and November 1. Bond date is October 31, 2004. Maturity date is November 1, 2009. Sh.1, 000 of bond issue costs were incurred. Required: 1) Provide all entries required for the bond issue through February 1, 2006, for Airbus using the interest method. 2) On June 1, 2007, Airbus retired Sh.20, 000 of bonds at 98 through open market purchase. Provide the entries to update the bond issue and to retire the bonds using the interest method. 3)Provide the entries required on August 1, 2007, under the following methods of discount amortization: i) Interest method ii) Straight-line method

    Date posted: December 12, 2018.  Answers (1)

  • The balance sheet of Spendthrift Ltd for the years ended 31 December, 2015 and 31 December 2015 were summarized and shown below: REQUIRED i. Prepare...

    The balance sheet of Spendthrift Ltd for the years ended 31 December, 2015 and 31 December 2015 were summarized and shown below: REQUIRED i. Prepare a cash flow statement using direct method ii. Prepare a cash flow statement using indirect method

    Date posted: November 23, 2018.  

  • a) Comment on whether the following individuals and companies were residents of Kenya for tax purposes for the year ended 31 Dec 2017. Justify your...

    a) Comment on whether the following individuals and companies were residents of Kenya for tax purposes for the year ended 31 Dec 2017. Justify your commend in each case: i) Mr. Charles Owino has a permanent home in Kenya. He works for a company based in the United Kingdom. He came to Kenya for a one month holiday on 1st September 2017but had not returned to the UK by 31 Dec 2017

    Date posted: November 22, 2018.  

  • Coogee ltd is a medium sized engineering company with an annual turnover of £23million. Most of its sales are on credit. At its financial year...

    Coogee ltd is a medium sized engineering company with an annual turnover of £23million. Most of its sales are on credit. At its financial year end 31 December 2007 its sales ledger contained 2,000 accounts with balances ranging from £50 to £10,000 and totaling £2,300,000. As a staff member of coogee’s external auditors you have been assigned to the audit provision for bad and doubtful debts which has been set as £120,000. Your initial enquiries established that £80,000 relates to the provision against specific bad and doubtful debts and £40,000 is a general provision determined as a percentage of overdue debtors with an increasing percentage being applied against the longest overdue accounts. You are aware that International Standard on Auditing (ISA) on Audit of accounting estimates is likely to be relevant to your audit of the provisions for bad debts. Required: a) Explain the approaches adopted by auditors in obtaining sufficient appropriate audit evidence regarding accounting estimates. (5marks) b) Describe the procedures you would apply in verifying the general provision for bad and doubtful debts. (12marks) c) Describe the procedures you would apply in verifying the specific provision for bad and doubtful debts. (8marks)

    Date posted: November 11, 2018.  

  • You are currently working as an audit assistant with AB partner of a firm of certified public accountants.During the audit of XYZ co you have...

    You are currently working as an audit assistant with AB partner of a firm of certified public accountants.During the audit of XYZ co you have been allocated Audit of motor vehicles for year ending September 2018.You are required to highlight the substantive procedure you would undertake in your audit of motor vehicle.

    Date posted: October 24, 2018.  

  • You are currently working as the audit assistant at AB partners certified public accountant. During the audit of XYZ company you have been allocated audit...(Solved)

    You are currently working as the audit assistant at AB partners certified public accountant. During the audit of XYZ company you have been allocated audit of motor vehicles for year ending September 2018. You are required to highlight the substantive procedures you would undertake in your audit of motor vehicle

    Date posted: October 20, 2018.  Answers (1)

  • Ochieng died on 31st October 2003 and left his estate as follows: KShs Household furniture 45,000 Cash in House 1,000 Cash in Bank 125,000 10,000 ordinary shares of Shs.10 each in BAT Kenya...

    Ochieng died on 31st October 2003 and left his estate as follows: KShs Household furniture 45,000 Cash in House 1,000 Cash in Bank 125,000 10,000 ordinary shares of Shs.10 each in BAT Kenya Ltd. Valued at Shs.15 150,000 per share. Investments at 5% on freehold property shares (interest thereon paid on 30th 200,000 June 31st December 2003) Share in Business of Patrick Ochieng & Company valued at date of death 613,200 Sundry debtors 10,000 His liabilities amounted to 2,500 Funeral expenses amounted to 5,000 A legacy of Shs10,000 was bequeathed to his Executor and was paid on 28th January 2004. The residue of the estate was left in trust to his infant son. 2 The household furniture was sold on 15th December 2003 for Shs.48,000. The shares were sold on the same date at Shs.14.50 Ex Div. A dividend being received on 25th January 2004 at 10% for the year ending 31st December 2003. Interest on investment in freehold property shares was received on 31st December 2003, on which date the share in the business of Patrick Ochieng and Company was received with interest at 5% PA. The liabilities and funeral expenses were discharged on 20th December 2003 on which date Shs.5000 of the debtors due were received, the balance being unpaid at the date of preparation of the accounts: Required: (a) Journal entries to record the above transaction. (10 marks) (b) The Estate’s Cash Book (8 marks) (c) The Estate’s Capital Account (10 marks) (d) The Estate’s Income Account (2 marks)

    Date posted: October 16, 2018.  

  • Listed below are selected transactions for Hern limited relating to its current liabilities during the fiscal year 2017 :10 January purchased merchandise 250000 a discount...

    Listed below are selected transactions for Hern limited relating to its current liabilities during the fiscal year 2017 :10 January purchased merchandise 250000 a discount of 2% is offered by suppliers.the company records purchases and account payable net of discounts and uses the periodic inventory system.19 January 166600 on invoice of 10 January ,the invoice was billed to the company for 170000 and was paid within the discount period.1 April issued a 1year promissory note to the suppliers in settlement of an invoice 100000 debited 31 March. the invoice was recorded net of 2% purchase discount that is 98000,the face amount of the note was 111680 including interest at 15% on 98000 for one year the note was recorded at face amount. required ,prepare journal entries to record above transactions.

    Date posted: October 14, 2018.  

  • List four advantages that would accrue to members of an accounting professional body from "peer review"(Solved)

    List four advantages that would accrue to members of an accounting professional body from "peer review".

    Date posted: October 12, 2018.  Answers (1)

  • Assuming that You have been invited by chamber of Commerce, so as to give a talk on sources of Finance...(Solved)

    Assuming that You have been invited by chamber of Commerce, so as to give a talk on sources of Finance, apart from the loans or overdrafts offered by financial institutions. You are requested to advice the participants on alternative forms of finance that are available to a local borrower.

    Date posted: September 10, 2018.  Answers (1)

  • Explain the following terms: (a) Materiality; (b) The duty of confidentiality; (c) Professional indemnity insurance; (d) Peer review; ...(Solved)

    Explain the following terms: (a) Materiality; (b) The duty of confidentiality; (c) Professional indemnity insurance; (d) Peer review; (e) Quality Control.

    Date posted: August 13, 2018.  Answers (1)

  • (a) Do you believe that the auditors should be responsible to users other than the shareholders? Give reasons to support your answer. (b) Does the...(Solved)

    a) Do you believe that the auditors should be responsible to users other than the shareholders? Give reasons to support your answer. b) Does the auditor require a codified definition of “reasonable care and skill” or should this be left to professional judgment? Explain. c) Why should the auditor be unwilling to take full responsibility for the detection of fraud during the annual audit? Explain. d) Discuss the proposition that the „expectations gap? has arisen because of the public?s ignorance and should therefore be resolved by the public themselves.

    Date posted: August 13, 2018.  Answers (1)

  • Outline the risks associated with cloud computing(Solved)

    Outline the risks associated with cloud computing.

    Date posted: August 10, 2018.  Answers (1)

  • Explain how you would verify the following: a) Investment income. b) Bank balances. c)...(Solved)

    Explain how you would verify the following: a) Investment income. b) Bank balances. c) Contingent liabilities. d) Petty cash balances.

    Date posted: August 8, 2018.  Answers (1)

  • Audit planning process allows the audit senior to acquire adequate knowledge about the entity. This process ensure an effective control of audit work. ...(Solved)

    Audit planning process allows the audit senior to acquire adequate knowledge about the entity. This process ensure an effective control of audit work. Required: a) Explain the auditor's planning process when planning for an audit of a new client. b) How does audit planning assist in the conduct of an audit? c) Explain the following controlling procedures in a well planned audit: i. Direction and supervision of work. ii. Review and co-ordinating of work. iii. Quality controls

    Date posted: August 8, 2018.  Answers (1)

  • You are the manager responsible for the audit of ABC Company, which has...(Solved)

    You are the manager responsible for the audit of ABC Company, which has a turnover of KShs 750 million. The company has been audited by your firm for a number of years and this is the second year you have been responsible as manager for the audit. However, owing to your responsibilities for other audits you are only intending to make periodic visits to the company during the course of the audit and you will not be involved in any of the detailed audit work. Required a) State the matters you would consider in planning the audit, prior to the commencement of the detailed audit work. b) Describe the way in which you would control the audit from the commencement of the work by the audit staff to the review stage by the partner immediately prior to him signing the audit report

    Date posted: August 4, 2018.  Answers (1)

  • a) In the context of a computer based accounting system, explain the meaning of the following terms: i. Application controls; ii. ...(Solved)

    a) In the context of a computer based accounting system, explain the meaning of the following terms: i. Application controls; ii. General controls b) Explain the importance of having proper systems documentation c) A Company wishes to change from an old computerised system to a new computer based accounting system. Explain how and why both systems should run parallel prior to the change over to the new system.

    Date posted: August 4, 2018.  Answers (1)

  • (a) Briefly explain the meaning of the term "control procedures". (b) What is the importance of...(Solved)

    (a) Briefly explain the meaning of the term "control procedures". (b) What is the importance of segregation of duties as a control procedure'? (c) In carrying out an audit, the auditor appraises and tests the system of internal control in order to ascertain that it is capable of processing transactions or determining quantities and values completely and accurately. The auditor further carries out substantive tests in an attempt to ensure that the transactions, assets and liabilities recorded in the accounting records upon which the figures in the financial statements are based, are completely and accurately recorded. Required: List and briefly explain the substantive tests the auditor would carry out to verify the values attributed to: (i) Trade debtors in a company's financial statements. (ii) Trade creditors in a company's financial statements.

    Date posted: August 4, 2018.  Answers (1)

  • Your firm is the auditor of Shah Engineering Ltd, and you have been...(Solved)

    Your firm is the auditor of Shah Engineering Ltd, and you have been asked to suggest the audit work you will carry out in verifying trade creditors and purchase accruals at the company’s year-end of 31 December 2003. You attended the stock take at the year-end. The Company operates from a single site and all raw materials for production are received by the goods inwards department. When the materials are received they are checked for quantity and quality to the delivery note and purchase order, and a multi—part goods received note is made out and signed by the storekeeper. If there are any problems with the raw materials, a discrepancy note is raised which gives details of the problems (e.g., incorrect quantities or faulty materials) The purchase accounting department receive the purchase invoice, check them to the purchase order and goods received note and post them to the purchase ledger. At the end of each month, payments are made to suppliers. The purchase ledger is maintained on a microcomputer. The main sundry creditors and accruals at the year-end include: a) Wages accruals and PAYE; b) VAT; c) Interest on loans overdrafts, telephone and electricity. Most employees’ wages are paid weekly in arrears. You are required to describe in detail the audit work you will carry out to: a) Check suppliers’ statements to the balances on the purchases ledger; b) Verify that purchases cut-off has been correctly carried out at the year end. c) Ensure that sundry creditors and accruals are correctly stated;

    Date posted: August 4, 2018.  Answers (1)

  • You are carrying out the audit of ACB Computers limited for the year...(Solved)

    You are carrying out the audit of ACB Computers limited for the year ended 31 December 2003. The company assembles microcomputers purchased from the Far East and sells them to retailers, and to individuals and other businesses. In the current year, there has been a recession and strong competition, which has resulted in a fall in sales and the profits. This has led to a trading loss and the company is experiencing going concern problems. Required: a) Describe the factors, which indicate that a company may not be a going concern. Your list should include all factors and not just those, which relate to ACB Computers Limited. b) Consider the form of audit report (i.e. qualified or unqualified) you would issue of ACB Computers limited if you conclude that the company is experiencing serious going concern problems, in the following two situations: I) You conclude that the financial statements give sufficient disclosure of the going concern problems. II) There is no disclosure of the going concern problems in the financial statements and you believe there is a serious risk that the company will fail in the foreseeable future. c) State the parties who may successfully sue you as auditor for negligence, and consider the arguments you could include in your defense when: I) The financial statements of ACB Computers Limited for the year ended 31 December 2003 do not mention any going concern problems and your audit report on these financial statements was unqualified and II) The company fails on 15 February 2004

    Date posted: August 4, 2018.  Answers (1)

  • The responsibilities of external auditors are not always well understood, especially with regard to the detection and reporting of fraud. When external auditors provide non-audit...(Solved)

    The responsibilities of external auditors are not always well understood, especially with regard to the detection and reporting of fraud. When external auditors provide non-audit services to their audit clients, it is essential that the auditors make a clear distinction between their audit and non-audit responsibilities. Required: a) Explain the responsibilities of external auditors to directors and shareholders b) Describe the limitations of the external audit in relation to the detection and reporting of fraud. c) Explain why it is essential for external auditors to be independent of their clients. d) Explain the advantages and disadvantages of external auditors providing consulting services to their audit clients.

    Date posted: August 4, 2018.  Answers (1)

  • Towards the end of an audit, it is common for the external auditor to seek a letter of representation (written representations) from the management of the...(Solved)

    Towards the end of an audit, it is common for the external auditor to seek a letter of representation (written representations) from the management of the client company. Required: (a) Explain why auditors seek letters of representation. (b) List the matters commonly included in the letter of representation. (c) Explain why it is important to discuss the content of the letter of representation at an early stage during the audit. (d) Explain why management is sometimes unwilling to sign a letter of representation and describe the actions an external auditor can take if management refuses to sign a letter of representation.

    Date posted: August 4, 2018.  Answers (1)

  • a) Internal control systems are designed, amongst other things, to prevent error and misappropriation. Required: Describe the errors and misappropriations that may occur if the following are not properly...(Solved)

    a) Internal control systems are designed, amongst other things, to prevent error and misappropriation. Required: Describe the errors and misappropriations that may occur if the following are not properly controlled: (i) Receipts paid into bank accounts; (ii) Payments made out of bank accounts; (iii) Interest and charges debited and credited to bank account (b) A book-selling company has a head office and 25 shops, each of which holds cash (banknotes, coins, and credit card vouchers) at the balance sheet date. There are no receivables. Accounting records are held at shops. Shops make returns to head office and head office holds its own accounting records. Your firm has been the external auditor to the company for many years and has offices near to the location of some but not all of the shops. Required: List the audit objectives for the audit of cash and state how you would gain the audit evidence in relation to those objectives at the year-end. c) The external auditors of companies often write to companies’ bankers asking for details of bank balances and other matters at the year-end. Required: Explain why auditors write to companies’ bankers and list the matters you would expect banks to confirm.

    Date posted: August 4, 2018.  Answers (1)

  • Citing six reasons, justify why an accounting officer of a procuring entity, may, at any time, prior to notification of tender award, terminate or...(Solved)

    Citing six reasons, justify why an accounting officer of a procuring entity, may, at any time , prior to notification of tender award, terminate or cancel procurement or asset disposal proceedings without entering into a contract.

    Date posted: July 23, 2018.  Answers (1)

  • What is cost accounting?(Solved)

    What is cost accounting?

    Date posted: July 11, 2018.  Answers (1)

  • List the purposes of the trial balance(Solved)

    List the purposes of the trial balance

    Date posted: June 25, 2018.  Answers (1)


Kenyaplex On Facebook