Series: MAY 2013

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AAA – Nov 2013 – L3 – SB – Q6 – Auditor’s Legal Liability

Discuss criminal charges against accountants, reasons auditors prefer out-of-court settlements, and the disadvantages of such settlements.

Question

Auditors’ liabilities may arise under common law and statute. Statutory liability may be civil or criminal. Professional accountants are increasingly guiding against incidences of litigation that may impact negatively on their work.

You are required to:

(a) Outline SIX ways through which accountants may be charged for criminal offenses. (6 Marks)

(b) Explain SIX reasons why auditors are willing to settle legal matters with their clients out of court. (6 Marks)

(c) State THREE disadvantages of an out-of-court settlement. (3 Marks)

(Total: 15 Marks)

Answer

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Tags: Auditor Liability, criminal offenses, legal considerations, Litigation, Out of Court Settlement, Professional Ethics
Level: Level 3

Topic: Auditor’s Legal Liability
Series: MAY 2013

AAA – Nov 2013 – L3 – AII – Q2 – Audit Evidence

Audit Evidence, Balance Confirmation, Reporting Dates, Discrepancy, Fraud

Question

A reported difference in a confirmation of balances by a debtor to a client due to different reporting date but not due to misstatement or fraud is known as………………….

Answer

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Tags: Audit evidence, Balance Confirmation, Discrepancy, Fraud, Reporting Dates
Level: Level 3

Topic: Audit evidence
Series: MAY 2013, NOV 2013

BL – May 2013 – L1 – SB – Q6C – Law of Trusts

Explain the reporting duty of a bank and stockbroker in cross-border transfers involving Dr. Aminu.

Question

Dr. Aminu recently transferred the sum of US$11,000 to his account in Business Bank Plc, Lagos, from his bank in the United States. He also informed his stockbroker of his intention to transfer his shares in some Nigerian companies listed on the New York Stock Exchange to his C.S.C.S. account with the stockbroker in Nigeria. The shares are valued at US$20,000.

You are required to:

Explain the reporting duty of Business Bank Plc and the stockbroker.

Answer

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Tags: Bank Transfers, Cross-Border Transactions, Nigerian Law, Reporting Duty
Level: Level 1

Topic: Law of Trusts
Series: MAY 2013

BL – May 2013 – L1 – SB – Q6B – Law of Trusts

Explain the duties of trustees regarding the disbursement of trust funds to beneficiaries.

Question

Biodun and Johanna are twins of twenty-one years of age. By the Will of their deceased father that came into effect ten years ago, the trustees were directed to invest a sum of N5 million and apply the income to the education of Biodun and Johanna. These beneficiaries have directed that the trustees pay the N5 million over to them.

You are required to:

Explain the duty of the trustees in relation to the directive of Biodun and Johanna.

Answer

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Tags: Disbursement, Trust Funds, Trustees
Level: Level 1

Topic: Law of Trusts
Series: MAY 2013

BL – May 2013 – L1 – SB – Q6A – Law Relating to Banking

State three reasons a creditor may present a bankruptcy petition against a debtor.

Question

Explain THREE reasons for which a creditor shall be entitled to present a bankruptcy petition against a debtor.

Answer

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Tags: Bankruptcy, Creditor’s Petition, Liquidated Debt
Level: Level 1

Topic: Law Relating to Banking
Series: MAY 2013

BL – May 2013 – L1 – SB – Q5D – Company Law

Explain the procedure to fill a casual vacancy in the office of the company’s auditor.

Question

Chief Ogongo, the Chairman of the recently incorporated Fortune Finance Limited,
has requested your advice on the appointment of auditors of the company,
particularly on the following issues:

What should be done where there is a casual vacancy in the offices of the auditors?

Answer

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Tags: Auditor, Casual Vacancy, Company Law
Level: Level 1

Topic: Company Law
Series: MAY 2013

BL – May 2013 – L1 – SB – Q5C – Company Law

Discuss what happens if no auditors are appointed at the AGM.

Question

Chief Ogongo, the Chairman of the recently incorporated Fortune Finance Limited,
has requested your advice on the appointment of auditors of the company,
particularly on the following issues:

What happens if, at an Annual General Meeting, no auditors were appointed or re-appointed?

Answer

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Tags: Company Law, Failure to Appoint Auditors
Level: Level 1

Topic: Company Law
Series: MAY 2013

BL – May 2013 – L1 – SB – Q5B – Company Law

Explain how existing auditors can be re-appointed without objection at the AGM.

Question

Chief Ogongo, the Chairman of the recently incorporated Fortune Finance Limited,
has requested your advice on the appointment of auditors of the company,
particularly on the following issues:

How would the existing auditors of the company, desirous of re-election at the next Annual General Meeting, and without objection, be re-appointed?

Answer

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Tags: Company Law, Re-Appointment of Auditors
Level: Level 1

Topic: Company Law
Series: MAY 2013

BL – May 2013 – L1 – SB – Q5A – Company Law

Explain how the first auditors of a company are appointed.

Question

Chief Ogongo, the Chairman of the recently incorporated Fortune Finance Limited,
has requested your advice on the appointment of auditors of the company,
particularly on the following issues:

How will the first auditors of the company be appointed?

Answer

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Tags: Appointment of Auditors, Company Law, First Auditors
Level: Level 1

Topic: Company Law
Series: MAY 2013

BL – May 2013 – L1 – SB – Q4B – Company Law

Explain two conditions Harddin Limited must fulfill to invite public subscription.

Question

Harddin Limited has informed you of its intention to invite the public to acquire its securities and to deposit money with it for a fixed period payable at call.

You are required to:

Explain TWO conditions that Harddin Limited must fulfill to achieve its proposed plan.

Answer

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Tags: Company Conversion, Investment and Securities Act, Public Subscription
Level: Level 1

Topic: Company Law
Series: MAY 2013

BL – May 2013 – L1 – SA – Q6 – Law of Contract

This question tests the understanding of an auctioneer's request for bids.

Question

An auctioneer’s request for a bid is regarded as:

A. Offer
B. Invitation to treat
C. Acceptance
D. Implied contract
E. Express contract

Answer

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Tags: Auctioneer, Contract Law, Invitation to Treat
Level: Level 1

Topic: Law of Contract
Series: MAY 2013

BL – May 2013 – L1 – SA – Q5 – Law of Tort

This question tests the knowledge of vicarious liability under the law of torts.

Question

The principle of law that states that a master will be liable for any tort committed by his servant in the course of the servant’s employment is known as:

A. Occupiers’ liability
B. Volenti non fit injuria
C. Negligence
D. Strict liability
E. Vicarious liability

Answer

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Tags: Employer Liability, Tort Law, Vicarious Liability
Level: Level 1

Topic: Law of Tort
Series: MAY 2013

BL – May 2013 – L1 – SA – Q4 – Nigerian Legal System

This question tests the knowledge of the supreme statute binding all authorities in Nigeria.

Question

The supreme statute that is binding on all authorities in the Federal Republic of Nigeria is:

A. The Interpretation Act
B. The Economic and Financial Crimes Commission Act
C. The Independent Corrupt Practices Act
D. The Constitution of the Federal Republic of Nigeria
E. The National Assembly Service Commission Act

Answer

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Tags: Legal Framework, Nigerian Constitution, Supreme Statute
Level: Level 1

Topic: Nigerian Legal System
Series: MAY 2013

BL – May 2013 – L1 – SA – Q3 – Company Law

This question tests the understanding of the advantages of incorporation

Question

Which of the following is NOT an advantage of incorporation?

A. Perpetual succession
B. Property right
C. Limited liability
D. Separate personality
E. Merger

Answer

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Tags: Incorporation, Limited Liability, Perpetual Succession
Level: Level 1

Topic: Company Law
Series: MAY 2013

BL – May 2013 – L1 – SA – Q2 – The Nigerian Legal System

This question tests the requirements for amending the provisions of Chapter IV of the 1999 Constitution.

Question

An amendment of any provision of Chapter IV of the 1999 Constitution relating to fundamental human rights requires approval by a resolution of not less than:

A. One-third of the Houses of Assembly of the States of the Federation
B. Two-thirds of the Houses of Assembly of the States of the Federation
C. Three-quarters of the Houses of Assembly of the States of the Federation
D. Half of the Houses of Assembly of the States of the Federation
E. All the 36 Houses of Assembly in Nigeria

Answer

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Tags: Amendment, Human Rights, Nigerian Constitution
Level: Level 1

Topic: The Nigerian Legal System
Series: MAY 2013

BL – May 2013 – L1 – SA – Q1 – Sources of Nigerian Law

This question tests the knowledge of the sources of Nigerian law.

Question

Which of the following is a source of Nigerian law?

A. Resolution of the National Assembly
B. Pronouncement of the Governor of a State
C. Judicial Precedent
D. The recommendation of a Panel set up by the Federal Government
E. Opinion of the Senate President

Answer

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Tags: Judicial Precedent, National Assembly, Nigerian Law
Level: Level 1

Topic: Sources of Nigerian Law
Series: MAY 2013

FA – May 2013 – L1 – SB – Q6 – Accounting Concepts

This question involves preparing the current accounts, cash-in-transit and inventories-in-transit accounts, and an aggregate Statement of Financial Position for October Enterprises Limited.

Question

October Enterprises Limited has its Head office in Lokoja with branches in Ibiam and Imala. The following are the separate Statements of Financial Position of the Head Office (HO) and branches as at 31 December 2012:

Additional Information:

i. Ibiam’s current account balance with HO was arrived at after debiting ₦2,750 cash remitted to Ibiam on 31 December, which was received on 1 January the following year.
ii. Imala’s current account balance with HO was arrived at after debiting ₦8,250 value of inventories returned to Imala on 31 December, which was received in Imala on 1 January the following year.
iii. HO current account balance with Ibiam was arrived at after debiting ₦2,065 inventories returned to HO on 31 December and received in Lokoja on 5 January the following year.
iv. Imala’s current account with Ibiam was arrived at after debiting ₦4,125 inventories sent to Imala on 31 December and received in Imala on 10 January the following year.
v. HO current account with Imala was arrived at after debiting ₦13,750 cash sent to Lokoja on 31 December and received in Lokoja on 12 January the following year.

You are required to prepare:
a. Current accounts (6 Marks)
b. Cash-in-transit account (1 Mark)
c. Inventories-in-transit account (3 Marks)
d. Aggregate Statement of Financial Position as at 31 December 2012, after incorporating the above transactions. (5 Marks)

Answer

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Tags: Branch accounts, Cash-in-Transit, Consolidation, Current Accounts, Inventories-in-Transit
Level: Level 1

Topic: Accounting Concepts
Series: MAY 2013

FA – May 2013 – L1 – SB – Q5 – Accounting Concepts

This question asks for journal entries to record share transactions in Xeloz Limited's books following an issue of 1,000,000 shares.

Question

Xeloz Limited offered to the public 1,000,000 ordinary shares of ₦1 each at ₦1.30 payable as follows:

On Application: 30k
On Allotment: 50k (premium inclusive)
First call on shares: 30k
Second call on shares: 20k

Applications were received for 1,420,000 shares, and the directors decided to deal with the applications on the following basis:

i. Applications for the first 600,000 shares were accepted in full.
ii. The next 800,000 applications were scaled down, so that for each two shares applied for, only one was allotted.
iii. Applications for 20,000 shares were rejected.

You are required to:
Prepare journal entries to record the above transactions in the books of Xeloz Limited. (15 Marks)

Answer

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Tags: Application and Allotment, Premium, Share Issue
Level: Level 1

Topic: Accounting Concepts
Series: MAY 2013

FA – May 2013 – L1 – SB – Q4 – Regulatory Environment of Accounting

Prepare the Statement of Profit or Loss

Question

The following balances were extracted from the accounting records of the partnership of David and Daniel as at 30 April 2013:

You are required to:
Prepare the Statement of Profit or Loss of the partnership for the year ended 30April 2013, in a vertical format.

Answer

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Tags: Depreciation, Inventory, Law of Partnership, Partnership
Level: Level 1

Topic: Regulatory Environment of Accounting
Series: MAY 2013

FA – May 2013 – L1 – SB – Q3 – Financial Statements Preparation

This question asks for the preparation of Mr. Pamona’s Statement of Profit or Loss and Statement of Financial Position following a theft in his shop.

Question

Mr. Pamona owns a corner shop in Lagos. On 30 December 2012, vandals looted his shop, stole all his inventories and cash of ₦75,000. Mr. Pamona was fully insured against theft and he has asked you to prepare his accounts to enable him estimate his insurance claim. Your investigation revealed the following:

i. Net assets on 1 January 2012:

Furniture and fittings:
Cost: ₦900,000
Accumulated depreciation: ₦(400,000)
Carrying value: ₦500,000
Inventories: ₦2,700,000
Trade receivables: ₦430,000
Prepayments (rates): ₦30,000
Cash in bank: ₦2,140,000
Cash float in till: ₦30,000
Trade payables: ₦1,650,000
Accrued electricity: ₦40,000

ii. Bank statements for nine months from 1 January 2012 show the following:
Receipts:

Cash and cheques lodged: ₦20,060,000
Investment income: ₦182,000
Total: ₦20,242,000

Payments:

Trade payables: ₦17,850,000
Rent (1 January – 31 December): ₦1,200,000
Electricity: ₦155,000
Insurance – theft: ₦45,000
Insurance – life: ₦107,000
Telephone: ₦83,000
Total: ₦19,440,000

iii. The following were paid in cash from the till:

Trade payables: ₦2,400,000
Drawings (per month): ₦295,000

iv. Mr. Pamona’s gross profit margin on sales has averaged 20% in recent years.

v. The furniture and fittings are now estimated to be worth only ₦200,000.

vi. A cheque for ₦52,000 in respect of the telephone bill for the quarter ended 30 September 2012 was not shown in the bank statements until 3 October 2012.

vii. Rates for the period 1 April to 1 October, 2012, amounting to ₦75,000 were still outstanding.

viii. Trade receivables and payables were ₦270,000 and ₦1,900,000 respectively on 30 September 2012.

You are required to prepare Mr. Pamona’s:
a. Statement of Profit or Loss for the nine-month period ended 30 September 2012. (10 Marks)
b. Statement of Financial Position as at that date. (5 Marks)

Answer

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Tags: Depreciation, Insurance Claims, Statement of Financial Position, Statement of Profit or Loss, Theft
Level: Level 1

Topic: Financial Statements Preparation
Series: MAY 2013

Series: MAY 2013

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AAA – Nov 2013 – L3 – SB – Q6 – Auditor’s Legal Liability

Discuss criminal charges against accountants, reasons auditors prefer out-of-court settlements, and the disadvantages of such settlements.

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AAA – Nov 2013 – L3 – AII – Q2 – Audit Evidence

Audit Evidence, Balance Confirmation, Reporting Dates, Discrepancy, Fraud

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BL – May 2013 – L1 – SB – Q6C – Law of Trusts

Explain the reporting duty of a bank and stockbroker in cross-border transfers involving Dr. Aminu.

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BL – May 2013 – L1 – SB – Q6B – Law of Trusts

Explain the duties of trustees regarding the disbursement of trust funds to beneficiaries.

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BL – May 2013 – L1 – SB – Q6A – Law Relating to Banking

State three reasons a creditor may present a bankruptcy petition against a debtor.

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BL – May 2013 – L1 – SB – Q5D – Company Law

Explain the procedure to fill a casual vacancy in the office of the company’s auditor.

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BL – May 2013 – L1 – SB – Q5C – Company Law

Discuss what happens if no auditors are appointed at the AGM.

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BL – May 2013 – L1 – SB – Q5B – Company Law

Explain how existing auditors can be re-appointed without objection at the AGM.

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BL – May 2013 – L1 – SB – Q5A – Company Law

Explain how the first auditors of a company are appointed.

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BL – May 2013 – L1 – SB – Q4B – Company Law

Explain two conditions Harddin Limited must fulfill to invite public subscription.

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BL – May 2013 – L1 – SA – Q6 – Law of Contract

This question tests the understanding of an auctioneer's request for bids.

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BL – May 2013 – L1 – SA – Q5 – Law of Tort

This question tests the knowledge of vicarious liability under the law of torts.

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BL – May 2013 – L1 – SA – Q4 – Nigerian Legal System

This question tests the knowledge of the supreme statute binding all authorities in Nigeria.

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BL – May 2013 – L1 – SA – Q3 – Company Law

This question tests the understanding of the advantages of incorporation

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BL – May 2013 – L1 – SA – Q2 – The Nigerian Legal System

This question tests the requirements for amending the provisions of Chapter IV of the 1999 Constitution.

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BL – May 2013 – L1 – SA – Q1 – Sources of Nigerian Law

This question tests the knowledge of the sources of Nigerian law.

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FA – May 2013 – L1 – SB – Q6 – Accounting Concepts

This question involves preparing the current accounts, cash-in-transit and inventories-in-transit accounts, and an aggregate Statement of Financial Position for October Enterprises Limited.

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FA – May 2013 – L1 – SB – Q5 – Accounting Concepts

This question asks for journal entries to record share transactions in Xeloz Limited's books following an issue of 1,000,000 shares.

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FA – May 2013 – L1 – SB – Q4 – Regulatory Environment of Accounting

Prepare the Statement of Profit or Loss

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FA – May 2013 – L1 – SB – Q3 – Financial Statements Preparation

This question asks for the preparation of Mr. Pamona’s Statement of Profit or Loss and Statement of Financial Position following a theft in his shop.

You're reporting an error for "FA – May 2013 – L1 – SB – Q3 – Financial Statements Preparation"

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