MAY 2013 – Page 8

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

FA – May 2013 – L1 – SA – Q32 – Double Entry Accounting Principles

This question tests the double-entry accounting treatment for the cash purchase of a non-current asset.

Question

What are the accounting entries to record the cash purchase of a non-current asset?

Answer

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Tags: Cash Purchases, Double Entry, Non-current Assets
Level: Level 1

Topic: Double-Entry Accounting Principles
Series: MAY 2013

FA – May 2013 – L1 – SA – Q31 – Double Entry Accounting Principles

This question asks for the double-entry accounting treatment for goods taken from inventory for personal use by the sole trader.

Question

A sole trader took some goods costing N1,000 from inventory for his own use. The normal selling price of the goods is N2,500. What are the double-entry postings required?

Answer

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Tags: Double Entry, Drawings, Inventory
Level: Level 1

Topic: Double-Entry Accounting Principles
Series: MAY 2013

FA – May 2013 – L1 – SA – Q30 – Accounts of Not-for-Profit Entities

This question asks for the term used to describe the excess of expenditure over income in an Income and Expenditure Account.

Question

Excess of expenditure over income in an Income and Expenditure Account of a Not-For-Profit Organisation is called:

Answer

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Tags: Income and Expenditure, Not-for-profit
Level: Level 1

Topic: Accounts of Not-for-Profit Entities
Series: MAY 2013

FA – May 2013 – L1 – SA – Q29 – Financial Statements Preparation

This question involves identifying the starting point for preparing final accounts from incomplete records.

Question

The starting point for the preparation of final accounts from incomplete records is:

Answer

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Tags: Incomplete Records, Statement of Affairs
Level: Level 1

Topic: Financial Statements Preparation
Series: MAY 2013

FA – May 2013 – L1 – SA – Q28 – Virtual Accounting: Digitisation

This question is about the definition of a collection or pool of related data.

Question

A collection or pool of related data which is available for use by any number of application packages, including accounting packages, is called:

Answer

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Tags: Accounting Systems, Data
Level: Level 1

Topic: Virtual Accounting: Digitisation
Series: MAY 2013

FA – May 2013 – L1 – SA – Q27 – Accounting Concepts

This question defines what a trial balance is.

Question

A detailed list of account balances extracted from the ledger at a particular date is called:

Answer

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Tags: Ledger Balances, Trial Balance
Level: Level 1

Topic: Accounting Concepts
Series: MAY 2013

FA – May 2013 – L1 – SA – Q26 – Depreciation Methods and Accounting for Disposals

This question involves calculating the profit or loss on the disposal of a non-current asset.

Question

A non-current asset with an original cost of N500,000 and accumulated depreciation of N400,000 was disposed of for N80,000. Calculate the profit or loss on disposal.

Answer

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Tags: Asset Disposal, Profit or Loss
Level: Level 1

Topic: Depreciation Methods and Accounting for Disposals
Series: MAY 2013

FA – May 2013 – L1 – SA – Q25 – Accruals and Prepayments

This question involves calculating the rent expense to be charged for the year.

Question

A firm paid a rent of N9 million to cover the eighteen months period ending 30 June 2013. How much rent should be charged to the Statement of Profit or Loss as rent expense for the year ended 31 December 2012?

Answer

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Tags: Accruals, Financial Reporting, Rent
Level: Level 1

Topic: Accruals and prepayments
Series: MAY 2013

FA – May 2013 – L1 – SA – Q24 – Recording Financial Transactions

This question involves calculating payments on account receivables during the year.

Question

During a financial year, a company’s financial records reveal the following:

Cash Revenue: N100,000
Credit Revenue: N500,000
Trade receivables at the beginning of the year: N30,000
Trade receivables at the end of the year: N44,000

What were the payments on account receivables during the year?

Answer

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Tags: Financial Reporting, Trade receivables
Level: Level 1

Topic: Recording Financial Transactions
Series: MAY 2013

FA – May 2013 – L1 – SA – Q23 – Accounting for Inventories (IAS 2)

This question tests the effect of overstating closing inventory on net income.

Question

What is the effect of overstating closing inventory on net income?

Answer

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Tags: Closing Inventory, Financial Statements
Level: Level 1

Topic: Accounting for Inventories (IAS 2)
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.

You're reporting an error for "AAA – Nov 2013 – L3 – SB – Q6 – Auditor’s Legal Liability"

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

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

You're reporting an error for "AAA – Nov 2013 – L3 – AII – Q2 – Audit Evidence"

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.

You're reporting an error for "BL – May 2013 – L1 – SB – Q6C – Law of Trusts"

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

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

You're reporting an error for "BL – May 2013 – L1 – SB – Q6B – Law of Trusts"

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.

You're reporting an error for "BL – May 2013 – L1 – SB – Q5A – Company Law"

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

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

You're reporting an error for "BL – May 2013 – L1 – SB – Q4B – Company Law"

FA – May 2013 – L1 – SA – Q32 – Double Entry Accounting Principles

This question tests the double-entry accounting treatment for the cash purchase of a non-current asset.

You're reporting an error for "FA – May 2013 – L1 – SA – Q32 – Double Entry Accounting Principles"

FA – May 2013 – L1 – SA – Q31 – Double Entry Accounting Principles

This question asks for the double-entry accounting treatment for goods taken from inventory for personal use by the sole trader.

You're reporting an error for "FA – May 2013 – L1 – SA – Q31 – Double Entry Accounting Principles"

FA – May 2013 – L1 – SA – Q30 – Accounts of Not-for-Profit Entities

This question asks for the term used to describe the excess of expenditure over income in an Income and Expenditure Account.

You're reporting an error for "FA – May 2013 – L1 – SA – Q30 – Accounts of Not-for-Profit Entities"

FA – May 2013 – L1 – SA – Q29 – Financial Statements Preparation

This question involves identifying the starting point for preparing final accounts from incomplete records.

You're reporting an error for "FA – May 2013 – L1 – SA – Q29 – Financial Statements Preparation"

FA – May 2013 – L1 – SA – Q28 – Virtual Accounting: Digitisation

This question is about the definition of a collection or pool of related data.

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FA – May 2013 – L1 – SA – Q27 – Accounting Concepts

This question defines what a trial balance is.

You're reporting an error for "FA – May 2013 – L1 – SA – Q27 – Accounting Concepts"

FA – May 2013 – L1 – SA – Q26 – Depreciation Methods and Accounting for Disposals

This question involves calculating the profit or loss on the disposal of a non-current asset.

You're reporting an error for "FA – May 2013 – L1 – SA – Q26 – Depreciation Methods and Accounting for Disposals"

FA – May 2013 – L1 – SA – Q25 – Accruals and Prepayments

This question involves calculating the rent expense to be charged for the year.

You're reporting an error for "FA – May 2013 – L1 – SA – Q25 – Accruals and Prepayments"

FA – May 2013 – L1 – SA – Q24 – Recording Financial Transactions

This question involves calculating payments on account receivables during the year.

You're reporting an error for "FA – May 2013 – L1 – SA – Q24 – Recording Financial Transactions"

FA – May 2013 – L1 – SA – Q23 – Accounting for Inventories (IAS 2)

This question tests the effect of overstating closing inventory on net income.

You're reporting an error for "FA – May 2013 – L1 – SA – Q23 – Accounting for Inventories (IAS 2)"

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