MAY 2013 – Page 9

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 – Q22 – Accounting Treatment for Bad and Doubtful Debts

This question involves calculating the net trade receivables after applying provision for doubtful debts and discount.

Question

The trial balance of a business shows a trade receivables balance of N90,000. Provision for doubtful debts is 5% of total receivables, while provision for discount on receivables is 2%. The amount to show in the Financial Statements as net trade receivables would be:

Answer

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Tags: Provision for Doubtful Debts, Trade receivables
Level: Level 1

Topic: Bad and Doubtful Debts
Series: MAY 2013

FA – May 2013 – L1 – SA – Q21 – Accounts of Not-for-Profit Entities

This question tests knowledge of the accounting basis used in recording transactions in a not-for-profit organisation.

Question

The accounting basis maintained in recording transactions in the Receipts and Payments account of a Not-For-Profit Organisation is:

Answer

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Tags: Accounting, Not-for-profit, Receipts and Payments
Level: Level 1

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

FA – May 2013 – L1 – SA – Q20 – Recording Financial Transactions

This question tests knowledge of the accounting entry to record profit loading on goods sent to a branch.

Question

The necessary accounting entry to record profit loading on goods sent to a branch by the Head Office is:

Debit | Credit
A. Branch Inventories Account | Branch Inventories Adjustment Account
B. Branch Inventories Account | Goods sent to Branch Account
C. Goods sent to Branch Account | Branch Inventories Account
D. Branch Inventories Adjustment Account | Branch Inventories Account
E. Branch Inventories Account | Goods sent to Branch Account

Answer

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Tags: Branch accounts, Profit Loading
Level: Level 1

Topic: Recording Financial Transactions
Series: MAY 2013

FA – May 2013 – L1 – SA – Q19 – Accounting for Inventories

This question tests the knowledge of items relevant in ascertaining the quantity of containers retained by customers.

Question

Among the following listed items, highlight the one that is irrelevant when ascertaining the quantity of containers retained by the customers:

A. Charged out containers
B. Returned containers
C. Returnable containers
D. Scrapped containers
E. Opening containers with customers

Answer

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Tags: Containers, Financial Reporting, Inventory
Level: Level 1

Topic: Accounting for Inventories (IAS 2)
Series: MAY 2013

FA – May 2013 – L1 – SA – Q18 – Recording Financial Transactions

This question asks for the cost of goods invoiced at a mark-up.

Question

If goods were invoiced by the Head Office to a branch for N86,400 at cost plus a 25% mark-up, what was the cost of the goods?

A. N64,800
B. N69,120
C. N86,400
D. N103,680
E. N108,000

Answer

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Tags: Cost of Goods, Financial Reporting, Invoice
Level: Level 1

Topic: Recording Financial Transactions
Series: MAY 2013

FA – May 2013 – L1 – SA – Q17 – Virtual Accounting

This question involves identifying the task most suitable for a spreadsheet.

Question

A spreadsheet is most suitable for which of the following tasks?

A. Posting of double-entry transactions in the general ledger
B. Preparing a budget
C. Preparing letters to sales agents
D. Maintaining an audit trail of transactions
E. Making presentations during a training programme

Answer

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Tags: Budgeting, Spreadsheet
Level: Level 1

Topic: Virtual Accounting: Digitisation
Series: MAY 2013

FA – May 2013 – L1 – SA – Q16 – Partnership Accounts

This question tests the knowledge of accounts kept by a partnership.

Question

Which of the following accounts will NOT be kept by a partnership?

A. Statement of Financial Position
B. Current Account
C. Realisation Account
D. Statement of Profit or Loss and other comprehensive income
E. Income and Expenditure Account

Answer

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Tags: Financial Reporting, Partnership Accounts
Level: Level 1

Topic: Partnership Accounts (Including Profit Sharing, Capital and Current Accounts)
Series: MAY 2013

FA – May 2013 – L1 – SA – Q15 – Partnership Accounts

This question is about calculating the balance on a partner’s current account.

Question

How much will be the balance on Emeka’s current account after adjusting for his share of profit, salary, and drawings?

A. N272,800
B. N302,400
C. N327,800
D. N352,800
E. N372,800

Answer

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Tags: Current Account, Partner’s Drawings, Profit Sharing
Level: Level 1

Topic: Partnership Accounts (Including Profit Sharing, Capital and Current Accounts)
Series: MAY 2013

FA – May 2013 – L1 – SA – Q14 – Partnership Accounts

This question is about the profit share of a partner.

Question

Bola, Emeka, and Sule are partners trading under the name BES Enterprises. They share profits or losses in the ratio of 3:2:1 respectively. The partnership made a net profit of N840,000 for the year ended 30 April 2013. What is Bola’s share of profit?

A. N300,200
B. N360,200
C. N361,000
D. N361,200
E. N362,100

Answer

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Tags: Financial Reporting, Partnership, Profit Sharing
Level: Level 1

Topic: Partnership Accounts (Including Profit Sharing, Capital and Current Accounts)
Series: MAY 2013

FA – May 2013 – L1 – SA – Q13 – Correction of Errors

This question deals with correcting an accounting error related to partner’s drawings.

Question

The repairs of the personal vehicle of a partner’s wife were wrongly treated as part of motor vehicle expenses of the partnership. Which of the following accounting entries is required to correct the error?

Debit | Credit
A. Partner’s Drawings Account | Motor vehicle expenses account
B. Motor vehicle expenses account | Partner’s current account
C. Motor vehicle expenses account | Partner’s drawings account
D. Motor vehicle expenses account | Partner’s current account
E. Partner’s capital account | Motor vehicle expenses account

Answer

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Tags: Accounting Errors, Partner’s Drawings
Level: Level 1

Topic: Correction of errors
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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FA – May 2013 – L1 – SA – Q22 – Accounting Treatment for Bad and Doubtful Debts

This question involves calculating the net trade receivables after applying provision for doubtful debts and discount.

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FA – May 2013 – L1 – SA – Q21 – Accounts of Not-for-Profit Entities

This question tests knowledge of the accounting basis used in recording transactions in a not-for-profit organisation.

You're reporting an error for "FA – May 2013 – L1 – SA – Q21 – Accounts of Not-for-Profit Entities"

FA – May 2013 – L1 – SA – Q20 – Recording Financial Transactions

This question tests knowledge of the accounting entry to record profit loading on goods sent to a branch.

You're reporting an error for "FA – May 2013 – L1 – SA – Q20 – Recording Financial Transactions"

FA – May 2013 – L1 – SA – Q19 – Accounting for Inventories

This question tests the knowledge of items relevant in ascertaining the quantity of containers retained by customers.

You're reporting an error for "FA – May 2013 – L1 – SA – Q19 – Accounting for Inventories"

FA – May 2013 – L1 – SA – Q18 – Recording Financial Transactions

This question asks for the cost of goods invoiced at a mark-up.

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FA – May 2013 – L1 – SA – Q17 – Virtual Accounting

This question involves identifying the task most suitable for a spreadsheet.

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FA – May 2013 – L1 – SA – Q16 – Partnership Accounts

This question tests the knowledge of accounts kept by a partnership.

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FA – May 2013 – L1 – SA – Q15 – Partnership Accounts

This question is about calculating the balance on a partner’s current account.

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FA – May 2013 – L1 – SA – Q14 – Partnership Accounts

This question is about the profit share of a partner.

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FA – May 2013 – L1 – SA – Q13 – Correction of Errors

This question deals with correcting an accounting error related to partner’s drawings.

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