MAY 2013 – Page 10 – NBC Institute

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 – Q12 – Accounting Concepts

This question tests the understanding of capital expenditure items.

Question

Which of the following should be classified as capital expenditure?

A. The annual depreciation of leasehold premises
B. Computer repairs and maintenance cost
C. Solicitors’ fees in connection with the purchase of leasehold premises
D. The wages of the machine operators
E. The interest paid on a loan

Answer

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Tags: Capital Expenditure, Financial Reporting
Level: Level 1

Topic: Accounting Concepts
Series: MAY 2013

FA – May 2013 – L1 – SA – Q11 – Accruals and Prepayments

This question involves calculating the electricity expense from a ledger account.

Question

The following transactions relate to Mahmud’s electricity expense ledger account for the year ended 30 June 2012:

Prepayment brought forward: N550
Cash paid: N5,400
Accrued carried forward: N650

What amount should be charged to the Statement of Profit or Loss in the year ended 30 June 2012 for electricity?

A. N5,400
B. N5,500
C. N5,800
D. N6,600
E. N7,500

Answer

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Tags: Accruals, Ledger, Prepayments
Level: Level 1

Topic: Accruals and prepayments
Series: MAY 2013

FA – May 2013 – L1 – SA – Q10 – Financial Statements Preparation

This question tests the calculation of a sole trader’s net profit.

Question

Which of the following is used to derive a sole trader’s net profit for a period?

A. Closing net assets + drawings – capital introduced – opening net assets
B. Closing net assets – drawings + capital introduced – opening net assets
C. Closing net assets – drawings – capital introduced – opening net assets
D. Closing net assets + drawings + capital introduced – opening net assets
E. Closing net assets + drawings + capital introduced + opening net assets

Answer

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Tags: Closing Net Assets, Net Profit, Sole Trader
Level: Level 1

Topic: Financial Statements Preparation
Series: MAY 2013

FA – May 2013 – L1 – SA – Q9 – Financial Statements Preparation

This question involves calculating the closing work-in-progress for a company.

Question

The following information relates to Ablaze Limited for the year ended 31 December 2012:

Prime cost: N122,000
Factory/production overheads: N185,000
Opening Work-in-progress: N40,000
Factory cost of goods completed: N300,000

What is the closing work-in-progress?

A. N47,000
B. N56,000
C. N66,000
D. N80,000
E. N100,000

Answer

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Tags: Accounting, Factory Cost, Work in Progress
Level: Level 1

Topic: Financial Statements Preparation
Series: MAY 2013

FA – May 2013 – L1 – SA – Q8 – Recording Financial Transactions

This question defines purchases in financial accounting.

Question

Which of the following correctly describes the meaning of “purchases”?

A. Items bought
B. Goods bought on credit
C. Goods bought for resale
D. Goods paid for
E. Goods returned by customers

Answer

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Tags: Goods for Resale, Purchases
Level: Level 1

Topic: Recording Financial Transactions
Series: MAY 2013

FA – May 2013 – L1 – SA – Q7 – Recording Financial Transactions

This question asks for an alternative name for the revenue journal.

Question

An alternative name for a revenue journal is:

A. Revenue invoice
B. Revenue day book
C. Daily sales record
D. Revenue ledger
E. Returns day book

Answer

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Tags: Prime Entry, Revenue Journal
Level: Level 1

Topic: Recording Financial Transactions
Series: MAY 2013

FA – May 2013 – L1 – SA – Q6 – Financial Statements Preparation

This question is about calculating the closing balance of account receivables.

Question

Given opening account receivables of N2,300,000, revenue of N9,600,000, and receipts from customers of N9,000,000, the closing account receivables balance should be:

A. N1,700,000
B. N2,900,000
C. N3,700,000
D. N12,700,000
E. N16,300,000

Answer

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Tags: Closing Balance, Financial Reporting, Receivables
Level: Level 1

Topic: Financial Statements Preparation
Series: MAY 2013

FA – May 2013 – L1 – SA – Q5 – Depreciation Methods and Accounting for Disposals

This question tests the understanding of depreciation charged on non-current assets.

Question

Depreciation charged on non-current assets is known to be:

A. The amount spent to buy the non-current asset
B. The salvage value of a non-current asset
C. The part of the cost of non-current asset consumed during its period of use
D. The amount of money spent in replacing non-current assets
E. The part of the cost of non-current asset reserved to be consumed in future periods

Answer

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Tags: Accounting Concepts, Depreciation, Non-current Assets
Level: Level 1

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

FA – May 2013 – L1 – SA – Q4 – Accounting Concepts

The question concerns the process of eliminating variations in accounting practice.

Question

The process to reduce or eliminate variations in accounting practice and to introduce a degree of uniformity into financial reporting is:

A. Accounting Standards
B. Accounting Concepts
C. Accounting Manuals
D. Accounting Statements
E. Accounting Records

Answer

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Tags: Accounting Standards, Financial Reporting, Uniformity
Level: Level 1

Topic: Accounting Concepts
Series: MAY 2013

FA – May 2013 – L1 – SA – Q3 – Regulatory Environment of Accounting

This question tests knowledge of the body responsible for developing IFRS.

Question

IFRS are developed and published by:

A. International Accounting Standards Committee
B. International Accounting Standards Advisory Council
C. International Accounting Standards Board
D. International Accounting Standards Foundation
E. International Accounting Reporting Standards Board

Answer

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Tags: Financial Reporting, IFRS, International Standards
Level: Level 1

Topic: Regulatory Environment of Accounting
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 – Q12 – Accounting Concepts

This question tests the understanding of capital expenditure items.

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FA – May 2013 – L1 – SA – Q11 – Accruals and Prepayments

This question involves calculating the electricity expense from a ledger account.

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FA – May 2013 – L1 – SA – Q10 – Financial Statements Preparation

This question tests the calculation of a sole trader’s net profit.

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FA – May 2013 – L1 – SA – Q9 – Financial Statements Preparation

This question involves calculating the closing work-in-progress for a company.

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FA – May 2013 – L1 – SA – Q8 – Recording Financial Transactions

This question defines purchases in financial accounting.

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FA – May 2013 – L1 – SA – Q7 – Recording Financial Transactions

This question asks for an alternative name for the revenue journal.

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FA – May 2013 – L1 – SA – Q6 – Financial Statements Preparation

This question is about calculating the closing balance of account receivables.

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FA – May 2013 – L1 – SA – Q5 – Depreciation Methods and Accounting for Disposals

This question tests the understanding of depreciation charged on non-current assets.

You're reporting an error for "FA – May 2013 – L1 – SA – Q5 – Depreciation Methods and Accounting for Disposals"

FA – May 2013 – L1 – SA – Q4 – Accounting Concepts

The question concerns the process of eliminating variations in accounting practice.

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FA – May 2013 – L1 – SA – Q3 – Regulatory Environment of Accounting

This question tests knowledge of the body responsible for developing IFRS.

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