A company has issued 6% irredeemable preferred shares of $1 each, and 6% irredeemable bonds. The current market value of the preferred shares is $0.75 each and the current market value of the bonds is $96.00 per $100 nominal. The rate of tax is 25%.

There are three pre-requisites for fraud ： motivation, opportunity and dishonesty. Match each of these with the most immediate control strategy from the following list.

Control strategies

1 Recruitment reference checking

2 Disciplinary codes

3 Internal checks and controls

(i) Motivation

(ii) Opportunity

(iii) Dishonesty (2 marks)

If the interactions of the subordinates are more efficient, then their supervisor’s span of control can be wider.

Is this statement true or false?

A.True

B.False

The following scenario relates to questions 1-5.

You should assume that today’s date is 25 April 2019.

Thidar commenced trading as a builder on 1 January 2018. She voluntarily registered for value added tax (VAT) on 1 January 2018.

Sales

Thidar’s sales for the first 15 months of trading have been:

Pre-registration expenditure

Thidar paid for the following standard rated services prior to registering for VAT on 1 January 2018:

Date                               Cost of service                         Description

£ 10 June 2017                    1,800                            Advertisement for the building business

8 December 2017                  300                             Advertisement for the building business

Both figures are exclusive of VAT. Thidar paid for the advertisement of £300 by cash, and she does not have any evidence of this transaction (such as a VAT invoice).

VAT return for the quarter ended 30 September 2018

Thidar’s VAT return for the quarter ended 30 September 2018 was filed by the submission deadline of 7 November 2018 and the related VAT liability was paid on time.

However, on 15 February 2019, Thidar discovered that the amount of VAT paid was understated by £1,200 as a result of incorrectly treating a standard rated sale as zero rated.

Given that the underpayment does not exceed £10,000, Thidar is permitted to correct this error on her VAT return for the quarter ended 31 March 2019, and this is what she will do.

Thidar will file this VAT return by the submission deadline of 7 May 2019 and pay the related VAT liability (including the underpaid £1,200) on time.

VAT return for the quarter ended 31 March 2019

Thidar is currently completing her VAT return for the quarter ended 31 March 2019 and is unsure as to how much input

VAT is non-deductible in respect of two items:

(1) During the quarter ended 31 March 2019, Thidar spent £800 on entertaining UK customers.

(2) During the quarter ended 31 March 2019, Thidar leased a motor car at a cost of £700. The motor car is used by Thidar and 75% of the mileage is for private journeys.

Both figures are exclusive of VAT.

1.In which month did Thidar exceed the VAT threshold for compulsory registration?

A Month 14

B Month 15

C Month 13

D Not yet exceeded

2. What amount of pre-registration input VAT was Thidar able to recover in respect of expenditure incurred prior to registering for VAT on 1 January 2018?

A £360

B £60

C £420

D £0

Absorption costing will result in the same profit as marginal costing in which THREE of the following situations?

A.When inventory levels are constant

B.When opening and closing inventory volumes are the same

C.When no inventory is held as opening inventory and no inventory is held as closing inventory

D.When opening inventory is greater than closing inventory

E.When closing inventory is greater than opening inventory

(2 marks)

You have been asked to work on a major investment decision that your company will be making, and discover that your brother-in-law is the managing director of a firm that may benefit from the outcome of the decision. You have no intention of allowing this to influence the advice you give your firm, and you know that your brother-in-law will not try to influence you in any way.

What professional quality would make you consider handing this task to a colleague, or otherwise raising questions with your superiors?

A Scepticism

B Accountability

C Independence of mind

D Independence in appearance (2 marks)

Which Of the three main sources of rules that regulate the behaviour of businesses, the minimum level of acceptable behaviour is set by which?

A Non-legal rules and regulations

B Ethics

C The law

D Society (2 marks)

(b) Are the following statements about social responsibility true or false?

(i) Social responsibility action is likely to have an adverse effect on shareholders' interests in the short term

(ii) An environmental audit involves assessing the opportunities and threats to an organisation

(iii) Only governments are concerned with social responsibility

(iv) Guaranteeing employees a minimum 'living wage' is an example of social responsibility

(2 marks)

(a) Which two of the following are criticisms of relativism?

A It takes no account of evolving norms

B It leads to a philosophy of anything goes

C It makes short-term desires equivalent to longer-term interests

D It is based on a fundamental contradiction

E A consensus may not be possible (2 marks)

(b) Which two of the following are criticisms of absolutism?

A It takes no account of evolving norms

B It leads to a philosophy of anything goes

C It makes short-term desires equivalent to longer-term interests

D It is based on a fundamental contradiction

E Whatever source is used, human interpretation will lead to different views

(a) Are the following statements about ethics true or false?

(i) The teleological view of ethics is based on duty

(ii) Bribery can sometimes be legal

(iii) Virtue ethics suggests that managers should incorporate values such as fairness and loyalty into their decision-making

(iv) An accountant's ethical behaviour serves to protect the public interest (2 marks)