The following scenario relates to questions 1–5 You are an audit manager at Horti & Co and you are considering a number of ethical issues which have arisen on some of the firm’s long-standing audit clients. Tree Co Horti & Co is planning it

企业计提存货跌价准备时，下列各项中允许采用的计提方式有(　)。

A. 按照存货单个项目计提

B. 与具有类似目的或最终用途并在同一地区生产和销售的产品系列相关，且难以将其与该产品系列的

其他项目区别开来进行计量的存货，可以合并计提

C. 按照期末结存存货的总体数量中跌价的比例计提

D. 数量繁多，单价较低的存货可以按照存货类别计提

企业在确定存货可变现净值时，应考虑的因素有(　　)。

A. 以取得的确凿证据为基础

B. 持有存货的目的

C. 资产负债表日后事项的影响

D. 折现率

下列关于企业存货的确认说法中，正确的有(　)。

A. 在确认存货时，需要判断与该项存货相关的经济利益是否很可能流入企业

B. 委托代销商品，由于其所有权并未转移至受托方，因而委托代销的商品仍应当确认为委托企业货

的一部分

C. 企业在判断与存货相关的经济利益能否流入企业时，主要结合该项存货使用权的归属情况进行析

确定

D. 必须能够对存货成本进行可靠地计量

U Co is being sued by a customer and legal proceedings are ongoing at 30 September 2017. In which of the following circumstances would U Co disclose a contingent liability in the notes to the financial statements for the year ended 30 September 2017?

(1) Legal advice indicates that there is a 45% chance that the customer’s claim will be successful and that damages will amount to $250,000

(2) Legal advice indicates that it is probable that the customer’s claim will be successful and that damages will amount to $200,000

(3) Legal advice indicates that there is an 80% chance that the customer’s claim will be successful but the amount of the claim cannot be assessed reliably at 30 September 2017

A 1 and 2 only

B 1 and 3 only

C 2 and 3 only

D 1, 2 and 3

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%.

What is the cost of the preference shares and the cost of the bonds?

A. Cost of preferred shares 8%, cost of bonds 4.7%

B. Cost of preferred shares 8%, cost of bonds 4.5%

C. Cost of preferred shares 6%, cost of bonds 4.5%

D. Cost of preferred shares 6%, cost of bonds 4.7%

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)