Tag: Ethics

Using the accruals basis of accounting, revenue is recorded and reported only when?

Select ONE answer:

1. Goods or services are delivered whether or not cash has been received
2. Cash is received at the time goods or services are delivered
3. Cash is received whether or not goods or services have been delivered
4. Cash is received after goods or services have been delivered

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 1

1. Correct == > Revenue is recorded when goods or services are delivered whether or not cash has been received.
2. Not correct
3. Not correct
4. Not correct

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Ted is the audit manager in the audit firm Bash and Co.

Cannock Stores Ltd has been an audit client for ten years and Ted has been the audit manager for the past two years.

Ted has also just acquired about 10% of Cannock Stores Ltd’s share capital as an inheritance on the death of a very distant relative.

Cannock Stores Ltd is attempting to obtain a listing on the London Stock Exchange and, as the company’s auditor.

The management of Cannock Stores Ltd would like Ted and the audit partner Keith to attend an evening dinner and drinks reception in an expensive London hotel, where they will present their listing arrangements to banks and existing major shareholders.

Which threats apply in relation to this situation?

Select ONE answer:

1. Self-interest and advocacy threats only
2. Self-interest and self-review threats only
3. Advocacy and self-review threats only
4. Self-interest, advocacy and self-review threats

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 1

1. Correct == > There is a self-interest threat and an advocacy threat to Bash & Co. Attending the social event may be inappropriate as Bash & Co as auditor may be seen as supporting Cannock Stores Ltd in this venture – the advocacy threat. Then, Ted owning shares in the company may create a self-interest threat – he may be more interested in the value of the shares than providing a ‘correct’ opinion on the financial statements.
2. Not correct
3. Not correct
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.

The five threats to fundamental professional principles are?

Select ONE answer:

1. Self-interest, self-review, encroachment, familiarity and intimidation
2. Self-interest, self-review, advocacy, familiarity and intimidation
3. Self-interest, self-review, advocacy, familiarity and intimacy
4. Self-promotion, self-review, advocacy, familiarity and intimidation

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 2

1. Not correct
2. Correct == > Encroachment, intimacy and self-promotion are incorrect.
3. Not correct
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.