Tag: Topic 1

Alex, the managing director of Lucy Ltd wants to understand the links between technical competence and professional responsibility in the accounting profession.

Which areas should be considered by Alex below?

Select ONE answer:

1. Disciplinary proceedings and the profession’s interest only
2. Disciplinary proceedings and accounting principles only
3. The profession’s interest and accounting principles only
4. Disciplinary proceedings, the profession’s interest and accounting principles

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 == > Applying accounting principles is an aspect of technical competence. Disciplinary proceedings are relevant when there has been a failure of technical competence and/or professional responsibility. The profession’s interest has no impact.
3. Not correct
4. Not correct

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

Part A of the IESBA Code of Ethics is a framework that applies to all professional accountants and it introduces the fundamental principles.

In this context ‘fundamental’ means?

Select ONE answer:

1. That the principles form the bedrock of professional judgements and practice
2. That the principles are the easiest aspects of the professional accountant’s work
3. That the Code is compliance-based
4. That adherence to rules is all that is required of a professional accountant

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 == > The fundamental principles form the bedrock of professional judgements and practice. It does not mean that the principles are easy; taking the approach of mere compliance; and/or of following rules is the exact opposite of what the fundamental principles represent.
2. Not correct
3. Not correct
4. Not correct

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

The ICAEW Code of Ethics is an example of which of the following theoretical approaches to ethical codes?

Select ONE answer:

1. A rules-based approach
2. A framework-based approach
3. A compliance-based approach
4. A tick box approach

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 incorrectThe ICAEW Code of Ethics is a framework- or ethics-based approach, which is the opposite of the compliance-, rule- or tick-box-based approach seen in other jurisdictions such as the US.
3. Not correct
4. Not correct

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

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

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

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.