Explain what is meant by the following terms as used in statistical inference: (i) Statistical hypothesis; (2 marks) (ii) Test of a hypothesis; (2 marks) (iii) Type I error; (2 marks) (iv) Type II error; (2 marks) (v) Level of significance (2 marks)

Define the following terms as used in linear programming: (i) Feasible solution (2 marks) (ii) Transportation problem. (2 marks) (iii) Assignment problem. (2 marks)

During the course of an audit, the auditor attempts to obtain sufficient relevant and reliable evidence to provide the satisfaction that the financial records are completed and accurate. One of the ways that the auditor obtains satisfaction is to select representative samples of transactions and balances for detailed testing, such […]

Mr. Banu Shah provided the following information for the year ended 31 December 2005: o He was employed as a full time director of Letex Limited at a salary of Sh.80,000 per month (PAYE Sh.31,200 per month was deducted). o Free goods worth Sh.30,000 were received from the company in […]

(a) Now that there is self assessment under the Income Tax Act, does the Commissioner of Income Tax have to issue any assessment? Explain. ( 5 marks) (b) Does an individual person have to raise an objection for tax assessed under the Income Tax Act now that there is self […]

An electric utility company has found that the weekly number of occurrences of lightning striking the transformers is a poisson distribution with mean 0.4. Required: (i) The probability that no transformer will be struck in a week. (4 marks) (ii) The probability that at most two transformers will be struck […]

i. Define the term audit programme. (2 marks) ii. Write in point form an audit programme to cover salary and wages of a small size firm. (8 marks)

A businessman is contemplating investing in a business worth Sh.5,000,000 but has not made up his mind on which form of ownership he will assume. The business is expected to produce a profit of Sh.2,000,000 before tax and his drawings/salary averaging 10% on investment. Required: Advice the businessman on the […]

Distinguish between sole proprietorship and limited liability forms of business in relation to: Income Tax PAYE for the owners of business Service charge for the owners and the business. ( 8 marks)