State briefly whether the following pairs of events are independent, and why. (i) Being an accountant and having large feet. (2 marks) (ii) Earning a large salary and paying a large amount of income tax. (2 marks) (iii) Being drunk while driving and having an accident. (2 marks) (iv) Any […]

i) Why should the auditor be unwilling to take full responsibility for the detection of fraud during the annual audit? Explain. (5 marks) ii) Discuss the proposition that the „expectations gap‟ has arisen because of the public‟s ignorance and should therefore be resolved by the public themselves. (5 marks)

The table below shows the income per month of borrowers and the percentage of all mortgages as provided by Building Society Mortgages in the year 2000. Income per month of borrowers (Sh.) Percentage of all mortgages Under 30,000 30,000 35,000 40,000 45,000 50,000 – – – – – 34,999 35,999 […]

a) Do you believe that the auditors should be responsible to users other than the shareholders? Give reasons to support your answer. (5 marks) b) Does the auditor require a codified definition of “reasonable care and skill” or should this be left to professional judgment? Explain. (5 marks)

Two machines, A and B are used to process certain items. The cost function for each machine is given by: Machine A: Y = 15 + 3X Machine B: Y = 18 – X + X2 Where: Y is the cost of producing X items (Sh. ‘000’) X is the […]

i) Give and explain five examples of non-taxable income i) With reference to wear and tear allowances, what is meant by the “pooling method”?

The table below shows the demand and supply schedules for a product. Price (Sh. Per Kg.) Demand (Kg) Supply (Kg.) 10 100 20 20 85 36 30 70 53 40 55 70 50 40 87 60 25 103 70 10 120 Required: Plot the demand and supply curves and determine […]

State and briefly explain any four main factors that may cause a fall in the supply of a good in the market.

Clearly explain the distinction between supply, demand and equilibrium price.