A production department uses a sampling procedure to test the quality of newly produced items. The department employs the following decision rule at an inspection station: If a sample of 14 items has a variance of more than 0.005, the production line must be shut down for repairs. Suppose the […]

In the course of the audit of ABC Stationers Ltd. for the year ended 30 June 2001, you have noted and recorded in the audit working papers, the following evidential matters: 1. Flowcharts of the company‟s payroll prepared by your audit assistant backed up by tests of controls. 2. An […]

Given below were the purchases and sales made by Tough Limited during the month of December 2005. The prices were inclusive of VAT at the standard rate of 17 percent. December 1 5 Purchased 400 units at Sh.5,600 per unit Sold 40 units at sh.7,200 per unit Sold 80 units […]

State and explain the benefits of value added tax (VAT) in the context of the principles of a good tax system. (20 marks)

John, a farmer, constructed a farmhouse on 2 January 2005 for Sh.6,000,000 and incurred the following additional expenditure: Sh. 2.1.2005 30.6.2005 30.9.2005 30.10.2005 Cattle dip Irrigation system Labour quarters Milking machinery 1,000,000 1,500,000 2,400,000 1,120,000 John sold the farm on 2.1.2006 to his brother, Peter, who is also a farmer. […]

Distinguish between farm works deductions and capital deductions.

Mr. Joe has two offers for employment in two engineering firms. The details of the two offers are as follows: Firm A Sh. Firm B Sh. Basic pay per month Benefits: Housing (market rent) p.m. Car 1600cc (cost) 45,000 50,000 600,000 41,000 60,000 600,000 Pension scheme which is registered by […]

Explain the matters that have to be considered in respect of a system of internal control for cash sales in a service station that sells petrol and repairs motor vehicles. (20 marks)

a) What are the main objectives of an internal control system? (5 marks) b) What are the disadvantages of rigidly adhering to a system of internal control? (5 marks)