Stuff I got wrong Flashcards
Your client sells a car with faulty breaks. What do you do?
Report to authorities as could be life threatening.
If the sales day books is incorrectly totalled does this need to be corrected in the SLCA?
Yes because the figures in the SLCA come from the day book.
If the cash receipts book was incorrectly totalled does that need to be corrected in the SLCA?
Yes it does because this is where the payment figures come from.
Opening capital account is calculated by doing what when you have a trial balance from the previous year?
Last years capital
Add last years profit
Less last years drawings
Do drawings go into the profit appropriation account?
NO!!!!!!!
Premium in labour hours is just the extra bit. True or false
True
When you are working out if overheads were absorbed correctly you must use the per hour or unit multiplied by the number of actual hours or unit.
DO NOT FORGET THIS!!!!!!!!!
What is the role of the International Federation of Accountants (IFAC)?
International body representing accounting bodies
Serve public interest by strengthening accountancy profession
To achieve this it will promote adherence to high quality standards to high quality standards and international convergence
Is it necessary for an accountant to be part of an accounting body to provide accountancy services
No it is not necessary.
State four areas where it would be expected an accountant working in practice would be required to keep their knowledge up to date
Audit/accounting standards
Tax legislation
Criminal law affecting accountants
Ethical codes
If a client threatens to go to a new accountant if you do not do what they want, what threat is it?
Intimidation
What are the 4 sponsoring bodies of AAT?
ICAEW
ICAS
CIPFA
CIMA
Is AAT’s code of ethics a code of conduct or a code of practice?
Code of practice
State the four types of legal action that could be brought against an accountant if they fail to act properly when working on a client?
Breach of contract
Professional negligence
Breach of trust
Fraud
If you are asked to provide a reference for a client but you do not know all the facts, what principle is being threatened?
Professional competence and due care
Not giving enough care to work
Which UK body has overall responsibility for regulating the accounting profession within the UK?
The Financial Reporting Council (FRC)
State which body would set the global ethical standards for accountants?
International Federation of Accountants (IFAC)
State three reserved areas of accounting and say why they are reserved?
Audit
Investment business
Insolvency
These are reserved areas as they require specialist knowledge which is not covered in the syllabus of all qualifications.
What is the consequence of losing a civil law claim including what courts will award?
The consequence will be an award of damages for losing the case. The aim of the damages is to compensate the injured party, not punish the person who has done wrong.
What are the entries when there is a new addition through part exchange?
Dr Machinery at cost with bank amount
Cr Bank with payment
Dr Machinery at cost with part exchange amount
Cr Disposals with part exchange amount
Dr Depreciation charge if any in first year
Cr Accumulated depreciation if any in first year
What actions should you take if your client wants you to produce unqualified accounts when there are significant errors?
Discuss with the client
Discuss with the partner
Keep written records
Consider contacting AAT
If client refuses to allow the changes, the firm should consider not working for them.
If the partner is willing to compromise the firms reputation then you should consider resigning
If a client asks you to speak at an investor meeting, what threat is it and what should you do?
It is an advocacy threat.
You should not as you should appear independent.
What must financial statements for a limited company include?
Statement of profit and loss Statement of financial position Statement of changes in equity Statement of cash flows Notes to the financial statements
What is the main difference between the sole trader and limited company financial statements?
Because there is the difference in how the two are funded there is a difference in the accounts.
Sole traders have a proprietor’s interest section which shows the capital, profit and drawings.
Where as a limited company has an equity section.
What are the advantages of a limited company?
Limited liability status
Easier to raise finance
Company continues to operate regardless of the ownership
Taxed under corporation tax
What the disadvantages of a limited company?
Anyone can access accounts as they are on companies house
More regulations to comply with
Accounts of larger companies must be audited
Issues of shares are highly regulated
Why might the client chose the diminishing balance method to depreciate vehicles
To follow the accruals basis of accounting.
Irrecoverable debts are credited to what account?
Trade receivables
Irrecoverable debts are credited to what account?
Trade receivables
A fixed budget changes with activity levels, and takes into account different types of cost behaviour. True or false
False, fixed budgets do not change. Flexible change with activity levels.
