(iii) State any disadvantages to the relief in (i) that Sharon should be aware of, and ide
(iii) State any disadvantages to the relief in (i) that Sharon should be aware of, and identify and describe
another relief that she might use. (4 marks)
(iii) State any disadvantages to the relief in (i) that Sharon should be aware of, and identify and describe
another relief that she might use. (4 marks)
(iii) State the value added tax (VAT) and stamp duty (SD) issues arising as a result of inserting Bold plc as
a holding company and identify any planning actions that can be taken to defer or minimise these tax
costs. (4 marks)
You should assume that the corporation tax rates for the financial year 2005 and the income tax rates
and allowances for the tax year 2005/06 apply throughout this question.
(a) (i) Defi ne a ‘test of control’ and a ‘substantive procedure’; (2 marks)
(ii) State ONE test of control and ONE substantive procedure in relation to sales invoicing. (2 marks)
(b) Shiny Happy Windows Co (SHW) is a window cleaning company. Customers’ windows are cleaned monthly, the window cleaner then posts a stamped addressed envelope for payment through the customer’s front door.
SHW has a large number of receivable balances and these customers pay by cheque or cash, which is received in the stamped addressed envelopes in the post. The following procedures are applied to the cash received cycle:
1. A junior clerk from the accounts department opens the post and if any cheques or cash have been sent, she records the receipts in the cash received log and then places all the monies into the locked small cash box.
2. The contents of the cash box are counted each day and every few days these sums are banked by which ever member of the fi nance team is available.
3. The cashier records the details of the cash received log into the cash receipts day book and also updates the sales ledger.
4. Usually on a monthly basis the cashier performs a bank reconciliation, which he then fi les, if he misses a month then he catches this up in the following month’s reconciliation.
Required:
For the cash cycle of SHW:
(i) Identify and explain THREE defi ciencies in the system; (3 marks)
(ii) Suggest controls to address each of these defi ciencies; and (3 marks)
(iii) List tests of controls the auditor of SHW would perform. to assess if the controls are operating effectively. (3 marks)
(c) Describe substantive procedures an auditor would perform. in verifying a company’s bank balance. (7 marks)
Explain why aluminium(III )is the only stable oxidation state of aluminum in this compounds,in contrast to thallium,which has states of+1 and+3.
A.diminish
B.decrease
C.reduce
D.dwindle
A.that physicians practicing in state facilities with past malpractice suits having been filed against them are required to disclose any such suits to prospective patients
B.that requires physicians practicing in state facilities to disclose any past malpractice suits filed against them to prospective patients
C.to require physicians with past malpractice suits filed against them and who practice in state facilities to disclose these to prospective patients
D.for physicians that practice in state facilities requiring them to have disclosed to prospective patients past malpractice suits filed against them
E.requiring physicians who practice in state facilities to disclose to prospective patients any past malpractice suits filed against them
A.how often
B.how old
C.how many
D.how much
(c) State any reliefs Bob could claim regarding the fall in value of his shares in Willis Ltd, and describe how the
operation of any such reliefs could reduce Bob’s taxable income. (4 marks)
Relevant retail price index figures are:
September 1990 129·3
April 1998 162·6
December 2004 189·9
Dolphins seem to talk to each other about any of the following EXCEPT ______.
A.their age
B.audio link
C.food sources
D.their emotional state
A.CLOSED
B.LISTEN
C.CLOSE_WAIT
D.ESTABLISHED
(ii) Explain why Galileo is able to pay the inheritance tax due in instalments, state when the instalments are
due and identify any further issues relevant to Galileo relating to the payments. (3 marks)
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