An individual's gross tax liability is reduced by tax set offs such as withheld tax which is tax deducted at the source. For example, an employee's gross tax liability is reduced by virtue of the fact that the employer has already deducted the Pay As You Earn (P.A.Y.E) before passing on the income. The employee, therefore, will not be required to pay this particular tax again. Other examples pension, bonuses and interest in which the individual's tax liability is already taken care of prior to the income getting into his/her hands.
Walest answered the question on August 27, 2019 at 10:26
- The following transactions relate to Munene traders during the month of March 2014. March 1 Started business with Ksh. 200,000 in the bank March 2...(Solved)
The following transactions relate to Munene traders during the month of March 2014.
March 1 Started business with Ksh. 200,000 in the bank
March 2 Purchased goods worth ksh. 50000 via cheque
March 3 Sold goods by cash ksh. 10,000
March 13 Bought equipment from Maasai traders of kshs. 80,000 on credit
March 15 Sold goods worth 15,000 to Kemere on credit
March 16 Kamere returned goods worth shs. 2000 due to them being faulty
March 21 Took goods worthy ksh. 3000 for personal use
March 25 Took ksh. 10000 from the cash in to the bank account
March 31 Paid salaries via cheque of ksh. 60,000
Required
Pass the necessary journal entries. (8mks)
b) Open relevant accounts to record the above transactions and balance them. (12mks)
Date posted: April 17, 2019. Answers (1)
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2003 May 1 bought a motor vehicle on credit from Motors Ltd for Sh.6, 790.
2003...(Solved)
Show the journal entries necessary to record the following items:
2003 May 1 bought a motor vehicle on credit from Motors Ltd for Sh.6, 790.
2003 May 3 A debt of Sh.34 owing from N Smart was written off as a bad debt.
2003 May 8 Furniture bought by us for Sh.490 was returned to the supplier Wood Offices, as it was unsuitable. Full allowance will be given.
2003 May 12 we are owed Sh.150 by W Hayes. He is declared bankrupt and we received
Sh.39 in full settlement of the debt.
2003 May 14 we take Sh.45 goods out of the business stock without paying for them.
2003 May 28 Some time ago we paid an insurance bill thinking that it was all in respect
Of the business. We now discover that Sh.76 of the amount paid was in fact
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2003 May 28 Bought Machinery Sh.980 on credit from Xerox Machines Ltd.
Date posted: December 14, 2018. Answers (1)
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Sh.50, 000 total face...(Solved)
On august 1 2005, airbus Ltd. (a company that records adjusting entries only once per year) issued bonds with the following characteristics:
Sh.50, 000 total face value.
12% stated rate.
16% yield rate.
Interest dates are February 1, May 1, August 1, and November 1.
Bond date is October 31, 2004.
Maturity date is November 1, 2009.
Sh.1, 000 of bond issue costs were incurred.
Required:
1) Provide all entries required for the bond issue through February 1, 2006, for Airbus using the interest method.
2) On June 1, 2007, Airbus retired Sh.20, 000 of bonds at 98 through open market purchase. Provide the entries to update the bond issue and to retire the bonds using the interest method.
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i) Interest method
ii) Straight-line method
Date posted: December 12, 2018. Answers (1)
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You are currently working as the audit assistant at AB partners certified public accountant. During the audit of XYZ company you have been allocated audit of motor vehicles for year ending September 2018. You are required to highlight the substantive procedures you would undertake in your audit of motor vehicle
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Date posted: August 13, 2018. Answers (1)
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b) Does the auditor require a codified definition of “reasonable care and skill” or should this be left to professional judgment? Explain.
c) Why should the auditor be unwilling to take full responsibility for the detection of fraud during the annual audit? Explain.
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c)...(Solved)
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Audit planning process allows the audit senior to acquire adequate knowledge about the entity. This process ensure an effective control of audit work.
Required:
a) Explain the auditor's planning process when planning for an audit of a new client. b) How does audit planning assist in the conduct of an audit?
c) Explain the following controlling procedures in a well planned audit:
i. Direction and supervision of work. ii. Review and co-ordinating of work. iii. Quality controls
Date posted: August 8, 2018. Answers (1)
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You are the manager responsible for the audit of ABC Company, which has a turnover of KShs 750 million. The company has been audited by your firm for a number of years and this is the second year you have been responsible as manager for the audit. However, owing to your responsibilities for other audits you are only intending to make periodic visits to the company during the course of the audit and you will not be involved in any of the detailed audit work.
Required
a) State the matters you would consider in planning the audit, prior to the commencement of the detailed audit work. b) Describe the way in which you would control the audit from the commencement of the work by the audit staff to the review stage by the partner immediately prior to him signing the audit report
Date posted: August 4, 2018. Answers (1)
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i. Application controls;
ii. ...(Solved)
a) In the context of a computer based accounting system, explain the meaning of the following terms:
i. Application controls;
ii. General controls
b) Explain the importance of having proper systems documentation
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Date posted: August 4, 2018. Answers (1)
- (a) Briefly explain the meaning of the term "control procedures".
(b) What is the importance of...(Solved)
(a) Briefly explain the meaning of the term "control procedures".
(b) What is the importance of segregation of duties as a control procedure'? (c) In carrying out an audit, the auditor appraises and tests the system of internal control in order to ascertain that it is capable of processing transactions or determining quantities and values completely and accurately. The auditor further carries out substantive tests in an attempt to ensure that the transactions, assets and liabilities recorded in the accounting records upon which the figures in the financial statements are based, are completely and accurately recorded. Required: List and briefly explain the substantive tests the auditor would carry out to verify the values attributed to: (i) Trade debtors in a company's financial statements.
(ii) Trade creditors in a company's financial statements.
Date posted: August 4, 2018. Answers (1)
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Your firm is the auditor of Shah Engineering Ltd, and you have been asked to suggest the audit work you will carry out in verifying trade creditors and purchase accruals at the company’s year-end of 31 December 2003. You attended the stock take at the year-end. The Company operates from a single site and all raw materials for production are received by the goods inwards department. When the materials are received they are checked for quantity and quality to the delivery note and purchase order, and a multi—part goods received note is made out and signed by the storekeeper. If there are any problems with the raw materials, a discrepancy note is raised which gives details of the problems (e.g., incorrect quantities or faulty materials) The purchase accounting department receive the purchase invoice, check them to the purchase order and goods received note and post them to the purchase ledger. At the end of each month, payments are made to suppliers. The purchase ledger is maintained on a microcomputer. The main sundry creditors and accruals at the year-end include:
a) Wages accruals and PAYE;
b) VAT;
c) Interest on loans overdrafts, telephone and electricity. Most employees’ wages are paid weekly in arrears.
You are required to describe in detail the audit work you will carry out to:
a) Check suppliers’ statements to the balances on the purchases ledger;
b) Verify that purchases cut-off has been correctly carried out at the year end.
c) Ensure that sundry creditors and accruals are correctly stated;
Date posted: August 4, 2018. Answers (1)