Tax payments differ from government fines and penalties because they are not intended to deter
or punish unacceptable behavior. Taxes differ from fees or user charges because they do not
1. What is the distinction between nominal GDP and real GDP?
2. What is PPP and how does it help us to make valid
international comparisons of real GDP?
3. Explain why real GDP might be an unreliable indicator of the
standard of living.
Use the following
10 Audit of leases
You are the manager responsible for the audit of Makepeace Co for the year ended 31
December 20X2. Makepeace Co has leased an asset from 1 January 20X2. The terms of
the lease are:
A non-refundable deposit of $5,800 on incepti
6 Going concern
You are planning the audit of Truckers, whose principal activities are road transport and warehousing
services, and the repair of commercial vehicles. You have been provided with the draft accounts for
the year ended 31 October 20
9 Revenue recognition and other matters
The senior partner of JLPN, a firm of auditors, has issued an 'Audit Risk Alert' letter to all
partners dealing with key areas of concern which should be given due consideration by his
firm when auditing pu
8 Financial instruments
On 1 January 20X8 Daniel Co issued a $20 million debenture at par, with a nominal rate of interest of
4%. The debenture is redeemable in five years' time at which point the holder will have the option to
convert the debent
7 Non-current assets
You are reviewing the file on the audit, which is nearing completion, of a listed company,
Apollo Co. Apollo produces two products, the X and the W. Apollo Co purchased two new
pieces of plant in the year. Plant is valued at
5-Audit Work- Going Concern
Describe the audit work to be performed in respect of going concern at.
Summary. If the company is not a going concern the accounts would be truer and fairer if
prepared on a break-up basis. Material adjustments
3 Audit procedures- subsequent events.
Describe the audit procedures which would be carried out in order to identify any material
(i) Ask management if there have been any material subsequent events.
(ii) Identify and ev
4 Hope Engineering
You are auditing the financial statements of Hope Engineering, a limited company, for the year
ending 31 March 20X8. The partner in charge of the audit instructs you to carry out a review of the
company's activities since the f
2 Subsequent events
Explain the nature and purpose of a subsequent events review.
(a) The auditor's active responsibility extends to the date on which they sign their audit report.
As this date is inevitably after the year end, it follows
Chapter 1 BASIC ACCOUNTING IN ACTION
I. Overview of Accounting.
A. Define accounting.
1. Accounting is considered the language of business. This is because in
todays business world it is impossible to get by without accounting. Every
Unit manufacturing costs:
Total unit manufacturing costs
Unit marketing sosts:
Total unit marketing costs
Total unit costs
11 Audit of deferred tax
Guido Co, a company producing domestic appliances for the retail market, began trading on
1 January 20X1. Its draft accounts for the year ended 31 December 20X2 show profit before
tax of $1,000,000, total assets of $5,200