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Hi – below are some questions I was stuck with during an audit test, especially Qs. 4, any help greatly appreciated!
1. There are some negative balances on the sales ledger for several customers, what might explain this?
A. Payments on account – is that correct?2. A major client told you about recent staff cuts, they mention payment will be forthcoming but they had problems with internet banking.
What steps do you take as a result of this conversation?3. What action and accounting adjustments to take in respect of balances over 3 months:
client A, £14,000 – despite repeated chases they have not paid nor responded to emails
client B, £25,000 – company is in liquidation4. We are acting as agent for a client which tasks us with managing their publicity account.
They have an annual spend of £240,000 which started in Jan 2015 for 12 insertions, one per month on an equal basis.We have received the following payments from the client:
1 Jan 15, 20% deposit on account – no invoice raised
1 Apr 15, 30% of total spend on account – no invoice raisedThe only sales invoice raised in the year was 31 Mar 15 for £30,000
What balance would appear in the sales ledger & any provisions relating to income as at:
31 Jan 15
28 Feb 15
31 Mar 15
30 Apr 15Peter – this is an impossible task!
How many marks are available for these questions and therefore how many points are you expected to make / expecting me to make?
Where are the questions from and why are there no answers available that would explain the solutions?
These are nothing like the questions that you are likely to face in P7. The first 3 are possibly F8 standard and, even then, the first and last questions could have come from an F3 paper
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