Accrual accounting requires company to record revenues when it receives cash from customers.（）

?Read the article about the cash basic of accounting.

?Choose the best word to fill each gap, from A, B, C or D.

?For each question 19—33, mark one letter (A, B, C or D) on your Answer Sheet.

?There is an example at the beginning.

Under the cash basis of accounting, a firm recognizes revenues from selling goods and providing Services in the period when it receives cash from customers. It reports (19) in the period when it makes cash expenditures for merchandise, salaries, insurance, taxes, and (20) items. To illustrate the measurement of performance under the cash basis of accounting, consider the following example.

Donald and Joanne Allens open a hardware store on January 1, Year 1. The firm receives $20,000 (21) cash from the Aliens and borrows $12,000 from a local bank. It must repay the loan on June 30, Year 1, with interest charged (22) the rate of 12 percent per year. The firm rents a store building on January 1, and pays 2 months' rent of $4,000 (23) . On January 1, it also pays the premium of $ 2,400 for property and liability insurance coverage for the year (24) December 31, Year 1. During January it acquires merchandise costing $40,000, (25) it purchases $26,000 for cash and $ 14,000 on account. Sales to customers during January total $50,000, of which $34,000 is for (26) and $16,000 is on account. The acquisition cost of the merchandise (27) during January is $32,000,and various employees receive $5,000 in salaries.

Lawyers, accountants, and (28) professionals are the principal entities that use the cash basis of ac counting. These professionals have (29) small investments in multiperiod assets, (30) buildings and equipment, and usually collect cash from clients soon after they (31) services. Most of these firms actually use a modified cash basis of accounting, under which they (32) the costs of buildings, equipment, and similar items as assets (33) .

Most individuals use the cash basis of accounting for the purpose of computing personal income and person al income taxes.

(19)

A．by using up

B．expenses

C．by spending

D．expense

Read the article about the cash basic of accounting.

Choose the best word to fill each gap, from A, B, Cor D.

For each question 19—33, mark one letter (A, B, C or D) on your Answer Sheet.

There is an example at the beginning.

Under the cash basis of accounting, a firm recognizes revenues from selling goods and providing services in the period when it receives cash from customers. It reports(19)…in the period when it makes cash expenditures for merchandise, salaries, insurance, taxes, and (20)…items. To illustrate the measurement of performance under the cash basis of accounting, consider the following example.

Donald and Joanne Aliens open a hardware store on January l, Year 1. The firm receives $ 20, 000 (21)…cash from the Aliens and borrows $ 12, 000 from a local bank. It must repay the loan on June 30, Year l, with interest charged (22)… the rate of 12 percent per year. The firm rents a store building on January l, and pays 2 months' rent of $ 4, 000 (23)…On January 1, it also pays the premium of $2, 400 for property and liability insurance coverage for the year (24)… December 31, Year 1. During January it acquires merchandise costing $ 40, 000, (25)… it purchases $ 26, 000 for cash and $ 14, 000 on account. Sales to customers during January total $ 50, 000, of which $ 34, 000 is for (26)…and $ 16, 000 is on account. The acquisition cost of the merchandise (27)…during January is $ 32, 000, and various employees receive $ 5, 000 in salaries.

Lawyers, accountants, and (28)…professionals are the principal entities that use the cash basis of accounting. These professionals have (29)… small investments in multiperiod assets, (30)…buildings and equipment, and usually collect cash from clients soon after they (31)…services. Most of these firms actually use a modified cash basis of accounting, under which they (32)…the costs of buildings, equipment, and similar items as assets (33)… .

Most individuals use the cash basis of accounting for the purpose of computing personal income and personal income taxes.

(19)

A．by using up

B．expenses

C．by spending

D．expense

—Read the article about the cash basic of accounting.

—Choose the best word to fill each gap, from A, B, C or D.

—For each question 19—33, mark one letter (A, B, C or D) on your Answer Sheet.

—There is an example at the beginning.

Under the cash basis of accounting, a firm recognizes revenues from selling goods and providing Services in the period when it receives cash from customers. It reports (19)______ in the period when it makes cash expenditures for merchandise, salaries, insurance, taxes, and (20)______ items. To illustrate the measurement of performance under the cash basis of accounting, consider the following example.

Donald and Joanne Allens open a hardware store on January 1, Year 1. The firm receives $20,000 (21)______ cash from the Aliens and borrows $12,000 from a local bank. It must repay the loan on June 30, Year 1, with interest charged (22)______ the rate of 12 percent per year. The firm rents a store building on January 1, and pays 2 months' rent of $4,000 (23)______. On January 1, it also pays the premium of $ 2,400 for property and liability insurance coverage for the year (24)______ December 31, Year 1. During January it acquires merchandise costing $40,000, (25)______ it purchases $26,000 for cash and $ 14,000 on account. Sales to customers during January total $50,000, of which $34,000 is for (26)______ and $16,000 is on account. The acquisition cost of the merchandise (27)______ during January is $32,000,and various employees receive $5,000 in salaries.

Lawyers, accountants, and (28)______ professionals are the principal entities that use the cash basis of ac counting. These professionals have (29)______ small investments in multiperiod assets, (30)______ buildings and equipment, and usually collect cash from clients soon after they (31)______ services. Most of these firms actually use a modified cash basis of accounting, under which they (32)______ the costs of buildings, equipment, and similar items as assets (33)______.

Most individuals use the cash basis of accounting for the purpose of computing personal income and person al income taxes.

A．by using up

B．expenses

C．by spending

D．expense

IFRS requires extensive use of fair values when recording the acquisition of a subsidiary.

Which of the following comments, regarding the use of fair values on the acquisition of a subsidiary, is correct?

A.The use of fair value to record a subsidiary’s acquired assets does not comply with the historical cost principle

B.The use of fair values to record the acquisition of plant always increases consolidated post-acquisition depreciation charges compared to the corresponding charge in the subsidiary’s own financial statements

C.Cash consideration payable one year after the date of acquisition needs to be discounted to reflect its fair value

D.Patents must be included as part of goodwill because it is impossible to determine the fair value of an acquired patent, as, by definition, patents are unique

Despite helping to record events, photos could damage our memories. Researchers found people who take pictures have【C1】______remembering what actually happened. This phenomenon has been named "photo-taking impairment effect". From childrens birthdays to that long-awaited family holiday, we all want to remember those【C2】______moments with a photograph.【C3】______if youre one of those people who cant stop【C4】______beware then—you could【C5】______forgetting it all in a flash. A study has found that taking too many photos may prevent us from forming detailed memories. Researchers from Harvard University, the University of Wisconsin-Madison and Columbia University in the U.S. recently found that many people now use the Internet【C6】______a memory. They claimed that when someone wants to know something they now use the Internet【C7】______an "external memory" just as computers use an external hard【C8】______. The study continued that we are now so【C9】______on smartphones and laptops, we go into "withdrawal when we cant find out something【C10】______". Far from helping us to【C11】______the moment, it could mean we miss whats going on right in front of our noses. Researchers led a group of students around a museum and asked them to either photograph or try to remember certain works of art and historical【C12】______. The next day, their memory was tested. It showed they were【C13】______at recognizing objects they had photographed than those they had only looked at. They were also poorer at【C14】______details of the objects they had taken pictures of. Dr Linda Henkel, who conducted the study at Fair field University in Connecticut, said: "People so often【C15】______out their cameras almost mindlessly. When people rely on technology to remember for them, it can have a【C16】______impact on how well they remember their【C17】______." Previous studies have suggested that【C18】______old photos can help us remember, but only if we spend long enough doing it. "In order to remember, we have to【C19】______and interact with the photos, rather than just【C20】______them," said Dr Henkel.

【C1】

A．puzzle

B．trouble

C．difficulty

D．fuss

Is a decentralized, distributed and public digital ledger that is used to record transactions across many computers so that the record cannot be alterred retroactively without the alteration of all subsequent blocks and the collusion ?of the network().

A.Cloud service

B.Blockchain

C.Internet of things

D.Artificial intellingence

2 It was the final day of a two-week-long audit of Van Buren Company, a longstanding client of Fillmore Pierce Auditors.

In the afternoon, Anne Hayes, a recently qualified accountant and member of the audit team, was following an audit

trail on some cash payments when she discovered what she described to the audit partner, Zachary Lincoln, as an

‘irregularity’. A large and material cash payment had been recorded with no recipient named. The corresponding

invoice was handwritten on a scrap of paper and the signature was illegible.

Zachary, the audit partner, was under pressure to finish the audit that afternoon. He advised Anne to seek an

explanation from Frank Monroe, the client’s finance director. Zachary told her that Van Buren was a longstanding client

of Fillmore Pierce and he would be surprised if there was anything unethical or illegal about the payment. He said

that he had personally been involved in the Van Buren audit for the last eight years and that it had always been

without incident. He also said that Frank Monroe was an old friend of his from university days and that he was certain

that he wouldn’t approve anything unethical or illegal. Zachary said that Fillmore Pierce had also done some

consultancy for Van Buren so it was a very important client that he didn’t want Anne to upset with unwelcome and

uncomfortable questioning.

When Anne sought an explanation from Mr Monroe, she was told that nobody could remember what the payment

was for but that she had to recognise that ‘real’ audits were sometimes a bit messy and that not all audit trails would

end as she might like them to. He also reminded her that it was the final day and both he and the audit firm were

under time pressure to conclude business and get the audit signed off.

When Anne told Zachary what Frank had said, Zachary agreed not to get the audit signed off without Anne’s support,

but warned her that she should be very certain that the irregularity was worth delaying the signoff for. It was therefore

now Anne’s decision whether to extend the audit or have it signed off by the end of Friday afternoon.

Required:

(a) Explain why ‘auditor independence’ is necessary in auditor-client relationships and describe THREE threats

to auditor independence in the case. (9 marks)