HKSI Paper 16 cheat sheet

Hong Kong sponsor representatives: evidence and the listing application

• Identify the applicant, transaction and sponsor responsibility.

• Test a narrative against appropriate evidence.

• Resolve contradictions and preserve material qualifications.

• Representatives and principals share foundations but have distinct roles.

• Cost of sales includes carriage inwards and excludes carriage outwards

• Closing inventory affects both the trading account and the balance sheet

• Drawings reduce capital and are never an expense

• An increase in the doubtful debts provision is charged to profit and loss

• Capital = opening capital + net profit − drawings

• Issued capital and actual cash received are different concepts.

• Share premium in the supplied par-value model is not sales revenue.

• Distinguish equity distributions from interest on liabilities.

• Prime cost includes direct materials consumed, direct labour and direct expenses

• Cost of production adds production overheads and adjusts for work in progress

• Selling and administration costs are not production costs

• Inventory is valued at the lower of cost and net realisable value

• Link each procedure to an assertion or criterion.

• Tracing and vouching direction can change the question answered.

• Existence, ownership, completeness and valuation need distinct evidence.

• Sample size does not cure an incomplete or biased population.

• A count or walkthrough alone does not prove every reporting assertion.