McqMate
| 1. |
Auditing refers to |
| A. | Preparation and checking of account |
| B. | Examination of accounts of business units only |
| C. | Examination of accounts of professional accountants |
| D. | Checking of vouchers |
| Answer» C. Examination of accounts of professional accountants | |
| 2. |
Main object of auditing is |
| A. | Detection of errors |
| B. | To find out whether P&L a/c & B/S show true and fair state affairs |
| C. | Detection of frauds |
| D. | Detection and prevention of frauds and errors. |
| Answer» B. To find out whether P&L a/c & B/S show true and fair state affairs | |
| 3. |
Auditing is luxury for a |
| A. | Joint stock company |
| B. | Partnership firm |
| C. | Small shop-keeper |
| D. | Government company |
| Answer» C. Small shop-keeper | |
| 4. |
Auditing is compulsory for |
| A. | Small scale business enterprises |
| B. | All partnership firms |
| C. | All joint stock companies |
| D. | All proprietary concerns |
| Answer» C. All joint stock companies | |
| 5. |
Propriety audit refers to |
| A. | Verification of accounts |
| B. | Examination accounts of propriety concerns |
| C. | Enquiry against justification and necessity of expresses |
| D. | Audit of Govt. companies |
| Answer» C. Enquiry against justification and necessity of expresses | |
| 6. |
Propriety is normally undertaken in case of |
| A. | Joint stock company |
| B. | Government company |
| C. | Statutory corporation |
| D. | Govt. departments |
| Answer» D. Govt. departments | |
| 7. |
Interim audit refers to |
| A. | Examination of accounts continuously |
| B. | Examination of accounts intermittently |
| C. | Audit work to find out and check interim profits of a company |
| D. | Carrying on audit for bonus purposes at the end of the year |
| Answer» C. Audit work to find out and check interim profits of a company | |
| 8. |
Final audit implies |
| A. | Audit of accounts at the end of the year |
| B. | Finally checking of accounts to reveal frauds |
| C. | Audit for submitting report immediately at the end of the year |
| D. | Audit of banking companies |
| Answer» A. Audit of accounts at the end of the year | |
| 9. |
A continuous audit is specially needed for |
| A. | Any trading concern |
| B. | Smaller concerns |
| C. | Banking companies |
| D. | Any manufacturing companies |
| Answer» C. Banking companies | |
| 10. |
Joint audit implies |
| A. | Audit of two concerns together |
| B. | Audit of joint stock companies |
| C. | Audit of joint sector companies |
| D. | Audit by two firms of C.A |
| Answer» D. Audit by two firms of C.A | |
| 11. |
Management audit means |
| A. | Audit undertaken on behalf of the management |
| B. | Evaluating performance of various management processes and functions |
| C. | Audit undertaken on behalf of Govt. to punish management |
| D. | Compulsory audit |
| Answer» B. Evaluating performance of various management processes and functions | |
| 12. |
Systems audit implies |
| A. | Systematic examination of accounts |
| B. | Audit undertaken to improve auditing systems |
| C. | Enquiring accounting and control systems |
| D. | Checking the performance of management |
| Answer» C. Enquiring accounting and control systems | |
| 13. |
Internal audit means |
| A. | Audit undertaken to ascertain truth and fairness of state of affairs |
| B. | Audit undertaken internally to evaluate management functions |
| C. | Audit undertaken by employees of the organization to check financial irregularities |
| D. | Audit by independent auditor to improve internal affairs |
| Answer» C. Audit undertaken by employees of the organization to check financial irregularities | |
| 14. |
Internal audit is |
| A. | Compulsory for a company with paid-up capital of Rs. 25 lakh and above |
| B. | Voluntary for a company |
| C. | Not necessary for a company |
| D. | Necessary for a company |
| Answer» B. Voluntary for a company | |
| 15. |
Internal audit is undertaken |
| A. | By independent auditor |
| B. | Statutorily appointed auditor |
| C. | By a person appointed by the management |
| D. | By Government auditor |
| Answer» C. By a person appointed by the management | |
| 16. |
Internal auditor is appointed by the |
| A. | Management |
| B. | Shareholders |
| C. | Government |
| D. | C & A-G |
| Answer» A. Management | |
| 17. |
The object of internal check is to |
| A. | Control wastage of resources |
| B. | Prevent errors and frauds |
| C. | Verify the cash receipts and payments |
| D. | Facilitate quick decision by the management |
| Answer» B. Prevent errors and frauds | |
| 18. |
Effective internal check system reduces |
| A. | The liability of auditor |
| B. | Work of auditor |
| C. | Both work as well as auditor |
| D. | Responsibilities of an auditor |
| Answer» B. Work of auditor | |
| 19. |
Internal check is a part of |
| A. | Internal audit |
| B. | Internal accounting |
| C. | External audit |
| D. | Internal control |
| Answer» D. Internal control | |
| 20. |
Internal check is carried on by |
| A. | Special staff |
| B. | Internal auditor |
| C. | Accountant |
| D. | None of the above |
| Answer» D. None of the above | |
| 21. |
Internal check is suitable for |
| A. | Larger concerns |
| B. | Smaller concerns |
| C. | Petty shop- keepers |
| D. | None of the above |
| Answer» A. Larger concerns | |
| 22. |
Internal check is carried on by |
| A. | Staff specially appointed for the purpose |
| B. | Internal auditor |
| C. | The members of the staff among themselves |
| D. | Supervisor of the staff |
| Answer» C. The members of the staff among themselves | |
| 23. |
Internal check is essential for |
| A. | Petty traders |
| B. | Cash transactions in a large concern |
| C. | A concern using automatic equipments |
| D. | None of the above |
| Answer» B. Cash transactions in a large concern | |
| 24. |
Misappropriation of goods may be checked by |
| A. | Proper supervision over stock |
| B. | Checking of employees |
| C. | Punishment of employees |
| D. | None of the above |
| Answer» A. Proper supervision over stock | |
| 25. |
Window dressing implies |
| A. | Curtailment of expenses |
| B. | Checking wastages |
| C. | Under- valuation of assets |
| D. | Over- valuation of assets |
| Answer» D. Over- valuation of assets | |
| 26. |
Falsification of accounts is undertaken by |
| A. | Auditors |
| B. | Clerks |
| C. | Accountants |
| D. | Responsible officials |
| Answer» D. Responsible officials | |
| 27. |
Errors of omission are |
| A. | Technical errors |
| B. | Error of principle |
| C. | Compensating errors |
| D. | None of the above |
| Answer» A. Technical errors | |
| 28. |
Test checking refers to |
| A. | Testing of accounting records |
| B. | Testing of honesty of employees |
| C. | Intensive checking of a selected number of transactions |
| D. | Checking of all transactions recorded |
| Answer» C. Intensive checking of a selected number of transactions | |
| 29. |
Test checking should not be applied to |
| A. | Sales book |
| B. | Purchase book |
| C. | Bank reconciliation statement |
| D. | Bills book |
| Answer» C. Bank reconciliation statement | |
| 30. |
Test checking should not be applied to |
| A. | Purchase book |
| B. | Sales book |
| C. | Stock book |
| D. | Cash book |
| Answer» D. Cash book | |
| 31. |
Vouching implies |
| A. | Inspection of receipts |
| B. | Examination of vouchers to check authenticity of records |
| C. | Surprise checking of accounting records |
| D. | Examining the various assets |
| Answer» B. Examination of vouchers to check authenticity of records | |
| 32. |
Payment for goods purchased should be vouched with the help of |
| A. | Creditors statement |
| B. | Correspondence with suppliers |
| C. | Cash memos |
| D. | Ledger accounts |
| Answer» A. Creditors statement | |
| 33. |
Payment for wages should be vouched with the help of |
| A. | Piece work statement |
| B. | Wage sheets |
| C. | Minute book |
| D. | Bank pass book |
| Answer» B. Wage sheets | |
| 34. |
Payment for building purchased should be vouched with the help of |
| A. | Title deed |
| B. | Correspondence with Brokers |
| C. | Building account |
| D. | Cash book |
| Answer» A. Title deed | |
| 35. |
Investment should be vouched with the help of |
| A. | Commission book |
| B. | Brokers book |
| C. | Sales deeds |
| D. | Minute book |
| Answer» B. Brokers book | |
| 36. |
Receipt from debtors should be vouched with the help of |
| A. | Counterfoil Receipts cash book |
| B. | Suppliers statement |
| C. | Sales Deeds |
| D. | General Ledger |
| Answer» A. Counterfoil Receipts cash book | |
| 37. |
Receipt from sale of investment should be vouched with the help of |
| A. | Brokers Budget Notes |
| B. | Brokers Sold Notes |
| C. | Minute Book |
| D. | Inventory of investment |
| Answer» B. Brokers Sold Notes | |
| 38. |
Purchases returns should be vouched with the help of |
| A. | Bought Notes |
| B. | Credit Notes |
| C. | Goods inward Book |
| D. | Cash Book |
| Answer» B. Credit Notes | |
| 39. |
Verification refers to |
| A. | Examination of journal and ledger |
| B. | Examination of vouchers related to assets |
| C. | Examining the physical existence and valuation of assets |
| D. | Calculation of value of assets |
| Answer» C. Examining the physical existence and valuation of assets | |
| 40. |
Object of verification of assets |
| A. | Physical verification of assets |
| B. | Checking value of assets |
| C. | Examining the authority of their acquisition |
| D. | All of the above |
| Answer» D. All of the above | |
| 41. |
Which of the following statements is correct? |
| A. | Valuation is a part of verification |
| B. | Verification is a part of valuation |
| C. | Valuation has nothing to do with verification |
| D. | Auditor is a valuer |
| Answer» A. Valuation is a part of verification | |
| 42. |
Stock should be valued at |
| A. | Cost |
| B. | Market price |
| C. | Cost price or market price whichever is lower |
| D. | Cost less depreciation |
| Answer» C. Cost price or market price whichever is lower | |
| 43. |
Valuation of Fixed Assets is based on the concept |
| A. | Going concern |
| B. | Conservation |
| C. | Money measurement |
| D. | Dual aspect |
| Answer» A. Going concern | |
| 44. |
Valuation means |
| A. | Calculating value of assets |
| B. | Checking the value of assets |
| C. | Checking the physical existence of assets |
| D. | Examining the authenticity of assets |
| Answer» B. Checking the value of assets | |
| 45. |
“ Auditor is not valuer” was stated in |
| A. | Kingston Cotton Mills case |
| B. | London & General Bank case |
| C. | Lee . V . Neuchatel Co. Ltd case |
| D. | London oil Storage Co. case |
| Answer» A. Kingston Cotton Mills case | |
| 46. |
Fixed assets are valued at |
| A. | Cost |
| B. | Market price |
| C. | Cost price or market price whichever is less |
| D. | Cost less depreciation |
| Answer» D. Cost less depreciation | |
| 47. |
Floating assets are valued at |
| A. | Cost |
| B. | Market price |
| C. | Cost price or market price whichever is less |
| D. | Cost less depreciation |
| Answer» C. Cost price or market price whichever is less | |
| 48. |
The scope of work of internal audit is decided by the |
| A. | Share holders |
| B. | Management |
| C. | To improve financial control |
| D. | All of the above |
| Answer» D. All of the above | |
| 49. |
Outstanding expenses should be verified with the help of |
| A. | Cash book |
| B. | Balance book |
| C. | Journal proper |
| D. | None of the above |
| Answer» C. Journal proper | |
| 50. |
Book debts should be verified with the help of |
| A. | Balance sheet |
| B. | Amount received from Debtors |
| C. | Debtors schedule |
| D. | Certificate from the management |
| Answer» C. Debtors schedule | |
| 51. |
Investments in hand should be verified with the help of |
| A. | Schedule of investments |
| B. | Balance sheet |
| C. | Inspection of securities |
| D. | Certificate from the bank |
| Answer» C. Inspection of securities | |
| 52. |
First auditor of a company is appointed by the |
| A. | Shareholders |
| B. | Central Govt. |
| C. | Company Law Board |
| D. | Board of Directors |
| Answer» D. Board of Directors | |
| 53. |
Which of the following persons is qualified to be a company auditor? |
| A. | An employee of the company |
| B. | A body corporate |
| C. | A person who is indebted to the company for an amount exceeding Rs. 1000 |
| D. | A practicing chartered accountant |
| Answer» D. A practicing chartered accountant | |
| 54. |
The first auditor of a company will hold office |
| A. | For a period of one year |
| B. | Till holding of statutory meeting |
| C. | Till the conclusion of first annual general meeting |
| D. | Till a new auditor is appointed |
| Answer» C. Till the conclusion of first annual general meeting | |
| 55. |
Normally, a company auditor is appointed by the |
| A. | Central Government |
| B. | Shareholders |
| C. | Board of Directors |
| D. | Company Law board |
| Answer» B. Shareholders | |
| 56. |
An auditor in a casual vacancy is appointed by the |
| A. | Board of Directors |
| B. | Shareholders |
| C. | Central Government |
| D. | Company Law board |
| Answer» A. Board of Directors | |
| 57. |
If an auditor is not appointed at annual general meeting, he is appointed by the |
| A. | The Central Government |
| B. | Board of Directors |
| C. | Shareholders |
| D. | Company Law board |
| Answer» A. The Central Government | |
| 58. |
A vacancy caused by resignation of the auditor is filled by |
| A. | Board of Directors |
| B. | At the general meeting of shareholders |
| C. | By the Central Government |
| D. | By the Company Law board |
| Answer» B. At the general meeting of shareholders | |
| 59. |
A special auditor is appointed by the |
| A. | Shareholders |
| B. | Board of Directors |
| C. | Central Government |
| D. | C & A - G |
| Answer» C. Central Government | |
| 60. |
A government Co. auditor may be appointed by the |
| A. | C & A – G |
| B. | Shareholders |
| C. | Central Government |
| D. | None of the above |
| Answer» A. C & A – G | |
| 61. |
A company auditor can be removed before expiry of his term by |
| A. | Shareholders |
| B. | Board of Directors |
| C. | Central Government |
| D. | State Government |
| Answer» B. Board of Directors | |
| 62. |
Remuneration of a company auditor is fixed by the |
| A. | Shareholders |
| B. | Board of Directors |
| C. | Central Government |
| D. | Appointing authority |
| Answer» D. Appointing authority | |
| 63. |
A company auditor, in general has to submit his report to |
| A. | Shareholders |
| B. | Board of Directors |
| C. | Central Government |
| D. | C & A – G |
| Answer» A. Shareholders | |
| 64. |
An auditor of Government company has to submit his report to the |
| A. | Shareholders |
| B. | Central Government |
| C. | C & A – G |
| D. | Ministry concerned |
| Answer» B. Central Government | |
| 65. |
Internal auditor has to submit report to |
| A. | Shareholders |
| B. | Government |
| C. | Company Law board |
| D. | None of the above |
| Answer» D. None of the above | |
| 66. |
Auditor should be dutiful like a |
| A. | A watch dog |
| B. | A blood hound |
| C. | A detective |
| D. | An insurer |
| Answer» A. A watch dog | |
| 67. |
Auditor, in general is an |
| A. | Employee of the company |
| B. | Agent of the company |
| C. | Agent of the shareholders |
| D. | None of the above |
| Answer» C. Agent of the shareholders | |
| 68. |
While checking allotment of shares the auditor should see that it is made within |
| A. | 100 days of issue of prospectus |
| B. | 120 days of issue of prospectus |
| C. | 150 days of issue of prospectus |
| D. | 80 days of issue of prospectus |
| Answer» B. 120 days of issue of prospectus | |
| 69. |
Which of the following percentage of nominal amount of shares should be received with application |
| A. | 10 |
| B. | 15 |
| C. | 5 |
| D. | 6 |
| Answer» C. 5 | |
| 70. |
While checking allotment, auditor should see that amount |
| A. | Equal to estimated fixed capital is received |
| B. | Equal to estimated working capital is received |
| C. | Necessary for purchase of land & building has been received |
| D. | None of the above |
| Answer» D. None of the above | |
| 71. |
For restriction regarding allotment of shares, the auditor should refer to section |
| A. | 25 |
| B. | 75 |
| C. | 64 |
| D. | 69 |
| Answer» D. 69 | |
| 72. |
For checking that allotment of shares has been properly made, an auditor should refer to |
| A. | Cash Book |
| B. | Shares Ledger |
| C. | Directors minutes book |
| D. | Shareholders minutes Book |
| Answer» C. Directors minutes book | |
| 73. |
Auditor should see that the return of allotment has been sent to Registrar within |
| A. | 1 month |
| B. | 2 months |
| C. | 3 months |
| D. | 40 days |
| Answer» A. 1 month | |
| 74. |
Application money should not be withdrawn unless |
| A. | Allotment is made |
| B. | Cash book has been prepared |
| C. | Certificate to commence business obtained |
| D. | Certificate of incorporation obtained |
| Answer» C. Certificate to commence business obtained | |
| 75. |
Shares issued for consideration other than cash should be vouched with the help of |
| A. | Directors minutes book |
| B. | Shareholders minutes book |
| C. | Contract with the party concerned |
| D. | Cash book |
| Answer» C. Contract with the party concerned | |
| 76. |
A company can issue Redeemable Preference shares, if authorized by |
| A. | Memorandum of association |
| B. | Articles of association |
| C. | Companies Act, 1956 |
| D. | None of the above |
| Answer» B. Articles of association | |
| 77. |
Auditor should see that amount received for premium on issue of shares should be shown in |
| A. | Subscribed capital |
| B. | Capital Reserve Account |
| C. | Share Premium account |
| D. | Paid- up capital account |
| Answer» C. Share Premium account | |
| 78. |
Share premium account should be shown in the Balance sheet under |
| A. | Paid-up capital |
| B. | Subscribed capital |
| C. | Reserves & surplus |
| D. | Reserved capital |
| Answer» C. Reserves & surplus | |
| 79. |
Amount of share premium may be utilized for |
| A. | Payment of dividend |
| B. | Writing of preliminary expenses |
| C. | Routine expenses |
| D. | Purchase of fixed assets |
| Answer» B. Writing of preliminary expenses | |
| 80. |
Shares can be issued at discount under section |
| A. | 76 |
| B. | 75 |
| C. | 79 |
| D. | 89 |
| Answer» C. 79 | |
| 81. |
Interest on calls paid in advance, according to Table A, should not exceed |
| A. | 6% |
| B. | 5% |
| C. | 10% |
| D. | 14% |
| Answer» A. 6% | |
| 82. |
Shares can be issued at premium, under section |
| A. | 76 |
| B. | 75 |
| C. | 78 |
| D. | 79 |
| Answer» C. 78 | |
| 83. |
A company can accept calls in advance from its shareholders under section |
| A. | 82 |
| B. | 79 |
| C. | 92 |
| D. | 78 |
| Answer» C. 92 | |
| 84. |
Shares can be issued at discount only after |
| A. | 2 years of the commencement of the business |
| B. | 1 year of the commencement of the business |
| C. | 3 years of the commencement of the business |
| D. | 5 years of the commencement of the business |
| Answer» B. 1 year of the commencement of the business | |
| 85. |
With regard to issue of share warrants to the bearers, the auditor should see that is it |
| A. | Permitted by Memorandum of Association |
| B. | Sanctioned by the Central Government |
| C. | Permitted by the Board of Directors |
| D. | None of the above |
| Answer» B. Sanctioned by the Central Government | |
| 86. |
For the for festure of shares, the auditor should check that it is permitted |
| A. | by Memorandum of Association |
| B. | by articles of association |
| C. | under Companies Act, 1956 |
| D. | None of the above |
| Answer» B. by articles of association | |
| 87. |
Premium received on issue of shares, later forfeited, should be transferred to |
| A. | Capital reserve |
| B. | Shares forfeited Account |
| C. | Capital Account |
| D. | None of the above |
| Answer» D. None of the above | |
| 88. |
With regard to issue of share certificates, the auditor should refer to section |
| A. | 110 |
| B. | 113 |
| C. | 114 |
| D. | 123 |
| Answer» B. 113 | |
| 89. |
Increase in share capital is permitted by |
| A. | Memorandum of Association |
| B. | Articles of association |
| C. | Court |
| D. | Companies Act, 1956 |
| Answer» B. Articles of association | |
| 90. |
Divisible profit should not include |
| A. | Interest on capital |
| B. | Capital |
| C. | Depreciation |
| D. | None of the above |
| Answer» D. None of the above | |
| 91. |
Dividend can not be paid out of |
| A. | Capital profit |
| B. | Capital receipts |
| C. | Revenue receipts |
| D. | None of the above |
| Answer» B. Capital receipts | |
| 92. |
Capital profit imply profit earned |
| A. | Through business transaction |
| B. | From capital |
| C. | From sale of fixed assets |
| D. | From sale of current assets |
| Answer» C. From sale of fixed assets | |
| 93. |
Capital profits |
| A. | Can be paid by way of dividends |
| B. | Cannot paid by way of dividends |
| C. | Can be paid by way of dividend under certain conditions |
| D. | None of the above |
| Answer» C. Can be paid by way of dividend under certain conditions | |
| 94. |
If there is capital loss, the auditor should |
| A. | Not allow payment of dividend |
| B. | Allow payment of dividends |
| C. | Allow payment of dividends after making such losses good |
| D. | None of the above |
| Answer» B. Allow payment of dividends | |
| 95. |
A company auditor should see that the dividend should be paid |
| A. | After charging depreciation |
| B. | Without charging depreciation |
| C. | Out of capital |
| D. | None of the above |
| Answer» A. After charging depreciation | |
| 96. |
In his report, the auditor gives his |
| A. | Judgment |
| B. | Opinion |
| C. | Guarantee to correctness of accounts |
| D. | True state of affairs |
| Answer» B. Opinion | |
| 97. |
Civil liability of an auditor implies liability for |
| A. | Misappropriation of cash |
| B. | Misappropriation of goods |
| C. | Fraud |
| D. | Misfeasance |
| Answer» D. Misfeasance | |
| 98. |
An auditor can be held liable under companies Act 1949 for |
| A. | Negligence |
| B. | Criminal offence |
| C. | Professional misconduct |
| D. | Breach of contract |
| Answer» C. Professional misconduct | |
| 99. |
Investigation of books of accounts and records is : |
| A. | Not legally compulsory |
| B. | Compulsory |
| C. | Compulsory as per companies act |
| D. | Compulsory as Income Tax Act |
| Answer» A. Not legally compulsory | |
| 100. |
Investigation is carries on behalf of |
| A. | Manager |
| B. | Employee |
| C. | Client |
| D. | On behalf of owner and third parties |
| Answer» D. On behalf of owner and third parties | |
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