McqMate
These multiple-choice questions (MCQs) are designed to enhance your knowledge and understanding in the following areas: Bachelor of Commerce (B Com) , Staff Selection Commission (SSC) .
| 101. |
Which of the following sections deal with qualifications of the auditor ? |
| A. | Section 226 (1) and section 226(2) |
| B. | Section 224 (1) and section 224 (2) |
| C. | Section 226 (3) and section 226(4) |
| D. | Section 224(3) & Sec.224 |
| Answer» A. Section 226 (1) and section 226(2) | |
| 102. |
Which of the following statement is not true? |
| A. | A partnership firm can be appointed as a statutory auditor of limited company |
| B. | Appointment can be made in the name of the firm |
| C. | Majority of the partners should be practicing in India |
| D. | All partners should be chartered accountants |
| Answer» C. Majority of the partners should be practicing in India | |
| 103. |
As per the requirements of section 226(3) and 226(4) a person is disqualified from being appointed as a statutory auditor if he holds |
| A. | Equity shares or debentures of the company |
| B. | Equity shares carrying voting of the company |
| C. | Shares carrying voting rights of the company |
| D. | Security carrying voting rights of the company |
| Answer» D. Security carrying voting rights of the company | |
| 104. |
The board of directors shall appoint first auditor of a company |
| A. | Within one month of completion of capital subscription state of the company |
| B. | Within one month of the promotion of the company |
| C. | Within one month of the commencement of the business of the company |
| D. | Within one month of incorporation of the company |
| Answer» D. Within one month of incorporation of the company | |
| 105. |
The term of the auditor ship of first auditor would be from the date of appointment till__ |
| A. | the conclusion of statutory meeting |
| B. | the conclusion of first annual general meeting |
| C. | the conclusion of next annual general meeting |
| D. | the date of removal |
| Answer» B. the conclusion of first annual general meeting | |
| 106. |
In case the directions fail to appoint first auditor (s), the shareholders shall appoint them at…..by passing a resolution |
| A. | a general meeting |
| B. | first annual general meeting |
| C. | statutory meeting |
| D. | annual general meeting |
| Answer» A. a general meeting | |
| 107. |
Which of the following statement is not true regarding appointment of statutory auditor by the Central Government? |
| A. | Such powers have been conferred upon it by section 224(3) |
| B. | If a company fails to appoint an auditor at a general meeting |
| C. | If an auditor refuses to accept appointment, the powers of the Central |
| D. | None of the above |
| Answer» B. If a company fails to appoint an auditor at a general meeting | |
| 108. |
If a casual vacancy in the office of auditor arises by his resignation it should only be filled by the company in a…….. |
| A. | Board meeting |
| B. | Extraordinary general meeting |
| C. | General meeting |
| D. | Annual general meeting |
| Answer» C. General meeting | |
| 109. |
For the purposes of section 224(IB) the number of partners of a firm which shall be taken into account would be as on the date of _ |
| A. | Completion of audit |
| B. | Auditor’s report |
| C. | Acceptance of audit |
| D. | Starting of audit work |
| Answer» C. Acceptance of audit | |
| 110. |
Which of the following is counted for the purposes of section 224(IB) the number of partners of a firm which shall be taken into account would be as on the data of ___ |
| A. | Joint audit |
| B. | Audit to non-profit companies |
| C. | Audit of unlimited companies |
| D. | All of the above |
| Answer» D. All of the above | |
| 111. |
Mr. A, a Charted Accountant, has nineteen audits, Out of following audits which audits should he accept to ensure he doesn’t violate provisions of section 224(IB) __ |
| A. | Audit of a private company |
| B. | Audit of branch of a foreign company |
| C. | Audit of two branches of an Indian company |
| D. | All of them |
| Answer» D. All of them | |
| 112. |
Which audit out of the following would not be regarded as one audit for the purposes of section 224(IB)? |
| A. | Audit of one branch each of two different companies |
| B. | Joint audit |
| C. | Audit head office & branches |
| D. | Audit of one or more branches of a company |
| Answer» A. Audit of one branch each of two different companies | |
| 113. |
The auditor of a Government company is appointed by the C & AG. His remuneration is fixed by__ |
| A. | The C & AG |
| B. | The shareholders |
| C. | The shareholders at an annual general meeting |
| D. | The board of directors |
| Answer» B. The shareholders | |
| 114. |
The section which contains provisions regarding remuneration of the auditor is_ |
| A. | Section 224(9) |
| B. | Section 224(7) |
| C. | Section 224(8) |
| D. | Section 224(6) |
| Answer» C. Section 224(8) | |
| 115. |
The authority to remove the first auditor before the expiry of term is with_ |
| A. | The shareholders in a general meeting |
| B. | The shareholders in the first annual General meeting |
| C. | The board of directors |
| D. | the Central Government |
| Answer» A. The shareholders in a general meeting | |
| 116. |
Which of the following statements is not correct regarding removal of first auditor before expiry of the term? |
| A. | He is removed at a general meeting |
| B. | The shareholders are authorized to do so |
| C. | The approval of the Central Government is required for such removal |
| D. | The provisions for such removal are contained in section 224(7) |
| Answer» C. The approval of the Central Government is required for such removal | |
| 117. |
The retiring auditor does not have a right to___ |
| A. | make written representations |
| B. | get his representations circulated. |
| C. | be heard at the meeting |
| D. | speak as a member of the company |
| Answer» D. speak as a member of the company | |
| 118. |
Who out of the following cannot be appointed as a statutory auditor of the company? |
| A. | Erstwhile director |
| B. | Internal auditor |
| C. | Relative of a director |
| D. | Only (b) and (c) |
| Answer» B. Internal auditor | |
| 119. |
A statutory auditor has a right of access at all times to |
| A. | Books and accounts of a company |
| B. | Books, accounts and documents of the company |
| C. | Books, accounts and vouchers of the company |
| D. | Notices and documents of the company |
| Answer» C. Books, accounts and vouchers of the company | |
| 120. |
The auditor has a right to |
| A. | Obtain information and explanation |
| B. | Obtain information and explanation from the employees and officers |
| C. | Obtain information and explanation necessary for the purpose of audit |
| D. | Both (b) and (c) |
| Answer» D. Both (b) and (c) | |
| 121. |
The principal auditor, as per clarification issued by the ICAI, does not have any right to |
| A. | Inspect working papers of the branch auditor |
| B. | Visit branches |
| C. | Seek information necessary for audit purposes |
| D. | Incorporate the branch audit report in his audit report |
| Answer» A. Inspect working papers of the branch auditor | |
| 122. |
Under which of the following section auditor has a duty to enquire into six specified matters and report by exception? |
| A. | Section 227(4A) |
| B. | Section 227 (IA) |
| C. | Section 227 (2) |
| D. | Section 227(3) |
| Answer» A. Section 227(4A) | |
| 123. |
The auditor has to enquire, under section 227 (IA) into different aspects, related to shares allotted for cash for the purpose of auditor include |
| A. | Shares against whose allotment cash has actually been received |
| B. | Shares allotted for consideration other than cash |
| C. | Shares allotted against a debt payable |
| D. | All of them |
| Answer» D. All of them | |
| 124. |
Right to visit branches has been given to the auditor under which section? |
| A. | Section 222(3) |
| B. | Section 228(2) |
| C. | Section 228(4) |
| D. | Section 228(3) |
| Answer» D. Section 228(3) | |
| 125. |
Which of the following statements with regard to rules regarding exemption from branch audit is not true? |
| A. | A branch office of a company can be granted exemption on the basis of quantum of activity criterion |
| B. | If a satisfactory arrangement of scrutiny check of the books of account of a branch office of a manufacturing company has been made, it can be exempted from branch audit |
| C. | Cost consideration should be considered as an important factor/ground for exemption from branch audit |
| D. | The auditor should state in his audit report that branch office is exempted by virtue of quantum of activity or any other basis |
| Answer» B. If a satisfactory arrangement of scrutiny check of the books of account of a branch office of a manufacturing company has been made, it can be exempted from branch audit | |
| 126. |
The branch auditor is appointed by – |
| A. | Shareholders in an annual general meeting |
| B. | Shareholders in general meeting |
| C. | Board of directors in board meeting |
| D. | Any of the above |
| Answer» B. Shareholders in general meeting | |
| 127. |
Special audit is conducted at the order of the Central Government. Which section gives such powers? |
| A. | Section 233(A) |
| B. | Section 233A |
| C. | Section 242(A) |
| D. | Section 242A |
| Answer» C. Section 242(A) | |
| 128. |
Who among the following can be appointed as special auditor by the Central Government? |
| A. | The statutory auditor |
| B. | chartered accountant in practice |
| C. | Any chartered accounted who is not in practice |
| D. | Both (a) and (b) |
| Answer» D. Both (a) and (b) | |
| 129. |
The scope of the audit including reference to the pronouncements of the ICAI, which the auditor adheres to, generally is communicated to the client in the ____
|
| A. | i) only |
| B. | Both (i) and (ii) |
| C. | Both (i) and (iii) |
| D. | All the above |
| Answer» B. Both (i) and (ii) | |
| 130. |
If any director is disqualified from being appointed under section 274(1) (g), the auditor should mention this fact in his audit report. For this purpose, how does he determine their eligibility : |
| A. | He obtains a representation from each director |
| B. | He obtains a management representation |
| C. | He enquiries from Registrar of Companies |
| D. | Any one of the above |
| Answer» A. He obtains a representation from each director | |
| 131. |
As per the ‘Statement on Qualification in Auditor’s Report’s issued by the ICAI, the auditor, Under section 227(3) has to gave a statement of fact on_ |
| A. | Proper books of account |
| B. | Accounting standards |
| C. | Cess payable under section 441A |
| D. | None of the above |
| Answer» C. Cess payable under section 441A | |
| 132. |
The date on auditor’s report should not be__ |
| A. | The data of AGM |
| B. | Later than the date on which the accounts are approved in board’s meeting |
| C. | Earlier than the date on which the accounts are approved by the management |
| D. | Both (a) and (b) |
| Answer» C. Earlier than the date on which the accounts are approved by the management | |
| 133. |
Section 227(2) of the Companies Act, requires the auditor to give his report to the members of the company on certain matters. Which of the following is not included in the above? |
| A. | Accounts examined by him |
| B. | Every balance sheet and profit and loss account laid before a general meeting during his tenure |
| C. | Every document that is a part of or ‘annexed to’ the balance sheet |
| D. | Every document which is attached to the profit and loss account |
| Answer» D. Every document which is attached to the profit and loss account | |
| 134. |
When restrictions that significantly affect the scope of the audit are imposed by the client, the auditor generally should issue which of the following opinion? |
| A. | Qualified opinion |
| B. | Disclaimer of opinion |
| C. | Adverse opinion |
| D. | Unqualified report with ‘an emphasis of matter’ paragraph; |
| Answer» A. Qualified opinion | |
| 135. |
Which of the following report not result in qualification of the auditor’s opinion due to a scope limitation? |
| A. | Restrictions the client imposed |
| B. | Reliance on the report of other auditor |
| C. | Inability to obtain sufficient appropriate evidential matter |
| D. | Inadequacy of accounting records |
| Answer» B. Reliance on the report of other auditor | |
| 136. |
The inventory consists of about one per cent of all assets. The client has imposed restriction on auditor to prohibit observation of stock take. The auditor cannot apply alternate audit procedures. |
| A. | Unqualified opinion |
| B. | Qualified opinion |
| C. | Disclaimer of opinion |
| D. | Adverse opinion |
| Answer» C. Disclaimer of opinion | |
| 137. |
The auditor has serious concern about the going concern of the company. It is dependent on company’s obtaining a working capital loan from a bank which has been applied for. Then management of the company has made full disclosure of these facts in the notes to the balance sheet. The auditor is satisfied with the level of disclosure. He should issue_ |
| A. | Unqualified opinion |
| B. | Unqualified opinion with reference to notes to the accounts |
| C. | Qualified opinion |
| D. | Disclaimer of opinion |
| Answer» B. Unqualified opinion with reference to notes to the accounts | |
| 138. |
Which of the following is true about explanatory notes? |
| A. | These are given by the directors of the company |
| B. | These are given to adhere to requirements of section 211. |
| C. | These are given by auditors of the company in auditor’s report |
| D. | All of the above |
| Answer» B. These are given to adhere to requirements of section 211. | |
| 139. |
The client changed method of depreciation from straight line to written down value method. This has been disclosed as a note to the financial statements. It has an immaterial effect on the current financial statements. It is expected, however, that the change will have a significant effect on future periods. Which of the following option should the auditor express? |
| A. | Unqualified opinion |
| B. | Qualified opinion |
| C. | Disclaimer of opinion |
| D. | Adverse opinion |
| Answer» A. Unqualified opinion | |
| 140. |
Which of the following is not true regarding requirements under section 227(3) (f) of the Companies Act, 1956? |
| A. | The auditor has to satisfy himself whether any of the directors of the company, whether public or private, are disqualified from being appointed as directors as per section 274(1) (g). |
| B. | Section 274(1) (g) is applicable to appointment of directors both in public and private companies but reporting is limited to only those directors of a company who are also directors of a public company |
| C. | The auditor requires every director to submit a written representation in respect of each Public company, of which the is a director, as to whether such company has defaulted in terms of provisions of sections 274(1) (g) |
| D. | The disqualification should be considered on the date of audit report. |
| Answer» D. The disqualification should be considered on the date of audit report. | |
| 141. |
The management of a company, to which AS3 is not applicable, does not include statement of cash flows in its annual report. The auditor should express |
| A. | Unqualified opinion |
| B. | Qualified opinion |
| C. | Adverse opinion |
| D. | Any of these depending upon materiality and pervasiveness and adequacy of disclosure |
| Answer» A. Unqualified opinion | |
| 142. |
In case the auditor gives a disclaimer of opinion in the audit report which of the following paragraph(s) of a standard unqualified audit report are modified? |
| A. | Scope paragraph |
| B. | Opinion paragraph |
| C. | Scope and opinion paragraphs |
| D. | Introductory, scope and opinion paragraph |
| Answer» C. Scope and opinion paragraphs | |
| 143. |
A departure from recognized accounting principle is disclosed in a note to the financial statements. The auditor should |
| A. | Issue a standard unqualified audit report |
| B. | Issue a qualified report |
| C. | Issue an unqualified report with ‘emphasis of matter’ paragraph |
| D. | Disclaim opinion |
| Answer» B. Issue a qualified report | |
| 144. |
The auditor should state the reasons for his reservations in audit report and should try to quantify the effect on them. This should be done in case he has expressed _
|
| A. | i) only |
| B. | i) and (iv) only |
| C. | i), iii) and (iv) only |
| D. | All of the above |
| Answer» A. i) only | |
| 145. |
Which of the following documents is not relevant for vouching cash sales? |
| A. | Daily cash sales summary |
| B. | Salesmen’s summary |
| C. | Monthly statements sent to customers |
| D. | Bank statement |
| Answer» C. Monthly statements sent to customers | |
| 146. |
The auditor should examine subsequent realization of revenue such as dividends, interest, commission, etc to |
| A. | Identify cases of unrecorded revenue |
| B. | Ensure proper disclosure in the balance sheet |
| C. | Recomputed accrued income on the data of balance sheet |
| D. | Any of these |
| Answer» A. Identify cases of unrecorded revenue | |
| 147. |
To test whether sales have been recorded, the auditor should draw a sample from a file of |
| A. | Purchase orders |
| B. | Sales orders |
| C. | Sales invoices |
| D. | Bill of loading |
| Answer» C. Sales invoices | |
| 148. |
For vouching of which item, the auditor is most likely to examine cost records? |
| A. | Commission earned |
| B. | Bad debts recorded |
| C. | Credit sales |
| D. | Sale of scrap |
| Answer» D. Sale of scrap | |
| 149. |
The “Guidance Note on Revenue” issued by the ICAI does not deal with |
| A. | Sales revenue |
| B. | Revenue rendering service |
| C. | Revenue from sale of fixed assets |
| D. | Income from interest, dividend |
| Answer» C. Revenue from sale of fixed assets | |
| 150. |
An auditor conducts a surprise check on the pay day (i.e) the day wages and salaries are paid. The primary purpose of this audit procedure is |
| A. | To ensure that there are no ghost workers |
| B. | To ensure the casual workers employed are authorized by the supervisor |
| C. | To test procedures for distributing pay cheques |
| D. | To obtain understanding of internal control system |
| Answer» C. To test procedures for distributing pay cheques | |
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