MCQs on Audit & Assurance (Part-18) (651 to 700)

MCQS ON AUDIT & ASSURANCE 

 651. Where no reply is received during the performance of direct confirmation procedures as part of audit of accounts receivable balances, the auditor should perform:

(a) No additional testing

(b) Additional testing including agreeing the balance to cash received; agreeing the detail of the respective balance to the customer’s remittance advice

(c) Additional testing including preparing a detailed analysis of the balance, ensuring it consists of identifiable transactions and confirming that these revenue transactions actually occurred

(d) Both (b) and (c)

652. Obtaining trade receivables ageing report and analysis and identification of doubtful debts is performed during audit of accounts receivable balances to address the following balance sheet assertion:

(a) Valuation

(b) Rights and obligations

(c) Existence

(d) Completeness

653. Observing inventory being counted and personally performing test counts to verify counts is performed during audit of inventory balances to address the following balance sheet assertion:

(a) Rights and obligations

(b) Valuation

(c) Completeness

(d) Existence

654. Wages paid to workers would always qualify as:

(a) Revenue expenditure

(b) Capital expenditure

(c) Revenue or capital expenditure depending upon facts and circumstances

(d) None of the above

655. During the course of audit of intangible assets, expenditure incurred during following phase is generally not capitalized:

(a) Development phase

(b) Research phase

(c) None of the above

(d) Both (a) and (b)

656. Search for unrecorded liability is performed during audit of current liabilities to address the following balance sheet assertion:

(a) Valuation

(b) Rights and obligations

(c) Existence

(d) Completeness

657. Cut-off testing is performed during audit of sales to address the following income statement assertion:

(a) Occurrence

(b) Measurement

(c) Completeness

(d) All of the above

658. ABC’s investee company-XYZ declares final dividend for financial year 2016-2017 in the meeting of board of directors held on April 10, 2017. In which financial year should ABC account for the dividend income:

(a) Proportionately i.e. considering 10 days of financial year 2017-18 and 355 days of financial year 2016-17

(b) Financial year 2016-17

(c) Financial year 2017-18

(d) Equally between financial year 2016-17 and financial year 2017-18

659. All inventory units held by the audit entity and that should have been recorded, has been recognized in the financial statements. The assertion involved is:

(a) Existence

(b) Completeness

(c) Rights and obligations

(d) Valuation

660. Which of the following is not an example of revenue expenditure-

(a) Salaries and wages of employees engaged directly or in-directly in production

(b) Repairs, maintenance and renewals of fixed assets

(c) Legal and professional expenses

(d) Development expenditure on land

Only For Old Syllabus Students

661. As per section 128 of the Companies Act, 2013, ‘Book and paper’ and ‘Book or paper’ include

a) Books of account

b) Deeds and vouchers

c) Writings, documents, minutes and registers

d) All of these

662. The books of account etc, must give a true and fair view of the state of the affairs of the company, including its branch office as per section:

a) 128

b) 129

c) 133

d) 143(2)

663. The company shall intimate to the Registrar on an annual basis at the time of filling of financial statement:

a) The name and internet protocol of the service provider

b) The location of the service provider(wherever applicable)

c) Where the books of account and other books and papers are maintained on cloud, such address as provided by the service provider

d) All of these

664. The books of account etc. of the company shall be kept at the _________ of the company.

a) Corporate office

b) Branch office

c) Registered office

d) Head office

665. All or any of the books of account and other relevant papers may be kept at such other place in India as the Board of directors may decide. In such a case, the company shall within ___________ days of the decision of the Board, file with the _________ a notice in writing----

a) 10, Registrar

b) 10, NCLT

c) 7, Registrar

d) 7, NCLT

666. Every company shall preserve in good order the books of account together with the relevant vouchers. The time period of preservation shall be not less than______ financial years immediately preceding the relevant financial year ----

a) 7

b) 8

c) 9

d) 10

667. The person responsible for compliance of section 128-----

a) Managing director

b) Whole-time director in charge of finance

c) Chief Financial officer

d) All of these

668. The books of account etc. maintained within India shall be open for inspection by___________ under section 128.

a) Any director

b) Any member

c) Auditor

d) All of these

669. As per section ______________, the financial statements shall comply with the accounting stamdards.

a) 128

b) 129

c) 133

d) 143(2)

670. If the financial statements do not comply with the accounting standards, the company shall disclose in its financial statements,

a) The deviation from the accounting standards

b) The reasons for such deviation, and

c) The financial effects, if any, arising out of such deviation

d) All of these

671. The financial statements shall be in the form or forms as may be provided for different class or classes of companies in Schedule_____________

a) I

b) II

c) III

d) IV

672. Sec. 129(1) shall apply to----

a) Insurance company and banking company

b) Company engaged in the generation or supply of electricity

c) Both a and b

d) None a and b

673. Under section 130, an application for reopening of accounts is made by----

a) CG or the Income-tax authorities

b) The securities and Exchange Board or any other statutory regulatory body or authority

c) Any person concerned

d) Any of these

674. Under section 130, an order for reopening of accounts is made by----

a) Account of competent jurisdiction

b) The tribunal

c) A court of competent jurisdiction or the tribunal

d) A court of competent jurisdiction and the tribunal both

675. No order shall be made in respect of re-opening of books of account relating to a period earlier than _______ financial years immediately preceding the current financial year.

a) 3

b) 5

c) 7

d) 8

676. Under section 131, directors may prepare revised financial statement or a revised report in respect of any of the _________ preceding FYs after obtaining approval of the _________.

a) 3, Tribunal

b) 3, CG

c) 8, tribunal

d) 8, CG

677. Under section 131, tribunal shall give notice to ___________ and shall take into consideration to the representations, if any.

a) CG

b) The income tax authorities

c) Either a or b

d) CG and the Income Tax authorities

678. As per the requirements of section 131, detailed reasons for revision of financial statement or report shall also be disclosed in

a) The Board’s report

b) The audit report

c) The annual report

d) All of these

679. Stages in prescribing accounting standards are performed in chronological order as follows:

a) ICAI-CG-NFRA

b) NFRA-ICAI-CG

c) CG-ICAI-NFRA

d) ICAI-NFRA-CG

680. The financial statement, including consolidated financial statement, if any, shall be submitted to the ____ after they have been approved or signed.

a) Managing director

b) Auditor

c) Members

d) ROC

681. The auditor’s report shall be attached to_________

a) Annual report

b) Board report

c) Cost audit report, if any

d) Every financial statement

682. Board report shall contain explanations or comments by the Board on every qualification, reservation

or adverse remark or disclaimer made---

a) By the auditor in his report

b) By the company secretary in practice in his secretarial audit report

c) Option (a) or (b)

d) Option (a) and (b)

683. The director’s responsibility statement shall disclose as to whether the directors had taken proper and

sufficient care—

a) For the maintenance of adequate accounting records in accordance with the provisions of this Act

b) For safeguarding the assets of the company

c) For preventing and detecting fraud and other irregularities

d) All of these

684. In the case of _______________, the director’s responsibility statement shall disclose as to whether the

directors, had laid down internal financial controls to be followed by the company and whether such

internal financial controls are adequate and were operating effectively

a) a listed company

b) Prescribed classes of companies

c) Both (a) and (b)

d) All companies

685. The Board’s Report shall contain the following information and details

a) Conservation of energy

b) Technology absorption

c) Foreign exchange and outgo

d) All of these

686. Authorized capital means ___________amount of capital, set out in ____________, which can be issued

by the company

a) Minimum, MoA

b) Minimum, AoA

c) Maximum, MoA

d) Maximum, AoA

687. ____________ is required in the ____________ to issue the shares at premium.

a) No provision, articles

b) Provision, articles

c) Provision, MOA

d) None of these

688. Where “Securities Premium Account” is used for any purpose other than the purposes permitted under

the Act, then, the provisions of the Act as are applicable to __________- shall apply.

a) Forfeiture of shares

b) Buy back of share capital

c) Alteration of share capital

d) Reduction of share capital

689. Issue of shares at a discount is prohibited in the case of

a) Public companies

b) Private companies

c) All companies, whether public or private

d) Listed companies

690. Issue of ___________ shares does not fall within the purview of Sec.53 of the Companies Act, 2013.

a) Sweat equity

b) Bonus

c) Option on

d) All of these

691. Issue of sweat equity shares must be authorized by________

a) Board Resolution

b) Articles

c) Passing SR

d) Passing OR

692. A company may buy-back its own shares or other specified securities out of---

a) Free reserves

b) Securities premium account

c) Proceeds of fresh issue of shares or other specified securities

d) Any of these

693. The ratio of debt (secured as well as unsecured debt) owed by the company must not be more than ______ the aggregate of paid up capital and free reserves after such buy-back.

a) Twice

b) Thrice

c) Four times of

d) Five times of

694. _________ is required to be passed in the ____________ for alteration of share capital.

a) OR, GM

b) SR, GM

c) OR, AGM

d) SR, AGM

695. Reduction of share capital requires passing of ____________ and confirmation of __________ also.

a) OR, TRIBUNAL

b) SR, TRIBUNAL

c) OR, COURT

d) SR, COURT

696. Reduction of share capital shall not be affected if the company has defaulted in----

a) Repayment of any deposits accepted by it

b) Payment of interest payable on such deposits

c) Either (a) or (b)

d) Both (a) and (b)

697. Forfeiture must be

a) Bonafide

b) Authorized by SR

c) Approved by Court

d) All of these

698. An option on shares arises when a person has __________ under an agreement with the company.

a) Privilege

b) Obligation

c) A duty

d) A right

699. Issue of bonus share is authorized by-----

a) Passing an OR in the General Meeting

b) Passing SR in the General Meeting

c) Passing OR in the Annual General Meeting

d) Passing SR in the Annual General Meeting

700. Bonus share may be issued out of------

a) Free reserves

b) Securities premium account

c) Capital redemption

d) Any of these