Quiznetik

Practical Auditing | Set 1

1. Auditing refers to

Correct : C. Examination of accounts of professional accountants

2. Main object of auditing is

Correct : B. To find out whether P&L a/c & B/S show true and fair state affairs

3. Auditing is luxury for a

Correct : C. Small shop-keeper

4. Auditing is compulsory for

Correct : C. All joint stock companies

5. Propriety audit refers to

Correct : C. Enquiry against justification and necessity of expresses

6. Propriety is normally undertaken in case of

Correct : D. Govt. departments

7. Interim audit refers to

Correct : C. Audit work to find out and check interim profits of a company

8. Final audit implies

Correct : A. Audit of accounts at the end of the year

9. A continuous audit is specially needed for

Correct : C. Banking companies

10. Joint audit implies

Correct : D. Audit by two firms of C.A

11. Management audit means

Correct : B. Evaluating performance of various management processes and functions

12. Systems audit implies

Correct : C. Enquiring accounting and control systems

13. Internal audit means

Correct : C. Audit undertaken by employees of the organization to check financial irregularities

14. Internal audit is

Correct : B. Voluntary for a company

15. Internal audit is undertaken

Correct : C. By a person appointed by the management

16. Internal auditor is appointed by the

Correct : A. Management

17. The object of internal check is to

Correct : B. Prevent errors and frauds

18. Effective internal check system reduces

Correct : B. Work of auditor

19. Internal check is a part of

Correct : D. Internal control

20. Internal check is carried on by

Correct : D. None of the above

21. Internal check is suitable for

Correct : A. Larger concerns

22. Internal check is carried on by

Correct : C. The members of the staff among themselves

23. Internal check is essential for

Correct : B. Cash transactions in a large concern

24. Misappropriation of goods may be checked by

Correct : A. Proper supervision over stock

25. Window dressing implies

Correct : D. Over- valuation of assets

26. Falsification of accounts is undertaken by

Correct : D. Responsible officials

27. Errors of omission are

Correct : A. Technical errors

28. Test checking refers to

Correct : C. Intensive checking of a selected number of transactions

29. Test checking should not be applied to

Correct : C. Bank reconciliation statement

30. Test checking should not be applied to

Correct : D. Cash book

31. Vouching implies

Correct : B. Examination of vouchers to check authenticity of records

32. Payment for goods purchased should be vouched with the help of

Correct : A. Creditors statement

33. Payment for wages should be vouched with the help of

Correct : B. Wage sheets

34. Payment for building purchased should be vouched with the help of

Correct : A. Title deed

35. Investment should be vouched with the help of

Correct : B. Brokers book

36. Receipt from debtors should be vouched with the help of

Correct : A. Counterfoil Receipts cash book

37. Receipt from sale of investment should be vouched with the help of

Correct : B. Brokers Sold Notes

38. Purchases returns should be vouched with the help of

Correct : B. Credit Notes

39. Verification refers to

Correct : C. Examining the physical existence and valuation of assets

40. Object of verification of assets

Correct : D. All of the above

41. Which of the following statements is correct?

Correct : A. Valuation is a part of verification

42. Stock should be valued at

Correct : C. Cost price or market price whichever is lower

43. Valuation of Fixed Assets is based on the concept

Correct : A. Going concern

44. Valuation means

Correct : B. Checking the value of assets

45. “ Auditor is not valuer” was stated in

Correct : A. Kingston Cotton Mills case

46. Fixed assets are valued at

Correct : D. Cost less depreciation

47. Floating assets are valued at

Correct : C. Cost price or market price whichever is less

48. The scope of work of internal audit is decided by the

Correct : D. All of the above

49. Outstanding expenses should be verified with the help of

Correct : C. Journal proper

50. Book debts should be verified with the help of

Correct : C. Debtors schedule

51. Investments in hand should be verified with the help of

Correct : C. Inspection of securities

52. First auditor of a company is appointed by the

Correct : D. Board of Directors

53. Which of the following persons is qualified to be a company auditor?

Correct : D. A practicing chartered accountant

54. The first auditor of a company will hold office

Correct : C. Till the conclusion of first annual general meeting

55. Normally, a company auditor is appointed by the

Correct : B. Shareholders

56. An auditor in a casual vacancy is appointed by the

Correct : A. Board of Directors

57. If an auditor is not appointed at annual general meeting, he is appointed by the

Correct : A. The Central Government

58. A vacancy caused by resignation of the auditor is filled by

Correct : B. At the general meeting of shareholders

59. A special auditor is appointed by the

Correct : C. Central Government

60. A government Co. auditor may be appointed by the

Correct : A. C & A – G

61. A company auditor can be removed before expiry of his term by

Correct : B. Board of Directors

62. Remuneration of a company auditor is fixed by the

Correct : D. Appointing authority

63. A company auditor, in general has to submit his report to

Correct : A. Shareholders

64. An auditor of Government company has to submit his report to the

Correct : B. Central Government

65. Internal auditor has to submit report to

Correct : D. None of the above

66. Auditor should be dutiful like a

Correct : A. A watch dog

67. Auditor, in general is an

Correct : C. Agent of the shareholders

68. While checking allotment of shares the auditor should see that it is made within

Correct : B. 120 days of issue of prospectus

69. Which of the following percentage of nominal amount of shares should be received with application

Correct : C. 5

70. While checking allotment, auditor should see that amount

Correct : D. None of the above

71. For restriction regarding allotment of shares, the auditor should refer to section

Correct : D. 69

72. For checking that allotment of shares has been properly made, an auditor should refer to

Correct : C. Directors minutes book

73. Auditor should see that the return of allotment has been sent to Registrar within

Correct : A. 1 month

74. Application money should not be withdrawn unless

Correct : C. Certificate to commence business obtained

75. Shares issued for consideration other than cash should be vouched with the help of

Correct : C. Contract with the party concerned

76. A company can issue Redeemable Preference shares, if authorized by

Correct : B. Articles of association

77. Auditor should see that amount received for premium on issue of shares should be shown in

Correct : C. Share Premium account

78. Share premium account should be shown in the Balance sheet under

Correct : C. Reserves & surplus

79. Amount of share premium may be utilized for

Correct : B. Writing of preliminary expenses

80. Shares can be issued at discount under section

Correct : C. 79

81. Interest on calls paid in advance, according to Table A, should not exceed

Correct : A. 6%

82. Shares can be issued at premium, under section

Correct : C. 78

83. A company can accept calls in advance from its shareholders under section

Correct : C. 92

84. Shares can be issued at discount only after

Correct : 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

Correct : B. Sanctioned by the Central Government

86. For the for festure of shares, the auditor should check that it is permitted

Correct : B. by articles of association

87. Premium received on issue of shares, later forfeited, should be transferred to

Correct : D. None of the above

88. With regard to issue of share certificates, the auditor should refer to section

Correct : B. 113

89. Increase in share capital is permitted by

Correct : B. Articles of association

90. Divisible profit should not include

Correct : D. None of the above

91. Dividend can not be paid out of

Correct : B. Capital receipts

92. Capital profit imply profit earned

Correct : C. From sale of fixed assets

93. Capital profits

Correct : C. Can be paid by way of dividend under certain conditions

94. If there is capital loss, the auditor should

Correct : B. Allow payment of dividends

95. A company auditor should see that the dividend should be paid

Correct : A. After charging depreciation

96. In his report, the auditor gives his

Correct : B. Opinion

97. Civil liability of an auditor implies liability for

Correct : D. Misfeasance

98. An auditor can be held liable under companies Act 1949 for

Correct : C. Professional misconduct

99. Investigation of books of accounts and records is :

Correct : A. Not legally compulsory

100. Investigation is carries on behalf of

Correct : D. On behalf of owner and third parties