Competitive Exams: Commerce MCQs (Practice-Test 30 of 99)

  1. When net profit is Rs. 2, 25, 000; taxes Rs. 25, 000; and net worth Rs. 10, 00, 000, what is the rate of return on shareholders equity?

    1. 22.5%

    2. 20%

    3. 25%

    4. Cannot be calculated

  2. Which one of the following is not indicated by an increase in the gross profit ratio as compared to that for the previous period?

    1. An increase in the sale price of the goods sold without corresponding increase in costs

    2. Stock omitted from the inventory at the end of the period

    3. Invoices for purchases omitted from the account

    4. Stock in trade at the beginning valued at a figure lower than it should have been

  3. The following information relates to an organization: Equity share capital Rs. 10, 00, 000; 18% debentures Rs. 8, 00, 000; 10% preference share capital Rs. 5, 00, 000; Current liabilities Rs. 3, 00, 000; Loan at 15% (Long term) Rs. 1, 40, 000; General Reserve Rs. 8, 00, 000; Current Assets Rs. 3, 50, 000. What is the Capital gearing ratio of the organization?

    1. 1.6

    2. 0.8

    3. 1.2

    4. 0.5

  4. By adopting which of the following tactics, return on investment of a company can be enhanced?

    1. Postponing the replacement.

    2. Valuing closing stock on LIFO basis during rising prices.

    3. Providing less depreciation.

    4. Making higher provisions.

    Select the correct answer using the code given below:

    1. 1 and 3

    2. 2 and 4

    3. 1, 3 and 4

    4. 1, 2, 3 and 4

  5. XYZ Ltd. Provides the following information: Net Profit Rs. 1, 600 Profit on sale of investments Rs. 480 Depreciation Rs. 5, 200 Loss on sale of machinery Rs. 200 Increase in stock Rs. 1, 000 Increase in creditors Rs. 1, 000 What is the amount of funds from operations of the company?

    1. Rs. 7000

    2. Rs. 7520

    3. Rs. 8520

    4. Rs. 6520

  6. In corporate sector, the expenses on account of social obligation are

    1. Compulsory

    2. Legitimate

    3. Optional

    4. None of the above

  7. Consider the following functions

    1. Compare the lists of debtors and creditors.

    2. Check the total of cash book.

    3. Ensure that no entry remained unspotted.

    4. Check the trial balance.

    What is the correct balance of these functions to be performed by an auditor to locate errors?

    1. 4 − 2 − 1 − 3

    2. 1 − 3 − 4 − 2

    3. 4 − 3 − 1 − 2

    4. 1 − 2 − 4 − 3

  8. Which one of the following is not an advantage of Interim Audit?

    1. Audit staff will prepare notes when they finish the interim audit

    2. The final audit can be completed soon

    3. It is good where publication of figures is necessary

    4. There is moral check on the staff

  9. Which one of the following is applicable to vouching and Post audit?

    1. Procedural tests are applied

    2. Important items from the balance sheet are taken

    3. Examination of profit & loss account, and balance sheet for present and past years

    4. Investigation into the items of nonrecurring nature

  10. Which one of the following statements is correct? While conducting audit, the auditor should ensure that the stock is valued at

    1. cost price

    2. market price

    3. cost or market price whichever is lower

    4. cost or market price whichever is higher

  11. Match List I (Matter for Audit Examination) with List II (Audit Technique Adopted) and select the correct answer using the codes given below

    List-I List-II
    1. Cash payments

    2. Plant and machinery

    3. Bank OD balance

    4. Disagreement between the bank balance shown by cash book and bank pass book

    1. Direct confirmation

    2. Physical verification

    3. Vouching

    4. Reconciliation review

    5. Test checking

    • A
    • B
    • C
    • D
      • 3
      • 1
      • 2
      • 4
      • 4
      • 2
      • 1
      • 5
      • 3
      • 2
      • 1
      • 4
      • 4
      • 1
      • 2
      • 5
  12. Consider the following statements: ‘Teaming and lapping’ method of fraud is committed by

    1. Concealment of a shortage by delaying the recording of cash receipts.

    2. When a cheque is received, it is not credited to customers but misappropriated.

    3. When another customer sends a cheque, it is credited to first customer's account.

    4. inflating the payment vouchers

    Which of the statements given above are correct?

    1. 1 and 4

    2. 1, 2 and 3

    3. 2 and 4

    4. 3 and 4

  13. The steps used to derive the deduction approach in accounting are as under

    1. Developing the techniques of accounting.

    2. Selecting the postulates the basic accounting propositions or premises.

    3. Specifying the objectives of financial statements.

    4. Deriving the principles of accounting.

    Which one of the following is the correct sequence of the above steps?

    1. 4 − 1 − 3 − 2

    2. 3 − 2 − 4 − 1

    3. 4 − 2 − 3 − 1

    4. 3 − 1 − 4 − 2

  14. Consider the following statements related to non-corporate audit

    1. The auditor is to ascertain the nature of revenue expenses.

    2. The auditor is to ascertain the weakness of internal control system.

    3. The auditor is not to ascertain the type of internal control system applicable for sensitive items in organization.

    4. The auditor is not to ascertain the appropriateness of books of accounts.

    Which of the statements given above are correct?

    1. 1 and 2

    2. 1, 2 and 3

    3. 3 and 4

    4. 1, 2 and 4

  15. To whom, is the auditor's report pursuant to a special audit of a company furnished?

    1. Shareholders of the company

    2. Board of directors of the company

    3. Central Government

    4. Concerned State Government (s)