Competitive Exams: Commerce MCQs (Practice-Test 35 of 99)

  1. Pay out ratio means the ratio of

    1. debtors to creditors

    2. profit distributed to profit retained

    3. earnings that are distributed through dividends

    4. interest payment to dividends

  2. Given that Sales = Rs. 50, 000 Variable Cost = Rs. 20, 000 Fixed Cost = Rs. 10, 000 Capital employed = Rs. 2, 00, 000 the profit-volume ratio will be

    1. 10%

    2. 15%

    3. 50%

    4. 60%

  3. Consider the following activities:

    1. Valuation

    2. Verification

    3. Vouching

    The correct sequence of these activities undertaken by an auditor is

    1. 3, 1, 2

    2. 3, 2, 1

    3. 2, 3, 1

    4. 1, 2, 3

  4. The value of which one of the following assets increases in the initial years of its life remains constant thereafter and finally begins to decline?

    1. Livestock

    2. Patents

    3. Goodwill

    4. Machinery

  5. Consider the following statements Continuous audit is useful because

    1. more detailed checking is possible

    2. audit can be completed quite quickly

    3. figures in the accounts cannot be altered as the auditor visits several times during the year

    4. internal check can be done away with

    Of these statements

    1. 1 and 2 are correct

    2. 2 and 4 are correct

    3. 2, 3 and 4 are correct

    4. 1, 3 and 4 are correct

  6. Match List I (Nature of audit) with List II (Related types of audit) and select the correct answer using the codes given below the lists:

    List-I List-II
    1. Audit work is carried on almost simultaneously with the recording, of transactions

    2. Auditor starts his work when the final accounts have been prepared

    3. Audit conducted in between two annual audits

    4. Some of the books and records of the whole period or specific period are audited

    1. Balance Sheet Audit

    2. Continuous Audit

    3. Interim Audit

    4. Cost Audit

    5. Partial Audit

    • A
    • B
    • C
    • D
      • 4
      • 1
      • 2
      • 3
      • 2
      • 1
      • 5
      • 3
      • 2
      • 1
      • 3
      • 5
      • 1
      • 2
      • 3
      • 4
  7. Which one of the following would be a sufficient ground for an auditor to submit a qualified report even though the management had given a note to the accounts?

    1. Securities belonging to the client are lodged with a depository

    2. Fixed assets have been mortgaged

    3. Bank balance as shown by the passbock is different from that indicated by the cash book

    4. Closing stock is valued at cost plus 10%

  8. Consider the following documents

    1. Audit Notebook

    2. Audit Programme

    3. Audit Report

    4. Audit Files

    The correct sequence which an auditor prepares these documents is

    1. 1, 2, 3, 4

    2. 2, l, 3, 4

    3. 2, 1, 4, 3

    4. 1, 2, 4, 3

  9. Which of the following pairs are correctly matched?

      • Test check
      • Random checking
      • Internal check
      • A system of automatic checking
      • Internal control
      • Includes internal check and internal audit
      • Investigation
      • General examination of all accounting records

    Select the correct answer using the codes given below:

    Codes:

    1. 1, 2, 3 and 4

    2. 1, 2 and 4

    3. 3 and 4

    4. 1, 2 and 3

  10. The scope of external audit in the case of a partnership firm is decided by the

    1. Companies Act

    2. Partnership Act

    3. letter of appointment of the auditor

    4. Income Tax Act

  11. A Chartered Accountant who has purchased on credit goods worth Rs. 2, 000 from a company ‘Z’ Ltd. is

    1. not disqualified from being appointed an auditor of Z Ltd.

    2. disqualified from being appointed an auditor of any company of the group

    3. disqualified from being appointed an auditor of Z Ltd.

    4. Disqualified from being appointed an auditor of any company having dealings with Z Ltd.

  12. The auditors of a company are NOT supposed to issue an unqualified report when

    1. Goodwill worth Rs. 1, 00, 000 built up by the company is not shown in the Balance Sheet

    2. Goodwill is shown in the Balance Sheet of the company although it has been totally lost

    3. Balance Sheet and Profit and Loss Account show a true and correct view of the company's affairs and are drawn in conformity with the Law

    4. proper Books of Accounts as required by Law have been kept by the company but the auditor has been refused access to some of these books

  13. Consider the following situations

    1. The business of the company is being conducted fraudulently

    2. The persons connected with the formation of the company have been guilty of fraud

    3. The company so desires it by way of a Special Resolution

    4. The Central Government NEED NOT

    NECESSARILY appoint inspectors to investigate the affair of the company in respect of situations listed at

    1. 1, 2 and 3

    2. 1 and 2

    3. 1 and 3

    4. 2 and 3

  14. Which of the following pairs is/are correctly matched.

      • Sinking Fund
      • Replacement of wasting assets
      • Secret Reserve
      • Overvaluation of liabilities
      • General Reserve
      • Provision for drop in value of assets

    Select the correct answer using the codes given below

    Codes

    1. 1, 2 and 3

    2. 1 and 3

    3. 2 alone

    4. 1 alone

    • Assertion (A): The Chairman's speech in NOT required under the-Companies Act. It is a matter of custom or tradition.
    • Reason (R): The Chairman's speech is comp1emen material and has to be read in conjunction with the Annual Report where he provides additional information on the status of the company's activities and the overall development taking place in that industry.
    1. Both A and R are true and R is the correct explanation of A

    2. Both A and R are true but R is NOT a correct explanation of A

    3. A is true but R is false

    4. A is false but R is true