Competitive Exams: Commerce MCQs (Practice-Test 46 of 99)

  1. Given that Opening Stock: Rs. 12, 000 Purchases: Rs. 90, 000 Return Outward: Rs. 4, 000 and that the closing stock is Rs. 2, 000 less than the opening stock the Stock Turnover ratio is

    1. 5 times

    2. 7 times

    3. 8 times

    4. 10 times

  2. EBIT/Total Assets Ratio is

    1. Liquidity Ratio

    2. Profitability Ratio

    3. Solvency Ratio

    4. Turn-over Ratio

  3. The dividend declared by a limited company is Rs. 2/-per share of face value of Rs. 10/-and the average market value is Rs. 25/-The yield is

    1. 5%

    2. 8%

    3. 10%

    4. 12.5%

  4. The primary objective of audit is to

    1. verify and value assets as per Company's Act

    2. verify liabilities and report to Registrar of Companies

    3. verify and report on the state of affairs of the business

    4. appoint auditors

  5. Balance Sheet audit is useful if the concern

    1. is weak in internal check

    2. has no internal check

    3. is a small one

    4. is a big one

  6. When the auditor examines and tests the client's accounting and other control systems to see whether or not they constitute a reliable base for the preparation of accounts, the it is known as

    1. Balance Sheet audit

    2. System audit

    3. Continuous audit

    4. Internal audit

  7. Match List I (Items) with List II (Heads in Balance Sheet) and select the correct answer using the codes given below the lists:

    LIST I LIST II
    1. Loss on issue of debentures

    2. Unclaimed dividend

    3. Prepaid rent

    4. Profit prior to incorporation

    1. Reserves and Surpluses

    2. Miscellaneous Expenditure

    3. Current Liabilities

    4. Current Assets

    • A
    • B
    • C
    • D
      • 3
      • 2
      • 1
      • 4
      • 3
      • 2
      • 4
      • 1
      • 2
      • 3
      • 4
      • 1
      • 2
      • 3
      • 1
      • 4
  8. Audit Notebook is a

    1. personal notebook of and auditor

    2. record of work performed by an auditor

    3. record of important points and enquiries which as auditor has to refer to his clients

    4. record of mistakes and errors detected during the course of audit of account books

  9. Consider the following statements: In order to plan and prepare his audit programme, an auditor must obtain information relating to

    1. client's history and business

    2. purpose and nature of engagement

    3. time schedule for the completion of audit

    Of these statements

    1. 1, 2 and 3are correct

    2. 1 and 3 are correct

    3. 2 and 3 are correct

    4. 3 alone is correct

  10. Which one of the following statements regarding the internal check system is correct? Its purpose is to

    1. have an accurate record of all the business transactions

    2. know the accounting method followed in the business

    3. plan for future audit works

    4. ascertain the profit, earning capacity of the business

  11. By observing, testing and assessing, an auditor examines the system of

    1. internal audit

    2. internal control

    3. continuous audit

    4. statutory audit

  12. An auditor of a partnership firm is appointed as per

    1. statute

    2. government orders

    3. agreement

    4. convention

  13. A company auditor may be removed in the meeting of the

    1. Board of Directors when the Managing Director is also present

    2. Board of Directors

    3. majority shareholders

    4. General Body of shareholders

  14. According to Sec. 224 of the Companies Act, 1956, a company auditor may be appointed by any of the three appointing authorities. The correct sequence of the order in which they can exercise their power to appoint a company auditor in the life of a company other than a government company is

    1. Board of Directors, Central Government, Shareholders

    2. Central Government, Shareholders, Board of Directors

    3. Shareholders, Board of Directors, Central Government

    4. Board of Directors Shareholders

    Central Government

  15. The liability of auditor can be

    1. only civil

    2. only criminal

    3. either civil or criminal

    4. civil and/or criminal