# Arunachal Pradesh PSC: Commerce MCQs (Practice_Test 3 of 99)

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1. X Ltd. Has current ratio of 2: 1 and quick ratio of 1.5: 1: If its current liabilities are Rs. 80, 000, then the value of-stock would be

1. Rs. 1, 60, 000

2. Rs. 1, 20, 000

3. Rs. 40, 000

4. Rs. 80, 000

2. If earnings per share of a company is Rs. 5 and the price earning ratio of other similar companies is 4, then the market value of the share of the company would be

1. Rs. 0.80

2. Rs. 1.25

3. Rs. 9

4. Rs. 20

3. If the cost of goods sold is Rs. 1, 00, 000/-, the value of opening stock is Rs. 20, 000/-and the value of closing stock is Rs. 80, 000/-, then the stock turnover ratio would be

1. 5 Times

2. 4 Times

3. 2 Times

4. 1 Times

4. Match List I with List II and select the correct answer:

 List-I List-II Current RatioDebt-Equity RatioNet Profit Margin RatioInterest Coverage Ratio Sufficiency of EBIT to cover interest charges interest chargesShort-term solvencyExposure to financial riskEarnings left for shareholders
• A
• B
• C
• D
• 2
• 3
• 1
• 4
• 3
• 2
• 1
• 4
• 3
• 2
• 4
• 1
• 2
• 3
• 4
• 1
5. Match list I with List II and select the correct answer:

 List-I List-II Leverage RatioLiquid RatioTurn-over RatioProfitability Ratio Short-term solvencyEarning capacityRelationship of Debt and EquityEfficiency of Assets Management
• A
• B
• C
• D
• 2
• 1
• 4
• 3
• 3
• 2
• 1
• 4
• 4
• 3
• 1
• 2
• 3
• 1
• 4
• 2
6. EPS is calculated as

1. EBIT Equity shares

2. EBIT-Preference Dividend Equity shares

3. EAT Equity shares

4. EAT-Preference Dividend

Equity shares

7. Consider the following information provided by XY. Ltd. Net profit before depreciation and taxes: Rs. 44, 000 Depreciation for the year: Rs. 8, 000 Goodwill written-off during the year: Rs. 10, 000 Rate of tax: 50% The cash flow of Ltd. From operations will be

1. Rs. 36, 000

2. Rs. 28, 000

3. Rs. 26, 000

4. Rs. 13, 000

8. If profit made during the year is Rs. 10, 000; increase and decrease in the current assets is Rs. 5, 000 and Rs. 4, 000 respectively, then the cash from operation equals

1. Rs. 9, 000

2. Rs. 10, 000

3. Rs. 11, 000

4. Rs. 19, 000

9. Consider the following statements: The important techniques of auditing are

1. Test check and sampling.

2. Flow charting of interrelated operations in the accounting system of an organization.

3. Using Internal Control Questionnaire.

4. Collecting information on price fluctuations from market-research organizations.

Which of the above statements are correct?

1. 1, 2 and 3

2. 1, 2 and 4

3. 2, 3 and 4

4. 1, 3 and 4

10. Match List I with List II and select the correct answer:

 List-I List-II Auditor is a watch dog but not a blood houndAn auditor should sign the balance sheet with open eyes. He should not depend on the officials of the companyCapital profit cannot be divided as dividend unless all the assets have been revaluated and the profit has been actually realizedAn action for negligence can be brought against the auditor in tort by a person with whom he is not in a contractual relationship but to whom he owes duty Union Bank of Allahabad caseHedley Byrne and Co. Ltd. Vs. Hiller 4 partners caseKingston Cotton Mills caseFostar Vs. The Trinidad Lake Ashalte Co. Case
• A
• B
• C
• D
• 1
• 3
• 2
• 4
• 3
• 1
• 2
• 4
• 1
• 3
• 4
• 2
• 3
• 1
• 4
• 2
11. Consider the following documents:

1. Audit Report

2. Audited Final Accounts

3. Audit Note Book

4. List of Lost Vouchers

5. Audit Programme

Which of the above documents re

Auditor's working papers?

1. 1, 2 and 4

2. 1, 3 and 4

3. 1, 3, 4 and 5

4. 2, 3 4 and 5

12. Match List I with List II and select the correct answer

 List-I List-II Interest on capital in construction worksManagement AuditFinancial AuditValuation in Balance Sheet Performance and ProprietyCapital ExpenditureAuthorization of ExpenditureCritical review by ManagementEntity Concept
• A
• B
• C
• D
• 2
• 4
• 5
• 3
• 4
• 1
• 2
• 5
• 2
• 1
• 3
• 5
• 4
• 2
• 3
• 1
13. Which of the following is NOT correct about the management auditor?

1. He appraises and reviews the past performance and future plans of the company

2. He evaluates the performance of management and finds out whether they are efficient or not

3. He works simultaneously with the statutory auditor verifying the financial state of affairs of the company

4. He examines both financial and non financial records of the organization

14. The Companies Act 1956 require the annual accounts to show a ‘true and fair view’ of the financial position of the company instead of ‘true and correct view’ because

1. too much of dependence on arithmetical accuracy may lead to window dressing

2. annual accounts should not only be made correctly but should also convey an overall fair view without any misleading impression

3. all financial transactions cannot be correctly expressed in terms of money

4. most of the stake holders do not have reasonable idea about accounting rules and regulations