Competitive Exams: Commerce MCQs (Practice-Test 69 of 99)

  1. It is necessary that an auditor should prepare an ‘Audit Programme’ maintain an ‘Audit Note Book’ use an Internal Control Questionnaire ‘and a’ Flow Chart of Accounting System adopt ‘Special Ticks’ for each class of transaction checked and divide work as well as responsibility among the members of his staff for an efficient conduct of audit work. All these refer to

    1. general principles of internal auditing

    2. general principles of internal checking

    3. basic principles of auditing

    4. general techniques of auditing

  2. Materiality in accounting is decided

    1. by the size of an item

    2. by the knowledge as to whether an individual item is having a significant influence on financial statement

    3. solely by the discretion of the accountant

    4. by the physical volume of the transaction

  3. Match List I (Event) with List II (Result) and select the correct answer using the codes given below:

    List-I List-II
    1. Collusion between two

    2. Falsification of accounts

    3. Operation of an effective

    4. Purchase of raw

    1. Payments of dividends or more persons otherwise not possible

    2. Error of principle committed to increase apparent profits

    3. Trial balance may agree system of internal check

    4. Frauds per-petrated and concealed materials is debited to loose tools account

    5. Possibility of errors and frauds is considerably reduced

    • A
    • B
    • C
    • D
      • 3
      • 4
      • 5
      • 2
      • 4
      • 1
      • 5
      • 2
      • 4
      • 1
      • 2
      • 5
      • 2
      • 4
      • 1
      • 3
  4. Which one of the following is the main object of auditing?

    1. Ascertaining whether all cash receipts and payments of an organisation have been correctly recorded and accounted for

    2. Preventing errors and frauds connected with financial trans, actions of an organisation

    3. Verifying books of accounts and annual financial statements of an organisation so as to give a report on the view presented by the said accounts and statements

    4. Recording properly all financial transactions in various books of accounts and preparing annual financial statements indicating the resuits of such transactions

  5. Management audit refers to

    1. audit on behalf of the management

    2. audit of management accounting system in operation

    3. systematic appraisal of management's objectives and procedures

    4. audit of managerially initiated financial transactions

  6. In evaluating internal control, the first step is to prepare an internal control questionnaire or a flow chart of the system. The subsequent steps should be to

    1. determine the extent of audit work necessary to form an opinion

    2. gather enough evidence to determine as to whether the internal control system is functioning as described

    3. write a letter to the management describing the weaknesses in the internal control system

    4. form a final judgement on the effectiveness of the internal control system

    The correct sequence of these steps would be

    1. 1, 2, 3, 4

    2. 2, 4, 1, 3

    3. 2, 1, 3, 4

    4. 2, 4, 3, 1

  7. When an auditor tests sales transactions, one step is tracing a sample of sales invoices to debits in the accounts receivable ledger. Based upon this step, he will form an opinion as to whether

    1. each sales invoice represents a valid sale

    2. all sales have been recorded

    3. all debits in accounts receivable ledger are supported by sales invoices

    4. recorded sales invoices are properly posted to customer accounts

  8. Accounting is the process of matching

    1. benefits and costs

    2. revenues and costs

    3. cash inflows and outflows

    4. potential and real performance

  9. A had started business with Rs. 20, 000 in the beginning of the year. During the year he borrowed Rs. 10, 000 from B. He further introduced Rs. 20, 000 in the business. He also gave Rs. 5, 000 as loan to his son. Goods given away as charity by him was Rs. 2, 000. Profits earned by him was Rs. 25, 000. He also withdrew Rs. 3, 000 from the business. His capital at the end of the year would be

    1. Rs. 50, 000

    2. Rs. 40, 000

    3. Rs. 62, 000

    4. Rs. 48, 000

  10. When it is not registered, a partnership firm is

    1. deemed to be an illegal association and is disallowed to carry on business

    2. allowed to carry on business subject to payment of penalty

    3. allowed to carry on business subject to certain disabilities

    4. allowed to carry on business only with the special permission of the Registrar of Firms

  11. Match List I (Organisation) with List II and select the correct answer using the codes given below

    List-I List-II
    1. Cooperative society

    2. Joint Hindu family

    3. Joint Stock company

    4. Partnership firm

    1. Collective business

    2. Purchase/Transfer of share

    3. By virtue of birth

    4. Common mutual interest

    5. Mutual contract

    • A
    • B
    • C
    • D
      • 1
      • 3
      • 2
      • 5
      • 5
      • 4
      • 1
      • 3
      • 4
      • 3
      • 2
      • 5
      • 4
      • 1
      • 2
      • 3
  12. Match List I with List II and select the correct answer

    List-I List-II
    1. Ashbury Rail Carriage & Iron

    2. Peek vs. Gurney

    3. Saolmon vs. Salomon & Co.

    4. Royal British Bank vs. Turquand

    1. Corporate entity Co. Ltd. Vs. Riche

    2. Objects clause

    3. Misstatement in prospectus

    4. Indoor management

    • A
    • B
    • C
    • D
      • 2
      • 1
      • 3
      • 4
      • 3
      • 4
      • 1
      • 2
      • 2
      • 3
      • 1
      • 4
      • 2
      • 3
      • 4
      • 1
  13. A special resolution passed for the purpose of reduction of capital of a company must be confirmed by the

    1. Registrar of Companies

    2. Company Law Board

    3. SEBI

    4. Appropriate Law Court

  14. Equity shares issued by a company to its-employees or directors at a discount or for consideration other than cash for providing know-how or making available rights in the nature of intellectual property rights or value additions are known as

    1. Employees Directors stock option

    2. Promoters quota

    3. Sweat equity

    4. Right shares

  15. A preliminary contract refers to a contract made on behalf of a company

    1. before the incorporation of the company

    2. after the incorporation of the company

    3. after the company obtains the certificate to commence business

    4. after incorporation but before obtaining the certificate of commencement of business