Solved Mcqs of Auditing Related To FPSC Senior Auditor Post, These 100+ Mcqs Will Help You To Prepare Written Test of FPSC Senior Auditor, Sol Lets Start Your Preparation:
FPSC Senior Auditor Past Paper ( Auditing ) Solved Mcqs:
Table of Contents:
1. Introduction To Auditing.
2. Concepts
3. Audit Evidence.
4. Audit Of
5. Verification &
Valuation Of Assets.
6. Audit Preparation.
7. Capital And Revenue
Expenditure.
8. EDP Audit.
9. Government Audit.
10. Internal Control.
11. Company Auditor.
12. Auditing Definitions.
INTRODUCTION TO AUDITING.
1. THE MAIN OBJECT OF AN AUDIT IS ___
A) EXPRESSION OF OPINION
B) DETECTION AND PREVENTION OF FRAUD AND ERROR
C) BOTH (A) AND (B)
D) DEPENDS ON THE TYPE OF AUDIT.
2. THE TITLE OF AAS2 ISSUED BY COUNCIL OF ICAI IS.
A) OBJECTIVE AND SCOPE OF THE FINANCIAL STATEMENTS
B) OBJECTIVE AND SCOPE OF THE AUDIT OF FINANCIAL STATEMENTS
C) OBJECTIVE AND SCOPE OF BUSINESS OF AN ENTITY
D) OBJECTIVE AND SCOPE OF FINANCIAL STATEMENTS AUDIT
3. WHICH OF THE FOLLOWING IS NOT TRUE ABOUT OPINION ON
FINANCIAL STATEMENTS?
A) THE AUDITOR SHOULD EXPRESS AN OPINION ON FINANCIAL
STATEMENTS.
B) HIS OPINION IS NO GUARANTEE TO FUTURE VIABILITY OF
BUSINESS
C) HE IS RESPONSIBLE FOR DETECTION AND PREVENTION OF FRAUDS
AND ERRORS IN
D) HE SHOULD EXAMINE WHETHER RECOGNIZED ACCOUNTING PRINCIPLE
HAVE BEEN CONSISTENTLY
4. A SALE OF RS. 50.000 TO A WAS ENTERED AS A SALE TO B.
THIS IS AN EXAMPLE OF
A) ERROR OF OMISSION
B) ERROR OF COMMISSION
C) COMPENSATING ERROR
D) ERROR OF PRINCIPLE
5. GOODS SENT ON APPROVAL BASIS‟ HAVE BEEN RECORDED AS CREDIT SALES. THIS IS AN
A) ERROR OF PRINCIPLE
B) ERROR OF COMMISSION
C) ERROR OF OMISSION
D) ERROR OF DUPLICATION
6. WHICH OF THE FOLLOWING STATEMENTS IS NOT TRUE?
A) MANAGEMENT FRAUD IS MORE DIFFICULT TO DETECT THAN
EMPLOYEE FRAUD
B) INTERNAL CONTROL SYSTEM REDUCES THE POSSIBILITY OF
OCCURRENCE OF EMPLOYEE
C) THE AUDITOR‟S RESPONSIBILITY FOR DETECTION AND PREVENTION
OF ERRORS AND FRAUDS
D) ALL STATEMENTS ARE CORRECT.
7. AS PER AAS4 IF AUDITOR DETECTS AN
A) HE SHOULD INFORM THE MANAGEMENT.
B) HE SHOULD COMMUNICATE IT TO THE MANAGEMENT IF IT IS MATERIAL
C) THE AUDITOR SHOULD ENSURE FINANCIAL STATEMENTS ARE
ADJUSTED FOR DETECTED
D) BOTH (B) AND (C)
8. WHICH OF THE FOLLOWING IS NOT A LIMITATION OF AUDIT AS
PER AAS4?
A) OBJECTIVITY OF AUDITOR'S JUDGMENT
B) SELECTIVE TESTING
C) PERSUASIVENESS OF EVIDENCE
D) LIMITATIONS OF INTERNAL CONTROL SYSTEM.
9. HOW MANY PRINCIPLES ARE LISTED IN AAS1, WHICH GOVERN
AUDITOR'S PROFESSIONAL
A) NINE
B) FOURTEEN
C) SEVEN
D) EIGHT
10. BOTH AUDITING AND ACCOUNTING ARE CONCERNED WITH
FINANCIAL
STATEMENTS. WHICH OF THE FOLLOWING
A) AUDITING USES THE THEORY OF EVIDENCE TO VERIFY THE
FINANCIAL INFORMATION
B) AUDITING LENDS CREDIBILITY DIMENSION AND QUALITY
DIMENSION TO THE FINANCIAL STATEMENTS PREPARED BY THE ACCOUNTANT.
C) AUDITOR SHOULD HAVE THROUGH KNOWLEDGE OF ACCOUNTING
CONCEPTS AND CONVENTION
D) ALL OF THE ABOVE.
11. THE RISK OF MANAGEMENT FRAUD INCREASES IN THE PRESENCE
OF:
A) FREQUENT CHANGES IN SUPPLIES
B) IMPROVED INTERNAL CONTROL SYSTEM
C) SUBSTANTIAL INCREASES IN SALES
D) MANAGEMENT INCENTIVE SYSTEM BASED ON SALES DONE IN A
QUARTER
12. AUDITING STANDARDS DIFFER FROM AUDIT PROCEDURES IN THAT
PROCEDURES RELATE
A) AUDIT ASSUMPTIONS
B) ACTS TO BE PERFORMED
C) QUALITY CRITERION
D) METHODS OF WORK
13. WHICH OF THE FOLLOWING FACTORS LIKELY TO BE IDENTIFIED
AS A FRAUD FACTOR BY THE
A) THE COMPANY IS PLANNING AN INITIAL PUBLIC OFFER OF
QUALITY SHARES TO RAISE ADDITIONAL
B) BANK RECONCILIATION STATEMENT INCLUDES DEPOSIT Transaction.
C) PLANT AND MACHINERY IS SOLD AT A LOSS.
D) THE COMPANY HAS MADE POLITICAL CONTRIBUTIONS.
14. THE MOST DIFFICULT TYPE OF MISSTATEMENT TO DETECT FRAUD
IS BASED ON:
A) RELATED PARTY PURCHASES
B) RELATED PARTY SALES
C) THE RESTATEMENT OF SALES
D) OMISSION OF A SALES
TRANSACTION FROM BEING RECORDED.
15. WHICH OF THE FOLLOWING STATEMENTS IS CORRECT CONCERNING
THE REQUIRED
A) AL RISK FACTORS AS MENTIONED IN AAS4, SHOULD BE
CONSIDERED AND DOCUMENTED ALONG
B) DOCUMENT THE IDENTIFICATION OF FRAUD RISK FACTORS ALONG
WITH RESPONSE TO THEM.
C) DOCUMENT MATERIAL FRAUD, RISK FACTORS AND RESPONSE TO
THEM.
D) NO DOCUMENTATION IN REQUIRED.
16. WHICH OF THE FOLLOWING IS THE MOST APPROPRIATE POTENTIAL
REACTION OF THE
ASSESSMENT THAT THE RISK OF MATERIAL MISSTATEMENT DUE TO
FRAUD IS HIGH IN RELATION
A) VISIT LOCATION ON SURPRISE BASIS TO OBSERVE TEST COUNTS
B) REQUEST INVENTORY COUNT AT A DATE CLOSE TO YEAR END
C) VOUCH GOODS SENT ON APPROVAL VERY CAREFUL Y
D) PERFORM ANALYTICAL PROCEDURES.
17. WHICH OF THE FOLLOWING IS NOT LIKELY TO BE A FRAUD RISK
FACTOR RELATING TO
A) TAX EVASION
B) FAILURE TO CORRECT KNOWN WEAKNESS IN
INTERNAL CONTROL SYSTEM
C) ADOPTION OF CONSERVATIVE ACCOUNTING PRINCIPLES
D) HIGH MANAGEMENT TURNOVER
18. PROFESSIONAL SKEPTICISM REQUIRES THAT THE AUDITOR ASSUME
THAT
MANAGEMENT IS
A) REASONABLY HONEST
B) NEITHER HONEST NOR DISHONEST
C) NOT NECESSARILY HONEST
D) DISHONEST UNLESS PROVED OTHERWISE
19. WHICH OF THE FOLLOWING INFORMATION SHOULD A SUCCESSOR
AUDITOR
OBTAIN DURING THE INQUIRY OF?
THE PREDECESSOR AUDITOR BEFORE ACCEPTING ENGAGEMENT?
I) INFORMATION ABOUT INTEGRITY OF MANAGEMENT
II) DISAGREEMENT WITH MANAGEMENT CONCERNING AUDITING
III) REVIEW OF INTERNAL CONTROL SYSTEM.
IV) ORGANIZATION STRUCTURE
A) (I) AND (I)
B) (I) AND (I I)
C) (I), (I) AND (I I)
D) I)
AND (I I)
20. THE AUDIT ENGAGEMENT LETTER, GENERAL Y, SHOULD INCLUDE A
REFERENCE TO
A) LIMITATIONS OF AUDITING
B) RESPONSIBILITIES OF MANAGEMENT WITH RESPECT TO AUDIT WORK
C) EXPECTATION OF RECEIVING A WRITTEN MANAGEMENT REPRESENTATION
LETTER.
D) A DESCRIPTION OF THE AUDITOR‟S METHOD OF SAMPLE
SELECTION.
21. THE USE OF AN AUDIT ENGAGEMENT LETTER IS THE BEST METHOD
OF ASSURING
A) AUDITOR WILL OBTAIN SUFFICIENT APPROPRIATE AUDIT EVIDENCE.
B) MANAGEMENT REPRESENTATION LETTER
C) ACCESS TO ALL BOOKS, ACCOUNTS AND VOUCHERS REQUIRED FOR
AUDIT PURPOSE
D) COOPERATION FROM OTHER AUDITORS
22. THE USE OF AN AUDIT ENGAGEMENT LETTER IS THE BEST METHOD
OF DOCUMENTING
I) THE REQUIRED COMMUNICATION OF SIGNIFICANT DEFICIENCIES IN
INTERNAL CONTROL
II)
III) OBJECTIVE AND SCOPE OF AUDITOR‟S WORK
IV) NOTIFICATION OF ANY CHANGES IN THE ORIGINAL ARRANGEMENTS
OF THE
AUDIT.
A) (I) AND (I)
B) (I) AND (II)
C) I AND (IV)
D) (I I
AND (IV)
23. AN AUDITOR WHO ACCEPTS AN AUDIT BUT DOES NOT POSSESS THE
INDUSTRY EXPERTISE OF THE BUSINESS ENTITY SHOULD
A) ENGAGE EXPERTS
B) OBTAIN KNOWLEDGE OF MATTERS THAT RELATE TO THE NATURE OF
ENTITY'S BUSINESS
C) INFORM MANAGEMENT ABOUT IT
D) TAKE HELP OF OTHER AUDITORS
24. THE LEAST IMPORTANT ELEMENT IN THE EVALUATION O F AN
AUDIT FIRM‟S SYSTEM OF
A) ASSIGNMENT OF AUDIT ASSISTANTS
B) SYSTEM OF DETERMINING AUDIT FEES
C) CONSULTATION WITH EXPERTS
D) CONFIDENTIALITY OF CLIENT‟S INFORMATION
25. THE PRIMARY PURPOSE OF ESTABLISHING QUALITY CONTROL
POLICIES AND
PROCEDURES FOR DECIDING ON CLIENT EVALUATION IS TO
A) ENSURE ADHERENCE TO GENERAL Y ACCEPTED AUDITING STANDARDS
B) ACCEPTANCE OR RETENTION OF CLIENTS WHOSE MANAGEMENT DOES
NOT LACK INTEGRITY
C) ENSURE AUDIT FEES IS CHARGED ACCORDING TO THE TYPE OF
AUDIT WORK ASSIGNED
D) ALL OF THE ABOVE
26. WHICH OF THE FOLLOWING IS NOT A QUALITY CONTROL
CONSIDERATION ON ACCEPTING
A) AVAILABILITY OF AUDIT ASSISTANTS WITH NECESSARY SKILL AND
COMPETENCE.
B) PROVISION OF OTHER SERVICES TO THE CLIENT WHICH MAY
IMPAIR INDEPENDENCE
C) PREDECESSOR AUDITOR'S ADVICE AS TO WHETHER AUDIT FEES
WERE PAID PROMPTLY
D) REVIEW OF AUDIT WORK DONE BY ONE PARTNER BY THE OTHER
27. AN AUDITOR OBTAINS KNOWLEDGE ABOUT A NEW CLIENT‟S
BUSINESS AND ITS
A) MAKE CONSTRUCTIVE SUGGESTIONS CONCERNING IMPROVEMENTS TO
THE CLIENT'S INTERNAL
B) EVALUATE THE APPROPRIATENESS OF AUDIT EVIDENCE OBTAINED
C) UNDERSTAND THE EVENTS AND TRANSACTIONS THAT MAY HAVE AN
EFFECT ON CLIENT‟S FINANCIAL
D) ALL OF THE ABOVE
CONCEPTS OF AUDITING.
1. Audit of banks is an
example
of
a) Statutory audit
b) Balance sheet audit
c) Concurrent audit
d) Both (a) and (b)
e) All of the above
2. Concurrent audit is a
part
of
a) Internal check system
b) Continuous audit
c) Internal audit system
d) None
3. In Pakistan, balance
sheet audit is synonymous
to
a) Annual audit
b) Continuous audit
c) Detailed audit
d) Statutory audit
4. Audit in depth is synonymous
for
a) Complete audit
b) Completed audit
c) Final audit
d) Detailed audit
5. Balance sheet audit
includes verification of_
a) Assets
b) Liabilities
c) Income and expense
accounts where appropriate
d) All of the above
6. Which of the following
statements is not true about continuous audit?
a) It is conducted at
regular interval
b) It may be carried out
on daily basis
c) It is needed when the
organization has a good internal control system
d) It is expensive
7. Which of the following
is not a fact of EPA?
a) Economic audit
b) Efficiency audit
c) Expenditure audit
d) Effectiveness audit
8. The Delhi Government had
constructed six bungalows for its ministers. They are lying unoccupied for last
three
a) Propriety Auditor
b) Performance Auditor
c) Financial Auditor
d) None of the above
9. Financial auditor is not
concerned with propriety of business transactions. However, the exceptions to
this rule
a) Section 227 (IA) of the
Companies Act, 1956
b) Section 227 (IA) and
section 227(4A) of the Act
c) CARO, 2003
d) Section 227 (IA) and
CARO, 2003
10. Balance Sheet does not
include ---
a) Verification of assets
and liabilities
b) Vouching of income and
expense accounts related to assets and liabilities
c) Examination of
adjusting and closing entries
d) Routine checks
11. Which of the following
statements is not correct about materiality?
a) Materiality is a
relative concept
b) Materiality judgments
involve both quantitative and qualitative judgments
c) Auditor‟s consideration
of materiality is influenced by the auditor‟s perception of the
needs of an informed
decision maker who will rely on the financial statements
d) At the planning state,
the auditor considers materiality at the financial statement level
only
12.…...the audit risk, the
materiality and …the audit effort
a) Lower, Higher, Lower
b) Lower, Lower, Higher
c) Higher, Lower, Lower
d) Lower, Higher, Higher
13. When issuing
unqualified opinion, the auditor who evaluates the audit findings should
a) Amount of known
misstatement is documented in working papers
b) Estimates of the total
likely misstatement is less than materiality level
c) Estimate of the total
likely misstatement is more than material y level
d) Estimates of the total
likely misstatement cannot be made
14. In determining the
level of materiality for an audit, what should not be considered?
a) Prior year‟s errors
b) The auditor‟s remuneration
c) Adjusted interim
financial statements
d) Prior year‟s financial
statements
15. Analytical procedures
issued in the planning stage of an audit,
a) helps to determine the
nature, timing and extent of other audit procedures
b) directs attention to
potential risk areas
c) indicates important
aspects of business
d) All of the above
16. Which of the following
statements is most closely associated with analytical
procedure? Applied at
substantive stage?
a) It helps to study relationship
among balance sheet accounts
b) It helps to discover
material misstatements in the financial statements
c) It helps to identify
possible oversights
d) It helps to accumulate
evidence supporting the validity of a specific account balance
17. For all audits of
financial statements made in accordance with AAS14, the use of analytical
a) Substantive testing
b) Planning stage
c) Overall review stage
d) All of the above
18. The basic assumption
underlying the use of analytical procedures is:
a) It helps the auditor to
study relationship among elements of financial information
b) Relationship among data
exist and continue in the absence of known condition to
the contrary
c) Analytical procedures
will not be able to detect unusual relationships
d) None of the above.
19. What are analytical
procedures?
a) Substantive tests
designed to assess control risk
b) Substantive tests
designed to evaluate the validity of management‟s representation letter
c) Substantive tests
designed to study relationships between financial and
d) All of the above
20. Which of the following
is not an analytical procedure?
a) Tracing of purchases
recurred in the purchase book to purchase invoices.
b) Comparing aggregate
wages paid to number of employees
c) Comparing the actual
costs with standard costs
d) All of them are
analytical procedure
21. When applying
analytical procedures, an auditor could develop independent estimate of
a) client‟s unedited
account balance
b) client‟s unedited
account balance adjusted for trends in the industry
c) Prior year audited
balance
d) Prior year audited
balance adjusted for trends in the industry
22. What is the primary
objective of analytical procedures used in the overall review stage of
a) To help to corroborate
the conclusions drawn from individual components of financial
statements
b) To reduce specific
detection risk
c) To direct attention to
potential risk areas
d) To satisfy doubts when questions arise
about a client‟s ability to continue
AUDIT EVIDENCE:
1. OF THE FOLLOWING, WHICH
IS THE LEAST PERSUASIVE TYPE OF AUDIT EVIDENCE?
A) BANK STATEMENTS
OBTAINED FROM THE CLIENT
B) DOCUMENTS OBTAINED BY
AUDITOR FROM THIRD PARTIES DIRECTLY.
C) CARBON COPIES
D) COMPUTATIONS MADE BY
THE AUDITOR
2. WHICH OF THE FOLLOWING
STATEMENTS IS, GENERAL Y, CORRECT ABOUT THE RELIABILITY OF
A) TO BE RELIABLE,
EVIDENCE SHOULD CONCLUSIVE RATHER THAN PERSUASIVE
B) EFFECTIVE INTERNAL
CONTROL SYSTEM PROVIDES RELIABLE AUDIT EVIDENCE
C) EVIDENCE OBTAINED FROM
OUTSIDE SOURCES ROUTED THROUGH THE CLIENT
D) ALL ARE CORRECT.
3. IN AN AUDIT OF FINANCIAL
STATEMENTS, SUBSTANTIVE TESTS ARE AUDIT PROCEDURES THAT
A) MAY BE ELIMINATED FOR
AN ACCOUNT BALANCE UNDER CERTAIN CONDITIONS
B) ARE DESIGNED TO
DISCOVER SIGNIFICANT SUBSEQUENT EVENTS
C) WILL INCREASE
PROPORTIONATELY WHEN THE AUDITOR DECREASES THE ASSESSED
D) MAY BE TEST OF
TRANSACTIONS, TEST OF BALANCE AND ANALYTICAL PROCEDURES
4. THE NATURE, TIMING AND
EXTENT OF SUBSTANTIVE PROCEDURES IS RELATED TO ASSESSED
A) RANDOMLY
B) DISPROPORTIONATELY
C) DIRECTLY
D) INVERSELY
5. WHICH OF THE FOLLOWING
FACTORS IS MOST IMPORTANT IN DETERMINING THE
A) THE RELIABILITY OF
AUDIT EVIDENCE AND ITS RELEVANCE IN MEETING THE
AUDIT OBJECTIVE
B) THE OBJECTIVITY AND
INTEGRITY OF THE AUDITOR
C) THE QUANTITY OF AUDIT
EVIDENCE
D) THE INDEPENDENCE OF THE
SOURCE OF EVIDENCE
6. WHEN IS EVIDENTIAL
MATTER, GENERALLY, CONSIDERED SUFFICIENT?
A) WHEN IT CONSTITUTES
ENTIRE POPULATION
B) WHEN IT IS ENOUGH TO
PROVIDE A BASIS FOR GIVING REASONABLE ASSURANCE
C) WHEN IT IS OBJECTIVE
AND RELEVANT
D) WHEN AUDITOR COL ACTS
AND EVALUATES IT INDEPENDENTLY
7. WHICH OF THE FOLLOWING
IS NOT CORROBORATIVE EVIDENCE?
A) MINUTES OF MEETINGS
B) CONFIRMATIONS FROM
DEBTORS
C) INFORMATION GATHERED BY
AUDITOR THROUGH OBSERVATION
D) WORKSHEET SUPPORTING
CONSOLIDATED FINANCIAL STATEMENTS
8. WHICH OF THE FOLLOWING
STATEMENTS IS NOT TRUE WITH RESPECT TO
MANAGEMENT REPRESENTATIONS OBTAINED
AS PER AAS11?
A) AUTHENTICATED COPY OF
RELEVANT MINUTES OF MEETINGS MAY BE REGARDED
B) IT SHOULD ALWAYS BE IN
WORKING
C) IT MAY BE DATED PRIOR
TO THE REPORT DATE
D) IT SHOULD BE ADDRESSED
TO THE AUDITOR
9. WHAT WOULD MOST
APPROPRIATELY DESCRIBE THE RISK OF INCORRECT REJECTION IN TERMS
A) THE AUDITOR CONCLUDES
BALANCE IS MATERIALLY CORRECT WHEN IN ACTUAL FACT IT
B) THE AUDITOR CONCLUDES
THAT THE BALANCE IS MATERIALLY MISSTATED WHEN IN ACTUAL FACT IT NOT
C) THE AUDITOR HAS
REJECTED AN ITEM FOR SAMPLE WHICH WAS MATERIAL
D) NONE OF THE ABOVE
10. WHICH OF THE FOLLOWING
AFFECTS AUDIT EFFECTIVENESS?
A) RISK OF OVER RELIANCE
B) RISK OF INCORRECT
REJECTION
C) RISK OF INCORRECT
ACCEPTANCE
D) BOTH (A) AND (C)
11. WHAT WOULD MOST
EFFECTIVELY DESCRIBE THE RISK OF INCORRECT ACCEPTANCE IN TERMS
A) THE AUDITOR HAS
ASCERTAINED THAT THE BALANCE IS MATERIAL Y CORRECT WHEN IN
B) THE AUDITOR CONCLUDES
THE BALANCE IS MATERIAL Y MISSTATED WHEN IN
ACTUAL FACT IS NOT
C) THE AUDITOR HAS
REJECTED AN ITEM FROM SAMPLE WHICH WAS NOT SUPPORTED
D) HE APPLIES RANDOM SAMPLING ON DATA WHICH
IS INACCURATE AND INCONSISTENT
AUDIT OF CASH TRANSACTION
1. WHICH OF THE FOLLOWING
DOCUMENTS IS NOT RELEVANT FOR VOUCHING CASH SALES?
A) DAILY CASH SALES
SUMMARY
B) SALESMEN‟S SUMMARY
C) MONTHLY STATEMENTS SENT
TO CUSTOMERS
D) BANK STATEMENT
2. THE AUDITOR SHOULD
EXAMINE SUBSEQUENT REALIZATION OF REVENUE SUCH AS DIVIDENDS,
A) IDENTIFY CASES OF
UNRECORDED REVENUE
B) ENSURE PROPER
DISCLOSURE IN THE BALANCE SHEET
C) RECOMPUTE ACCRUED
INCOME ON THE DATA OF BALANCE SHEET
D) ANY OF THESE
3. TO TEST WHETHER SALES
HAVE BEEN RECORDED, THE AUDITOR SHOULD DRAW A SAMPLE FROM
A) PURCHASE ORDERS
B) SALES ORDERS
C) SALES INVOICES
D) BILL OF LOADING
4. FOR VOUCHING OF WHICH
ITEM, THE AUDITOR IS MOST LIKELY TO EXAMINE COST RECORDS?
A) COMMISSION EARNED
B) BAD DEBTS RECORDED
C) CREDIT SALES
D) SALE OF SCRAP
5. THE “GUIDANCE NOTE ON
REVENUE” ISSUED BY THE ICAI DOES NOT DEAL WITH
A) SALES REVENUE
B) REVENUE RENDERING
SERVICE
C) REVENUE FROM SALE OF
FIXED ASSETS
D) INCOME FROM INTEREST,
DIVIDEND
6. AN AUDITOR CONDUCTS A
SURPRISE CHECK ON THE PAY DAY (I.E) THE DAY WAGES AND
A) TO ENSURE THAT THERE
ARE NO GHOST WORKERS
B) TO ENSURE THE CASUAL
WORKERS EMPLOYED ARE AUTHORIZED BY THE SUPERVISOR
C) TO TEST PROCEDURES FOR
DISTRIBUTING PAY CHEQUES
D) TO OBTAIN UNDERSTANDING
OF INTERNAL CONTROL SYSTEM
7. WHICH OF THE FOLLOWING
WOULD PREVENT DOUBLE PAYMENT OF THE SAME VOUCHER?
A) THE PERSON SIGNING THE
CHEQUE SHOULD CANCEL THE SUPPORTING DOCUMENTS
B) CHEQUES SHOULD BE
SIGNED BY AT BEST TWO PERSONS
C) THE DATA OF PAYMENT OF
VOUCHERS OF SIMILAR NATURE SHOULD BE THE SAME
D) ALL OF THE ABOVE
8. IN CASE OF UNCLAIMED
WAGES, THE AUDITOR SHOULD EXAMINE WHETHER
A)THE AMOUNT HAS BEEN
DEPOSITED IN A SEPARATE BANK ACCOUNT
B) DEPOSITED WITH THE
CASHIER
C) HELD IN A SAFE DEPOSIT
BOX
D) ALL OF THESE
9. WHILE VOUCHING WAGES,
AUDITOR SHOULD EXAMINE WHETHER THERE IS PROPER SEGREGATION OF
A) MAINTAINING PERSONNEL
RECORDS AND APPROVING CHANGING IN WAGES RATES
B) PROPOSING PAY ROLL
SUMMARY AND DISBURSEMENT OF WAGES
C) MAKING SALARY
STATEMENTS AND FILING TAX RETURNS
D) COMPARING TIME CLOCK
RECORDS WITH TIME REPORTS PREPARED BY SUPERVISORS
10. IN ORDER TO VOUCH,
WHICH OF THE EXPENSES, THE AUDITOR WILL EXAMINE BILL OF ENTRY?
A) CUSTOM
B) EXCISE DUTIES
C) SALES TAX
D) INCOME TAX
11.WHILE VOUCHING, HOW WILL
THE AUDITOR ENSURE HIMSELF THAT ALL CREDIT SALES
A) EXAMINING CUTOFF POINTS
B) MATCHING ENTRIES IN THE
SALES BOOK AGAINST RENUMBERED SALES INVOICES
C) COUNTING THE NUMBER OF
INVOICES AND MATCHING THE NUMBER WITH ENTRIES ON SALES BOOK
D) BOTH (A) AND (B)
12.IN CASE OF SALES RETURN,
THE AUDITOR SHOULD EXAMINE WHICH DOCUMENTS?
A) CREDIT NOTES, ADVICE
NOTES AND INWARD RETURN NOTES
B) DEBIT NOTES, ADVICE
NOTES AND INWARD RETURN NOTES
C) PURCHASE INVOICES,
ADVICE NOTES AND INWARD RETURN NOTES
D) CREDIT NOTES,
INSPECTION REPORT AND INWARD RETURN NOTES
13.AN INTERNAL AUDITOR
DISCOVERED THAT FICTITIOUS PURCHASES HAVE BEEN RECORDED BY
A) PURCHASE INVOICES ARE
INDEPENDENTLY MATCHED WITH PURCHASE ORDERS AND GOODS RECEIVED NOTES
B) GOODS RECEIVED NOTES
REQUIRES THE SIGNATURE OF INDIVIDUAL WHO AUTHORIZED THE PURCHASE
C) ROUTINE CHECKS ARE
PERFORMED BY INTERNAL AUDITOR FORTNIGHTLY.
D) PURCHASE FUNCTION AND
PRODUCTION FUNCTION ARE CLUBBED IN ONE DEPARTMENT
14.WHICH OF THE FOLLOWING
IS MOST CRUCIAL TO A PURCHASE DEPARTMENT?
A) REDUCING THE COST OF
ACQUISITION
B) SELECTING SUPPLIES
C) AUTHORIZING THE
ACQUISITION OF GOODS
D) ASSURING THE QUALITY OF
GOODS
15.THE AUDITOR IS MOST
LIKELY TO EXAMINE RELATED PARTY TRANSACTIONS VERY CAREFULLY
A) CREDIT SALES
B) SALES RETURNS
C) CREDIT PURCHASES
D) CASH PURCHASES
16. IN ORDER TO VOUCH BOUGHT
LEDGER, THE AUDITOR OBTAIN CONFIRMATIONS FROM CREDITORS.
A) THE SUPPLIER EXIST
B) THERE ARE NO UNRECORDED
LIABILITIES
C) RECORDED PURCHASES
ACTUALLY OCCURRED
D) TO LINK CREDITORS WITH
CASH BOOK ENTRIES
17.THE CREDITORS ACCOUNTS,
GENERALLY, HAVE CREDIT BALANCE. DEBIT BALANCE MAY BE DUE TO
A)ADVANCE PAID AGAINST AN
ORDER
B) GOODS RETURNED
C) WRONG DEBIT TO SUPPLIER
ACCOUNT
D) ANY OF THESE
18.IN CASE OF VOUCHING, THE
AUDITOR IS LEAST LIKELY TO EXAMINE AUTHORIZATION
A) BAD BAD WRITTEN OFF
B) SALES RETURN
C) PURCHASE RETURN
D) DISCOUNT ALLOWED TO
CUSTOMERS AS PER ORGANIZATIONAL POLICY
19.VENDORS SHOULD BE
APPROVED BY MANAGEMENT BEFORE PURCHASE DEPARTMENT EXECUTES AN
A)PURCHASES COULD BE MADE
FROM VENDORS WHOSE PRODUCT QUALITY MAY NOT BE GOOD
B) PURCHASES MAY BE MADE
FROM RELATED PARTIES WITHOUT
MANAGEMENT‟S KNOWLEDGE
C) PURCHASES COULD BE MADE
FROM VENDORS WHO MAY HAVE OFFERED PRICE TO
D) ANY OF THESE
VERIFICATION & VALUATION OF ASSETS
1. WHICH OF THE FOLLOWING
IS NOT TRUE WITH REGARD TO VERIFICATION OF ASSETS?
A) IT INVOICES SUBSTANTIATION OF OCCURRENCE OF TRANSACTIONS
B) ITS OBJECTIVE IS TO ESTABLISH EXISTENCE, OWNERSHIP,
POSSESSION, VALUATION AND DISCLOSURE
C) THE AUDITOR HAS TO FORM AN OPINION ON DIFFERENT ASPECTS
D) ALL ARE TRUE
2. WHICH OF THE FOLLOWING
STATEMENTS IS NOT TRUE ?
A) VALUATION OF ASSETS IS THE RESPONSIBILITY OF MANAGEMENT
B) THE AUDITOR CAN RELY ON A CERTIFICATE ISSUED BY AN AUTHORIZED
VALUATIONER AS TO THE
C) THE AUDITOR SHOULD VALUE THE ASSET AS PER GENERALLY ACCEPTED
ACCOUNTING PRINCIPLE
D) VALUATION IS NO PART OF AUDITOR’S DUTY
3. AN AUDITOR IS VERIFYING
VALUATION OF BUILDING WHICH HAS BEEN SELF CONSTRUCTED
A) BILLS OF CONTRACTOR
B) MINUTES OF MEETING OF BOARD OF DIRECTORS
C) CERTIFICATES OF ENGINEER AND ARCHITECT
D) LOAN AGREEMENT
4. WHICH OF THE FOLLOWING
ASSETS IS LEAST LIKELY TO BE SUBJECTED TO LIEN?
A) FREEHOLD LAND
B) PLANT AND MACHINERY
C) LEASEHOLD PROPERTY
D) MOTOR VEHICLES
5. AN ANALYSIS OF FIXED
ASSETS ACCOUNT HAS REVEALED POSSIBILITY OF UNRECORDED SALE OF
A) EXAMINATION OF PROPERTY
TAX FILES
B) INQUIRY OF PLANT
MANAGER
C) EXAMINATION OF DEBITS
TO ACCUMULATED DEPRECIATION
D) ALL OF THE ABOVE
6. THE AUDITOR HAS NOTICED
EXISTENCE OF RECURRING LOSSES SALE OF FIXED ASSETS
A) DEPRECIATION CHARGES
ARE INSUFFICIENT
B) POLICY OF SALE OR
DISPOSAL OF FIXED ASSETS NEEDS TO BE REVIEWED
C) THE SALE OF ASSETS HAVE
NOT BEEN PROPERLY AUTHORIZED
D) ACCOUNTING ERRORS
7. WHICH OF THE FOLLOWING
FINANCIAL STATEMENTS ASSERTIONS ARE ADDRESSED BY TESTING
A) EXISTENCE AND OWNERSHIP
B) VALUATION AND
DISCLOSURE
C) POSSESSION AND
OWNERSHIP
D) COMPLETENESS AND
VALUATION
8. THE AUDITOR WHILE
VERIFYING PREPAID INSURANCE HAS CONCLUDED THAT THERE IS
A) MODIFY HIS AUDIT REPORT
B) INSIST IT SHOULD BE
DISCLOSED IN THE NOTES TO FINANCIAL STATEMENTS
C) WRITE IT IN LETTER OF
WEAKNESS
D) BOTH (B) AND (C)
9. WHILE VERIFYING
INTANGIBLE ASSETS, AN AUDITOR WOULD RECOMPUTE AMORTIZATION CHARGES AND
A) VALUATION
B) EXISTENCE
C) DISCLOSURE
D) POSSESSION
10.WHEN AUDITING PREPAID
INSURANCE, AN AUDITOR DISCOVERS THAT THE INSURANCE POLICY
A) NO INSURANCE HAS BEEN
UNDERTAKEN FOR BUILDING
B) LIEN ON BUILDING
C) INSURANCE PREMIUM HAS
NOT BEEN PAID
D) INSURANCE PREMIUM PAID
BUT NOT RECORDED
11.EQUITY SHARES OF XY LTD.
HELD BY ABC LTD. ARE IN THE CUSTODY OF STOCK HOLDING
A) REVIEWING LAST YEAR‟S
WORKING PAPERS.
B) OBTAINING A CERTIFICATE
FROM A RESPONSIBLE OFFICIAL OF THE ABC LTD.
C) OBTAINING A CERTIFICATE
FROM SHCIL
D) OBTAINING A CERTIFICATE
FROM XY LTD.
12.WHICH OF THE FOLLOWING
CONTROLS WOULD ENSURE THAT SECURITIES ARE NOT LOST, STOLEN
A) ESTABLISH PHYSICAL
BARRIERS OVER INVESTMENT SECURITIES
B) MAINTAIN FILES OF
AUTHORIZED SIGNATURES
C) SEGREGATE INVESTMENT
APPROVAL FORM ACCOUNTING AND FROM CUSTODY
OF SECURITIES
D) ALL OF THE ABOVE
13.WHICH OF THE FOLLOWING
IS NOT A PROPER THIRD PARTY TO HOLD INVESTMENTS ON BEHALF
A) REGIONAL LEVEL
CUSTODIAN
B) NATIONAL LEVEL
CUSTODIAN
C) INDIA TRILLS – NATIONAL
LEVEL STOCK BROKING FIRM
D) AEZ SECURITIES LTD.
14. A
STOCK BROKING FIRM
A) SENDING DEBTOR‟S
CONFIRMATION LETTERS
B) REVIEWING SUBSEQUENT
COLLECTION
C) VERIFY DEBTORS AGAINST
SALES DOCUMENT
D) BOTH (A) AND (B)
15.ANALYTICAL PROCEDURES
ARE LEAST LIKELY TO BE USE IN THE AUDIT OF –
A) CASH BALANCE
B) INVESTMENTS
C) BILLS RECEIVABLES
D) DEBTORS
16.WHICH OF THE FOLLOWING
STATEMENTS IS NOT TRUE WITH REGARD TO TEEMING AND LADING ?
A) IT RESULTS IN THE
DELIBERATE MISAPPROPRIATION OF CASH RECEIPTS
B) IT IS ASSOCIATED WITH
CASH RECEIPTS
C) IF SAME INDIVIDUAL
MAINTAINS CASH RECEIPTS AND CASH PAYMENTS TEEMING
D) TO CONCEAL THE
SHORTAGE, THE DEFRAUD, USUALLY, TRIES TO KEEP BANK AND BOOK AMOUNTS IN DAILY AGREEMENT SO THAT A BANK RECONCILIATION WILL NOT DETECT THE IRREGULARITY.
17.THE BALANCE OF CASH IN
OFTEN BETWEEN ONE TO FIVE PERCENT OF TOTAL ASSETS. TICK THE MOST APPROPRIATE STATEMENT WITH REGARD TO VERIFICATION OF CASH IN CONTEXT OF THIS
A) CASH IN ALWAYS MATERIAL
AS MATERIALITY IS QUALITATIVE CONCEPT
B) NO AUDIT OF CASH IS
NEEDED WHEN, IN AUDITOR‟S OPINION, CASH IS
IMMATERIAL. MATERIALITY IS
A
C) THE CASH BALANCE NEED
ONLY BE AUDITED IF THE BALANCE IS IN OVERDRAFT
D) CASH IS TO BE VERIFIED
IF CONTROL RISK IS ASSESSED AS HIGH
18.WHEN COUNTING CASH ON
HAND THE AUDITOR SHOULD ___
A) ENSURE PRESENCE OF
SOMEBODY FROM MANAGEMENT
B) OBTAIN A RECEIPT FROM
CUSTODIAN AS TO ITS RETURN
C) ENSURE POSTAGE AND
REVENUE STAMPS ARE NOT COUNTED IN PHYSICAL COUNT
D) TEMPORARY ADVANCES TO
EMPLOYEES ARE COUNTED TO CALCULATE BALANCE OF
19.WHICH OF THE FOLLOWING
STATEMENT IS NOT TRUE REGARD TO AUDITOR‟S ATTENDANCE AT STOCK TAKING?
A) AUDITOR SHOULD ATTEND
PHYSICAL STOCK TAKING ONLY IF INVENTORY IS MATERIAL
B) AUDITOR MAY NOT ATTEND
PHYSICAL VERIFICATION OF STOCK BY MANAGEMENT, IF
C) IF INVENTORY IS MATERIAL,
EVEN WHEN THE AUDITOR IS NOT PLACING RELIANCE ON THE PHYSICAL VERIFICATION BY THE MANAGEMENT, HE SHOULD ATTEND IT
D) THE PRIMARY OBJECTIVE
OF AN AUDITOR‟S OBSERVATION OF AN ENTITY‟S
OBSERVATION OF AN ENTITY'S
20.WHILE OBSERVING A CLIENT‟S
ANNUAL PHYSICAL INVENTORY, AN AUDITOR CONDUCTED TEST COUNTS FOR CERTAIN TEST COUNTS WERE HIGHER THAN THE RECORDED QUANTITIES IN THE CLIENT‟S PERPETUAL RECORDS. THIS SITUATION COULD BE THE RESULT OF THE CLIENT‟S FAILURE TO RECORD –
A) PURCHASE RETURNS
B) SALES RETURNS
C) GOODS WITH CONSIGNOR
D) PURCHASE DISCOUNTS
21.INSPECTION
REPORT/RECEIVING REPORT SUPPORTS ENTRIES IN
A) SALES BOOK AND SALES RETURN
BOOK
B) PURCHASE BOOK AND SALES
RETURN BOOK
C) CASH BOOK AND PURCHASE
BOOK
D) SALES BOOK AND PURCHASE RETURN BOOK
AUDIT PREPARATION:
1. WHICH OF THE FOLLOWING AUDITING ASSURANCE STANDARD DEALS
WITH AUDIT PLANNING?
A) AAS7
B) AAS8
C) AAS9
D) AAS3
2. AUDIT PROGRAMME IS PREPARED BY
A) THE AUDITOR
B) THE CLIENT
C) THE AUDIT ASSISTANTS
D) THE AUDITOR AND HIS AUDIT ASSISTANTS
3. THE WORKING PAPERS WHICH AUDITOR PREPARES FOR FINANCIAL
STATEMENTS AUDIT ARE _
A) EVIDENCE FOR AUDIT CONCLUSIONS
B) OWNED BY THE CLIENT
C) OWNED BY THE AUDITOR
D) RETAINED IN AUDITOR‟S OFFICE UNTIL A CHANGE IN AUDITORS
4. THE QUANTITY OF AUDIT WORKING PAPERS COMPLIED ON
ENGAGEMENT WOULD MOST
A) MANAGEMENT‟S INTEGRITY
B) AUDITOR‟S EXPERIENCE AND PROFESSIONAL JUDGMENT
C) AUDITOR‟S QUALIFICATION
D) CONTROL RISK
5. WHICH OF THE FOLLOWING BEST DESCRIBES THE PRIMARY PURPOSE
OF AUDIT
A) TO DETECT ERRORS OR FRAUD.
B) TO COMPLY WITH GAAP
C) TO GATHER SUFFICIENT APPROPRIATE EVIDENCE
D) TO ASSESS AUDIT RISK
6. WHICH OF THE FOLLOWING IS NOT AN ADVANTAGE OF THE
PREPARATION OF WORKING PAPER?
A) TO PROVIDE A BASIS FOR REVIEW OF AUDIT WORK
B) TO PROVIDE A BASIS FOR SUBSEQUENT AUDITS
C) TO ENSURE AUDIT WORK IS BEING CARRIED OUT AS PER
PROGRAMME
D) TO PROVIDE A GUIDE FOR ADVISING ANOTHER CLIENT ON SIMILAR
ISSUES
7. WHICH OF THE FOLLOWING IS NOT AN ADVANTAGE OF THE
PREPARATION OF WORKING PAPER?
A) TO PROVIDE A BASIS FOR REVIEW OF AUDIT WORK
B) TO PROVIDE A BASIS FOR SUBSEQUENT AUDITS
C) TO ENSURE AUDIT WORK IS BEING CARRIED OUT AS PER
PROGRAMME
D) TO PROVIDE A GUIDE FOR ADVISING ANOTHER CLIENT ON SIMILAR
ISSUES
8. FOR WHAT MINIMUM PERIOD SHOULD AUDIT WORKING PAPERS BE
RETAINED BY AUDIT FIRM?
A) FOR THE TIME PERIOD THE ENTITY REMAINS A CLIENT OF THE
AUDIT FIRM.
B) FOR
C) FOR A PERIOD AUDITOR OPINES THEM TO BE USEFUL IN
SERVICING THE CLIENT
D) FOR THE PERIOD THE AUDIT FIRM IS IN EXISTENCE.
9. WHICH OF THE FOLLOWING FACTORS WOULD LEAST LIKELY AFFECT
THE QUANTITY AND CONTENT OF
A) THE ASSESSED LEVEL OF CONTROL RISK
B) THE POSSIBILITY OF PEER REVIEW
C) THE NATURE OF AUDITOR‟S REPORT
D) THE CONTENT OF MANAGEMENT REPRESENTATION LETTER
10. WHICH OF THE FOLLOWING STATEMENT IS TRUE REGARDING AN
AUDITOR‟S WORKING PAPERS?
A) THEY DOCUMENT THE LEVEL OF INDEPENDENCE MAINTAINED BY THE
AUDITOR
B) THEY SHOULD BE CONSIDERED AS THE PRINCIPLE SUPPORT FOR
THE AUDITOR‟S REPORT
C) THEY SHOULD NOT CONTAIN DETAILS REGARDING WEAKNESSES IN
THE
INTERNAL CONTROL SYSTEM
D) THEY HELP THE AUDITOR TO MONITOR THE EFFECTIVENESS OF THE
AUDIT FIRM‟S QUALITY
11. WHICH OF THE FOLLOWING STATEMENT BEST DESCRIBES THE
UNDERSTANDING WITH RESPECT TO OWNERSHIP AND CUSTODY OF WORKING PAPERS PREPARED BY AN AUDITOR?
A) THE WORKING PAPERS MAY BE OBTAINED BY THIRD PARTIES WHEN
THEY APPEAR TO BE RELEVANT TO ISSUES RAISED IN LITIGATION
B) THE SAFE CUSTODY OF WORKING PAPERS IS THE RESPONSIBILITY
OF CLIENT, IF KEPT AT HIS PREMISES
C) THE WORKING PAPERS MUST BE RETAINED BY AN AUDIT FIRM FOR
A PERIOD OF 10 YEARS
D) SUCCESSOR AUDITORS MAY HAVE ACCESS TO WORKING PAPERS OF
THE
PREDECESSOR AUDITORS. THE
12. THE CURRENT FILE OF THE AUDITOR‟S WORKING PAPERS,
GENERAL Y, SHOULD INCLUDE
A) A FLOWCHART OF THE INTERNAL CONTROLS
B) ORGANIZATION CHARTS
C) A COPY OF FINANCIAL STATEMENTS
D) COPIES OF BOND AND DEBENTURES
13. KNOWLEDGE OF THE ENTITY‟S BUSINESS DOES NOT HELP THE
AUDITOR TO
A) REDUCE INHERENT RISK
B) IDENTIFY PROBLEM AREAS
C) EVALUATE REASONABLENESS OF ESTIMATES
D) EVALUATE APPROPRIATES OF GAAP.
14. THE MAIN ADVANTAGE OF USING STATISTICAL SAMPLING
TECHNIQUES IS THAT SUCH TECHNIQUES:
A) MATHEMATICALLY MEASURE RISK
B) ELIMINATE THE NEED FOR JUDGMENTAL SAMPLING
C) DEFINES THE VALUES OF TOLERABLE ERROR
D) ALL OF THE THEM.
15. WHICH OF THE FOLLOWING METHODS OF SAMPLE SELECTION IS
LEAST SUITABLE
A) SYSTEMATIC SAMPLING
B) RANDOM SAMPLING
C) HAPHAZARD SAMPLING
D) NONE
16. WHICH OF THE FOLLOWING STATEMENTS IS CORRECT?
A) LOWER THE SAMPLING RISK GREATER THE SAMPLE SIZE
B) SMALLER THE TOLERABLE ERROR, GREATER THE SAMPLE SIZE
C) LOWER THE EXPECTED ERROR, SMALLER THE SAMPLE SIZE
D) ALL
ARE CORRECT
17. WHICH OF THE FOLLOWING FEATURES IS MOST IMPORTANT FOR
RANDOM BASED SELECTION?
A) SAMPLE SHOULD BE DRAWN FROM POPULATION
B) EVERY STRATA OF POPULATION SHOULD BE REPRESENTED IN THE
SAMPLE
C) EVERY ITEM IN THE POPULATION HAS AN EQUAL CHANCE OF BEING
SELECTED IN
D) ITEMS SHOULD BE SELECTED AT „N‟ THE INTERVAL
18. RISK OF UNDER RELIANCE IS THE RISK THAT THE SAMPLE
SELECTED TO TEST CONTROLS___
A) DOES NOT SUPPORT THE AUDITOR'S PLANNED ASSESSED LEVEL OF
CONTROL RISK WHEN
B) SUPPORTS THE AUDITOR'S PLANNED ASSESSED LEVEL OF CONTROL
RISK WHEN
C) IS NOT SUPPORTED BY ADEQUATE DOCUMENTS
D) BOTH (A) & (C)
19. WHICH OF THE FOLLOWING FACTORS IS (ARE) CONSIDERED IN
DETERMINING THE SAMPLE SIZE
A) PROJECTED ERROR
B) TOLERABLE ERROR
C) EXPECTED ERROR
D BOTH (B) AND (C)
20.TOLERABLE ERROR, IS THE MAXIMUM MONETARY ERROR THAT THE
AUDITOR IS PREPARED TO
A) SAMPLE SIZE
B) AUDIT RISK
C) MATERIALITY
D) EXPECTED
ERROR
CAPITAL AND REVENUE EXPENDITURE:
1. WHICH OF THE FOLLOWING
EXPENSES SHOULD NOT BE TREATED AS CAPITAL EXPENDITURE?
A) EXPENSES PAID ON
INSTALLATION OF A PLANT.
B) COST OF DISMANTLING A
BUILDING IN CASE A NEW BUILDING IS TO BE CONSTRUCTED
C) LEGAL EXPENSES INCURRED
TO DEFEND A SUIT RELATED TO TITLE OF PATENT. THE SUIT HAS BEEN LOST
D) THE FEES PAID TO ENGINEER
WHO CONSTRUCTED THE PLANT.
2. WHICH OF THE FOLLOWING
IS NOT A REVENUE EXPENSE?
A) COST OF RAISING A LOAN
B) COST OF ACCESSORIES OF MOTOR
VEHICLES SPENT AT THE TIME OF PURCHASE
C) EXPENSES INCURRED FOR
LYING OF SEWERS ON LAND PURCHASED
D) INSURANCE PREMIUM PAID AT
THE TIME OF REGISTRATION OF THE SHIP
3. DEPRECIATION DOES NOT
ARISE FORM _______
A) EFFLUX ION OF TIME
B) USE
C) OBSOLESCENCE THROUGH
TECHNOLOGY BE MARKET CHANGES
D) RE MARKET EXPECTATION
4. WHICH OF THE FOLLOWING
SCHEDULE OF THE COMPANIES ACT, 1956 DEALS WITH DEPRECIATION?
A) SCHEDULE XIV
B) SCHEDULE V
C) SCHEDULE XIII
D) SCHEDULE X
5. SCHEDULE XIV HAS
PRESCRIBED RATES OF DEPRECIATION FOR DOUBLE SHIFT AND TRIPLE
A) BUILDING
B) PLANT AND MACHINERY
C) FURNITURE AND FITTINGS
D) SHIPS
6. IF THE BOOK VALUE OF AN
ASSET STANDS AT ……..PER CENT OF THE ORIGINAL COST, A COMPANY
A) TWO
B) FIFTEEN
C) FIVE
D) TEN
7. A COMPANY HAS BOUGHT
PATENTS. WHICH OF THE FOLLOWING METHODS IS MOST SUITABLE
A) SLM
B) WDV
C) SUM OF YEAR DIGITS
D) ANY OF THE ABOVE
8. WHICH OF THE FOLLOWING
IS A REVENUE RESERVE?
A) CAPITAL REDEMPTION
RESERVE
B) SECURITY PREMIUM ACCOUNT
C) DEBENTURE REDEMPTION
RESERVE
D) CAPITAL RESERVE
9. WHICH OF THE FOLLOWING
WILL NOT LEAD TO CREATION OF SECRET RESERVE?
A) UNDERVALUATION OF CLOSING
STOCK
B) CHARGING CAPITAL EXPENDITURE TO REVENUE
C) GOODS SENT ON CONSIGNMENT
BEING SHOWN AS ACTUAL SALES
D) CHARGING HIGHER RATES OF DEPRECIATION ON
FIXED ASSETS THAN ACTUAL
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