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This set of Practical Auditing Multiple Choice Questions & Answers (MCQs) focuses on Practical Auditing Set 4
Q1 | A company can issue Redeemable Preference shares, if authorized by
- Memorandum of association
- Articles of association
- Companies Act, 1956
- None of the above
Q2 | Auditor should see that amount received for premium on issue of shares should be shown in
- Subscribed capital
- Capital Reserve Account
- Share Premium account
- Paid- up capital account
Q3 | Share premium account should be shown in the Balance sheet under
- Paid-up capital
- Subscribed capital
- Reserves & surplus
- Reserved capital
Q4 | Amount of share premium may be utilized for
- Payment of dividend
- Writing of preliminary expenses
- Routine expenses
- Purchase of fixed assets
Q5 | Shares can be issued at discount under section
- 76
- 75
- 79
- 89
Q6 | Interest on calls paid in advance, according to Table A, should not exceed
- 6%
- 5%
- 10%
- 14%
Q7 | Shares can be issued at premium, under section
- 76
- 75
- 78
- 79
Q8 | A company can accept calls in advance from its shareholders under section
- 82
- 79
- 92
- 78
Q9 | Shares can be issued at discount only after
- 2 years of the commencement of the business
- 1 year of the commencement of the business
- 3 years of the commencement of the business
- 5 years of the commencement of the business
Q10 | With regard to issue of share warrants to the bearers, the auditor should see that is it
- Permitted by Memorandum of Association
- Sanctioned by the Central Government
- Permitted by the Board of Directors
- None of the above
Q11 | For the for festure of shares, the auditor should check that it is permitted
- by Memorandum of Association
- by articles of association
- under Companies Act, 1956
- None of the above
Q12 | Premium received on issue of shares, later forfeited, should be transferred to
- Capital reserve
- Shares forfeited Account
- Capital Account
- None of the above
Q13 | With regard to issue of share certificates, the auditor should refer to section
- 110
- 113
- 114
- 123
Q14 | Increase in share capital is permitted by
- Memorandum of Association
- Articles of association
- Court
- Companies Act, 1956
Q15 | Divisible profit should not include
- Interest on capital
- Capital
- Depreciation
- None of the above
Q16 | Dividend can not be paid out of
- Capital profit
- Capital receipts
- Revenue receipts
- None of the above
Q17 | Capital profit imply profit earned
- Through business transaction
- From capital
- From sale of fixed assets
- From sale of current assets
Q18 | Capital profits
- Can be paid by way of dividends
- Cannot paid by way of dividends
- Can be paid by way of dividend under certain conditions
- None of the above
Q19 | If there is capital loss, the auditor should
- Not allow payment of dividend
- Allow payment of dividends
- Allow payment of dividends after making such losses good
- None of the above
Q20 | A company auditor should see that the dividend should be paid
- After charging depreciation
- Without charging depreciation
- Out of capital
- None of the above
Q21 | In his report, the auditor gives his
- Judgment
- Opinion
- Guarantee to correctness of accounts
- True state of affairs
Q22 | Civil liability of an auditor implies liability for
- Misappropriation of cash
- Misappropriation of goods
- Fraud
- Misfeasance
Q23 | An auditor can be held liable under companies Act 1949 for
- Negligence
- Criminal offence
- Professional misconduct
- Breach of contract
Q24 | Investigation of books of accounts and records is :
- Not legally compulsory
- Compulsory
- Compulsory as per companies act
- Compulsory as Income Tax Act
Q25 | Investigation is carries on behalf of
- Manager
- Employee
- Client
- On behalf of owner and third parties