1. Sree media Company Limited acquired the business of M/s Bharat Traders. The valuation of the items acquired was—building Rs. 1,20,000; machinery Rs. 80,000 and stock-in-trade Rs. 30,000. The company issued in lieu of the above items 800, 10% debentures of Rs. 100 each at par and 1 5000 equity shares of Rs. 10 each.
How much was the flow of funds in the above transaction?
(a) Rs. 2,30,000
(b) Rs. 1,00,000
(c) Rs. 50,000
(d) Rs. 30,000
Ans. (d)
2. What are the aspects to be considered while qualifying the audit report on the accounts of a company?
1. An item requiring specific disclosure under the Companies Act is not so disclosed
2. Where the auditor has not been able to form an opinion due to his inability to obtain sufficient, appropriate evidence information and explanation
3. An auditor realizes that items in a financial statement are misstated to such an extent that the financial statement does not give a true and fair view
Select the correct answer using the Code given below:
Code:
(a) 1 only
(b) 1 and 2
(c) 2 and 3
(d) 1, 2 and 3
Ans. (d)
3. Analytical review by an auditor mainly includes:
(a) examining vouchers and other documents
(b) physical verification of assets
(c) examining day books with ledgers
(d) study of ratios and trends
Ans. (d)
4. Statements on Standard Auditing Practices (SAPs) are important while discharging the auditing function by a member of the ICAI in case of a company, because SAPs are:
(a) prescribed by the ICAI
(b) contained in the Companies Act, 1956
(c) approved by the Department of Company Affairs
(d) approved by the Central Government in consultation with Comptroller and Auditor-General
Ans. (a)
5. Which audit is carried out during the accounting period with some interval, it is called:
(a) periodic audit
(b) partial audit
(c) continuous audit
(d) interim audit
Ans. (c)
6. Which one of the following pairs is NOT correctly matched?
(a) Suppression of invoices : Window dressing
(b) Overcharging depreciation : Secret reserves
(c) Omission of cash receipts from debtors : Understatement of sales
(d) Omission of credit sale : Understatement of debtors
Ans. (a)
7. Internal audit report is submitted to:
(a) Government
(b) Shareholders
(c) Creditors
(d) Board of Directors
Ans. (d)
8. The main purpose of auditing is to:
(a) detect accounting offences and to punish the offender
(b) prepare and authenticate the accounts
(c) prepare the accounts and authenticate their true and fair view
(d) certify the financial position of the business
Ans. (d)
9. Every auditor appointed under Section 224 (1) of the Companies Act, 1956 shall inform in writing as to whether he has accepted or refused to accept the appointment. Such an intimation shall be given by him to the
(a) company within 30 days of receipt from the company of the intimation of his appointment
(b) Company Law Board within 30 days of receipt from the company of the intimation of his appointment
(c) company within 7 days of receipt from the company of the intimation of his appointment
(d) Registrar within 30 days of receipt from the company of the intimation of his appointment
Ans. (d)
10. If an auditor does something wrongfully in the performance of his duties resulting in financial loss to the company, he will be held guilty of:
(a) civil negligence
(b) misfeasance
(c) criminal negligence
(d) financial irregularity
Ans. (b)
11. Audit Committee shall act in accordance with the terms of reference to be specified by:
(a) Statutory Auditors
(b) SEBI
(c) Board of Directors
(d) Central Government
Ans. (c)
12. The selection of items, to be included in the audit on a subjective basis without consideration of sample size of method of selection, is:
(a) probability sampling
(b) systematic sampling
(c) random sampling
(d) judgment sampling
Ans. (a)
13. The scope of audit in a partnership firm is governed by:
(a) partnership act
(b) partnership deed
(c) agreement between partnership firm and auditor
(d) number of partners of the firm
Ans. (c)
14. While establishing the statistical sampling plan, the degree of precision required is determined by:
(a) keenness of the management
(b) suitability of accounting systems and. procedures
(c) allowable margin of error the auditors are willing to accept
(d) random number table used for the purpose
Ans. (d)
15. Match List- I with List -II and select the correct answer using the Code given below the Lists:
List—I List—II
A. Inspection of books of account under 1. Central government
Section 209A of the Companies Act, 1956
B. Constitution of National Advisory Committee 2. Registrar of Companies
on Accounting Standards
C. Books of account 3. Registered office
D. Reasons for failure to buy back shares 4. The ICAI
5. Directors’ Report
Code:
A B C D
(a) 2 1 3 5
(b) 3 1 2 4
(c) 2 4 3 5
(d) 3 4 2 1
Ans. (c)
16. The scope of ‘management audit’ is determined by the:
(a) shareholders
(b) Board of Directors
(c) Comptroller and Auditor-General (C & AG)
(d) Comptroller and Auditor-General in consultation with the Central Government
Ans. (b)
17. In the case of an auditor appointed under Section 619 of the Companies Act, 1956 by the Comptroller and Auditor-General of India, the remuneration shall be fixed by the
(a) company in general meeting
(b) comptroller and Auditor-General of India
(c) comptroller and— Auditor-General of India consultation with the Central Government
(d) Company Law Board
Ans. (d)
18. Test checking reduces:
(a) the work of an auditor
(b) tie liability of an auditor
(c) both work and liability of an auditor
(d) the remuneration of an auditor
Ans. (a)
19. X is proposed to be appointed as the auditor of ABC Co. Ltd. at the ensuing AGM in place of the retiring auditor Y. This requires:
(a) a special resolution and approval of the Company Law Board
(b) a special notice
(c) an ordinary resolution and approval of the Company Law Board
(d) a special resolution and approval of Central Government
Ans. (b)
20. Test checking of entries in the audit work refers to:
(a) the internal checks
(b) the internal controls
(c) checking some sample items from a large number of similar items
(d) checking the cash flow of business
Ans. (c)
21. The First Standard Auditing Practice (SAP-I) is related to:
(a) objectives and scope of the audit of financial statements
(b) basis principles governing an audit
(c) documentation
(d) detecting fraud and error
Ans. (a)
22. Which of the following relating to Audit’ Programme is NOT correct?
(a) The auditor cannot defend himself on the basis of audit programme if there is a charge of negligence against him
(b) it is useful basis for planning the programme for ‘the subsequent year
(c) It helps in the final review before the report is signed
(d) it simplifies the allocation of work amongst the audit staff
Ans. (a)
23. Who is ‘bull’?
(a) A stock broker who deals or specializes in a few shares
(b) An investor who sells securities in anticipation of being able to re-buy them later at a lower price
(c) An investor who buys securities in anticipation of being able to sell them at a higher price
(d) An investor who expects the price of a security or of the market as a whole to fall
Ans. (c)
24. Commercial paper is a:
(a) long-term corporate security meant for small investors
(b) medium-term corporate security meant for institutional investors
(c) treasury paper meant for corporate investors
(d) short-item corporate security meant for large-scale investors
Ans. (c)
25. A cartel is a combination of firms:
(a) which are functioning in a particular industry
(b) whose combined assets are worth more than 90% of total assets of the industry
(c) who control major chunk of the market
(d) whose combined profits are enormous
Ans. (d)
26. Social responsibility of business assumes considerable importance towards:
(a) owners and workers
(b) consumers and community
(c) government and nation
(d) All the above
Ans.(d)
27. The distinctive characteristic of ‘perpetual succession’ of a joint stock company refers to:
(a) uninterrupted business in spite of continuous losses
(b) immunity from government direction for the closure of the company
(c) immunity from resolution passed in the annual general body meeting for closure of the company
(d) uninterrupted existence not affected by the death or insolvency of members of the company
Ans. (d)
28. A statutory corporation is one which comes into being
by:
(a) registration under Companies Act, 1956
(b) virtue of enactment of a Special Act
(c) registration under any enforceable Act operating in India
(d) the entrepreneurial effort of the government
Ans. (d)
29. Consider the following statements:
An unregistered partnership firm suffers from the following disabilities4.
1. A partner of such firm cannot file a suit for the dissolution of the firm
2. The firm cannot file a suit against any third party for realization of its dues
3. A partner cannot file a suit against any other partner to enforce any right arising out of partnership deed
Which of the above statements are correct?
(a) 1, 2 and 3
(b) 1 and 3
(c) 1 and 2
(d) 2 and 3
Ans. (d)
30. Exim Bank of India provides financial assistance to exporters and importers in India:
(a) in foreign currency only
(b) both in Indian currency and foreign currencies
(c) as zero-interest loans
(d) as subsidies
Ans. (d)
31. In life insurance, the risk insured is:
(a) certain to occur and also the timing of its occurrence is known
(b) certain to occur, but its timing of its occurrence is not known
(c) not certain to occur and also the timing of its occurrence is not known
(d) not likely to occur
Ans. (c)
32. The national re-insurer in India is:
(a) General Insurance Corporation of India
(b) United India Insurance Company Ltd.
(c) Insurance Regulatory and Development Authority
(d) Oriental Fire and General Insurance Company Ltd.
Ans. (a)
33. Which one of the following risks is not insured by the Export Credit and Guarantee Corporation?
(a) The risk of non-payment by the foreign buyer
(b) The risk that the importer may return the goods on the ground of lower quality
(c) The political risk that the import license may be revoked
(d)The risk of war, revolution, etc.; in the buyer’s country
Ans. (b)
34. Which one of the following indicates the correct chronological order of the ‘system’ designed for purchasing ‘office supplies’?
(a) Select sources of supply, initiate requisition, order supplies, receive supplies and pay vendor
(b) Initiate requisition, order supplies, select sources of supply, receive supplies and pay vendor
(c) Select sources of supply, initiate requisition order supplies, pay vendor and receive supplies
(d) Initiate requisition, select sources of supply, order supplies, receive supplies and pay vendor
Ans. (b)
35. Which one among the following is an instance of Participative Management?
(a) Board of Directors
(b) Trade Unions
(c) Work Committees
(d) Task Force
Ans. (c)
36. The size of an office can be measured in which of the following ways?
1. Production capacity of the organization
2. Number of employees
3. Investment in equipment and machines
4. Total administrative expenses
Select the correct answer using the Code given below:
Code:
(a) 1 and 4 are correct
(b) 1 and 2 are correct
(c) 1, 2 and 3 are correct
(d) 2, 3 and 4 are correct
Ans. (d)
37. Contingency School of Management
(a) practice-oriented
(b) principle-oriented
(c) result-oriented
(d) profit and loss-oriented
Ans. (a)
38. The term ‘organizational climate’ best represents:
(a) human environment prevailing in an organization
(b)union management relations within an organization
(c) problems introduced by faulty organizational structure
(d) socio-cultural environment in an organization
Ans. (d)
39. Which one of the following is the correct sequence in terms of the four management functions, first identified by Henry Fayol?
(a) Planning, Organizing, Leading and Controlling
(b) Planning, Organizing, Staffing and Coordinating
(c) Planning, Motivating, Directing and Reporting
(d) Planning, Staffing, Communicating and Leading
Ans. (b)
40. Match List-I (Office records) with List-II (Need of such record) and select the correct answer using the Code given below the Lists:
List-I List-II
A. File 1. Recording small and necessary expenses
B. Ledger 2. Recording transactions
C. Petty cash book 3. Keeping necessary documents
D. Office manual 4. Computerizing office system
Code:
A B C D
(a) 3 2 1 4
(b) 4 5 3 1
(c) 3 5 1 2
(d) 4 2 3 1
Ans. (a)
41. Organizations require narrow span of control if there are:
(a) mature subordinates within
(b) competent and trained managers
(c) unclear plans for non repetitive operations
(d) well defined plans for repetitive operations
Ans. (b)
42. Which one f the following traits describes properly organic or behavioral structure of organization?
(a) Wider spans of control
(b) More centralization
(c) Higher degree of specialization
(d) Taller hierarchy
Ans. (a)
43. People resist change in organization because of:
(a) fear of unemployment
(b) increase in responsibility
(c) need for new social adjustments
(d) All the above
Ans. (d)
44. When there are large number of smaller projects and the activities of those projects are to be accomplished by setting up some temporary departments, the appropriate organizational structure should be:
(a) project organization
(b) functional organization
(c) matrix organization
(d) divisional organization
Ans. (c)
45. The managerial function of organizing involves:
(a) reviewing and adjusting plan in the light of changing conditions
(b) establishing programme for the accomplishment of objectives
(c) creating a structure of functions and duties to be performed by a group
(d) getting things done through others
Ans. (c)
46. Which one of the following is the major consideration for decentralization?
(a) Organization’s environment
(b) Nature of management function
(c) Size of the organization
(d) Ability of higher-level managers
Ans. (c)
47. Which among the following is the most popular approach for accomplishing the results?
(a) Management by exception
(b) Reward system
(c) Management by objectives
(d) Mentor system
Ans. (c)
48. Which among the following is the oldest and simplest device for achieving coordination?
(a) Hierarchy
(b) Planning
(c) Incentives
(d) Rules
Ans. (b)
49. Centralizing the office work is desirable mostly because it:
(a) fixes responsibility
(b) avoids duplication
(c) permits better supervision
(d) permits better delegation
Ans. (a)
50. Match List-I with List-II and select the correct answer using the Code given below the List:
List- I List-II
A. F.W. Taylor 1. Principles of Management
B. Maslow 2. Team Work
C. Esprit de Corps 3. Scientific Management
D. V Henry Fayol 4. Theory of Human Motivation
Code:
A B C D
(a) 1 4 2 3
(b) 3 2 4 1
(c) 1 2 4 3
(d) 3 4 2 1
Ans. (d)
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