Paper: 12 COMPANY ACCOUNTS AND AUDIT (True/False)
Company Accounts
1.       Buy-back of shares can also be made out of the proceeds of the earlier issues of the same kind of shares. False
2.       Marked applications are those applications which bear the stamp of an underwriter. True
3.       In order to spread the risk of under-subscription, the principal underwriters may enter into subsidiary agreements with sub-leases. False
4.       When debentures are issued at discount, it is prudent to write off the loss during the life of debentures. True
5.       Transfer to Capital redemption reserve account is not allowed from Dividend Equalization Fund. False

6.       Operating Lease is a lease which transfers substantially all the risks and rewards incidental to ownership. False
7.       Any surplus cash may be utilized by the company for buy-back and avoid the payment of dividend tax. True
8.       The profit on forfeiture and re-issue of equity shares are credited to Capital Redemption Reserve. False
9.       As per Companies Act 2013, companies are not permitted to buy back their own shares out of securities premium. False
10.   In case the leaseback is a finance lease, the sale proceeds in excess of the carrying amount should be immediately recognized in the Income Statement. False
11.   Issue of fully paid up bonus shares increases the total shareholders fund. False
12.   Interest and dividend received form a part of financing cash flow. False
13.   Exchange difference arising in respect of monetary items is to be recognized as income or expenditure during the year. True
14.   Capital Reserve is a Reserve which is available for distribution as Dividend. False
15.   Interest received by a finance company is a part of cash flow from investing activities. False
16.   Interest accrued and due should be shown under the head Other Current Liabilities in a Balance Sheet of a Company. True
17.   Bonus is the share of profit which is payable by the insurance company to the policyholders. True
18.   Interest on loan is included in ‘other operating expenses’ under the Statement of Profit and Loss. False
19.   In case of an underwriting arrangement, marked applications are those applications that bear the stamp of the issuing company. False
20.   Machinery purchased by issuing shares is shown under Cash Flow from Investments Activities in Cash Flow Statement. False
Auditing
1.       An Audit notebook is a bound book in which a large variety of matters observed during the course of audit are recorded. True
2.       The concept of true and fair is a fundamental concept in auditing. True
3.       First auditor of the company is appointed by the Board of Directors within 45 days from the date of first AGM. False
4.       A Statutory Audit is an official investigation into alleged wrong doing. False
5.       Section 70 deals with the Audit of Debenture. False
6.       An Audit Committee should have 4 directors. False
7.       CARO-Companies (Auditor's Report) order, 2016 is applicable to Banking Companies. False
8.       Internal Check is part of Accounting Control. True
9.       The Branch Auditor shall prepare report on the Accounts of the Branch examined by him and send it to Audit Committee. False
10.   Maintenance of Cost Accounting Standards is mandatory as per Section 143 of Companies Act. False
11.   Routine checking is a substitute of vouching. False
12.   Casual vacancy in the office of Cost Auditor is filled by Board of Directors. True
13.   As per Section 138 of Companies Act 2013, no private company or unlisted company is required to appoint an internal auditor. False
14.   Audit Memorandum is a detailed plan of audit work clearly specifying the responsibilities of the audit staff and time allotted to perform the same. False
15.   Substantive procedure is also known as test of control. False
16.   Cut-off procedures are adopted to allocate revenues and costs to the proper accounting period. True
17.   Audit Programme is a part of Current Audit File. True
18.   Internal audit is conducted by the staff of the entity or by an independent professional appointed for that purpose. True
19.   The first auditor of a company is appointed by the shareholders of the company at the general meeting. False
20.   A company auditor can render actuarial services to his client. False

Post a Comment

Kindly give your valuable feedback to improve this website.

Previous Post Next Post