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Commerce Test

Description: Commerce
Number of Questions: 25
Created by:
Tags: Commerce Bank Company Accounts Ratio Analysis Prevention of Oppression and Mismanagement Meetings and Proceedings Prospectus Memorandum and Articles of Association Accounts and Audit Final Accounts of Companies Inspection and Investigation
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When creditors' velocity or creditors' turnover is higher as compared to debtors' velocity, it would

  1. improve liquidity

  2. reduce liquidity

  3. have no effect on liquidity

  4. improve financial position

Show answer
Correct Option: C

Directions: Choose the correct option for the given question.

Consider the following statements: Current ratio is increased by

  1. Issue of redeemable preference shares.
  2. Selling of old furniture for cash.
  3. Cash realized from debtors. Which of the statements given above are correct?

  1. (1) and (2) only

  2. (2) and (3) only

  3. (1) and (3) only

  4. All of the above

Show answer
Correct Option: A

Directions: Choose the correct option for the given question.

Which of the following transactions changes the current ratio?

  1. Purchase of goods for cash

  2. Plant acquired on account

  3. Sold goods on credit

  4. Debentures converted into equity capital

Show answer
Correct Option: B

Directions: Choose the correct option for the given question.

A company has issued a 20-year bond at Rs. 1 par value with a coupon rate of 10 per cent. The required rate of return on similar bonds is 12 per cent. What is the current value of the bond?

  1. Rs. 905.33

  2. Rs. 850.45

  3. Rs. 833.33

  4. Rs. 820.20

Show answer
Correct Option: A

Directions: Choose the correct option for the given question:

Members of a company may apply to which of the following for relief, under the Companies Act, 1956 in cases of oppression?

  1. Central Government

  2. High Court of Judicature

  3. National Company Law Tribunal

  4. National Company Law Appellate Tribunal

Show answer
Correct Option: C

Directions: Choose the correct option for the given question.What does management audit imply?

  1. Complete audit

  2. Detailed audit

  3. Efficiency audit

  4. Interim audit

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Correct Option: C

Directions: Choose the correct option for the given question:

A company limited by shares has to call the statutory meeting within a period of not less than one month and not more than six months. This period is counted with reference to which of the following?

  1. The date of incorporation.

  2. The date at which the company is entitled to commence business.

  3. The date of actual receipt of certificate of incorporation.

  4. The date of actual commencement of business.

Show answer
Correct Option: B

Directions: Choose the correct option for the given question.

Which of the following statements is correct?

  1. Internal audit and management audit are the same.

  2. Internal audit and statutory audit are the same.

  3. Internal audit is compulsory in all cases.

  4. Statutory audit of company accounts is compulsory.

Show answer
Correct Option: D

Directions: Choose the correct option for the given question.

Where does an auditor of a cooperative society submit the audit report?

  1. To the managing committee of the society only.

  2. To the Registrar of Cooperative Societies of the state concerned only.

  3. To the State Assembly concerned.

  4. To the Registrar of Cooperative Societies of the state concerned and a copy to the society.

Show answer
Correct Option: B

Directions: Choose the correct option for the given question.

Which of the following is eligible to issue Shelf Prospectus?

  1. Any company contemplating for public issue of securities

  2. Any public financial institution

  3. Only manufacturing companies

  4. Only foreign companies engaged in trading in India

Show answer
Correct Option: B

Directions: Choose the correct option for the given question.

Few items of P/L account of a company are

Sales (Rs.) 1,60,000 Closing stock 38,000 Non-operating Expenses 800 Non-operating Income 4,800 Net Profit 28,000 What is the Operating Profit Ratio?

  1. 18%

  2. 20%

  3. 15%

  4. 57%

Show answer
Correct Option: C

Directions: Choose the correct option for the given question.

Which of the following statements is correct?

  1. Audit of an educational institution is compulsory, if it is run by a charitable trust.

  2. A club is treated as a commercial establishment.

  3. The accounts of a charitable trust can be audited by any person, who belongs to accountancy profession.

  4. Audit of a charitable trust is not compulsory under law.

Show answer
Correct Option: A

Directions: Choose the correct option for the given question.

Which of the following companies does not have the obligation to get its Articles of Association registered along with the Memorandum of Association?

  1. Public Company limited by shares

  2. Unlimited companies

  3. Private companies limited by shares

  4. Companies limited by guarantee

Show answer
Correct Option: A

Directions: Choose the correct option for the given question.Rs. Sundry Debtors 15,000 Bills Receivable (B/R) 12,500 Cash at Bank 17,500 Stock 15,000 Profit 20,000 Creditors 25,000 Bills Payable (B/P) 15,000 Sales 1,00,000 What is the Acid Test Ratio?

  1. 1·5 : 1

  2. 1·125 : 1

  3. 16 2/3%

  4. 50%

Show answer
Correct Option: B

Directions: Choose the correct option for the given question and consider the following statements.

The vouching of remuneration to directors involve the checking of

  1. Special resolution.
  2. Statement of accounts.
  3. Approval note of the Central Government.
  4. Minutes Book. Which of the statements given above are correct?

  1. (1) and (2) only

  2. (2) and (3) only

  3. (1), (2) and (4)

  4. (1), (3) and (4)

Show answer
Correct Option: D

Directions: Choose the correct option for the given question.

Under the heading 'Secured Loans', the following are disclosed

  1. Loans and Advances from banks.
  2. Debentures.
  3. Loans and Advances from subsidiaries.
  4. Other loans and advances. What is the correct chronological order of disclosure of the items given above in balance sheet of a company?

  1. 3 - 1 - 2 - 4

  2. 2 - 4 - 3 - 1

  3. 3 - 4 - 2 - 1

  4. 2 - 1 - 3 - 4

Show answer
Correct Option: D

Directions: Choose the correct option for the given question.

Which of the following is not a part of the usual contents of the current file and audit working papers?

  1. A copy of accounts on which auditors are reporting

  2. Audit programme

  3. Minutes of the meetings

  4. Memorandum of Association and Articles of Association

Show answer
Correct Option: D

Directions: Choose the correct option for the given question.

Match List-I with List-II List-I (Liability of Auditor) List-II (Example) (a) Liability for negligence 1. Breach of trust or duty (b) Liability for misfeasance 2. Untrue statement in the prospectus (c) Criminal liability 3. Not liable for untrue statement in prospectus (d) Liability to third party 4. Dividends paid out of capital Which of the following is the correct match?

  1. (a) 4 (b) 3 (c) 2 (d) 1

  2. (a) 2 (b) 1 (c) 4 (d) 3

  3. (a) 4 (b) 1 (c) 2 (d) 3

  4. (a) 2 (b) 3 (c) 4 (d) 1

Show answer
Correct Option: C

Directions: Choose the correct option for the given question and consider the following statements.

  1. Corporate governance requires the appointment of audit committees by public limited companies.
  2. The members of an audit committee should be those non-executive directors who do not represent the controlling group.
  3. The independence of the statutory auditors is likely to be affected, if he deals directly with the audit committee. Which of the statements given above are correct?

  1. (1) and (2) only

  2. (2) and (3) only

  3. (1) and (3) only

  4. All of the above

Show answer
Correct Option: A

Directions: Choose the correct option for the given question.

Consider the following statements: Accounting control comprises

  1. The plan of organization concerned with decision process.
  2. The plan of organization concerned with safeguarding of assets.
  3. The procedure concerned with safeguarding of assets. Which of the statements given above are correct?

  1. (1) and (2) only

  2. (2) and (3) only

  3. (1) and (3) only

  4. All of the above

Show answer
Correct Option: B

Directions: Choose the correct option for the given question.

Consider the following statements: Audit working papers are maintained because

  1. They act as a guide to subsequent audit.
  2. They verify the arithmetical accuracy of the books of accounts.
  3. They provide evidence of the work performed by the auditor. Which of the statements given above are correct?

  1. (1) and (2) only

  2. (2) and (3) only

  3. (1) and (3) only

  4. All of the above

Show answer
Correct Option: C

Directions: Choose the correct option for the given question.

Consider the following stages: An auditor has to undergo before commencing an audit

  1. Ascertaining the scope of audit work.
  2. Gaining knowledge about business of the client.
  3. Going through the agreement with the client.
  4. Instructions to and information from the client. What is the correct sequence of the above stages?

  1. 2 - 1 - 3 - 4

  2. 3 - 4 - 2 - 1

  3. 2 - 4 - 3 - 1

  4. 3 - 1 - 2 - 4

Show answer
Correct Option: D

Directions: Choose the correct option for the given question.

Match List-I with List-II and select the correct answer using the code given below the Lists List-I (Technique) List-II (Auditing Procedure) (a) Rotation of Duties (1) Internal control (b) Random Sampling (2) Physical examination (c) Trend Analysis (3) Selective verification(d) Cash verification (4) Overall assessmentCodes:

  1. (a) 1 (b) 4 (c) 3 (d) 2

  2. (a) 2 (b) 3 (c) 4 (d) 1

  3. (a) 1 (b) 3 (c) 4 (d) 2

  4. (a) 2 (b) 4 (c) 3 (d) 1

Show answer
Correct Option: C

Directions: Choose the correct option for the given question.

Which of the following statements is/are correct?

  1. Internal control includes quality control.
  2. Internal control is compulsory for all forms of business organizations.
  3. Internal control helps external auditor to design suitable audit programme for client's organization.

  1. (1) only

  2. (2) only

  3. (3) only

  4. (1) and (3)

Show answer
Correct Option: D

Directions: Choose the correct option for the given question.

Net profit after tax of Rs. 2,00,000 is Rs. 4,00,000. Share capital is Rs. 8,00,000 and revenue reserve is Rs. 2,00,000. What is the rate of return on equity?

  1. 40%

  2. 50%

  3. 60%

  4. 75%

Show answer
Correct Option: A
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