PRACTICAL AUDITING MCQ
Auditing typically refers to financial statement audits or an objective examination and evaluation of a company’s financial statements – usually performed by an external third party. Audits can be performed by internal parties and a government entity, such as the Internal Revenue Service (IRS)
91. Dividend can not be paid out of
a) Capital profit
b) Capital receipts
c) Revenue receipts
d) None of the above
Answer:- b) Capital receipts
92. Capital profit imply profit earned
a) Through business transaction
b) From capital
c) From sale of fixed assets
d) From sale of current assets
Answer:- c) From sale of fixed assets
93. Capital profits
a) Can be paid by way of dividends
b) Cannot paid by way of dividends
c) Can be paid by way of dividend under certain conditions
d) None of the above
Answer:- c) Can be paid by way of dividend under certain conditions
94. If there is capital loss, the auditor should
a) Not allow payment of dividend
b) Allow payment of dividends
c) Allow payment of dividends after making such losses good
d) None of the above
Answer:- b) Allow payment of dividends
95. A company auditor should see that the dividend should be paid
a) After charging depreciation
b) Without charging depreciation
c) Out of capital
d) None of the above
Answer:- a) After charging depreciation
96. In his report, the auditor gives his
a) Judgment
b) Opinion
c) Guarantee to correctness of accounts
d) True state of affairs
Answer:- b) Opinion
97. Civil liability of an auditor implies liability for
a) Misappropriation of cash
b) Misappropriation of goods
c) Fraud
d) Misfeasance
Answer:- d) Misfeasance
98. An auditor can be held liable under companies Act 1949 for
a) Negligence
b) Criminal offence
c) Professional misconduct
d) Breach of contract
Answer:- c) Professional misconduct
99. Investigation of books of accounts and records is :
a. Not legally compulsory
b. Compulsory
c. Compulsory as per companies act
d. Compulsory as Income Tax Act
Answer:- a. Not legally compulsory
100. Investigation is carries on behalf of
a. Manager
b. Employee
c. Client
d. On behalf of owner and third parties
Answer:- d. On behalf of owner and third parties
