accounting & auditing solved mcqs

8/16/2019 Accounting & Auditing Solved MCQs

http://slidepdf.com/reader/full/accounting-auditing-solved-mcqs 1/443

Introduction

1)

The accounting process involves in recording:

A. Quantifiable economic event

B. Non quantifiable economic event

C. All of them

D. None of them

2)

In accounting an Economic event is referred to as:

A. Cash

B. Bank statement

C. Transaction

D. Exchange of money

3)

Identify the correct seuence of accounting process



A. Communicating?Recording?Identifying

B. Recording?Communicating?Identifying

C. Identifying?communicating?recording

D. Identifying!recording!communicating

")

#oo$$eeping mainly concerns %ith %hich part of accounting process&

A. Analysing



B. Preparing financial statements

C) 'ecording financial information

D. Auditing the books of accounts

()

inancial accounting provides financial information to all of the follo%ing

external users except:

A. overnment agencies

B. investors

C.

CreditorsD. *anagers

+

or %hich step of accounting process the accountants of business entity

prepare financial statements&

A. Identification of economic event

B. ,ommunication of financial

information

C. Recording financial information

D. !aking decisions about business

-)

.eeping the log of financial information in boo$s of original entries is



called

A. 'ecording

B. summari"ing

C. rouping

D. Processing

/)

0uditing is %hat&

A. Reporting the financial information

B. Examination of financial statements



C. Preparation financial statements

D. maintaining the ledger records

)

hich of the follo%ing is the external user of financial statements&

A. !anager of the business

B. C#$ of the business

C. ,reditor of the business

D. Controller of the business

1)

hich of the follo%ing is the internal user of financial statements&

A. Creditor of the business

B. overnment agency

C. %hareholder of the business

&) *anager of the business

11)

444444444 is the first phase of accounting cycle

A. Identifying an economic event or transaction

B. Preparing 'ournals

C. Posting entries to ledger accounts



D. !aking decisions about business

12)

inancial statements differ from management account because

A. They are

mainly prepared for external users of financial information

B. (hey are more comple) and hard to prepare

C. (he are the summary of accounting data



D. (he are prepared on basis of actual concept

13)

44444444 is a separate legal entity that Total capital can be divided in

many shares

A. Partnership

B. %ole proprietorship

C. ,ompany

D. Non*profit organi"ation

1")

0n asset posses %hich of the follo%ing&

A. uture economic benefits for the

business

B. All kind of benefits for the business

C. #)penses for the business

D. !erits and &emerits for the business

1()

5iabilities are %hich of the follo%ing&

A. Resources

B. 6bligations



C. +uture benefits

D. #)penses

1+)

44444444 is the gross inflo% of economic benefits

A. Assets

B. ,iabilities

C. Income

D. #)penses



1-)

The gross decrease in economic benefits for the business are %hat&

A. Expenses

B. $bligations

C. Creditors

D. Income or gain

1/)

0n asset must be 4444444 by the business to be sho%n as an asset in its

7balance sheet7

A. Possessed

B. 6%ned

C. Controlled

D. -sed

1)

5iability are arisen from %hich of the follo%ing events&

A. Present event

B. +uture event

C. 8ast event



D. Non of them

2)

hich of the follo%ing can be considered as the most important phase of

accounting cycle and it is

the primarily ob9ective of financial accounting&

A. Identifying transactions

B. Preparing .( Accounts.

C. 8reparing financial statements

D. Preparing trial balances



21)

hich is the most important characteristic that all assets of a business

have&

A. ,ong life of assets

B. /alue of assets

C. Intangible nature of assets

D. uture economic benefits

22)

hat is the basic accounting euation&

A. ,apital5iabilities;0ssets

B. Assets0 liabilities 1Capital

C. Capital0assets1liabilities

D. ,iabilities0Capital

23)

hich of the follo%ing is a liability&

A. Cash

B. #quipment

C. &ebtors

D. ,reditors

2")

hat is euity&

A. Cash from the business

B. liability of a business

C. 6%ner<s claim on total assets

D. $2ner3s claim on total liabilities

2()



Identify the asset from the follo%ing

A. ,ash and cash euivalent

B. Creditors

C. Notes payable

D. Bank loan

2+)

4444444 the %ithdra%al of cash and goods by the o%ner of the busienss for

his=her personal use

A. &epreciation

B. >ra%ings

C. $utflo2 of cash

D. Appreciation

2-)

?et loss occurs %hen

A. Expenses are greater than Income

B. #)penses are less than Income

C. #)penses1Income

D. ,iabilities are greater than income



2/)

>ouble entry implies that

A. Recording entries in 'ournal

B. Recoding entries in ,edger account

C. 'ecording t%o aspects of every

transaction

D. Recording every transaction in books

2)



Identify the nominal account

A. !achinery account

B. Building account

C. Creditors account

D. 'ent expenses account

3)

hich of the follo%ing accounts can be classified as a real account&

A. Rent e)penses account

B. Rent income account

C. insurance e)penses account

D. ,ash account

0?@E':

4 0 2 , 3 > " , ( > + # - 0 / # , 1 >

11 0 12 0 13 , 1" 0 1( # 1+ , 1- 0 1/ , 1 , 2 ,

21 > 22 0 23 > 2" , 2( 0 2+ # 2- 0 2/ , 2 > 3 >

5ournal 5ournal1)

The process of recording is done

A. (2o times a year

B. once a year

C. reuently during the accounting period



D. At the end of a accounting period

2)

Aeneral 9ournal is a boo$ of 4444444 entries

A. +irst

B. 6riginal

C. %econdary

D. eneric



3)

The process of recording transactions in different 9ournals is called

A. Posting

B. #ntry making

C. Ad'usting

D. BournaliCing

")

Every business transaction affects at least 44444444 accounts

A. $ne

B. T%o

C. (hree

D. Infinite

()

>iscount allo%ed is a $ind of deduction from

A. Account payable

B. 0ccount receivable

C. Cash account

D. &iscount account



+)

The other name of 9ournal is

A. ,edger

B. ( account

C. >ay boo$

D. Cash book

-)

0 9ournal entry in %hich t%o or more account is debited or credited is



referred as

A. 5ournal entry

B. !ulti entry

C. Additional entry

D. ,ompound entry

/)

The term 2=1Dn=3 implies that 444444 discount %ill be given if the

payment is made %ithin

44444 days or full amount is receivable %ithin 3 days

A. 2F1

B. 4678

C. 46796

D. 974:

)

Aoods returned by customer should be debited to %hich of the follo%ing

accounts&

A. %ales income account

B. %ales account

C. 'eturn in%ard account

D. #)penses account



1)

>iscount allo%ed is

A. Expense of business

B. Income of business

C. ,oss of business

D. Abnormal loss of business

11)

444444444 is the evidence that a transaction too$ place

A. @ource documents

B. ,edger

C. Bonds

D. 5ournals

12)

hich of the follo%ing %ill be debited if a business purchases goods on

credit&

A. Cash

B. &ebtor

C. Creditor

D. 8urchases

13)

hich of the follo%ing accounts %ill be debited if the business<s o%ner

%ithdra%s cash from business for his personal use&

A. >ra%ings

B. Cash

C. Business

D. %tock

1")

Bournals are also referred as

A. Book of entries



B. #oo$ of original entries

C. ( account

D. Books of economic event

1()

The standard format of 9ournal does not include %hich of the follo%ing&

A. 0ssets column

B. &ate column

C. &escription column



D. Amount column

1+)

In %hich of the follo%ing orders data is entered in 9ournal&

A. Alphabetical order

B. Numeric order

C. Bullets order

D. ,hronological order

1-)

hich of the follo%ing accounts %ill be credited if a company purchases

building for cash&

A. Capital account

B. +i)ed assets account

C. Building account

D. ,ash account

1/)

>iscount for uic$ repayment of debt is normally referred as

A. (rade discount

B. Prompt payment discount

C. ,ash discount



D. Bulk discount

1)

The first step in accounting process is

A. Recording the transaction

B. Identifying the transaction

C. Posting the transaction

D. Preparing the source documents

2) 0 chart of accounts generally start %ith %hich of the

follo%ing types of

accounts&

A. 0ssets accounts

B. liability accounts

C. Cash accounts

D. Revenue accounts

0?@E':

4 , 2 # 3 > " # ( # + , - > / 0 , 1 0 11 0 12 > 13

0 1" # 1( 0 1+ > 1- > 1/ , 1 # 2 0G

Accounting #quation

1)

The #asic accounting euation is

A. Asset1#)pense 0Income

B. Assets1Cash0Capital

C. 0ssets;,apital5iabilities

D. Assets1#)penses0Capital

2)

ind out the value of assets if: 5iabilities;H( and ,apital;H1

A. ;<666

B. H+

C. ;=666

D. ;9666



")

,apital increases if 444444 increases

A. #)penses

B. &ra2ings

C. Interest on capital

D. 'evenue

()

,apital of a business decreases if there is an increase in

A. >ra%ings

B. Income

C. ains

D. +resh capital

+)

If the total liabilities of a business decrease by H( %hat %ill be the

effect on total asset&

assuming the amount of capital remain same)

A. Remain constant

B. >ecrease by H(

C. Increase by ;:666

D. Increase by ;467666

-)

If the business<s o%ner %ithdra%s cash for his=her personal use %hat %ill be the

effect on capital&

A. Increase in capital

B. Remain the same

C. >ecrease in capital

D. No effect on capital

/)



?et income eual to 'evenues minus

A. ains

B. &epreciation

C. Expenses

D. Capital e)penditures

)

,ollection of account receivable %ill

A. Increase assets and decrease assets

B. Increase assets and decrease liabilities

C. Increase assets and increase capital

D. Increase assets and increase cash

1)

8ayment of expenses %ill 444444 the assets

A. Increase

B. 'educe

C. apportion

D. $verstate

11)

hich of the follo2ing is the practical implementation of theaccounting equation?

A. Cash flo2 statement

B. Income statement



C. %tatement of changes in equity

D. %tatement of financial position

48@

hich of the follo2ing accounting equation is correct?

A. Cash0$ther assets1Capital*,iabilities

B. Capital0 ,iabilities1Assets0Income

C. Assets*,iabilities1Capital

D. Assets0Capital1,iabilities

49@

+resh capital introduction 2ill increase

A. Assets and liabilities

B. Assets and equity

C. ,iabilities and equity and bank balance

D. Capital and liabilities

4<@

Cash received for services rendered 2ill

A. Increase cash and liability

B. Increase equity and liability

C. Increase fi)ed assets and cash

D. Increase cash and equity

4:@

hich of follo2ing best describes the increase in equity e)pands

A. Business operations

B. cash outflo2s

C. Inflo2s of cash

D. Appropriation e)penses

4>@

If Cash1;4666 inventories1;<666 &ebtors1;:666 fi)ed assets1?Capital0,iabilities1;4:666 hat is the Amount of total assets?

A. ;:666

B. ;467666

C. ;4:7666

D. ;867666

4=@

&epreciation decreases



A. ,iabilities

B. Cash

C. Bank

D. Capital

4@

An increase in provision for bad debt 2ill

A. &ecrease net income

B. &ecrease liabilities

C. Increase net income

D. Increase liabilities

4@

Current assets * Current liabilities1?

A. Capital

B. Absorbed capital

C. Net assets

D. Net 2orking capital

86@

Assets*,iabilities1?

A. Cash

B. #quity



C. Net income

D. Net e)penses

0ns%er:

4 c 2 b 3 c " d ( a + b - c / c a 1 b 11 d 12 c 13 b 1" d 1( a

4> a 4= d 4 a 4 d 86 bD,edger or ( Accounts

5edger or T 0ccounts

1)

(ransferring entries from 'ournal to ledger account is commonly kno2nas

A. Recording

B. (ransferring

C. Posting

D. #ntry making

8@

An account records the in the balance of an item

A. Increase

B. &ecrease

C. Increase or decrease

D. Appreciation

9@

If credit side of a bank account is greater than the debit side7 it indicates2hich of the follo2ing?

A. Bank overdraft

B. Cash at bank

C. Bank balance

D. Current Asset

<@

If debit side of a bank account is greater than credit side it indicates

2hich of the follo2ing?

A. Cash at bank



B. Bank understatement

C. Bank overdraft

D. Balance overstatement

:@

2ill be credited if goods are given as charity

A. Cash



B. Charity

C. Purchases

D. %ales

>@

hich of the follo2ing is kno2n as the base for preparing trial balance?

A. 5ournal

B. Cash account

C. ,edger account

D. Balance sheet

=@

If debit balance is greater than creadit balance then the account blance2ill beE

A. Credit balance

B. &ebit and credit balance

C. Cash balance

D. &ebit balance

@

(he normal balance of capital account is

A. Credit balance

B. &ebit balance

C. Cash balance



D. Neither debit nor credit balance

@

(he normal balance of asset account is

A. Credit balance

B. &ebit balance

C. Cash balance

D. Neither debit nor credit balance

B. Real account

C. Cash accounts

D. Banks account

4<@

(he real accounts are accounts of Assets7 liabilities and

A. #)penses

B. Revenues



C. Capital

D. &ra2ing

4:@

Building account is classified as account

A. Nominal

B. Real

C. Cash

D. Capital

4>@

$ffice equipments account is classifed as account

A. Nominal

B. Real

C. Cash

D. Capital

4=@

helps business to classify transactions according to their nature

A. eneral 'ournal

B. Real accounts

C. ,edger accounts



D. Cash accounts

4@

hich of the follo2ing is a real account?

A. $ffice equipment

B. Rent e)penses

C. Rent income

D. Insurance e)pense

4@ hich of the follo2ing accounts are closed at the end of anaccounting

period?

A. Nominal accounts

B. Balance sheet accounts

C. Real accounts

D. None of them

86@

hich of the follo2ing is the closing balance of a ledger account?

A. Blance cFd

B. Balance bFd

C. Balance eFd

D. Balance fFc

Ans2ersE

4 c 8c 9 a < a : c > c = d a b 46 b 44 a 48 d 49 a 4< c 4: b4> b 4= c 4 a 4 a 86 aD

4

(rial balance !cqs4@

(rial balance is prepared to check accuracy of

A. ,edger accounts balances

B. Balance sheet balances

C. Income statement balances

D. Cash flo2 statement balances

8@

If a transaction is completely omitted from the books of accounts7 2ill it affect the

agreement of a trial balance?

A. Ges

B. No

C. (ransactions can3t be omitted

9@

is the common base for preparing a trial balance

A. ,edger accounts

B. eneral 5ournal

C. %peciali"ed 'ournals

D. Balance sheet

<@

hich of the follo2ing is true about a trial balance?

A. It lists do2n the balances of accounts

B. It lists do2n the balances of a balance sheet

C. It is a kind of financial statement

D. It is not a part of accounting cycle



:@

&ebit balance 1 Credit balance in a trial balance indicates that

A. No error in recording transactions

B. No error in posting entries to ledger accounts

C. Account balances are correct

D. !athematically Capital0,iabilities1Assets

>@

(rial balance is commonly prepared

A. +requently during the year

B. At the end of an accounting period

C. At the end of a month

D. At the end of a year



=@

hich of the follo2ing 2ill affect the agreement of a trial balance?

A. Complete omission of a transaction

B. Partial omission of a transaction

C. #rror of principle

D. Compensating errors

@

If debit balances 1 credit balances7 trial balance only sho2s or check the

and it does not indicate that no errors 2ere made during recording and postingA. Arithmetic accuracy

B. #rrors of commission

C. $missions of economic events

D. -nderstatements of balances

@

hich of the follo2ing account 2ith normal balance is sho2n at the debit side of a

trial balance?

A. Rent income account

B. Creditors account

C. -nearned income account

D. Cash account



46@

hich of the follo2ing account 2ith normal balance is sho2n at the credit side of a

trial balance?

A. Cash account

B. Bank account

C. #quipment account

D. Accrued e)penses account

Ans2ers E

4 a 8 b 9 a < a : d > b = b a d 46 dD4

Book of original entries * Cash book !CHs

4@

(he closing balance of petty cash book is considered as

A. ,iability

B. Asset

C. #)penses

D. Income

8@

Payment of rent e)penses is recorded on 2hich side of cash book?

A. Receipts

B. Payments

C. Income

D. #)pense

9@

An entry 2hich is made on both sides of a cash book is called

A. Cash entry

B. Contra entry

C. Payment entry

D. Compound entry

<@

A cash book 2ith cash7 bank and discount column is commonly referred as

A. Cash book



B. (2o columns cash book

C. (hree columns cash book

D. Petty cash book

:@

Cash book records

A. Cash payments

B. Cash receipts

C. Cash payments and cash receipts

D. Neither cash payments nor cash receipts

>@

Cash discount is allo2ed on repayment of debt

A. ,ump sum

B. Prompt

C. Actual

D. None of them

=@

Cash book is prepared by



A. Bank

B. Accountant of business

C. !anager of a company

D. Bank3s cashier

@

(he most common imprest system is the system

A. petty cash



B. Cash book

C. Cash receipt

D. &iscount

@

&iscount received is recorded on 2hich of the follo2ing side of a cash

book?

A. Receipts

B. Payments

C.

Incomes

D. #)penditures

46@

&ra2ings by o2ner of business are generally recorded on 2hich of thefollo2ing side of

a cash book?

A. Receipts

B.

Payments

C. Incomes

D. #)penditures

44@

Introduction capital by o2ner of business is recorded on 2hich side of acash book?



A. Receipts

B.

Payments

C. Incomes

D. #)penditures

48@

Cash book 2ith cash and discount column is mostly referred as

A. %imple cash book

B. (2o column cash book

C. (hree column cash book

D. Petty cash book

49@

A cash book that is used to record the small payments of cash is generallyreferred as

A. %imple cash book

B. (2o column cash book

C. (hree column cash book

D. Petty cash book

4<@

A simple or one column cash book usually has 2hich of the follo2ing main

columns?

A. Bank

B. Payments

C. &iscount

D. Cash

4:@

Purchase of office equipment for cash 2ill be recorded on 2hich of thefollo2ing sides

of a cash book?



A. Receipts

B. Payments

C. Incomes

D. #)penditures

4>@

Postdated checks are considered as

A. Cash

B. Bank balance



C@ Accounts receivable

D. Cash reserve

4=@

Postage stamps on hand are considered as

A. Bank

B. Prepaid e)penses

C. Accounts receivable

D. Creditor

4@

Petty cash fund is supposed to be replenished

A. #very day

B. #very half year

C. #very year

D. At the end of every accounting period

4@

hich of the follo2ing is generally not the party to a check?

A. Payee



B. Payer

C. Bank

D. %eller

86@

A credit balance in cash book indicates

A. Bank balance

B. Cash at bank

C. Bank overdraft

D. Bank underdraft

Ans2ersE

4 B 8 B 9 B < C : C > B = B A B 46 B 44 A 48 B 49 & 4< &4:B 4> C 4= B 4 & 4 & 86 CD

+avourable balance of cash book implies that

A. Credit balance of cash book

B. &ebit balance of cash book

C. Bank overdraft

D. Ad'usted balance of cash book

8@

A cash deposit made by business appears on the bank statement as balance

A. &ebit

B. Credit

C. #)penses

D. ,iability

9@

Bank reconciliation statement is the comparison of a bank statement sent by bank@

2ith the prepared by business@

A. Cash receipt 'ournal

B. Cash payment 'ournal

C. Cash book

D. +inancial statements

<@

A check returned by bank marked .N%+. means that

A. Bank can3t verify your identity

B. (here are not sufficient funds in your account

C. Check has been forged

D. Check can3t be cashed being illegal



:@

In the Bank reconciliation statement .&eposit in transit. is usually

A. %ubtracted from bank balance



B. Added to bank balance

C. Added to Cash book balance

D. %ubtracted from cash book balance

>@

Bank reconciliation statement is prepared by

A. Accountant of the business

B. !anager of the business

C. Controller of the bank

D. Accountant of the bank

=@hich of the follo2ing error results in unad'usted cash book balance?

A. $utstanding checks

B. -npresented checks

C. &eposit in transit

D. $mission of Bank charges@

Bank charges amounting to ;:666 2as not entered in the cash bookDIdentify the correct ad'ustment in cash book

A. Bank charges 2ill be debited in cash book

B. Bank charges 2ill be added to cash book balance

C. Bank charges 2ill be credited in cash book D.Bank charges need no ad'ustment in cash book

@

-npresented checks also referred as

A. -ncollected checks

B. -ncredited checks

C. $utstanding checks

D. Bounced checks

46@

are checks that are issued by the business but not yet presentedto bank

A. -ncollected checks





D. Bounced checks

44@

Checks that are presented to bank but not yet credited by the bank

A. -npresented checks



D. Bounced checks

48@

-ncollected checks also referred as

A. -npresented checks



D. Bounced checks

49@

+avourable balance of bank statement implies that

A. Credit balanceB. &ebit balance

C. Bank overdraft

D. Ad'usted balance

4<@

%tanding orders are

A. Credited in the cash book

B. &ebited in the cash book

C. #ntered in the bank statement

D. #ntered in the petty cash balance

4:@

A company 2as entered in hire purchase agreement and had to pay

;4666 per monthD(hree payments 2ere made via bank account but noentry 2as found in cash bookD Identify the correct ad'ustment in cash book

A. ;4666 2ill be added to cash book balance

B.;8666 2ill be deducted from cash book balance

C. ;9666 2ill be added to cash book balance

D. ;9666 2ill be subtracted from cash book balance4>@



;:666 deposited in bank account 2as entered t2ice in the cash bookDIdentify the correct ad'ustment in cash book



AN%#R%D

1 B

2 B

3 C

4 B

5 B

6 A

7 A

8 C

9 C46C44

B48B49A4<A4:

&4>A4=B4A4

A86B

+INANCIA, ACC$-N(IN !CH% %#( 4

!CH +$R +INANCIA, ACC$-N(IN

1. hich #nglish alphabet is similar to the shape of an account?



a@ Ib@

( c@Kd@ None

2. ross Profit is the

difference bet2een a@ Net%ales and Cost of goods sold



b@ PA( and &ividends c@ Net %ales and Cost of productiond@ Net %ales and &irect costs of productionsLKintsE a@ (rading account is prepared to find out the ross Profit dueto the operations of a businessD It is the difference bet2een the Net %ales iDeD7 %ales lesssales return@ and the Cost of goods soldD Cost of goods sold1 $pening %tock0 Net Purchases MClosing %tock 0 &irect e)pensesDKence option a@ is the right optionD $ption c@ is incorrect because costof production does not

consider the opening stock and closing stock ad'ustmentD %imilarlyoption d@ ignores stock balance ad'ustmentD

3. Recording of Capital contributed by the o2ner as liability ensures the

adherence of principle of a@ &ouble #ntryb@ oingConcern c@

%eparate #ntryd@ !aterialityLKintsE c@ Recording of capital contributed by the o2ner as liabilityensures the adherence of principle of the O%eparate entity or Business entity concept D (he‖

concept requires the business to be treated as distinct from the persons 2ho o2n it then it becomes possible to record transactions

of the business 2ith the proprietor alsoD ithout such a distinction7 theaffairs of the firm 2ill bemi)ed up 2ith the private affairs of the proprietor and the true pictureof the firm 2ill not beavailableD-nder the oing Concern Concept7 it is assumed that the business 2ille)it for a long time andtransactions are recorded from this point of vie2D It is this that

necessitates distinction bet2eene)penditure that 2ill render benefit over a long period and that2hose benefit 2ill be e)haustedquicklyD-nder &ouble*entry or &ual aspect concept7 each transaction has t2oaspects7 if a business hasacquired an asset7 it must have resulted in one of the follo2ingE? %ome other asset has been given upD? (he obligation to pay for it has arisenD? (here has been a profit7 leading to an increase in the amount that the business o2es to the proprietorD



? (he proprietor has contributed money for the acquisition of the assetD? (he concept of !ateriality requires all the material items to berecorded and disclosed separatelyD

4. (he basic concepts related to Balance %heet are

a@ Cost Conceptb@ Business #ntity Concept



c@ Accounting PeriodConcept d@ Both a@ andb@ above

LKintsE d@ Cost concept requires the transactions to be recorded in the

books of accounts at theamounts actually involvedD %uppose a firm purchases a piece of landfor Q 47:67666 but considers its2orth Q 97667666D (he purchase 2ill be recorded at Q 47:67666DBusiness entity concept requires the business to be treated as distinct from the persons 2ho o2n it then it becomes possible to recordtransactions of the business 2ith the proprietor alsoD ithout such a

distinction7 the affairs of the firm2ill be mi)ed up 2ith the private affairs of the proprietor and the true picture of the firm 2ill not beavailableD Accounting period concept is applicable to the Profit ,ossAccount 2hich is preparedfor the year ending and cannot be applied to Balance %heet as it is astatement prepared as on a particular dateD (herefore7 cost and entity concepts are related to Balance%heetD

5. (he basic concepts related to P , Accountare

a@ Reali"ation Conceptb@ !atching Conceptc@ Cost Conceptd@ Both a@ and b@ above

LKintsE d@ -nder Reali"ation concept7 accounting is a historical recordof transactions and unlessmoney has been reali"ed M either cash has been received or a legal

obligation to pay has beenassumed by the customer* no sale can be said to have taken place and no profit can be said tohave arisenD !atching concept requires that all the revenues must bematched 2ith the e)pensesD(herefore7 the above concepts are related to the Profit ,oss AccountD

6. hich of the follo2ing is are@ characteristics@ of Bad &ebt?



business must be recordedD

8. P , Account is prepared for a period of one year by follo2ing

a@ Consistency Conceptb@ Conservatism Conceptc@ Accounting Period Conceptd@ Cost ConceptLKintsE c@ P, AFC is prepared for a period of one year byfollo2ing the concept of Accounting

PeriodD

9. If the oing Concern concept is no longer valid7 2hich of

the follo2ing is true? a@ All prepaid assets 2ould becompletely 2ritten*off immediatelyb@ (otal contributed Capital and Retained #arnings 2ouldremain unchanged c@ Intangible Assets 2ould continue to be

carried at net Amorti"ed historical cost d@ ,and held as anInvestment 2ould be valued at its reali"able value

LKintsE d@ -nder the oing Concern Concept7 it is assumed that the business 2ill e)it for a longtime and transactions are recorded from this point of vie2D It is thisthat necessitates distinction bet2een e)penditure that 2ill render benefit over a long period and that2hose benefit 2ill be

10. -nder 2hich of the follo2ing concepts are shareholders treated as creditors forthe amount they

paid on the shares they subscribed to?

a@ Cost Conceptb@ &uality Conceptc@ Business #ntity Conceptd@ %ince the shareholders o2n the business7 they are not treated as

creditors LKintsE c@ -nder business entity concept7 the shareholdersare treated as creditors of the companyDIt is also kno2n as separate entity conceptD

0ns%ers:

4 b 8 a 9 c < d : d > d = c c d 46 c

11. (he underlying accounting principles@ necessitating amorti"ation of intangibleassets@ isFare



a@ Cost Conceptb@ Reali"ationConcept

c@ !atching Conceptd@ Both a@ and c@ aboveLKintsE c@ (he matching concept requires that all the revenues must bematched 2ith the e)penses incurred during the accounting periodD (hee)penses relating to intangible assets areamorti"ed over the periods in 2hich the benefit from intangible assetsaccrue and therefore theunderlying principle is the matching conceptD

12. hich of the follo2ing practices is not in consonance 2ith the

convention of conservatism? a@ Creating Provision for Bad debtsb@ Creating Provision for &iscount on Creditorsc@ Creating Provision for &iscount on &ebtorsd@ Creating Provision for ta)LKintsE b@ (he principle of conservatism seeks provisions for allthe probable lossesD Creating provision for discount on creditors tantamount to recognition of probable gain in the form of discount and hence it is not in consonance 2ith conservatismD

13. (he accounting measurement that is not consistent 2ith the oing

Concern concept is a@ Kistorical Costb@ Reali"ationc@ (he (ransaction Approachd@ ,iquidation /alueLKintsE d@ ,iquidation value is the value of the business 2hen the business is 2ound up and is under liquidation 2hereas the going concern concept assumes that the business2ill continue over a

long time and therefore the accounting measurement O,iquidation/alue is inconsistent 2ith‖

going concern conceptD

14. Recording of +i)ed Assets at cost ensures adherence of

a@ Conservatism Conceptb@ oing Concern Conceptc@ Cost Concept



d@ Both a@ and b@ aboveLKintsE c@ Cost concept requires the transactions to be recorded in the books of accounts at the

amounts actually involvedD %uppose a firm purchases a piece of landfor Q 47:67666 but considers its2orth Q 97667666D (he purchase 2ill be recorded at Q 47:67666D (herefore7recording of fi)ed assets atcost ensures the adherence of cost conceptD

15. $mission of paise and sho2ing the round figures in financial

statements is based on a@ Conservatism Conceptb@ Consistency Concept

c@ !aterialityConcept d@Reali"ationConcept

LKintsE c@ $mission of paise and sho2ing the round figure in financialstatements is based on theconcept of materialityD

16. S ,tdD7 purchased goods for Q : lakh and sold F46th of the value of goods for Q> lakhD Nete)pensesduring the year 2ere Q 8:7 666D (he company reported its net profit as Q =:7666D hichof thefollo2ing concept is violated by the company?

a@ Reali"ationb@ Conservationc@ !atchingd@ Accrual

LKintsE c@ !atching concept requires the e)penses must relate to thegoods and services soldduring that period to arrive at the net profits of the enterpriseD Kencematching concept requiresthe recognition of revenue and e)penses on a comparable basisD In theabove question that amount of Q =:7666 as net profit 2as arrived at bydeducting Q :7667666 being cost of purchases @0 Q 8:7666 e)penses from the sale proceeds of Q >7667666D (his does not

follo2 matching conceptsince the cost of goods sold is to be deducted and not the cost of purchases7 since some purchases have been left in stockD %o the net profit using matching concept is Q >7667666 less costof goods Q <7:67666 iDeD Q :7667666 ) F46@ less e)penses of Q 8:7666 1 Q478:7666D

17. Accounting does not record non* financial transactions because of



a@ #ntity Conceptb@ Accrual Conceptc@ Cost Concept

d@ !oney !easurement Concept

LKintsE d@ (he money measurement conceptE Accounting records onlythose transactions 2hichare e)pressed in monetary value7 though quantitative records are keptDKence7 accounting doesnot record non M financial transactionsD

18. !rD Rohit7 o2ner of Rohit +urniture ,tdD7 o2ns a personal residence thatcost Q >76676667 but has a market value of Q 7667666D &uring preparation of thefinancial statement for the business7 the entirevalue of property 2as ignored and 2as not sho2n in the financial statementsD (he

principle that

2as follo2ed 2as

a@ (he concept of the Business #ntityb@ (he concept of the Cost Principlec@ (he concept of oing Concern Principled@ (he concept of &uality PrincipleLKintsE a@ Business entity concept requires the business to be treated as aseparate entityD

19. Provision for bad debt is made as per the

a@ #ntity Conceptb@ Conservatism Conceptc@ Cost Conceptd@ oing Concern Concept

LKintsE b@ Provision for bad debts is made as per the concept of

conservatismD

20. +i)ed Assets and Current Assets are categori"ed as per concept of

a@ %eparate #ntityb@ oing Concernc@ Consistencyd@ (ime

0ns%ers:

44 c 48 b 49 d 4< c 4: c 4> c 4= d 4 a 4 b 86(otal depreciation of an asset cannot e)ceed itsE

a@ %crap value



b@ Residual valuec@ !arket valued@ &epreciable value

102. A

mount paid to agan posted to the credit side of his account2ould affecta@ agan3s accountb@ Cash accountc@ Cash account and agan3s accountd@ None of these

103. hich of the follo2ing statements

isFare true ?

a@ A sale of an asset is recorded in the %ales Book b@ (otal of Return $ut2ard Book is debited to Return $ut2ard Account



c@ (he balance of Petty Cash Book is aliability d@ Cash Book is a subsidiary book as 2ell as a ledger

LKintsE d@ (he sale of an asset is recorded in the Asset Account and not

in the %ales book 2hich pertains to sale of goods@D %tatement a@ is falseD(otal of Return $ut2ards book being purchase return@ has a credit balanceD (he total is transferredat the end of the period to the credit of the Purchase Account and notdebited to Return $ut2ards AccountD %tatement b@ is falseD(he balance of Petty Cash book is not a liability7 it is an asset as it isthe balance of cash left 2ith

the petty cashierD %tatement c@ is incorrectDCash Book is both a subsidiary book or book of original entry 2hereall cash transactions aredirectly recorded and a ledger7 it plays the role as a Cash Accounta ledger@D Kence statementd@ is trueD

104. hich of the follo2ing is

true regarding closing entries?

a@ (hey must be follo2ed by reversing entriesb@ (hey transfer the balances in all of the Nominal Accounts to the(rading and Profit and ,ossAccountc@ (hey must be made after the reversing entries but before the ad'ustingentries

d@ (hey must be made after the ad'usting entries but before the reversingentries

LKintsE d@ Closing entries are required to transfer the nominal accountsto the Profit ,oss Accountand the (rading accountD Real accounts and personal account are notclosed to Profit ,ossAccount or (rading AccountD (heir balance is carried in the Balance

%heet and appears as opening Balance in the ne)t accounting periodD

105. Closing stock is generally valued at

a@ Cost Priceb@ !arket Pricec@ Cost price or !arket price2hichever is higher d@ Cost price or!arket price 2hichever is lo2er LKintsE d@ Para :7 of A%*8 states that inventories should be valued at thelo2er of cost and netreali"able valueD



106. hich of the follo2ing assets isFare to be valued at the lo2er of costand net reali"ablevalue?

a@ ood2ill

b@Inventoriesc@Investmentsd@ Both b@ and c@ aboveD

LKintsE b@ Inventories b@ are to be valued at the lo2er of cost and netreali"able valueD All the

other assets stated in other alternatives are valued as per the costconceptD ood2ill a@ is a fi)ed



intangible asset and is sho2n at the cost of its acquisitionD Investmentsc@ are valued at cost or market value 2hichever is lessD (he combination of b@ and c@ isincorrect because a correct

ans2er 2ith incorrect ans2er is an incorrect ans2erD (hus7 the correctans2er is b@D

107. A fe2 errors committed in Ahhi2alia3s books of account are given belo2D %tate 2hicherrors 2ould affect the (rial BalanceD

a@ %ales of Q:6 to Ram completely omitted from books of accountb@ Purchases of Q=86 from %hyam entered in the purchases

'ournal as Q=66 c@ Purchases 5ournal is overcast by Q47666d@ %ales returns 'ournal is undercast by Q866e@ Amount paid to Agar2al 2rongly posted to the debit to!ittal3s account f@ Bank overdraft sho2n under debitcolumn in the (rial Balanceg@ %ales of Q:66 to %adiq entered in sales 'ournal assales to !ushtaq h@ ages paid for installation ofmachinery debited to 2ages account a@ a7 c and g

b@ c7 d and f c@ c7 d7 eand h d@ c7d7 f and h

108. hich of the follo2ing methods is not a practical 2ay of reali"ingrevenue?

a@ &elivery methodb@ Percentage*of*completion methodc@ Production methodd@ !oving average methodLKintsE d@ (he follo2ing methods are the practical 2ays of reali"ingrevenue applying the conservatism concept and reali"ation concept andthe a@ &elivery method in case of sale of goods7 b@ Percentage*of*completion method in case of rendering of services and c@ Productionmethod in case of agriculture produceD (hus7 these are the various2ays of recogni"ing revenueand the methods adopted to recogni"e revenueD !oving averagemethod d@ is the method of valuing inventory and it is not the method adopted to recogni"erevenueD (hus7 d@ is the correctans2erD

109. (he amount payable to a person as consideration for the use of rightsvested in him is



a@ &ividendb@ Royaltyc@ Purchase considerationd@ Installment

LKintsE b@ (he amount paid to the landlord for use of rights vested inhim is the royaltyD &ividend isthe amount paid for the investment made in an enterprise and is notthe correct ans2erD Purchaseconsideration is the price paid for receiving a title of a propertymoveable and immoveable and isnot the correct ans2erD Installment is the payment of amount instages and is not the amount paidfor using the rights vested in the landlord and is not the correct ans2erD



110. Buildings account is debited 2ith an amount to2ards repairsD (his is ane)ample ofa@ #rror of commission

b@ #rror of principle c@#rror ofomissiond@ Compensating error LKintsE b@ Buildings account debited 2ith an amount to2ardsrepairs is an error of principleD #rror of principle is a 2rongclassification of e)penditure or receiptD

111. (he concept of conservatism2ill have the effect of

a@ $verstatement of Assetsb@ -nderstatement of Assetsc@ $verstatement of ,iabilitiesd@ -nderstatement of ,iabilities

LKintsE b@ (he concept of conservatism 2ill have the effect ofunderstatement of assets since thefinancial statements are usually dra2n up on rather a conservative basisDindo2*dressing iDeD7sho2ing a position better than 2hat it is7 is not permittedD

112. &uring the year 8644*86487 the value of closing inventory 2asoverstated by Q 8:7666D

hich of the follo2ing is true?

a@ (he cost of goods sold 2as overstated during 8644*8648 and income2ill be understated during8648*8649b@ (he income 2as overstated during 8644*48 and closing inventory2ill be overstated during8648*8649

c@ (he retained earnings 2as overstated during 8644*8648 andretained earnings 2ill be understated during 8648*8649d@ (he cost of goods sold 2as understated during 8644*8648 butretained earnings 2ill not beaffected during 8648*8649

LKintsE c@ Closing %tockTs overstatement increases the profit of thecurrent period and results in the

increase of retained earnings relating to the current accounting periodD It decreases the profit andthereby retained earnings of the ne)t accounting period since the



closing stock of the currentaccounting period becomes the opening stock of the ne)taccounting period7 the overstatementof 2hich has the effect of decreasing the profits and retained earningsD

113. hich of the follo2ingerrors is an error of omission?

a@ %ale of Q 466 2as recorded in the Purchases 5ournalb@ ages paid to !ohan have been debited to his accountc@ (he total of the sales 'ournal has not been posted to the%ales Account d@ Repairs to buildings have been debitedto buildings account

LKintsE c@ #rror of omission occurs 2hen a transaction is entirelyomitted from record in the original books partially omitted 2hile postingD (herefore7 omission of posting of thesales 'ournal to



117. Closing stock in the (rial Balanceimplies that

a@ It is already ad'usted in the opening stock b@ It is ad'usted in the Purchase AFc

c@ It is ad'usted in the Cost of%ale AFc d@ It is ad'usted in theProfit ,oss AFc

LKintsE b@ Closing %tock appearing in the (rial Balance implies that ithas already been ad'usted inthe Purchases Account and hence appears as an asset in the Balance %heetD



118. hich of the follo2ing statements istrue?

a@ If a (rial Balance tallies7 it al2ays means that none of thetransactions has been completely

omittedb@ A (rial Balance 2ill not tally if a transaction is omittedc@ A customer to 2hom goods have been sold on credit cannot availhimself of a cash discountd@ A credit balance in the Pass Book indicates e)cess of deposits over2ithdra2als LKintsE d@ A credit balance in the Pass Book implies afavourable balance indicates e)cess of deposits over 2ithdra2als and a debit balance in the Pass Bookimplies unfavorable balance iDeD7 aoverdraftD Kence statement d@ is the true statementD

119. (he ad'ustment to bemade for income received in advance isE

a@ Add income received in advance to respective income and sho2 itas a liability b@ &educt income received in advance from respective

income and sho2 it as a liability c@ Add income received in advanceto respective income and sho2 it as assetd@ &educt income received in advance from respective income andsho2 it as an asset in theBalance %heet

LKintsE b@ Income received in advance given as an ad'ustment requiresa deduction of the same

from the income amount and disclosure of the same as a liability in theBalance %heet

120. hich of the follo2ing statementsis correct?

a@ (he (rial Balance is prepared after preparing the Profitand ,oss Account b@ (he (rial Balance sho2s only balancesof Assets and ,iabilitiesc@ (he (rial Balance sho2s only nominal account balancesd@ (he (rial Balance has no statutory importance from the point of vie2 ofla2

LKintsE d@ A (rial Balance is a summary of all eneral ,edger Balancesoutstanding as on a particular dateD All the debit balances from the ledger are sho2n onone side and all the credit

balances are sho2n on the other sideD A (rial Balance is prepared before +inal Accounts are preparedD +rom the point of vie2 of la27 a (rial Balance has no statutory



importanceD

121. hile finali"ing the current year1s accounts7 the company reali"edthat an error 2asmade in the

calculation of closing stock of the previous yearD In the previous year7closing stock 2asvaluedmore by Q :67666D As a result

a@ Previous yearTs profit is overstated and current yearTs profitis also overstatedD b@ Previous yearTs profit is understated andcurrent yearTs profit is overstatedD

c@ Previous yearTs profit is overstated and current yearTs profit isunderstatedDd@ (here 2ill be no impact on the profit of either the previous year or thecurrent yearD

LKintsE c@ Closing stock overstatement and opening stockunderstatement increases the profitsand vice versa is also equally trueD

122. hich of the follo2ing is not correct?

a@ #rrors 2hich affect one account can be errors of postingb@ #rrors of omission arise 2hen any transaction is left to be recorded

c@ #rrors of carry for2ard from one year to another year affect bothPersonal and Real AFc d@ #rrors of commission arise 2hen anytransaction is recorded in a fundamentally incorrectmanner

LKintsE d@ #rror of Commission arises because of 2rong recording72rong casting7 2rong carryfor2ard7 2rong posting7 2rong balancing etcD

123. hich of the follo2ingerrors is an error of omission?

a@ Purchase of Q 87666 has been recorded in the %alesReturn Book b@ Repairs to machinery has beendebited to !achinery Accountsc@ (he total of purchase 'ournal has not been posted to the PurchaseAccount d@ ,egal charges paid to !rD ,a2yer have been debited to hisaccount LKintsE c@ #rror of complete omission arises 2hen a particulartransaction is completely or partiallyomitted to be recorded in the books of accountsD

124. If goods 2orth Q 47=:6 returned to a supplier is 2rongly entered insales return book asQ 47:=6 7 then

a@ Net Profit 2ill decrease by Q 974<6b@ ross Profit 2ill increase byQ 97986 c@ ross Profit 2illdecrease by Q 97:66 d@ rossProfit 2ill decrease by Q 97986

125. +or the past 9 years7 &U ,tdD has failed to accrue unpaid 2ages earned by 2orkers

during the last2eek of the yearD (he amounts omitted7 2hich 2ere considered material72ere as follo2sE!arch 9478646 * Q :>7666!arch 947 8644 * Q :47666!arch 947 8648 * Q ><7666(he entry on !arch 947 8648 to rectify these omissions 2ould include a

a@ Credit to 2age e)pense for Q ><7666b@ &ebit to 2age e)pense for Q><7666 c@ &ebit to 2age



e)pense for Q :47666 d@ &ebitto 2age e)pense for Q 497666

126. Purchase 'ournal is kept to record

a@ All purchases of goodsb@ All credit purchases of goodsc@ All credit purchasesd@ None of these

127. (he beginnings inventory of the current year is overstated by Q :7666and closing

inventory isoverstated by Q 487666D(hese errors 2ill cause the net income for the current year by

a@ Q 4=7666overstated@ b@ Q487666 understated@c@ Q =7666 overstated@d@ Q =7666 understated@

LKintsE c@ $verstatement of closing stock results inoverstatement of profit and overstatement of opening stock results in understatement of profitD In the instantcase7 there 2ill be overstatement of profit by Q 487666 * Q :76661 Q =7666D

128. (he accountant of ,eo ,tdD recorded a payment by cheque to a creditor

for supply of materials as Q479<6D:>D (he bank recorded the cheque at its correct amount of Q 974<6D:>D(he Companyhas not passed any rectification entries and the error is not detected through the bank reconciliationD(he

impact of this error is

a@ (he (rial Balance 2ill not agreeb@ (he balance of creditors is understatedc@ (he purchases are understatedd@ (he favorable bank balance as per Pass Book is less than the Bank balance as per Cash book

LKintsE d@ (he favourable bank balance as per Pass Book 2ill be lessthan the bank balance as per Cash Book7 since the debit in the bank account is more than the debit inthe Cash Book d@D Asdebit and credit are for equal amount there is no disagreement ofthe (rial Balance Creditors balance is overstated but not understatedE (he favourable bank balanceas per Pass Book 2ill be

less than the Bank balance as per Cash Book7 since the debit in theBank Account is more than thedebit in the Cash bookD Purchases are not affected7 as it is a payment tothe creditorD (hus7 thecorrect ans2er is d@D

129. hich of the follo2ing errors affects the agreement of a (rial

Balance?a@ !istake in balancing an accountb@ $mitting to record a transaction entirely in the subsidiary books



c@ Recording of a 2rong entry in the subsidiary booksd@ Posting an entry on the correct side but in the 2rong account

LKintsE a@ (he mistake in balancing an account affects the agreement ofa (rial Balance a@ is the

correct ans2erD (he other mistakes do not affect the agreement of(rial BalanceD (he omission torecord a transaction entirely in the subsidiary books b@ 2ill not affectthe agreement of a (rialBalance because both the aspects of a transaction are omitted to berecordedD Recording of a2rong entry in the subsidiary books c @ 2ill not cause disagreementof a (rial Balance because7

the 2rong entry so recorded has the effect of posting the transaction in themanner it is



recordedD Posting an entry on the correct side in the 2rong account d@does not affect the tallying of a (rialBalance because the aspect of the transaction is posted to the correctside of an accountD (hus

a@ is the correct ans2erD

130. hich of the follo2ing statementsisFare true?

i@ An error in casting the subsidiary books is an error of commissionii@ An error in 2rong casting of the sales day book 2ill not affect the personal accounts of debtors

iii@ !istake in transferring the balance of an account to the (rial Balance2ill not affecttheagreement of the (rial Balanceiv@ (he mistake of treating a liability as an income or vice versa 2ill notaffect theagreement of a(rial Balance

a@ $nly i@above b@ $nlyii@ abovec@ Both i@ and ii@ aboved@ i@7ii@ and iv@ above

LKintsE d@ An error in casting the subsidiary books is an error of

commissions i@7 an error in 2rongcasting of the sales day book 2ill not affect the personal accounts ofdebtors ii@ and the mistakeof treating a liability as an income or vice versa 2ill not affect theagreement of a (rial Balance iv@are the true statements and the combination of these statementsalternatives d@ is the correctans2erD (he other alternatives are incurrence because a@ states only the

statement in i@ b@ statesonly the statement ii@ and the alternative c@ is the combination of i@and ii@ 2hich is incompleteD(hus7 the correct ans2er is d@D

131. hich of the follo2ing should not be treated as revenuee)penditure?

a@ Interest on loans and debenturesb@ Annual fire insurance premiums on Plant and #quipmentc@ %ales ta) paid in connection 2ith the purchase of office equipment



d@ %mall e)penditures on long* lived assets7 such as Q 86 for a paper 2eightD

LKintsE c@ A revenue e)penditure is an e)penditure 2hose benefite)pires 2ithin the currentaccounting period and is in the nature of recurring and is therefore2ritten off to P, AFcD %ales ta) paid in connection 2ith the purchase of office equipment is a non*recurring e)penditure 2hose benefit is going to last for more than one accounting period andhence not a revenue e)penditureD

132. Capital e)penditure is ane)penditure 2hich

a@ Benefits the current accounting period



b@ ill benefit the ne)t accounting period c@ Results in the acquisition of a permanent assetd@ Results in the acquisition of a current asset

LKintsE c@ A capital e)penditure is a non* recurring e)penditure2hose benefit lasts for more thanone accounting periodD #)ample is the acquisition of a fi)ed or permanentassetsD

133. hich of thefollo2ing is not a deferred revenue e)penditure?

a@ #)penses in connection 2ith issue of equity sharesb@ Preoperative e)pensesc@ Keavy advertising e)penses to introduce a ne2 productd@ ,egal e)penses incurred in defending a suit for breach of contract tosupply goods

LKintsE d@ &eferred revenue e)penditure is a revenue e)penditure2hose benefit lasts for morethan one accounting periods and is therefore 2ritten off during the periods over 2hich the benefitlastsKo2ever7 A% 8> requires that &eferred revenue e)penditure ise)pensed 2holly in the year of incurrence@D ,egal e)penses incurred in defending a suit for breach ofcontract for supply of goodsdoes not satisfy the prerequisites of a deferred revenue e)penditureD

134. Any donation received for aspecific purpose is a

a@ ,iabilityb@ Assetsc@ Revenue receiptsd@ Capital receipts

135. hich of the follo2ing is

an item of capital e)penditure?

a@ Research and development costs during the year b@ Interest on borro2ed fund utili"ed for acquisition of $ffice+urniture c@ Installation charges paid in con'unction 2ith the purchase of $ffice #quipment d@ !onthly rent of a machineryused in the business

LKintsE c@ A capital e)penditure is a non* recurring e)penditure2hose benefit lasts for more thanone accounting periodD Installation charges paid in con'unction 2ith the purchase of office equipment is an one*time e)penditure 2hose benefit



lasts for more than one accounting periodD


a@ Provision for doubtful debts represents the amount that cannot be collected b@ (he distinction bet2een capital and revenueitems is important because it is of fundamentalimportance to the determination of profitsc@ oods lost by fire need not be accounted for sincethey are not sales d@ +ree samples received are businessgains

137. (he balance of 2hich of the follo2ing accounts do not disappear7 oncethey aredebitedFcreditedto (rading AccountD



a@ %alesb@Purchasesc@ In2ard

returns d@Closing stock

LKintsE d@ (he closing stock d@ is the value of goods 2hich remainunsold at the end of the period2hose balance appears once in (rading Account and once in Balance%heet of the businessD Allother accounts sales a@7 purchases b@ and In2ard Returns c@ are

closed once they are absorbed by the (rading AccountD (hus d@ is the correct ans2erD

138. hich one of the follo2ing should be considered a revenuee)penditure?a@ Q4666 paid for the e)ecution of a ne2 plantb@ ,oss of Q467666 incurred in increasing the sitting

accommodation of a hotel c@ &amage paid on account of breach of a contract to supply certain goodsd@ Repair to machinery purchased7 second handD

139. hich of the follo2ing statements are F is true? ?#vents after Balance%heet? area@ All the significant events after the Balance %heet date

b@ (he events after Balance %heet date but before submitting it tothe Registrar of Companiesc@ (he events after Balance %heet date but before itsapproval by the board d@ All changes after Balance %heetdate before its approval

LKintsE c@ #vents occurring after the Balance %heet date are thosesignificant events7 both favourable and unfavourable7 that occur

bet2een the Balance %heet date and the date on 2hichthe financial statements are approved by the Board of &irectors in thecase of a company7 and bythe corresponding approving authority in the case of any other entityD

140. hich one of the follo2ing isa capital e)penditure?

a@ Compensation paid to &irectors on termination of their services

b@ #)penditure incurred in connection 2ith the rene2al of a (rade !arkD c@ ratuities paid to &irectors ontermination of their servicesD



d@ Royalty paid in installments for the purchase of rights tomanufacture and sell patient medicinesD

141. hich of the follo2ing enhances the earning capacity of anasset?a@ Increase in 2orking capacity of an assetb@ Reduction in operating costsc@ Replacing damaged parts of an assetd@ Both a@ and c@ above

LKintsE d@ #nhancement of earning capacity can be by 2ay ofreplacement of 2orn out or damaged parts 2hich retarded the earningcapacity and increase in the 2orking capacity increases the earningcapacity of the assetD

142. hich of the follo2ing items should not be capitali"ed relating to fi)ed assets?



a@ Interest payable on loans or deferred credits taken for the acquisitionor construction of fi)edassets before they are ready for useb@ %tand by equipment and servicing equipment

c@ #)penditure incurred on test runs and e)perimental productiond@ Administration and general e)penses

LKintsE d@ $nly those e)penses 2hich relate to and specificallyattributable to the asset are capitali"edD Administration and generale)penses cannot be specifically attributable to the assetand hence cannot be capitali"edD

143. hich of these errors affect onlyone account

a@ #rrors of castingb@ #rrors of carry for2ardc@ #rrors of postingd@ All the three

144. hich of these errors affect t2o

or more accounts

a@ #rrors of complete omissionb@ #rrors of principlec@ #rrors of posting to 2rong accountd@ All the three

145. hich of the follo2ing error

is an error of principle

a@ Q :7666 received from %ham credited to Ram AFcb@ Q :7666 incurred on installation of ne2 plant debited totravelling e)penses AFc c@ Q :66 paid for 2ages debited to salaryAFcd@ Q :66 being purchase of ra2 material debited to purchase AFc Q :6

146. hich of the follo2ing is an onesided error

a@ Q :66 purchase of old equipment not recorded in the books of AFc at all b@ Q :66 being e)pense on travellinge)pense credited to travelling e)penses c@ Bothd@ None

147. Any gain on the sale of non*current assets should be from

the net profitand the lossmust be to the net profit in determining fund from operation



a@ Added7 Reducedb@ Added7 Addedc@ &educted7 Addedd@ &educted7 &educted

148. Cash book recordsV

a@ $nly cash salesb@ All types of cash receipts and paymentsc@ $nly revenue receiptsd@ $nly capital receipts



149. In a three column cash book********** does not e)ist

a@ Cash columnb@ Bank column

c@ Petty cash columnd@ &iscount column

150. hich of these transactions 2ill not be recorded in cash bookV a@ Cash received from debtorsb@ Cash paid to creditors

c@ %alary remained outstandingd@ Cash deposited 2ith bank

151. (he closing balance of a pettycash book is a F an V

a@ ,iability

b@ ainc@ Assetsd@ ,oss

152. hich column of acash book 2ill not have credit balance V

a@ Bank column

b@ &iscount columnc@ Cash columnd@ None

153. Petty cash balance is aFan V

a. Assetsb@ #)penditurec@ ,iability

d@ None

154. hich of these is a Part of cash in hand

a@ Postage stampsb@ BFR c@ Cheque &eposited 2ith Bank d@ BFR endorsed

155. hich of the follo2ing is a Real AFc

a@ %alary AFc



a@ Balance %heetb@ Profit and ,ossAFcc@ (rading AFc

d@ None of these

166. Revenue receipts are sho2n in V

a@ Balance %heetb@ Profit and ,oss appropriation AFcc@ !anufacturing AFcd@ (rading and Profit and ,oss AFc

167. R evenue is generally recognised as being earned at that point oftime 2hena@ sale is effectedb@ cash is receivedc@ production is completedd@ debts are collected

168. hich of the follo2ing is a revenuee)penses

a@ Ra2 material consumedb@ Plant purchasedc@ ,ong term loan raised from bank d@ %hare Capital

169. hich of the follo2ing is a capitale)penditure

a@ Repair of plant and machineryb@ %alary paid to 2orkersc@ Cost of stand by equipmentd@ Annual 2hite2ash of the office building

170. hich of these types of e)penditure 2ould not be treated as a Capital#)penditurea@ Acquisition of an Assetb@ #)tension of an Assetc@ Improvement of the e)isting Assetd@ !aintenance of the Asset

171. #

)penses of the follo2ing nature are treated as a Revenue e)pensese)cept V a@ #)penses for day to day running of the business



b@ Putting the ne2 asset in 2orking conditionc@ &epreciationd@ Purchase of ra2 material

172. Cash received from debtors 2ould be deemed as WWWWof fundsDa@ No flo2b@ %ourcesc@-sesd@

ain

173. Purchase day book records



a@ All cash purchases b@ Allcredit purchasesc@ $nly credit purchase of ra2 material or goods purchased for resale d@ All purchases

174. 5ournal is also kno2n by V

a@ !emorandum AFcb@ Uaccha booksc@ Books of original entryd@ Proper books

175. enerally the termfund is used to mean the difference bet2een

a@ Current assets and current liabilitiesb@ Profit and loss AFC and Balance sheetc@ Current assets and non*current liabilitiesd@ Current liabilities and non*current liabilities

176. (he periodic total of

purchase day book is posted to V

a@ Creditors AFcb@ &ebtors AFcc@ Purchase AFcd@ None

177.

hich of these documents is not required for BankReconciliationa@ Bank column of Cash Book b@ Bank Pass Book c@ Bank %tatementd@ (rial Balance

178. hich of these 2ill not

affect Bank and Cash balancea@ Cash received from S credited to Gb@ Cheques issued to A but debited to Bc@ Cheques deposited and cleared on the same dated@ All the three

179. hich of these items are taken into consideration for preparation ofad'usted Cash

Book

a@ !istake in Cash



a@ Credit side of CashBook b@ &ebit side ofCash Book c@ &ebit side of (rial Balanced@ Credit side of Balance %heet

182. &ifference in Bank Balance as per Pass Book and Cash Book may arise onaccount of a@ Cheque issued but not presentedb@ Cheque issued but dishonouredc@ Cheque deposited and credited by bank d@ All of a@ and b@ above

LKintsE d@ &ifferences in Bank Balance as per Bank Pass Book and CashBook arise due to manyreasonsD +e2 of them are Cheques issued a credit entry in CashBook made@ but not presented for payment so no corresponding entry in Pass Book@DCheques issued a credit entry in Cash Book made@ but dishonoured sono corresponding entry

made in Pass Book@DIn case of cheques deposited and credited by bank7 entries in both CashBook and the Bank Pass book are made7 hence no difference arisesDKence option d@ is the right optionD $nly in situations a@ and b@ result indifferenceD

183. hich of the follo2ing statements

isFare true?

a@ hen there are cheques deposited but not collected by the banker7overdraft balance as per Pass Book 2ill be less than that as per Cash Book b@ hen the payment side of the Cash Book is undercast7 overdraft balance as per Cash Book 2ill be more than overdraft balance as per Pass Book

c@ hen reconciliation is to be done 2ith the e)tracts of the CashBook and Pass Book relating tothe same period7 the transactions 2hich do not figure in one of thee)tracts are to be noted d@ Bank interest debited in the Pass Book is to be added to $verdraft Balance as per Pass Book toarrive at the $verdraft balance as per Cash Book

LKintsE c@ %tatement a@ is false7 since 2hen cheques are deposited at

bank7 the e)isting overdraft balance as per Cash Book decreases 2hereas 2hen the cheques have not been collected the overdraft balance as per Pass book is more that of



Cash bookD%tatement b@ is false7 2hen the payments side of the Cash Book isundercast results in undercasting of overdraft balance7 hence theoverdraft balance as per Cash Book 2ill be less7than the overdraft balance as per Pass BookD%tatement c@ is true7 since 2hen e)tracts of Cash Book and e)tractsof the Pass Book relating tosame period are taken and compared7 the entries 2hich do not figurein both the e)tracts implythat these entries create the difference in the balances7 hence are to be noted for the preparation of reconciliation statementD%tatement d@ is false7 since Bank interest debited in the Pass Book

increases the overdraft balancehence to arrive at the balance as per cash7 since the above correspondingentry is not made



in the Cash Book7 the interest amount is to be deducted from theoverdraft balance as per Bank PassBookDKence only option c@ is true7 all other options are falseD

184. (he Bank Reconciliation%tatement is prepared

a@ (o rectify the mistakes in the Cash Book b@ (o arrive at the Bank Balancec@ (o arrive at the Cash Balanced@ (o bring out the reasons for the difference bet2een the Balance as per Cash Book and the

Balance as per Bank %tatement

LKintsE d@ (he basic ob'ective of the preparation of the BankReconciliation %tatement is to locatethe reasons for differences bet2een the balance as per Cash book andthe balance as per Bank %tatementD (he ancillary benefits during this process of preparationcan be said to be rectification

of mistakes in cash book7 rectification of mistake in bank statement etcDKence option d@ is theright choiceD

185. hich of the follo2ing statements isfalse?

a@ hen the bank column of a Cash Book sho2s a credit balance7 itmeans an amount is due tothe bank b@ hen Pass Book sho2s a debit balance7 it means overdraft as perPass Book c@ hile preparing Bank Reconciliation %tatement7cheques paid into bank but not yet clearedare deducted from the &ebit balance as per Cash Book to arrive at the balance as per Pass Book d@ A Bank Reconciliation %tatement is a part of Pass Book

LKintsE d@ A credit balance in the Cash Bookbank column@ denotes anoverdraft balanceD Itimplies that the business is due to the bank respect of that amount it hasoverdra2nD Kence optiona@ is trueDA credit balance in the Pass book refers to favourable balance and adebit balance in the pass

book refers to -nfavorable balance or overdraftD Kence option b@ istrueD hen preparing a BR%7 2here there is a debit balance orfavourable balance in the Cash book



bank column@7 cheques paid into bank but not yet cleared are deductedfrom the cash book bank column@ balance to arrive at the balance in the bank Pass bookD Kence statement c @ istrueD

A Bank Reconciliation %tatement does not form part of pass bookD Itis prepared by the business toreconcile the balances as per Pass Book or Bank %tatement and theCash Book bank column@DKence statement d@ is falseD




a@ Bank charges increase debit balance sho2n as per Bank Columnof the Cash BookD b@ Bank charges increase debit balance as per

Bank pass bookDc@ A cash sale of a non*trading asset is recorded in the 'ournal properD d@ Cash discount allo2ed by the business 2ill appear on thedebit side of the debtorTs accountD

LKintsE b@ Bank charges increase debit balance as per Bank PassBook b@ is the correct ans2erD(he debit balance as per Bank Pass Book indicates the overdraft

balance and the bank charges being the e)penditure increase the debit balanceD (he alternative a@ isincorrect because the bank charges decrease the debit balance sho2n as per Bank column of the Cash Book and donot increase the debit balance as per Cash Book signifies thefavourable balanceD A cash sale of anon*trading asset is recorded in the 5ournal Proper is incorrectc@ because all in transactions

involving cash receipts and payments are recorded in the Cash bookcash discount allo2ed bythe business 2ill appear on the debit side of the debtorTs account d@ isincorrect because7 thecash discount allo2ed is a reduction in the balance of a debtorTsaccount 2hich appears on thecredit sideD (hus b@ is the correct ans2erD

187. Bank reconciliation is astatement prepared to reconcileV

a@ (rial balanceb@ Cash book c@ Bank AFcd@ Cash as per cash book 2ith bank balance as per bank pass book

188. Bank reconciliation statement is a part of V

a@ Cash book b@ (rial balancec@ Auditors reportd@ None of these

189. Benefits of

preparing Bank Reconciliation %tatement includes V

a@ It bring out any errors committed in preparation of Cash book F



Bank Pass Book b@ Kighlights under delay in clearance ofcheques deposited but not creditedc@ Kelp kno2 actual bank balanced@ All the three

190. &ebit balance as per bank pass book mean V

a@ %urplus cashb@ Bank $verdraftc@ (erms deposits 2ith bank d@ None of these

191. hich of the follo2ing is not a cause of difference in balance as percash book and balance as

per bank pass bookV

a@ #rrors in cash book b@ #rrors in pass book

c@ Cheques deposited and clearedd@ Cheques issued but not presented for payment

192. Provision is created for V

a@ -nkno2n ,iabilitiesb@ Uno2n ,iabilitiesc@ Creation of %ecret Reserves

d@ All the (hree

193. hich of the follo2ing is not a method of chargingdepreciationa@ %traight line !ethodb@ ritten do2n value !ethodc@ &iscounted present value !ethod

d@ %um of digits !ethod194. A second hand car is purchased for Q 87667666 and sold at Q 47<67666after t2o yearsDIf depreciation is charged X 46Y on %,! method7 find the profit or loss onsale of the carD

a@ Q 867666 ,oss

b@ Q 867666 Profitc@ Q 467666 ,ossd@ Q 467666 Profit

195. In the above question if the depreciation is charged X46Y on 2rittendo2n valuemethod7 find the profit or loss on sale of the %econd hand carD

a@ ,oss of Q 867666b@ ,oss of Q887666 c@ ,ossof Q 447666d@ Profit of Q 447666

196. (he term ? Reserve? has been defined in ****** of the Companies

Act7 4:>a@ Part III %chedule /Ib@ Part III



%chedule / c@Part II %chedule/Id@ Part I %chedule I

197. hich of the follo2ing is true 2ith respect to providing depreciationunder diminishing balancemethod?

a@ (he amount of depreciation keeps increasing every year 2hile therate of depreciation keepsdecreasing

b@ (he amount of depreciation and the rate of depreciation decreaseevery year c@ (he amount of depreciation decreases 2hile the rate ofdepreciation remains the same d@ (he amount of depreciation and therate of depreciation increases every year

LKintsE c@ -nder the 2ritten do2n value method of depreciation7 the rate of percentage of



depreciation is fi)ed7 but it applies to the value of the asset at 2hich theasset stands in the booksin the beginning of the yearD (herefore7 the amount of depreciationdecreases as the fi)ed rate of

depreciation is charged on 2ritten do2n values of the assetD198. hich ofthe follo2ing statements best describes the purpose of depreciation?

a@ Regular reduction of asset value to correspond to changes in marketvalue as the asset agesb@ A process of correlating the market value of an asset 2ith its gradualdecline in physical efficiency

c@ Allocation of cost in a manner that 2ill ensure that Plant and#quipment items are not carriedon the Balance %heet in e)cess of net reali"able valued@ Allocation of the cost of an asset to the periods in 2hich services arereceived from the asset

LKintsE d@ A%*> defines depreciation as a measure of the 2earingout7 consumption or other loss of

value of a depreciable asset arising from use7 efflu)ion of time orobsolescence through technology and market changesD &epreciation isallocated so as to change a fair proportion of the depreciable amount in each accounting period during thee)pected useful life of the assetD&epreciation includes amorti"ation of assets 2hose useful life is predeterminedD (he ultimate outcome of accounting for depreciation iscash available to replace the asset ho2ever this cannot be the purpose

of depreciationD

199. (he main ob'ective of providingdepreciation is to

a@ Calculate the true profitb@ %ho2 the true financial position in the Balance %heetc@ Provide funds for replacement of fi)ed assets

d@ Both a@ and b@ aboveLKintsE d@ (he main ob'ective of providing depreciation is to find outthe true Net Profit or ,oss for an accounting period and to present a true and fair vie2 of thestate of affairs of the businessDProviding funds for replacement is only an ancillary ob'ective and not themain ob'ectiveD

200. &epreciation is a process of

a@ /aluation



b@ /aluation and allocationc@ Allocationd@ Appropriation

LKintsE c@ A%*> on depreciation accounting defines TdepreciationT

as the measure of 2earing out7consumption or other loss of a value of a depreciable asset arisingfrom use7 efflu)ion of time or obsolescence through technology and market changesD &epreciation isallocated so as to chargea fair proportion of the depreciable amount in each accounting periodduring the e)pected useful life of the assetD &epreciation includesamorti"ation of assets 2hose useful life is

predeterminedD

0?@E'@:

464 a 468 a 469 d 46< d 46: d46> b 46= b 46 d 46 b 446 b 444 b 448 c 449 c 44< d 44: d 44> c

44= b 44 d 44 b 486 d 484 c 488d 489 c 48< d 48: d 48> b 48= c48 d 48 a 496 d 494 c 498 c 499d 49< d 49: c 49> b 49= d 49 c49 c 4<6 a 4<4 d 4<8 d 4<9 d 4<<d 4<: b 4<> b 4<= c 4 c 4:= a 4: b 4: c 4>6 c

4>4 c 4>8 c 4>9 a 4>: a 4>>d 4>= a 4> a 4> c 4=6 d 4=4 b4=8 a 4=9 c 4=< c 4=: a 4=> c 4==d 4= d 4= a 46 b 44 a 48 d49 c 4< d 4: d 4> b 4= d 4a 4 d 46 b 44 c 48 b 49 c4< a 4: b 4> a

4= c 4 d 4 b 866 c

201. (he portion of the acquisition cost of the asset yet to be allocated iskno2n asa@ ritten do2n valueb@ Accumulated valuec@ %alvage valued@ Residual /alue

202. hich of the follo2ing statements is true 2ith regard to 2ritten do2nvalue methodof depreciation?

i. (he rate at 2hich the asset is 2ritten offreduces year after year iiD (he amount ofdepreciation provided reduces from year to year

iiiD (he rate of depreciation as 2ell as the amount of depreciationreduce year after year ivD (he value of the asset gets reduced to "eroover a period of time



a@ $nly i@ aboveb@ $nly ii@ abovec@ Both i@ and ii@ aboved@ i@7ii@ and iii@ above

203. (he accounting process of gradually converting the une)pired cost offi)ed assets intoe)pensesover a series of accounting periods is

a@ &epreciationb@ Physical deterioration of the assetc@ &ecrease in market value of the asset

d@ /aluation of an asset at a point of time

204. hich of the follo2ing factors are primarily considered to determinethe economiclife of an asset?



a@ Passage of time7 asset usage7 andobsolescence b@ (a) regulations and%#BI guidelinesc@ (a) regulations and asset usaged@ %#BI guidelines and Asset usage

205. In 2hich of the follo2ing methods7 the cost of the asset is spread overin equal proportion during its useful economic life?

a@ %traight*line methodb@ ritten do2n valuemethod c@ -nits*of*

production methodd@ %um*of*the yearsT*digits method

206. hich of the follo2ing statementsis correct?

a@ &epreciation cannot be provided in case of loss in afinancial year b@ &epreciation is a charge against profitc@ &epreciation is provided in the books only 2hen there is profitd@ &epreciation is an appropriation of profit

LKintsE b@ &epreciation is provided as a charge against profitsD It is notan appropriation of profitD Itis provided irrespective of 2hether the business is making a lossor a profitD Kence statement b@ is atrue statementD

207. &epreciation is calculated on the

a@ Cost price of assetb@ !arket pricec@ Cost0 (ransport0 Installatione)penses d@ Cost or marketvalues 2hichever is less

208. hich of the follo2ingis an e)ternal cause of depreciation

a@ Routine repair and maintenanceb@ !isusec@$bsolescenced@ ear andtear

209. &epreciation is a process of V



a@ /aluation of fi)ed assetsb@ Allocation of cost over the useful life of assetsc@ enerating funds replacements of the assetsd@ Avoidance of ta)

210. hich of the follo2ing is notdepreciated

a@ Buildingb@ ,andc@ Plant and !achineryd@ $ffice equipment

211. %chedule SI/ of the Companies Act specifies VVVVVV asminimum rate of depreciation &/@ on ship fishing vessels



a@8=Yb@99Yc@46Yd@4:Y

212. V VVVVV is also kno2n as Appraisal system ofdepreciationa@ Inventory system

b@ %urvey systemc@ Annuity systemd@ Insurance

213. Bad debts recovered account2ill be transferred to

a@ &ebtorTs Account

b@ Profit and ,oss Accountc@ Provision for &oubtful &ebt Accountd@ #ither b @or c@ above

LKintsE d@ hen Bad debts are recovered the entry isCash AFc WWWWWWWWWWWWWWWWWWWW&rD(o Bad debts recovered AFc(his AFc can either be transferred to P , AFc or Provisions for &oubtful

&ebts AFcD

214. (he entry for creating aProvision for bad debts is

a@ &ebit Provision for Bad &ebts AFc and credit&ebtors AFc b@ &ebit &ebtors AFc and creditProvision for Bad &ebts AFcc@ &ebit Provision for Bad &ebts AFc and credit Profit ,oss AFc

d@ &ebit Profit and ,oss AFc and credit Provision for Bad &ebts AFcD

LKintsE d@ Provision for bad debt is a charge against profit andtherefore7 the entry for creating provision for bad debts is done by debiting P, AFc and crediting provision for bad debts accountD

215. hen a person purchasing goods on credit he becomes aWWWWDD in

the books of the seller*

a@ &ebtor



b@ Creditor c@&efaulterd@$ffender 216. hich of these is not a Businesse)pense*

a@ +ire Insurance of other buildingb@ ,IC Premium of proprietor c@ Interest on Capitald@ Commission on sales

217. Cost of goods sold e)cludes*

a@ $pening %tock b@ Carriagein2ard c@ages %alaryd@ Postage %tamps



218. (a) deducted at source AFc appears in*

a@ Assets sideb@ ,iability sidec@ Profit ,oss AFc

d@ &ebited to Capital AFc

219. Investment in o2n share AFc appearsin M

a@ Asset sideb@ ,iability sidec@ Netted from Capital

d@ Profit ,oss AFc

220. Paymentsreceived in advance from a customer for a contract can be

a@ %ho2n as a deduction from contract 2ork*in* progress on asset side b@ %ho2n as a liabilityc@ Credited to P, AFcd@ #ither a@ or b@ above

221. If a company hascontingent liabilities7 they appear in the

a@ Balance %heetb@ &irectorsT reportc@ Notes on account to Balance %heetd@ ChairmanTs report

LKintsE c@ Contingent liabilities are disclosed in the notes to Balance%heetD

222. Recent developments have made much of a company1s inventoryobsoleteD (hisobsoleteinventory should be

a@ ritten do2n to "ero or its scrap valueb@ %ho2n in the Balance %heet at its replacement costc@ %ho2n in the Balance %heet at cost7 but classified as anon*current asset d@ Carried in the accounting records atcost until it is sold

223. hich of the follo2ing is not classified as inventory in the financial

statements?a@ +inished goodsb@ ork*in*



process c@%tores andsparesd@ Advance payments made to suppliers for ra2 materials


a@ Inventory valuation affects only the income statementb@ -ndercasting or overcastting of subsidiary book is an e)ample oferror of commission c@ Capital e)penditure 2rongly treated as revenueis an e)ample of error of commission d@ Inventories should be valuedat lo2er of historical cost and current replacement cost

225. hich of the follo2ingstatements is F are not correct?

a@ Provision for bad debts appears as a liability on theBalance %heet b@ (he provision for bad debts is o2edto the proprietor



c@ Bad debts could be less than the provisionfor bad debts d@ Bad debts could e)ceed the provision for bad debts

LKintsE b@ Provision for bad debts is created to ad'ust the loss of

future bad debtsD (his account iscreated by a debit to the Profit ,oss Account iDeD7 a charge against profitsD (his account sho2s acredit balance and appears on the liabilities side of the Balance %heetDActual bad debts for a particular period may e)ceed the provision provided or may be lessthan the provision madeD

226. If actual bad debts are more than the provision for bad debts7 thenthere 2ill be aa@ Credit balance of Provision for Bad &ebts Accountb@ &ebit balance of Provision for Bad &ebts Accountc@ &ebit balance of Bad &ebts Accountd@ &ebit balance of &iscount on &ebtors Account

LKintsE b@ Provision for Bad &ebts Account is created for 2riting off bad debtsD %ince the provisionfor bad debts is a credit balance account7 If the actual bad debtse)ceed the provision createdthen there 2ill be debit balance of provision for bad debts accountD

a. (he creation of provision for doubtful debts given as an

ad'ustment requiresa@ &ebit Profit and ,oss Account and deduct the provision fromdebtorsb@ Credit Profit ,oss Account and deduct the provision from debtors c@ Credit Profit and ,ossAccount and add the provision to debtorsd@ &ebit Profit ,oss Account and add the provision to debtors

LKintsE a@ (he ad'ustment for provision for bad debts account given inthe ad'ustments is to debitP, AFc and deduct from %undry &ebtors7 the amount of provision for bad debtsD Provision for baddebts is created against %undry &ebtors and therefore deducted from%undry &ebtors and &ebitedto P, AFc as it is a charge against P, AFcD

228. -nder the direct 2rite*off method of recogni"ing a bad debt e)penseDhich of thefollo2ingstatements isFare true?



a@ (he bad debt e)pense is not matched 2ith the related salesb@ Revenue is overstated in the year of salesc@ It violates the matching principle of accountingd@ All of the above

LKintsE d@ -nder the direct 2rite off method of recogni"ing a baddebt e)pense7 the alternative d@is the correct ans2er 2hich the combination of the follo2ingstatements a@ (he bad debt e)penseis not matched 2ith the related sales because the e)pense is 2rittenoff in the year of occurrenceand it is not matching 2ith the related salesD b@ Revenue is overstatedin the year of %ales as a



result not making any provision for possible loss on account of non*recoverable accountD c@ Itviolates the matching principle of accounting as the e)pense of bad debtis not matched for the

same period of incomeD (hus7 d@ is the correct ans2erD

229. At the time of preparation of financial accounts7 bad debt recoveredaccount 2ill betransferred to

a@ &ebtors AFcb@ Profit ,oss AFcc@ Profit ,oss Ad'ustment AFc

d@ Profit ,oss Appropriation AFc

LKintsE b@ Bad debt recovered is a 2indfall gain and it is transferredto Profit ,oss Account at thetime of preparation of +inal AccountsD If provisions account is there inthe books it 2ill be transferredto Provision AFc and the balance if any in the provision account 2ill betransferred to Profit

,ossAccountD It is recovery of bad debt 2ritten off and hence it is nottransferred to &ebtors AccountD Itis not transferred to Profit ,oss Ad'ustment AccountD It is not anappropriation to be transferred toProfit ,oss Appropriation AccountD (hus7 the ans2er is b@D

230. (he balance of Revaluation Reserve pertaining to an asset that has

been disposed off or retired can be transferred to

a@ eneral Reserve AFcb@ Profit ,oss AFcc@ Asset AFcd@ Capital Reserve AFc

LKintsE d@ According to A%*46 on disposal of a previously revalued itemof fi)ed asset7 the difference bet2een net disposal proceeds and the net book value should be charged or creditedto the Profit ,oss %tatement e)cept that to the e)tent that such aloss is related to an increase2hich 2as previously recorded as a credit to revaluation reserve and2hich has not been subsequently reversed or utili"ed7 it may becharged directly to that accountD

(his balance no longer needed@ being of capital nature should betransferred to Capital ReserveAccountD



231. Property7 Plant and #quipment are conventionally presented in theBalance %heet ata@ Replacement cost M Accumulated &epreciation

b@ Kistorical cost M %alvage /aluec@ Kistorical cost M &epreciation portion thereof d@ $riginal cost ad'usted for general price*level changes

LKintsE c@ As per A%*46 on fi)ed assets7 property plant equipmentshould be presented in theBalance %heet at historical cost gross book value@ less depreciation 1 net book valueD

232. $utstanding salaries is sho2n as

a@ An Asset in the Balance%heet b@ A ,iabilityc@ By ad'usting it in the P , AFcd@ Both b@ and c@ above

LKintsE d@ $utstanding salaries is the e)pense relating to the currentaccounting period but has not been paid yet and therefore7 it is a current liabilityD

233. Insurance prepaid is sho2n as

a@ Current Assetb@ Current ,iabilityc@ +i)ed Assetd@ Income

LKintsE a@ Prepaid insurance is the e)pense relating to the ne)taccounting period but has been paid in the current accounting period and hence it is a current assetD (head'ustment 2ould be todeduct it from the respective e)pense account in the P, AFc and sho2

it as a current asset in theBalance %heetD

234. &epreciation appearing inthe (rial Balance should be

a@ &ebited to P, AFcb@ %ho2n as liability in Balance %heet

c@ Reduced from related asset in Balance %heetd@ Both a@ and c@ above

LKintsE a@ Any item appearing in the (rial Balance 2ill have one effectiDeD7 depreciation appearingin the (rial Balance 2ill be debited to the Profit ,oss AccountDKo2ever7 if depreciation is given inthe ad'ustments7 it 2ill have double effect iDeD7 it should be debited

to P, AFc and deducted fromthe gross fi)ed asset block in the Balance %heet alsoD

235. A club paid subscription fees of Q47<66D $ut of 2hich Q 866 is prepaidD Insuch casea@ P, AFC is debited 2ith Q 47<66b@ P, AFC is debited 2ith Q 47866

c@ Q 866 is sho2n as current assetd@ Both b@ and c@ above

LKintsE d@ Ad'ustments for prepaid subscription feesE

P. , AFc #)tract(otal subscription fees paid 47<66,essE %ubscription fees prepaid Relating to ne)t

AFc period 866%ubscription fees 4866(he prepaid subscription fees of Q 866 2ill be sho2n as a current asset inthe Balance %heet as it isan e)pense relating to the ne)t accounting period but has been paid in the current accounting



239. hich of the follo2ing entries is correct in respect of reserve fordiscounts onaccounts payable?

a@ &ebit P, AFc and Credit Reserve for &iscount on

Accounts Payable AFc b@ &ebit Accounts Payable AFc andCredit P, AFcc@ &ebit Reserve for &iscount on Accounts Payable AFc and Credit P,AFcd@ &ebit Reserve for &iscount on Accounts Payable AFc and creditAccounts Payable AFc LKintsE c@ (he entry 2ill be as follo2sEReserve for &iscount on CreditorsAFcWWWWWWWWWWWWWWWWWW &rD (o Profit ,ossAFcIt 2ill be sho2n on the credit side as a separate item and 2ill be sho2non the ,iabilities side by2ay of deduction from the %undry CreditorsD

d. %undry debtors as per (rial Balance is Q <97666 2hich includes Q87866 due from 1K1 in respect of goods sent to him on approval basis7the cost price of 2hich is Q 4766DRectification 2ould involveE

a@ Adding Q 87866 to closing stock b@ &educting Q 4766 from closing stock and deducting Q 87866 eachfrom debtors and sales c@ Adding Q 4766 to closing stock and deductingQ 87866 each from debtors and salesd@ &educting Q 4766 from debtors

241. oods in stock 2orth Q 66 are destroyed by fire and the Insurance CoDis accepted theclaim for 600. Ad'ustment 2ould involveE

a@ &ebit of Q 66 to (rading Account and credit of Q >66 and Q 866 toinsurance company and

Profit and ,oss Account respectivelyb@ &educt the Q 66 from closing stock in the (rading Accountc@ Credit insurance company for Q >66d@ &ebit of Q >66 and Q 866 to insurance company and Profitand ,oss Account respectively andcredit of Q 66 to (rading Account

242. Prepaid e)penses are valued

on the Balance %heet at

a@ Replacement costb@ Current costc@ Cost to acquire less accumulated amorti"ationd@ Cost less e)pired portion

LKintsE d@ Prepaid e)penses are the e)penses 2hich relate to theune)pired portion of the benefitof the e)penseD Kence7 these are valued on the Balance %heet at thecost less e)pired portionD

243. hich of the follo2ingrelationships isFare false?

a@ Net Profit 1 ross Profit M Administration and $ther e)pensesb@ Net Profit 1 ross Profit 0 Administration e)penses and

$ther e)penses c@ $pening %tock 0 Purchases M Closing%tock 1 Cost of %alesd@ Both b@ and c@ above



LKintsE d@ Net Profit1 ross Profit* Administration and other e)pensesDKence option b@ is falseD$pening stock0 Purchases*Closing stock1 Cost of material consumednot cost of salesD $ption c @ is falseD

244. ross Profit is equal to

a@ %ales M Cost of goods soldb@ %ales M Closing %tock 0 Purchasesc@ $pening %tock 0 Purchases M Closing %tock d@ None of the above

245.

hich of the follo2ing shall not be deducted from net profit 2hilecalculatingmanagerial



remuneration? a@ ,osson sale of undertakingb@ &ebts considered bad and 2ritten off c@ ,iability arising from a breach of contract

d@ &irectorTs remuneration

LKintsE d@ &irectorTs remuneration shall not be deducted from net profit 2hile calculating managerial remunerationD

246. hich of the follo2ing equations iscorrect?

a@ ross Profit0 %ales0 &irect e)penses0 Purchases0 Closing stock 1

$pening stock b@ ross Profit0 %ales0 &irect e)penses0 Purchases*Closing stock 1 $pening %tock c@ ross Profit 0 $pening %tock 0&irect e)penses 0 Purchases* Closing stock 1 %ales d@ ross Profit M$pening %tock 0 &irect e)penses 0 Purchases 0Closing stock 1 %ales

247. hich of the follo2ing is not true 2ith regard to preparation of Profit ,ossAccount?

a@ Profit ,oss Account is prepared for a certain period andhence it is an interim statementb@ Profit ,oss Account does not disclose the effect ofnon*financial items c@ Net Profits are ascertained on the basis of current costsd@ Net Profits as disclosed by P, Account is not absolute

248. (he Profit and ,oss Account sho2s the

a@ +inancial results of the concern for a periodb@ +inancial position of the concern on a particular datec@ +inancial results of the concern on a particular dated@ Cost of goods sold during the period

LKintsE a@ A profit and ,oss Account is prepared for the period ending2hich sho2s the financial or

operating results of the concern for a periodD


a@ Provision for doubtful debts represents the amount thatcannot be collected b@ Cash balance on hand sho2s 2hetherthe business has earned Profit or ,oss c@ +ree samplesreceived are business gainsd@ (he &/ of an asset depreciated on the reducing balance methodcan never become "ero




a@ Provision for discount on debtors can be estimated only after

computing the provision for doubtful debtsb@ All pre*received incomes under the cash system of accountingare current gains c@ Cash balance on hand sho2s 2hether the business has earned Profit or ,ossd@ Capital e)penditure should be sho2n in the books by debitingasset account and creditingsupplier or cash account

252. hich of the follo2ing 2ill not appear in Profit and ,oss Account of a business?a@ &ra2ingsb@ Bad debtsc@ Accrued e)pensesd@ Reserve for discount on %undry Creditors

LKintsE a@ Profit and ,oss Account is an income statement 2hich depictsall incomesFgains ande)pensesFlosses during an accounting periodD &ra2ings are neitheran income nor an e)pense to be recorded in Profit and ,oss AccountD (hus a@ is the correct ans2erD(he items in other alternatives are either e)penses or accrued e)pensesor probable income of discount on sundry

creditorsD (he depreciation7 bad debts and provision for doubtfuldebts and accrued e)pensesappear in the Profit and ,oss Account and provision for income iDeD7 provision for discount on sundrycreditorsD Kence a@ is the correct ans2erD

253. hich of the follo2ing is nota financial statement?

a@ Profit and ,oss Accountb@ Balance %heetc@ +unds +lo2 %tatementd@ (rial Balance

LKintsE d@ (rial Balance d@ is not a financial statementD It is a list of allaccounts sho2ing outstanding balances at the end of the accounting periodD It helps in the preparation of financialstatementsD (he Profit and ,oss Account a@ Balance %heet b@ and+unds +lo2 statement c@ arethe financial statements prepared by a business entityD +unds flo2



statement though categori"edas one of the financial statements7 its preparation is not mandatoryD(hus d@ is the correct ans2erD

254. If une)pired insurance appears in the (rial Balance7 itshould bea@ Credited to the Profit ,oss Accountb@ &ebited to the Profit ,oss Accountc@ %ho2n on the liabilities side of the Balance %heetd@ %ho2n on the assets side of the Balance %heet

LKintsE d@ -ne)pired insurance or prepaid insurance must be sho2n on theassets side of



the Balance %heet7 because it is an assetD It cannot be sho2n on theliabilities side of the Balance%heetD It cannot be debited to Profit ,oss AFcD Also it cannot becredited to Profit ,oss AFcD

Kence d@ is trueD255. hich of the follo2ing areFis nota fi)ed asset?

a@ %tock b@ /ehiclec@ +i)ed deposit in bank d@ Both a@ and c@ above

256. hich of the follo2ing areFis acurrent asset?

a@ %undry &ebtorsb@ %tock c@ Prepaid insuranced@ All of a@7 b@ and c@ above

257. (a) deducted at sourceappears in the Balance %heet

a@ $n the assets side under current assetsb@ $n the assets side under loans and advancesc@ $n the liabilities side under current liabilitiesd@ $n the liabilities side under provisions


a@ Balance %heet discloses financial position of the businessb@ A person 2ho o2es to the business is called &ebtor c@ &ecrease in the value of the asset could decrease the value of a liabilityd@ Assets are to be sho2n in the Balance %heet at the reali"able value

LKintsE d@ A%*46 on Accounting for +i)ed Assets states that fi)ed assetsare to be sho2n in theBalance %heet at their actual costD


a@ (he balance of the goods account sho2s the value of stock in hand b@ Balancing of all accounts must be

done at the end of each dayc@ Assets 2hich are to remain in business for continuous use and notmeant for conversion into



cash are fi)ed assetsd@ Balance %heet discloses income position of the business

260. (he Balance %heet givesinformation regarding the

a@ Results of operations for a particular periodb@ +inancial position during a particular periodc@ Profit earning capacity for a particular periodd@ +inancial position as on a particular date

261. hich of the follo2ing accounts appears@ in the Balance %heet of a business?



i. %tock at the end of the financialyear iiD %tock at the beginning of thefinancial year iiiD &ra2ings

ivD Prepaid Rentv. Interest received but not yet earneda@ $nly i@ aboveb@ $nly iii@ abovec@ Both i@and iii@ aboved@ i@7 iii@7 iv@ and v@ above

LKintsE d@ %tock at the end of the financial year is the closing stock7dra2ings are the amounts2ithdra2n by the o2ner of the business for personal use and prepaidrent is the amount of rent2hich is paid in advance of the current financial year and interestreceived but not yet earned isthe amount of interest received 2hich does not pertain to the current year are the items that appear in the Balance %heet of a businessD %tock at the beginning of the financial year is the opening stock that appears in

(rading Account of a business and not in the Balance %heetD (husd@7 the combination of all the accounts in alternatives i@7 iii@7 iv@and v@ is the correct ans2erD

262. Computers taken on hire by a business for a period of t2elve monthsshould beclassified as

a@ Current assets

b@ Intangible assetsc@ &eferred revenue e)penditured@ Not an asset

LKintsE d@ Computers taken on hire by a business for a period oft2elve months is not an asset because it is not o2ned by the business to be classified as assetD (hus7the correct ans2er is d@D

%ince it is not an asset it cannot be classified as any asset and otheralternatives are not the correctans2ersD

263. hich of the follo2ing is not anintangible asset?

a@ (rade mark

b@ +ranchisec@ Accounts Receivabled@ %ecret Profit



LKintsE c@ An accounts receivable is not an intangible assetD It isthe amount that the business hasto receive from its debtorsD (he other assets mentioned inalternatives a7 b7 and d* trademark7

franchises and secret processes are intangible assetsD Kence7 the correctans2er is c@D

264. hich of the follo2ing is a currentliability?

a@ Prepaid e)pensesb@ (rademark c@ &iscount on issue of shares



a@ &ebts included in %undry &ebtors 2hich are doubtful in natureb@ -ncalled liability on partly paid sharesc@ Claims against the company not ackno2ledged as debtsd@ Arrears of fi)ed cumulative dividend

LKintsE a@ A contingent liability is the loss 2hich 2ill be kno2n ordetermined only on the occurrence or non* occurrence of one or morefuture uncertain eventsD &ebts of debtors is not anuncertain event but only the reali"ation of a part of the debt in doubtfulfor 2hich provision must be provided and hence it is not a contingent liabilityD Items in otheralternatives uncalled



liability on partly paid shares b@ may be called up in the event ofnecessity7 claims against the company notackno2ledged as debts c @ they may or may not turn out to be debts infutureD Arrears of cumulative fi)ed dividend d@ are contingent

liabilitiesD267. hich of the follo2ing arecurrent assets of a business?

i. Income received in advanceiiD %tock iiiD &ebtorsivD Pre*paid e)penses

v. Accrued income

a@ Both i@ and iv@ aboveb@ Both ii@ and iii@ abovec@ i@7ii@ and iii@ aboved@ ii@7iii@7iv@ and v@ above

268. hich of the follo2ing statements is

true?a@ Bad &ebts Recovered Account is transferred to %undry&ebtors Account b@ Bill of e)change is dra2n by the purchaser c@ (rial Balance establishes the arithmetical accuracy of theaccounting records d@ A 2ell maintained asset need not bedepreciated

LKintsE c@ Bad debts recovery amount 2ill be transferred to Profit ,oss Account and not to %undry&ebtors AccountD Kence a@ is not correctD Bill of e)change is dra2n bythe dra2er iDeD7 the seller and not the purchaserD According to Companies Act7 all assets must bedepreciatedD Kence a@7b@ and d@ are not trueD By tallying (rial Balance al2ays proves thearithmetical accuracy of theaccounting recordsD Kence c@ is correctD

269. Closing entries are generally passed V

a@ At the time of opening ne2 books of accountb@ At the time of closing the accountsc@ &uring the course of accounting period any timed@ After certification of accounts

270. Closing stock appearingin the (rial Balance is sho2n in M



a@ (rading AFc and Balance %heetb@ Profit and ,oss AFcc@ Balance %heet onlyd@ (rading AFc only

271. &epreciation Account appearing in the (rial Balance issho2n in V a@ Profit and ,oss AFcb@ (rading AFcc@ &educted from the concerned assets AFcd@ %ho2n on the liability side

272. Profit on sale of old plant is sho2n M

a@ In (rading AFcb@ In Profit and ,oss Appropriation AFcc@ Profit and ,oss AFc

d@ Being a non operating item ignored

273. Carriage on goods purchased issho2n in V

a@ Profit and ,oss AFcb@ Capitali"ed 2ith 2ork in progressc@ (rading AFc

d@ %ho2n in Balance %heet

274. hich of these is not an operatingincome

a@ Income from sale of trading goodsb@ Bad debts recoveredc@ Interest on +&sd@ None

275. ABC holds an average inventory of Q 9>7666CP@ 2ith an inventoryturnover of :timesD If the firm makes a gross profit of 8:Y on sales7 find the total sales of the company

a@ Q 87<67666b@ Q

87467666c@ Q87667666d@ Q4767666

276. +rom thefollo2ing details 2hat 2ill be the partners1 commission? Net

profit before charging partnersT commission Q>:7666D PartnersTcommission X 44Yafter charging such commission

a@ ><<4b@:<94

c@=>:<d@

=>

277. +rom thefollo2ing details 2hat 2ill be the partners1 commission? Net profit before charging partnersT commission Q>:7666D PartnersT

commission 44Y beforecharging such commission

a@ ><<4b@:<94c@

=4:6d@:=>

278. Arrangement of Balance %heet in a logical order iskno2n as V a@ &ressing Balance %heet

b@ !arshalling Balance %heetc@ +ormatting Balance%heet d@ !ake up ofBalance %heet

279. Improper valuation of inventoryeffectsV

a@ Profitabilityb@ +inancial positionc@ Both

d@ Cash inflo2s

280. +ind the cost of goods sold if goods are sold for Q 87666 at 8:Y profit on costa@ Q 47>66b@ Q47:66 c@

Q 47666d@ Q4766

281. +ind the value of openingstock from the follo2ing dataDPurchases Q 47:676667 Closing stock Q 967666 7 %ales Q878676667 ross profitQ <67666D

a@ Q :67666b@ Q::7666c@ Q>67666d@ Q

>:7666

2. A Bill of #)change is dra2n on 4st April7 8648 payable after 9monthsD (he due date of the bill is

a@ 96th 5une78648b@ 4 st5uly78648 c@

< th 5uly78648d@ < th August78648

LKintsE d@ Bill dra2n on 4st April7 8648 payable after 9 monthsD (hedue date is 4st April7 8648 0 9months 0 9 days of grace 1 <th 5uly7 8648D

283. hich of the follo2ing statementsisFare true?

a@ Noting charges are paid by the holder of the bill on thedate of default b@ A bill can be endorsed only thrice



c@ $n rene2al of bill the old bill is canceledd@ Both a@ and c@ above

LKintsE d@ Noting charges are paid by the holder of the bill to get

the bill noted for dishonour on thedate of its dishonourD %tatement a@ is trueDA bill can be endorsed any number of times7 there is no limitto the number of endorsementsD%tatement b@ is falseDRene2al of bill takes place 2hen the acceptor requests the dra2er tocancel the old bill and dra2a ne2 billD Kence statement c @ is trueD

Kence option d@ stating that statement a@ and c@ are the right choiceD

284. hen bill discounted 2ith the bank is dishonoured?

a@ AcceptorTs Account is debited in the books of dra2er b@ Bills Receivable Account is credited in the books of dra2er c@ Bank Account is debited in the books of dra2er



d@ Bills Payable Account is debited in the books of dra2er

LKintsE a@ hen a bill discounted 2ith bank has been dishonoured7 thedra2er debits the Acceptors Account restores the acceptor status adebtor for the amount due@ and credits the Bank Account or Cash

Account the amount he pays to bank@D(he acceptor debits the Bills Payable Account7 the noting charges andcredits the &ra2erTs Account Restores the status quo of the creditor to2hom he is due to pay@DKence option a@ is correctD All other options are incorrectD

285. hich of the follo2ing statementsisFare false?

a@ Accommodation bills are dra2n for the benefit of dra2er onlyb@ Bills sent for collection is an assetc@ Bills of e)change cannot be dra2n on a banker d@ Both a@ and c@ above

LKintsE d@ Accommodation bills are dra2n for the benefit of both the parties to the billD Kencestatement a@ is falseDBills sent for collection in the books of the dra2er is an asset replacingthe Bills Receivable asset@DA cheque is a bill of e)change 2hich is dra2n on a banker7 payable atsightD Kence option c @ isfalseDKence option d@ the statements a@ and c @ are false7 is the right choiceD

286. In the books of the dra2er7 the accounting treatment involved onreceipt of a bill of e)change duly accepted by the dra2ee is

i. &ebit Bills Receivable AccountiiD &ebit &ra2eeTs AccountiiiD Credit &ra2eeTs AccountivD Credit %ales Account

a@ $nly i@ aboveb@ Both ii@ and iv@above c@ Both i@ andiii@ above d@ Bothi@ and iv@ above

LKintsE c@ In the books of the dra2er7 the accounting treatment involvedon receipt of a bill of

e)change duly accepted by the dra2ee is debit Bills ReceivableAccount and credit &ra2eeTsAccount DiDeD7 the combination of statements in i@ and iii@



alternative c@ is the correct ans2erD (heother alternatives are incorrect because the combination of one correctans2er 2ith the statement of incorrect ans2erD &ra2eeTs Account isdebited ii@ as soon as a sale is made or anyadvances is made and &ra2eeTs Account is not debited 2hen the bill of e)change is acceptedand sales is credited iv@ 2hen the sale is made and not at the time ofacceptance of bill of e)changeD (hus7 the alternatives a@7 statement i@b@7 combination of ii@ and iv@ d@ combinationof i@ and iv@ are incorrectD

287. (he noting charges levied on dishonour of an endorsed bill by the Notary Public are to

be borne by



a@ (he dra2er of the bill b@ (he person responsible for dishonour c@ (he holder of the billd@ (he endorser of the bill

LKintsE b@ (he noting charges are the charges paid to Notary Public for presenting a bill for payment and to note the fact of dishonourD (hecharges are to be borne by the person responsiblefor dishonour 2ho is none other than the dra2eeD (hus7 the correctans2er is b@D (he dra2er of the bill a@ is incorrect ans2er becausethe dra2er may pay the charges initially butultimately they are to be borne by the dra2eeD (he holder of the c@ is

entitled to receive the payment of the bill and to bear the noting chargeson the billD (he endorser d@ may be the dra2er of the bill in 2hich case he 2ill recover the noting charges from thedra2ee of the billD (hus b@ isthe correct ans2erD

288. (he dra2er of a trade bill passes relevant entries 2ith regard to thetransaction

involved in itD But7 incase of an accommodation bill7 he passes an entry in addition to the usualentriesD (headditionalentry so passed is 2ith respect to

a@ &iscounting of the bill 2ith the bank b@ Payment of the bill on due date

c@ Remitting or receiving the amountd@ %ending the bill to bank for collection

LKintsE c @ In case of accommodation bills7 the additional entry that isto be passed other than theusual entries passed 2ith regard to trade bills in the books of the dra2eris in respect of c @ remitting or receiving the amount at the time ofdiscounting the bill and honouring the bill at

maturityD (he entries passed are the same in case of discounting the bill2ith the bank a@ and noadditional entry is passed e)cept for sending the share of proceedsto the dra2eeD $n payment of the bill on due date b@ no additional entry is passed in the books of thedra2erD If the bill is sent tothe bank for collection7 d@ the purpose behind theaccommodation bill is defeatedD Ko2ever7 no

additional entry is required to be passed at the time of sending the bill to the bank for collectiond@D (hus7 c@ is the correct ans2erD



289. -nder 2hich of the follo2ing situations7 is 'ournal entry not passed inthe books of thedra2er?

a@ hen a discounted bill is honoured by the dra2eeon the due date b@ hen a bill is sent to the bank forcollectionc@ hen a bill is rene2ed at the request of the dra2eed@ hen a debtor accepts a bill dra2n by the dra2er

LKintsE a@ hen a discounted bill is honoured by the dra2ee on the duedate7 a@ no 'ournal entry

is passed in the books of the dra2erD (he entry is passed at the time ofdiscounting of the bill itself and no entry is required if the discounted bill is honoured on duedateD Kence7 a@ is the correct

ans2erD (he other alternatives are incorrect because7 2hen a bill issent to the bank for collectionb@ a 'ournal entry debiting bills sent to bank for collection and creditingBills Receivable is passedDhen a bill is rene2ed at the request of the dra2ee c@ a 'ournal entryis passed canceling the old bill and raising a ne2 bill 2ith interestD hen a debtor accepts a billdra2n by the dra2er d@ 2hen

a debtor is converted to bills receivable and debtors balance is reducedand Bills Receivable account is increased to e)tent of the amount passinga 'ournal entry to that effectD (hus7 a@ is thecorrect ans2erD

290. hich of the follo2ingis not a feature of a promissory note?

a@ It must be in 2riting

b@ It contains an unconditional promise to payc@ It is payable to the bearer d@ It must be signed by the maker

LKintsE c@ According to the Negotiable Instrument Act7 promissorynote is not payable to the bearerD It must contain an order to payD %o this is not the characteristicof promissory noteD $ther

options are the characteristics of promissory noteD84 c 88 c 89 d 8< a 8: d 8> c 8= b8 c 8 a 86 c

291. Ko2 many parties aregenerally found in a Bill of #)change

a@ <

b@8c@9d@:

292. S dra2s a Bill of #)change on G for Q 467666 on 4*4*8649 for 9

monthsD (he due dateof the bill 2ill be V

a@ <*<*8649

b@ 9*<*8649 c@4*<*8649d@ 94*9*8649

293. hen a BFR is endorsed by the &ra2er 2hat entry is passed by the&ra2eeV a@ BFR AFc &rD to &ra2er AFc CrDb@ BFP AFc &rD to &ra2er AFc CrDc@ 9rd PartyTs AFc &rD to BFP AFc CrDd@ No entry at all

294. hen a BFR isdiscounted7 2hat entry is passed by the &ra2eeV



a@ Bank AFc &rD to BFR CrDb@ &ra2er AFc &rD to BFRAFc CrDc@ BFR AFc &rD to BFP AFc CrDd@ No entry

295. Noting charges are ultimately borne by V

a@ &ra2eeb@ &ra2er c@Payee

d@ None

296. Negotiable Instrument Act 2asenacted inV

a@ 44b@44c@4=4d@8664

297. hich of these is not an essential feature of a bill of e)change

a@ -nconditional

b@ Certainty of amountc@ In 2ritingd@ Amount to be paid in foreign currency

298. A foreign bill of e)change is generally dra2n up in V a@ (riplicateb@ &uplicatec@ %ingle

d@ Huadruplicate

299. hich of these are notrequired in a promissory note

a@ Acceptanceb@ -nconditional promise to payc@ Properly stampedd@ Payment to be made legal currency

300. Accommodation bills are generally for V

a@ enuine trade reasonsb@ +or mutual financial accommodationc@ (o help augment money supplyd@ All the three

0?@E'@:

864 a 868 b 869 a86< a 86: a 86> b 86= c 86 c 86 b 846 b 844 a 848 a 849 d 84< d

84: a 84> b 84= d 84 a 84 a 886d 884 c 888 a 889 d 88 b 88= a 88 d 88 b 896 d894 c 898 d 899 a 89< a 89: d 89>a 89= b 89 b 89 c 8<6 c 8<4 d8<8 d 8<9 d 8<< a 8<: d

8<> c 8<= a 8< a 8< d 8:6 c 8:4c 8:8 a 8:9 d 8:< d 8:: d 8:> d8:= c 8: d 8: c 8>6 d 8>4 d 8>8d 8>9 c 8>< d 8>: a 8>> a 8>= d

8> c 8> b 8=6 c 8=4 a 8=8 c 8=9c 8=< c 8=: a 8=> a 8== c 8= b8= c 86 a 84 c 88 c 89 d 8<a 8: d 8> c 8= b 8 c 8 a86 c 84 c 88 a 89 d 8< d 8:a 8> b 8= d 8 a 8 a 966 b964 b

A. Purchase 'ournal

B. %ales 'ournal

C. Purchases return 'ournal

D. %ales return 'ournal

2)

%A,#%

on credit is recorded in 2hich of the follo2ing 'ournal?

A. Purchase 'ournal

B. %ales 'ournal



3)

(ransactions that a B-%IN#%%doesn3t record in anyspecialised 9ournal are recorded in %hich of the follo%ing 9ournals or day boo$s&



A. Cash payments 'ournal

B. Cash receipts 'ournal


D. eneral 'ournal

")

0nother name of 9ournal is



A. %peciali"ed 'ournal

B. &ay book

C. Cash book

D. Record book

()

hich of the follo%ing specialised 9ournals %ill record

.goods returned by the B-%IN#%%

.?

A. Purchase 'ournal

B. %ales 'ournal



+)

%ales and purchase 'ournal don3t record

A. Credit sales

B. Credit purchases

C. Credit sales and purchasesD. Cash sales and purchases-)

,ash received from debtor is recorded in %hich

of the follo2ing %P#CIA,IJ#& 'ournals?

A. Purchase 'ournal

B. %ales 'ournal

C. Cash receipts

D. Cash payments 'ournal/)

hich of the follo%ing is a type of cash receipt 9ournal cash payment 9ournal&



A. Bank statement

B. %tatement of cash flo2

C. Cash book

D. Cash documents

),ash purchases is recorded in %hich of the follo%ing specialiCed 9ournals&

A. Purchase 'ournalB. %ales 'ournal




D. Cash payments 'ournal1)

0 brief explanation recorded belo% every entry in

general 9ournal is commonly $no%n as

A. Narration

B. #)planationC. %ummary

D. $ther information11)

,redit purchase of plant and machinery is recorded

in 2hich of the follo2ing %P#CIA,IJ#&

'ournals?

A. eneral 'ournalB. Cash 'ournal

C. Purchase 'ournal

D. Purchase return 'ournal12)

>ebit note is the basis for recoding a transaction in %hich of the follo%ing 9ournals&

A. eneral 'ournal

B. Cash 'ournal

C. Purchase 'ournalD. Purchase return 'ournal13)

.%A,#

of old furniture. 2ill be recorded in 2hich of the follo2ing specialised 'ournals?

A. Purchase 'ournal

B. %ales 'ournal

C. eneral 'ournalD. Cash receipt 'ournal1")

Credit note is the basis for recording a transaction in 2hich of the

follo2ing %P#CIA,IJ#&

'ournals?

A. Purchase 'ournalB. %ales return 'ournal

C. eneral 'ournal

D. Cash receipt 'ournal1()

%peciali"ed 'ournals are more adequate for 2hich (GP# $+ B-%IN#%%#%

?

A. %mall businessesB. Big businessesC. %ole proprietorship



D. Partnership

1+)

hich of the follo%ing is $no%n as an evidence that a transaction too$ place&

A. Cash receipts 'ournal

B. eneral 'ournal

C. %ource document

D. Cash book 1-)

B-%IN#%% paid rent amounting to ;466. 2hich of the follo2ingspeciali"ed 'ournals records this transaction?

A. Cash receipts 'ournal

B. Cash payments 'ournalC. %ales 'ournal

D. Purchase 'ournal1/)

,redit memo or credit note ?oG is entered in %hich of the follo%ing 9ournal&

A. eneral 'ournal

B. Cash 'ournal

C. Purchase 'ournal

D. %ales return day book 0?@E':

1 > 2 # 3 > " # ( , + > - , / , > 1 0

11 0 12 0 13 , 1" # 1( # 1+ , 1- # 1/ 0G

Costs that change in response to alternative courses of action are calledE

a. Relevant costsb. &ifferential costs

c. (arget costsd. %unk costs

2. (he cost data pertaining to Product ?S? of S, ,tdD are asfollo2s E!a)imum capacity 967666 units Normal capacity 4:7666 units

Increase in inventory 476 units/ariable cost per unitQ 48 %elling price per unit Q :6+i)ed manufacturing overhead costs Q 97>67666If the profit under Absorption costing method is Q 476476667 the profit under !arginal costing method2ould be

a. Q 47<>7486b. Q 47897:>6c. Q ::76

3. (hetotal cost incurred in the operation of a business undertaking other than thecost of manufacturing and production is kno2n as

a. &irect costb. /ariable costc. Commercial costd. Conversion cost

4. Consider thefollo2ing data for a company during the month of 5une 8648

Budgeted hours <7666%tandard hours for actual production <7<66!a)imum possible hours in the budget period <766Actual hours 9766(he activity ratio of the company during the month is

a. 444Yb. 486Y

c. :Yd. 44=Y

LKint E Activity ratio 1 %tandard hours for actual production ) 466Budgeted hours1 <7<<6 hours ) 466 1 444Y<7666 hours

5. (otal unit costs are

aDIndependent of the cost system7 used to generate them bDNeeded for determining product contributioncDIrrelevant in marginal analysisdDRelevant for cost*volume*profit analysis

6. hich of the follo2ing bases is not appropriate for apportionment of(ransport

departmentTs cost ?

a. Crane hoursb. Crane valuec. (ruck !ileaged. (ruck value

7. (he cost of obsolete inventory acquired several years ago7 to beconsidered in a keep vsDdisposaldecision is an e)ample of E



aD-ncontrollable cost bD%unk costcDAvoidable costdD$pportunity cost

LKint E Costs of obsolete inventory represent the sunk cost because thecosts have already beenincurredD

8. Budgeted sales for the ne)t year is :7667666 unitsD &esired endingfinished goodsinventory is

47:67666 units and equivalent units in ending *I*P inventory is >67666unitsD (he opening

finished goods inventory for the ne)t year is 67666 units7 2ith :67666equivalent units in beginning*I*Pinventory Ko2 many equivalent units should be produced?

a. :767666b. :7:67666c. :7667666d. :7=:7666

LKint E -sing production related budgets7 units to produce equals budgeted sales 0 desired endingfinished goods inventory 0 desired equivalent units in ending *I*P

inventory M beginning finishedgoods inventory M equivalent units in beginning *I*P inventoryD(herefore7 in this case7 units to produce is equal to :7667666 0 47:67666 0 >67666 M 67666 M :67666 1:767666D

9. If the asset turnover and profit margin of a company are 4D: and 6D9:respectively7 the

return oninvestment is

a. 6D>:b. 6D9:c. 4D:6d. :D8

LKint E Return on investment 1 Asset turnover ) Profit margin 1 4D: ) 6D9:1 6D>:

10. A company is currently operating at 6Y capacity levelD (he production under normalcapacitylevel is 47:67666 unitsD (he variable cost per unit is Q 4< and the total fi)edcosts are Q7667666D If thecompany 2ants to earn a profit of Q <76676667 then the price of the product per unit should be

a. Q 9=D:6b. Q 9D8:c. Q 8<D66d. Q 9:D66

LKint E (otal fi)ed cost * Q 7667666#)pected profit * Q <7667666/ariable cost at 6Y level

6Y ) 47:67666 units ) Q 4<@ * Q 4>767666(otal price * Q 8767666Per unit price at 6Y level 1 Q 8767666 F 47867666 units@ 1 Q 8<D66D

11. Consider the follo2ing data pertaining to the production of a company

for a particular month E$pening stock of ra2 material Q 447:=6Closing stock of ra2 material Q 46796Purchase of ra2 material during the month Q 4787<:6(otal manufacturing cost charged to product Q 97974>:+actory overheads are applied at the rate of <:Y of direct labour costD(he amount of factory overheads applied to production is

a. Q >:768:

b. Q <78=c. Q :7686d. Q 47:87>8<LKint E Ra2 material used1 $pD %tock 0 Purchases M ClD %tock 1

Q 447:=6 0 Q 4787<:6 M Q 46796 1 Q 4787><6!anufacturing cost 1 Ra2 material used 0 &irect labour 0 +actoryoverheadQ 97974>: 1 Q 4787><6 0 &irect labour 0 <:Y of &irect labour 4D<: &irect labour 1 Q 8767:8:&irect labour 1 Q 47<<7:66(he amount of factory overhead1 <:Y of Q 47<<7:66 1 Q >:768:D

12. (he budgeted annual sales of a firm is Q 6 lakhs and 8:Y of the sameis cash salesD If the averageamount of debtors of the firm is Q : lakhs7 the average collection period ofcredit salesmonthsD

a. 4D:6b. 4D66c. 6D:6d. 4D=:

LKint E (otal annual sales 1 Q 6 lakhs(otal cash sales 1 8: Y of 6 lakhsD 186 lakhsD (otal credit sales 1 =:Y of6 lakhs 1 >6 lakhsAverage amount of debtors 1 : lakhs 1 4 months

average credit salesD (herefore7 average collection period is 4 monthD

13. If the minimum stock level and average stock level of ra2 material ?A? are <7666 and7666 units respectively7 find out its reorder quantityD

a. 7666 unitsb. 447666 unitsc. 467666 unitsd. 7666 units

LKint E Average stock level 1 !inimum stock level 0 ZReorder quantity 7666 units 1 <7666 units 0 Z Reorderquantity

Z Reorder quantity 1 7666 units M <7666 unitsReorder level 1 :7 666 units F 6D: 1 467666 units

14. A 2orker has a time rate of Q 4:FhrD Ke makes =86 units of componentstandard time E: minutesFunit@ in a 2eek of < hoursD Kis total 2ages including Ro2an bonus for the

2eek isa. Q =8b. Q 86c. Q <6d. Q ><LKint E %tandard time 1 : times ) =86 units 1 >6 hours>6 minutes(ime taken 1 <hrsD (ime saved1 48 hrsD(otal earning of a 2orker under Ro2an plan1 < hrsD ) Q 4:@ 0 48 hrsD ) < hrsD ) Q 4:@>6 hrsD1 Q =86 0 Q 4<< 1 Q ><

15. A company maintains a margin of safety of 8:Y on its currentsales and earns a profit of Q 96 lakhs per annumD If the company has a profit volume PF/@ ratio of <6Y7 its currentsales amount to

a. Q 866 lakhsb. Q 966 lakhsc. Q 98: lakhsd. None of the above

LKint E !argin of safety 1 ProfitF PF/ Ratio1 96F6D<6 1 Q =: lakhs6D8: of sales 1 Q =: lakhsKence7 %ales 1 =:F6D8: 1 Q 966 lakhs

16. %ale for t2o consecutive months7 of a company are Q 9767666 and Q<7867666D (hecompanyTs net profits for these months amounted to Q 8<7666 and Q <67666 respectivelyD

(here is no changeincontributionFsales ratio or fi)ed costsD (he contributionFsales ratio of thecompany is

a. 4F9b. 8F:c. [

d. None of the aboveLKint E Contribution F sales 1 Increase in profit F Increase in sales1 <67666 M 8<7666@ F <7867666 M 9767666@1 4>7666F<67666 1 8F:

17. A ,imited has fi)ed costs of Q >7667666 per annumD It manufacturesa single product 2hich it sells for 866 per unitD Its contribution to salesratio is <6YD A ,imitedTs break*even

in units is

a. =7:66b. 7666c. 97666d. 47:66LKint E Break*even units 1 +i)ed cost F contribution per unit1 Q >7667666F <6Y of Q 8661 =7:66



18. (he current liabilities of Akash ,tdD is Q 967666D If its current ratio is9E4 and Huick ratio is 4E47 the value of stock*in*trade 2ill be

a. Q 867666b. Q 967666c. Q >67666d. Insufficient information

LKint E Current Ratio 1 Current Assets 1 9E4Current ,iabilitiesCurrent Assets 1 Q 967666 ) 9 1 Q 67666Huick Ratio 1 Huick Assets 1 4E4Huick ,iabilities

c. Q 9D66 lakhd. None of A7 B7 C

LKint E Break even sales 1 Q : lakhs \ 6D<6 1 Q 48D:6 lakhs(otal sales 1 48D:6 D 1 Q 86D66 lakhs

4 M 6D9=:@Kence the profit of the company E Q 86 lakh ) 6D9=: ) 6D<6 1 Q 9D66 lakhs

22. (he cost*volume*profit relationship of a company is described by theequation y 1 Q7667666 06D>6)7 in 2hich ) represents sales revenue and y is the total cost at the salesvolume

represented by )D If the company desires to earn a profit of 86Y on sales7 the requiredsales 2ill beD

a. Q <67667666b. Q 9:7:67666c. Q 8<7667666d. Q 867667666

LKint E /ariable cost 1 >6Y 7 therefore7 contribution to sales ratio 1<6Y PF/ ratio@ CompanyTs target profit 86Y in sales7 therefore7revised contribution 2hich covers only fi)ed cost 140. * 86Y 1 86YDRequired sales 1 fi)ed cost F revised contribution 1 Q 7667666F 86Y 1 Q<67667666D

23. ABC ,tdD is having <66 2orkers at the beginning of the year and:66 2orkers at the end of the yearD &uring the year 86 2orkers 2eredischarged and 4: 2orkers left theorgani"ationD &uring the year the company has recruited >: 2orkersD $f these7 4 2orkers 2ere recruitedin the vacanciesof those leaving7 2hile the rest 2ere engaged for an e)pansion schemeD (he

labour turnover rateunder separation method is E

a. 88D86Yb. =D=Yc. <D66Yd. 4<D<6Y

LKint E Average number of 2orkers 1 <66 0 :66@F8 1 <:6%eparation method1 NoD of separations during the period ) 466Average number of 2orkers during the period

1 86 0 4: ) 466<:6

1 =D=Y

24. $ne of the most important toolsin cost planning isE

a. &irect costb. Cost %heetc. Budget

d. !arginal CostingD

25. #conomies and



diseconomies of scale e)plain 2hy theE

a. %hort*run average fi)ed cost curve declines so long as outputincreasesD

b. !arginal cost curve must intersect the minimum point of thefirm3s average total cost curveDc. ,ong*run average total cost curve is typically -*shapedDd. %hort*run average variable cost curve is -*shapedD

26. hich of the follo2ing is not arelevant cost?

a. Replacement costb. %unk costc. !arginal costd. %tandard costD

27. hich of the follo2ing is anaccounting record?

a. Bill of !aterialb. Bin Cardc. %tores ,edgerDd. All of theseD

28. (hefi)ed*variable cost classification has a special significance in preparationof E

a. +le)ible Budget

b. !aster Budgetc. Cash Budgetd. Capital Budget

29. Input in a process is <666 units and normal loss is 86YD hen finishedoutput in the process is only 98<6 units7 there is an E

a. Abnormal loss of <6 unitsb. Abnormal gain of <6 unitsc. Neither abnormal loss nor gainDd. Abnormal loss of >6 unitsD

30. Idle capacity of a plant is thedifference bet2eenE

a. !a)imum capacity and practical capacity

b. Practical capacity and normal capacityc. Practical capacity and capacity based on sales e)pectancyd. !a)imum capacity and actual capacityD

25. hen PF/ratio is <6Y and sales value is Q4676667 the variable cost 2ill be

a. Q <666b. Q >666c. Q 46666d. /ariable Cost cannot be calculated from data givenD

32. (he fore) component ofimported material cost is converted

a. At the rate on the date of settlementb. At the rate on the date of transaction

c. At the rate on date of deliveryd. None of the aboveD



33. !a)imum possible productive capacity of a plant 2hen no operating time islost 7 is its

a. Practical capacityb. (heoretical capacityc. Normal capacityd. Capacity based on sales e)pectancy

LKint E (heoretical capacity is the denominator*level concept that is based on producing at fullefficiency all the timeD7Practical capacity is a denominator*level concept that reduces the

theoretical capacity by unavoidable operating interruptions such asscheduled maintenance time7 shutdo2ns for holidaysand so onD

Normal capacity measures the denominator level in terms of demandfor the output of the plantD Normal capacity utili"ation is a concept based on the level ofcapacity utili"ation that specifies the

average customer demand over a time period7 that includes seasonal7cyclical and trend factorsD

34. hen production is belo2 standard specification or quality and cannot be rectified byincurringadditional cost7 it is called

a. &efective

b. %poilagec. asted. %crap

LKint E 4@ %poiled goods*goods that do not meet production standardsand are either sold for their salvage value or discarded 8@ &efective units*goods that do not meetstandards and are sold at

a reduced price or re2orked and sold at the regular or a reduced price9@ aste*material that islost in the manufacturing process by shrinkage7 evaporation7 etcD and <@%crap*by*product of themanufacturing process that has a minor market valueD

35. CA% requires each type ofutility to be treated as

a. %eparate cost ob'ectb. Not part of cost as not include in materialc. Not part of cost as they do not form part of productd. (reated as administrative overheadsD

36. %elling and distributionoverhead does not includeE

a. Cost of 2arehousingb. Repacking costc. (ransportation costd. &emurrage chargesD

37. henovertime is required for meeting urgent orders7 overtime premium should be

a. Charged to Costing Profit and ,oss AFcb. Charged to overhead costsc. Charged to respective 'obs



d. None of the aboveD

LKint E hen cost is incurred for specified 'ob7 the cost should be charged tothat 'ob onlyD

38. #)changelosses or gains after purchase transaction is complete is treated as

a. Product costDb. $verhead costDc. Purchase costDd. +inance cost

39. %elling price per unit Q 4:D66 &irect !aterials cost per unit Q 9D:6&irect ,abour cost

per unit Q <D66 /ariable $verhead per unit Q 8D66 Budgeted fi)ed production overhead costs are Q >67666 per annum charged evenly across each month of the yearD Budgeted production

costs are967666 units per annumD hat is the Net profit per unit under Absorption costingmethodD

a. Q D:6b. Q 4:D66c. Q 44D:6d. Q 9D:6

40. hichof the follo2ing cost is linked 2ith the calculation of cost of inventories?

a. Product costb. Period costc. Both product and period costd. Kistorical cost

41. If7 %ales 1 Q 667666!arkup rate 1 8:Y of costhat 2ould be the value of ross profit?

a. Q 8667666b. Q 4>67666c. Q <67666d. Q ><67666

42. hich of the follo2ing is (R-# 2hen piece rate system is used for2agedetermination?

a. -nder this method of remuneration a 2orker is paid on the basis of time taken by him to perform the 2ork b. -nder this method of remuneration a 2orker is paid on the basis of

productionc. (he rate is e)pressed in terms of certain sum of money for total productiond. (he rate is not e)pressed in terms of certain sum of money for total production

43. (he salary of factory clerk is treated asE

a. &irect labor costb. Indirect labor costc. Conversion cost



d. Prime cost

44. Averageconsumption ) #mergency time is a formula for the calculation ofE

a. ,ead timeb. Re*order levelc. !a)imum consumptiond. &anger level

45. #$H is a point 2hereE

a. $rdering cost is equal to carrying costb. $rdering cost is higher than carrying costc. $rdering cost is lesser than the carrying costd. (otal cost is ma)imum

46. A 2orker is paid Q 6D:6 per unit and he produces 4 units in = hoursDUeeping in vie2the piece rate system7 the total 2ages of the 2orker 2ould beE

a.4 ) 6D:6 1 Q b.4 ) = 1 Q 48>c.= ) 6D: 1 Q 9D:

d. 4 ) = ) 6D:6 1 Q >9

47. henclosing stock is over valuate7 2hat 2ould its effect on profit?

a.Cannot determined 2ith given statementb. It 2ill Increase the profitc. It 2ill decrease the profit

d. No effect on profit

48. A firm sells bags for Q 4< eachD (he variable cost for each unit is QD hat is the

contribution margin per unit?

a. Q >b. Q 48c. Q 4<d. Q

49. hichof the follo2ing is N$( true? A small company3s breakeven pointE

a. $ccurs 2here its revenue equals its e)pensesb. %ho2s entrepreneurs1 minimum level of activity required tokeep the company in operation

c. Is the point at 2hich a company neither earns a profit nor incurs aloss

d. (otal contribution margin equals total variable e)penses

50. Ueller CoD sells a single product for Q 8 per unitD If variable costs are>:Y of sales and

fi)ed costs total Q 7667 the break*even point 2ill beE

a. 4:76== unitsb. 47866 units

c. :9 unitsd. 47666 units

51. If B ,imited sho2s required production of 486 cases of product for themonth7 directlabor per case is 9 hours at Q 48 per hourD Budgeted labor costs for themonth should beE

a. Q 479>6b. Q 47<<6c. Q <7986d. Q :79<>

52. hich of the follo2ing is a process by 2hich managers analy"eoptions available to set

courses of action by the organi"ation?

a. Keuristics methodb. &ecision making



c. (he &elphi techniqued. %ystematic error

53. hich of the

follo2ing is not true about differential costs?

a. It is a broader concept than variable cost as it takes into accountadditional fi)ed costs caused by management decisions

b. ith the passage of time and change in situation7 differentialcosts 2ill vary

c. (he difference in cost bet2een buying them from outside or make

them in the company isdifferential cost7 irrelevant for decisions

d. (hey are e)tra or incremental costs caused by a particulardecision

54. hich oneof the follo2ing is the (raditional approach for costing?

a. Contribution approachb. Absorption costing approachc. &ecision making approachd. !arginal costing approach

55. hat2ould be the margin of safety ratio based on the follo2inginformation?

%ales price 1 Q 466 per unit/ariable cost 1 Q 8: per unit+i)ed cost 1 Q :6 per unit

a. 8:Yb. 99D999Y

c. >>D>>>Yd. =:Y

56. IfECost of opening finished goods Q 87666Cost of goods to be produced Q >7666

$perating e)penses Q 47666D

hich of the follo2ing is the cost of goods available for sale?

a. Q 7666

b. Q <7666c. Q =7666d. Q 7666

57. Ahmed Corporation has sales of Q :667666 for the periodD (he sellinge)penses are

estimated as12. of salesD(he gross profit for the period is amounting to Q 4:67666D

Calculate the amount of selling e)penses for the period?

a. Q >67666b. Q <:7666c. Q 67666d. Q 8467666

58. hichof the follo2ing 2ould be considered to be an investment centre?



a. !anagers have control over marketingb. !anagers have a sales team

c. !anagers have a sales team and are given a credit controlfunction

d. !anagers can purchase capital assets and are given a credit controlfunction

59. hichof the follo2ing 2ould N$( lead to an increase in net cash flo2?

a. ,arger sales volume

b. Kigher selling pricec.Reduced material cost

d. Charging of lo2er depreciation

60. All of thefollo2ing are features of a relevant cost #SC#P(E

a. (hey affect the future costb. (hey cause an increment in cost

c. Relevant cost is a sunk costd. (hey affect the future cash flo2s

61. hich ofthe follo2ing statement is (R-# about the relevant cost?

a. It is a sunk costb. It is an opportunity cost

c. It do not affect the decision making processd. All costs are relevant

62. Indecision making all costs already incurred in past should al2ays beE

a. Ignoredb. Considered

c. Partially ignoredd. Partially considered

63. hich ofthe follo2ing statement is (R-# about historical cost?



a. It is al2ays relevant to decision makingb. It is al2ays irrelevant to decision making

c. It is al2ays an opportunity costd. It is al2ays reali"able value

64. In costaccounting7 unavoidable loss is charged to 2hich of the follo2ing?

a. +actory over head control accountb. ork in process control account

c. !arketing overhead control account

d. Administration overhead control account

65. !err ick &ifferential Piece Rate Plan based on piece rates isfi)edD

a. (2o

b. (hreec. +our d. +ive

66. hichof the given is are@ the methods@ of measurement of ,abor (urnover?

2. %eparation method3. +lu) method

4. Replacement method5. All of the given options

67. hat 2ill be the impact of normal loss on the overall per unit cost ?

a. Per unit cost 2ill increaseb.Per unit cost 2ill decrease

c. Per unit cost remain unchangedd. Normal loss has no relation to unit cost

68. hich of the given units can never become part of firstdepartment of Cost of

Production Report?

a. -nits received from preceding departmentb. -nits transferred to subsequent department

c. ,ost unitsd. -nits still in process

69. &etails of the process for the last period are as follo2sE

Put into process :7666 kg!aterials Q 87:66

,abor Q=66Production overheads 866Y of labor

Normal losses are 46Y of input in the processD (he output for the period

2as <7866 Ug from the processD (here 2as no opening and closing ork* in* processD hat 2erethe units of

abnormalloss?

a. :66 unitsb. 966 unitsc. 866 unitsd. 466 units

70. ABC Company makes a single product 2hich it sells for Q 86 per unitD+i)ed costs are Q

=:7666 per month and product has a profitFvolume ratio of <6YD In that period actualsales 2ere Q

88:7666DRequiredE Calculate ABC Company Break #ven point in Q

a. Q4=7 :66b. Q:>87 :66c. Q 47:667666

d. None of the given options

71. All of thefollo2ing are the features of fi)ed costs #SC#P(E

a. Although fi)ed 2ithin a relevant range of activity level but arerelevant to a decision



making2hen it is avoidableD

b. Although fi)ed 2ithin a relevant range of activity level but arerelevant to a decision making

2hen it is incrementalDc. enerally it is irrelevant

d. It is relevant to decision making under any circumstances

72. A typical factoryoverhead cost isE

a. &istributionb. Internal audit

c. Compensation of plant manager d. &esign

73. An average cost is alsokno2n asE

a. /ariable costb. -nit costc. (otal costd. +i)ed cost

74. Period costs areE

a. #)pensed 2hen the product is soldb. Included in the cost of goods sold

c. Related to specific periodd. Not e)pensed

75. hilecalculating the #$H7 number of orders is calculated byE

a. &ividing required unit by ordered quantityb. !ultiplying the required units 2ith ordered quantityc. !ultiplying the ordered quantity 2ith cost per order d. !ultiplying the required units 2ith cost per order

76. hich of thefollo2ing best describe piece rate system?



a. (he increased volume of production results in decreased cost of production

b. (he increased volume of production in minimum timec. #stablishment of fair standard rates

d. Kigher output is a result of efficient management

77. (he term Costapportionment is referred toE

a. (he costs that can not be identified 2ith specific costcentersD

b. (he total cost of factory overhead needs to be distributed amongspecific cost centers but must be divided among the concerneddepartmentFcost centersDc. (he total cost of factory overhead needs to be distributed amongspecific cost centersD


78. hich of the follo2ing loss is not included as part of the cost oftransferred or finished

goods7 but rather treated as a period cost?

a.$perating lossb.Abnormal lossc. Normal loss

d. Non*operating loss

79. Kyde Park Company produces sprockets that are used in 2heelsD #achsprocket sells for

Q :6 andthe company sells appro)imately <667666 sprockets each yearD -nit costdata for the year

follo2sE

&irect material Q 4:&irect labor Q 46

$ther costE!anufacturing&istribution

+i)edQ :Q <

/ariableQ =Q 9

RequiredE Identify the unit cost of sprockets under direct costing

a. Q <<b. Q 9=

c. Q 98d. Q 9:

80. hen production is equal to sales7 2hich of the follo2ing is (R-#?

a. No change occurs to inventories for either use absorption costing

or variable costing methodsb. (he use of absorption costing produces a higher net income thanthe use of variable costingc. (he use of absorption costing produces a lo2er net income thanthe use of variable costing

d. (he use of absorption costing causes inventory value to increasemore than they 2ould though

the use of variable costing

81. %elling price per unit is Q 4:7 total variable cost per unit is Q 7 and total



fi)ed costs are Q4:7666 of

OSI( D hat is the breakeven point in units for OSI( ?‖ ‖

a. 97666 unitsb. 47666 unitsc. 47>>= unitsd. 87:66 units

15. hile constructing a Break even chart7 the gap bet2een sales line and

variable cost line sho2s2hich of the follo2ing?



a. +i)ed costb. Break even point

c. Contribution margind. /ariable cost

83. All of thefollo2ing compose cost of goods sold #SC#P(E

a. Ra2 materialb. ,abor c. Capital

d. +actory overhead

84. Amount of &epreciation on fi)ed assets 2ill be fi)ed in nature ifcalculated under

2hich of thefollo2ing method?

a. %traight line methodb. Reducing balance method

c. %ome of year3s digits methodd. &ouble declining method

85. hich ofthe follo2ing is N$( a relevant cost to decision making?

a. $pportunity costsb. Relevant benefitsc. Avoidable costs

d. %unk costs

86.hat 2ould be the attitude of the management in treating %unk costsin decision

making?

a. A periodic investment of cash resources that has been made andshould be relevant for decision making

b. It is a past cost 2hich is not directly relevant in decisionmaking

c. !anagement 2ill treat it as variable cost each time in decision

makingd. None of the given options

87. !rD Aslam is running his o2n personal +inancial services businessDKe has been offered a 'ob for a salary of Q <:7666 per month 2hich hedoes not availedD Q <:7666 2ill be

considered asE

a. %unk Costb. $pportunity costc. Avoidable costd.Kistorical cost

88. hich of thegiven cost does not become the part of cost unit?

6. Advertising e)penses7. &irect labor cost

8. +actory overhead cost9. Cost of ra2 material

89. Budgeted +actory overhead at t2o activity levels is as follo2s for the periodD

Activity level Budgeted factory overhead,o2 467666 Kours Q <67666Kigh :67666 Kours Q 67666

RequiredE Identify variable rate 2ith the help of above mentioneddataD

a. Q <D66 per hour b. Q 4D>6 per hour c. Q 4D66 per hour

d. Q 8D66 per hour

90. hich of the given cost is N$( required to prepare Cost of ProductionReport?

a. Period cost

b. !aterial costc.,abour cost

d. +actory overhead cost

91. Identify the +$Krate on the basis of machine hour?

a. Q <D66b. Q <D6c. Q <D846d. Q <D9:

92. hich of the given 2ill N$( be included for the calculation ofequivalent units of

material under 2eighted average costing method?

a. $pening 2ork in process unitsb. Closing 2ork in process units

c. -nit completed and transferred outd. None of the given options

93. (he basic assumption made in direct costing 2ith respect to fi)ed costs is

that

a. +i)ed cost is a controllable cost

b. +i)ed cost is a product costc. +i)ed cost is an irrelevant costd. +i)ed cost is a period cost

94. (he little Rock Company sho2s Break even sales is Q <67 :66 andBudgeted %ales is Q

:67666DIdentify the !argin of safety ratio?

a. 4Yb. 4Yc. 4D4Y

d. Required more data to calculate

95. A machine cost Q >67666 five years agoD It is e)pected that themachine 2ill generate

future

revenue of <67666D Alternatively7 the machine could be scrapped for Q9:7666D An

equivalentmachine in the same condition cost 97666 to buy no2D

RequiredE Identify the reali"able value 2ith the help of given dataD

a. Q >67666b. Q <67666c. Q 9:7 666d. Q 97666

Budgeted production overheads Q8767666Actual machine hours =67666 hours

Actual production overheads Q87:7666

96. Cost of finishedgoods inventory is calculated byE

a. &educting total cost from finished goods inventoryb. !ultiplying units of finished goods inventory 2ith the cost perunitc. &ividing units of finished goods inventory 2ith the cost perunit

d. !ultiplying total cost 2ith finished goods inventory

97. Assuming no returns out2ards or carriage in2ards7 the cost of goodssold 2ill be equal

toE

a. $pening stock ,ess purchases plus closing stock b. Closing stock plus purchases plus opening stock

c. %ales less gross profitd. Purchases plus closing stock plus opening stock plus directlabor

98. All of the follo2ing are essential requirements of a good 2age system#SC#P(E

a. Reduced labor and overhead costsb. Reduced per unit variable costs

c. Increased productiond. Increased operating costs

99. Profitunder absorption costing 2ill be higher than under marginal costing if E

a. Produced units ] -nits soldb. Produced units ^ -nits soldc. Produced units 1 -nits sold

d. Profit cannot be determined 2ith given statement

100. ood 5ob Plc makes one product 2hich sells for Q 6 per unitD+i)ed costs are Q 87666 per month and marginal costs are Q <8 per unitDhat sales level in units 2ill provide a

profit of Q 467666?

a. 9:6 unitsb. >>= unitsc. 47666 unitsd. 479:6 units

0ns%ers:

4 b 8 c 9 c < a : c > b = b a a 46 c 44 a 48 b 49 c 4< d

4: b 4> b 4= a 4 c 4 9 869 84 c 88 a 89 b 8< c 8: c8> b 8= c 8 a 8 b 96 d 94 b 98 b 99 c 9 d9= c 9 d 9 d <6 a <4 b <8 b <9 b << d <: a <> a <= b< a < d :6 d :4 c :8 b :9c : a := a : d: d >6 c >4 b >8 a >9 b ><a >: b >> d >= a > a > b=6 d =4 d =8 c =9 b =< c =:a => b == c = b = d 6 a4 d 8 c 9 c < a : d > b = b a c 6 a 4 a8 d 9 d < a : c > b =

c d a 466 c

A store ledger card is similar to the D

a. %tock ledger b. Bin cardc. !aterial cardd. Purchase requisition card

202. hich of the follo2ing element must be taken into account 2hilecalculating totalearnings of a2orker under different incentive 2age schemes?

a. Rate per unitb. -nits of productionc. #)tra time taken by employee to complete the productiond. Number of 2orkers employed

203. (he 'ournal entry of purchase of stock under periodic inventory system 2ould be?

a. Inventory to Cashb. Cash to Purchases

c. Purchases to Inventoryd. None of the given options

204. Closing 2ork in process Inventoryof last yearE

a. Is treated as $pening inventory for current year b. Is not carried for2ard to ne)t year c. Become e)pense in the ne)t year d. Charge to Profit ,oss account

205. %ales are Q <7:67666D Beginning finished goods 2ere Q 897666D #ndingfinished goods

are Q 967666D (he cost of goods sold is Q 97667666D hat is the cost of goodsmanufactured?

a. Q 9897666b. Q 9967666c. Q 897666




206. hile transporting petrol7 a little quantity 2ill be evaporated suchkind of loss istermed asE

a. Normal ,ossb. Abnormal ,ossc. It is incremental lossd. It cannot be abnormal loss

207. (he cost of electricity bill ofthe factory is treated asE

a. +i)ed costb. /ariable costc. %tep costd. %emi variable cost

LKint E %emi /ariable Cost E It is also kno2n as mi)ed costD It is the cost2hich is part fi)ed and par variableD It is in fact the mi)ture of both behaviorsD#)amples includeE -tility bills M there is a fi)ed line rent plus chargesfor units consumedD %alesmanTs salary M there is a fi)ed monthly salary plus commission per units soldD

208. A cost centre is E

a. A unit of product or service in relation to 2hich costs are ascertainedb. An amount of e)penditure attributable to an activity

c. A production or service location7 function7 activity or item ofequipment for 2hich costs areaccumulatedd. A centre for 2hich an individual budget is dra2n up

209. Cost accounting department prepares that helps them in preparing finalaccountsD

a. Cost sheetsb. Cost of goods sold statementc. Cost of production Reportd. !aterial requisition form

210. hen+$K is under applied and charged to Net Profit 7 the treatment 2ould beE

a. -nder applied Add net profitb. -nder applied ,ess net profitc. -nder applied ,ess operating e)pense

211. eighted average cost per unit is calculated by 2hich of the follo2ing formula?

a. Cost of goods issuedFnumber of units issuedb. (otal CostF(otal -nitsc. Cost of goods manufacturedFclosing unitsd. Cost of goods soldFtotal units

212. Buyer produced 867666 units and their total factory cost 2as Q<:676667 other cost like property ta) on factory building 2as Q 467666included in that cost till year ended the cost

of per unit 2ould beE

a. Q 88D:b. Q 89D:c. QD8<D:

d. Q 8>D:LKint E Cost per unit 1 Cost of goods manufactured F Number of unitsmanufactured

213. A standard rate is paid to the employee 2hen he completed his 'obE

a. In time less than the standard

b. In standard timec. In time more than standardd. Both in standard time and more than the standard time

214. %tore incharge after receiving the material as per the goods receivednote7 places thematerial atits location and makes an entry in D

a. Bin Cardb. %tore ,edger Cardc. %tock ,edger d. None of the given options

215. If opening inventory of material is Q 867666 and closing inventory is Q<67666DtheAverage inventory amount 2ill beE

a. Q <67666b. Q 967666c. Q 867666d. Q 467666

LKint E Average Inventory1 $pening Inventory 0 Closing InventoryF8

216. P/C Company has ordering quantity 467666 unitsD (hey have storagecapacity 867666units7 theaverage inventory 2ould beE

a. 867666b. :7666

c. 467666d. 8:7666



LKint E Average ordering quantity1 $rdering HuantityF8

217. All Indirect cost ischargedFrecord in the head of

a. Prime costb. +$K costc. &irect labor costd. None of the given options

218. -nderF$verapplied +$K cost can be ad'usted in 2hich of the follo2ingE

a. #ntire Productionb. Cost of oods %old

LKint E Inventory turnover ratio 1 Cost of goods soldFAverage inventory

224. +$K applied rate of RsD :D>6 per machine hourD &uring theyear the +$K to RsD 8=:7666 and <7666 machine hours 2ere usedDhich one of follo2ing statement iscorrect?

a. $verhead 2as under*applied by RsD>7866b. $verhead 2as over*applied by RsD>7866c. $verhead 2as under*applied by RsD=7866



d. $verhead 2as over*applied by RsD=7866

225. Cost accountingconcepts include all of the follo2ing #SC#P(E

a. Planningb. Controllingc. %haringd. Costing

226. are future coststhat effect the current management decisionD

a. %unk Costb. %tandard Costc. Relevant Costd. Irrelevant Cost

LKint E Relevant cost is 2hich changes 2ith a change in decisionD (heseare future costs that effectthe current management decisionD

227. hich of the follo2ing costs is part of the prime cost for manufacturingcompany?

a. Cost of transporting ra2 materials from the suppliers premisesb. ages of factory 2orkers engaged in machine maintenancec. &epreciation of truck used for deliveries to customersd. Cost of indirect production materials

228. &irect materialopening inventory add net purchases is called

a. !aterial consumedb. !aterial available for usec. (otal material purchasedd. !aterial ending inventory

229. hich of the follo2ing is to be called product cost ?

a. !aterial costb. ,abor costc. +$K costd. All of the given options

230. A Blanket Rate isEa. A single rate 2hich used throughout the organi"ation departmentsb. A double rates 2hich used throughout the organi"ation departments



c. If the time taken is less than the time allo2ed7 the group receives a bonus on time savedd. If the time taken is greater than the time allo2ed7 the 2orkers inthe group receive time deductions for e)tra hours

232. hich of thefollo2ing best describes the manufacturing costs?

a. &irect materials7 direct labor and factory overheadb. &irect materials and direct labor c. &irect materials7 direct labor7 factory overhead7 and administrativeoverheadd. &irect labor and factory overhead

233. Kigh labor turnover is N$(desirable becauseE

a. It denotes the instability of the labor forceb. It is an indication of high labor costc. It sho2s frequent changes in the labor forced. All of the given options

234. !anufacturingentities classified the inventory in 2hich of three kinds?

a. !aterial inventory7 IP inventory7 +inished goods inventoryb. !aterial inventory7 purchased good inventory7 IP inventoryc. !aterial inventory7 purchased good inventory7 +inished goodsinventoryd. IP inventory7 +inished goods inventory7 purchased good inventory

235. hich of the follo2ing iscorrect for ma)imum level?

a. Reorder level M !inimum consumption ) ,ead time@ 0 #$Hb. !a)imum consumption ) ,ead time@ M !inimum consumption ),ead time@ 0 #$Hc. L!a)imum consumption * !inimum consumption@ ,ead time0 #$H

d. All of the given options

236. Inventory turnover ratio can be calculated as follo2?

a. Cost of goods soldFAverage inventoryb. ross profitFAverage inventoryc. Cost of goods soldFsaled. Cost of goods soldFross profit

237. (he component of +actoryoverhead are as follo2



a. &irect material 0 Indirect material 0 &irect e)pensesb. Indirect material 0 Indirect labor 0 $thers indirect costc. &irect material 0 Indirect e)penses 0 Indirect labor d. &irect labor 0 Indirect labor 0 Indirect e)penses

238. $vertime that isnecessary in order to fulfill customer orders is calledE

a. Avoidable overtimeb. -navoidable overtimec. Premium $vertimed. +le) time

239. (he Process of costapportionment is carried out so thatE

a. Cost may be controlledb. Cost unit gather overheads as they pass through cost centers



c. hole items of cost can be charged to cost centersd. Common costs are shared among cost centers

240. (aylor3s &ifferentialPiece Rate Plan uses***********piece ratesD

a. (hreeb. (2oc. +our d. +ive

241. -nder Kalsey premium plan7 if the employee completes his 'ob in lessthan the

standard time fi)ed for the 'ob7 he is givenE

a. $nly 2ages for the actual hours takenb. ages for the actual hours taken plus bonus equal to one half ofthe 2age of the time savedc. ages for the actual hours taken plus bonus equal to one third of

the 2age of the time savedd. $nly the bonus equal to one half of the time saved

242. Increase in material Inventory meansE

a. (he ending inventory is greater than opening inventoryb. (he ending inventory is less than opening inventoryc. Both ending and opening inventories are equald.

Cannot be determined243. orking hours of labor can be calculated 2ith the help of all e)ceptE

a. %mart cardb. (ime sheetc. Clock cardd. %tore card

244. Amount of net purchase can be calculated as follo2

a. Purchase of direct material add trade discount less purchase returnadd carriage in2ard lessother material handling costb. Purchase of direct material less trade discount l add purchase

return add carriage in2ard lessother material handling costc. Purchase of direct material less trade discount less purchase return



less carriage in2ard addother material handling costd. Purchase of direct material less trade discount less purchase returnadd carriage in2ard add

other material handling cost

245. All of thefollo2ing are terms used to denote +actory $verheads #SC#P(E

a. +actory burdenb. +actory e)pensesc. !anufacturing overheadd. Conversion costs



246. Reduction of labor turnover7 accidents7 spoilage7 2aste andabsenteeism are the resultsof 2hich of the follo2ing 2age plan?

a. Piece rate planb. (ime rate planc. &ifferential pland. roup bonus system

247. Costs 2hich are constant for a relevant range of activity and rise tone2 constant level

once thatrange e)ceeded is calledE

a. A fi)ed costb. A variable costc. A mi)ed costd. A step cost

248. Cost of goods sold can becalculated as follo2

a. Cost of goods manufactured Add $pening finished goodsinventory ,ess Closing finishedgoods inventoryb. Cost of goods manufactured ,ess $pening finished goodsinventory ,ess Closing finished

goods inventoryc. Cost of goods manufactured ,ess $pening finished goodsinventory Add Closing finishedgoods inventoryd. Cost of goods manufactured Add $pening finished goodsinventory Add Closing finishedgoods inventory

249. If7C$% 1 Q =67666 P !argin 1 96Y of sales hat 2ill be the value of%ales?

a. Q 8667666b. Q >>7>>=c. Q 4667666d. Q >87:66

LKint E %ales 196666 _466Y F 96Y 1 Q 4667666

250. Annual requirement is =66 units consumption per 2eek is 4:6



unitsD -nit price Q :7 order cost Q 46 per orderD Carrying cost Q 4 per unitand lead time is 9 2eek7 (he #conomicorder quantity 2ould beD

a. 9: unitsb. 966 unitsc. 8:6 unitsd. 4:6 units

251. hat 2ill be the

impact of normal loss on the overall per unit cost ?a. Per unit cost 2ill increaseb. Per unit cost 2ill decrease



c. Per unit cost remain unchangedd. Normal loss has no relation to unit cost

252. Alpha company purchased a machine 2orth Rs 8667666 in the lastyearD No2 that machine can be use in a ne2 pro'ect 2hich companyhas received this yearD No2 the costof that machine is to becalled

a. Pro'ect costb. %unk costc. $pportunity costd. Relevant cost

253. +$K absorption rate iscalculated by the 2ay of E

a. #stimated +$K CostF&irect labor hoursb. #stimated +$K CostFNo of units produced

c. #stimated +$K CostFPrime Costd. All of the given options

254. hich of thefollo2ing isFare not associated 2ith ordering costs?

a. Interestb. Insurancec. $pportunity costsd. All of the given options

255. -nder perpetual Inventorysystem at the end of the yearE

a. No closing entry passedb. Closing entry passedc. Closing value find through closing entry only


256. (he Kino Corporation has a breakeven point 2hen sales are Q 4>67666and variablecosts at thatlevel of sales are Q 4667666D Ko2 much 2ould contribution margin increaseor decrease7 if variable

e)penses dropped by Q 867666?

a. 9=D:YD



b. >6YDc. 48D:YDd. 8>Y

LKint E %ales14>67666 /C14667666 C!1>67666Contribution to sales ratio CF% ratio@ 1Contribution!argin in QF%ales in Q >67666F4>6766616D9=:6D9=:_46619=Y Ne2 /C1676667%ales14>67666C!167666Contribution to sales ratio CF% ratio@ 1Contribution

!argin in QF%ales in Q 67666F4>6766616D:1:6YRise in C!19=D:*:6@148D:



257. (he short run is a time period in 2hichE

a. All resources are fi)edDb. (he level of output is fi)edDc. (he si"e of the production plant is variableDd. %ome resources are fi)ed and others are variable

258. $pportunity cost is the best e)ample ofE

a. %unk Costb. %tandard Costc. Relevant Costd. Irrelevant Cost

259. (he components of factoryoverhead are as follo2sE

a. &irect material 0 Indirect material 0 &irect e)pensesb. Indirect material 0 Indirect labor 0 $thers indirect costc. &irect material 0 Indirect e)penses 0 Indirect labor d. &irect labor 0 Indirect labor 0 Indirect e)penses

C. (he term !a)imum level representsE

a. (he ma)imum stock level indicates the ma)imum quantity of anitem of material 2hich can beheld in stock at any timeDb. (he ma)imum stock level indicates the ma)imum quantity of anitem of material 2hich cannot be held in stock at any timeD

c. (he average stock level indicates the ma)imum quantity of an itemof material 2hich can beheld in stock at any timeDd. (he available stock level indicates the ma)imum quantity of anitem of material 2hich can beheld in stock at any timeD

261. (he +I+$ inventory costing method 2hen using a perpetual inventory

system@assumes that thecost of the earliest units purchased is allocated in 2hich of the follo2ing2ays?

a. +irst to be allocated to the ending inventoryb. ,ast to be allocated to the cost of goods soldc. ,ast to be allocated to the ending inventoryd.

+irst to be allocated to the cost of good sold262. A firm -ses its o2n capital or -ses its o2ner3s time andFor financialresources both



are e)amples of

a. Implicit Costb. #)plicit Costc. %unk Costd. Relevant Cost

LKint E A cost that is represented by lost opportunity in the use of acompany3s o2n resources7e)cluding cash(hese are intangible costs that are not easily accounted forD +or e)ample7 thetime and

effort that an o2ner puts into the maintenance of the company ratherthan 2orking on e)pansion

263. If &irect !aterial 1 487666 &irect ,abor 1 666 and other &irect Cost1 8666 then2hat 2ill be the Prime Cost?

a. 48666b. 4<666c. 86666d. 88666

264. age7 Rent !aterials are e)amplesof E

a. Implicit Costb. #)plicit Costc. &irect Costd. !anufacturing Cost

LKint E A business e)pense that is easily identified and accountedforD #)plicit costs represent clear7obvious cash outflo2s from a business that reduce its bottom*line profitabilityD (his contrasts 2ithless*tangible e)penses such as good2ill amorti"ation7 2hich are not asclear cut regarding their effects on a business3s bottom*line value

ood e)amples of e)plicit costs 2ould be items such as 2age e)pense7rent or lease costs7 andthe cost of materials that go into the production of goodsD ith thesee)penses7 it is easy to see thesource of the cash outflo2 and the business activities to 2hich the e)penseis attributed

265. An investor invests in stock e)change he foregoes the opportunity

to invest further in his hotelD (he profit 2hich the investor 2ill begetting from the hotel is D

a. $pportunity costb. Period Cost

c. Product Costd. Kistorical Cost

LKint E 4D (he cost of an alternative that must be forgone in order to

pursue a certain actionD Putanother 2ay7 the benefits you could have received by taking an alternativeactionD2. (he difference in return bet2een a chosen investment and one that

is necessarily passed upD%ay you invest in a stock and it returns a paltry 8Y over the yearD In placing your money in thestock7 you gave up the opportunity of another investment * say7 arisk*free government bondyielding >YD In this situation7 your opportunity costs are <Y >Y * 8Y@

266. It is possible for an item of overhead e)penditure to be shared amongst

manydepartmentsD It isalso possible that this same item may relate to 'ust one specific departmentDIf the item 2as not charged specifically to a single department this 2ould bean e)ample

ofE

a. Apportionmentb. Allocationc. Re*apportionmentd. Absorption

267. enerally7the danger level of stock is fi)ed the minimum level

a. Belo2b. Abovec. #qual

d. &anger level has no relation to minimum level

268. hich of thefollo2ing is F are time based incentive 2age plan?

a. Kasley Premium Planb. Kasley eir Premium Planc. Ro2an Premium Pland. All of the given options

269. hich of thefollo2ing isFare reported in production cost report?

a. (he costs charged to the departmentb. Ko2 the costs 2ere assigned to the output?c. (he equivalent units of production by the departmentd. All of the given options

270. &irect materials cost is Q 67666D &irect labor cost is Q >67666D +actoryoverhead is Q67666DBeginning goods in process 2ere Q 4:7666D (he cost of goods manufacturedis Q 8<:7666Dhat is thecost assigned to the ending goods in process?

a. Q <:7666b. Q 4:7666c. Q 967666d. (here 2ill be no ending Inventory

LKint E &irect !aterial **** 67666 iven@&irect labor ******* >67666 iven@+$K ************** 67666 iven@$pen IP******* 4:7666(otal 8<:666 cost of goods manufactured is also 8<:666 so balance is"ero@

271. %ales are Q <:67666D Beginning finished goods 2ere Q 897666D #ndingfinished goodsare Q 967666D (he cost of goods sold is Q 9667666D hat is the cost of goodsmanufactured?

a. Q 9897666b. Q 9967666c. Q 897666d. None of the given options

272. -nder PeriodicInventory system Purchase of inventory is treated asE

a. Assets



b. #)pensec. Incomed. ,iability

273. hen prices are rising over time7 2hich of the follo2ing inventory

costing methods2ill result in the lo2est gross marginFprofits?

a. +I+$b. ,I+$c. eighted Averaged. Cannot be determined

274. (he maindifference bet2een the profit center and investment center isE

a. &ecision makingb. Revenue generationc. Cost incurrence

d. Investment

275. (he Inventory (urnover ratio is : times and numbers of days in a yearis9>:DInventory holding period in days 2ould be

a. 466 daysb. =9 daysc. :6 daysd. 46 days

276. $ver applied +$K 2ill al2ays result 2hen a predetermined +$K rate is appliedandE

a. Production is greater than defined capacity

b. Actual overhead costs are less than budgeted overheadc. Budgeted capacity is less than normal capacityd. Actual overhead incurred is less than applied $verhead

277. (he flu) method of labor turnoverdenotesE

a. orkers appointed against the vacancy caused due todischarge or quitting of the organi"ationb. orkers appointed in replacement of e)isting employeesc. orkers employed under the e)pansion schemes of the companyd. (he total change in the composition of labor force



LKint E (he flu) method of labor turnover denotes the total change inthe composition of labor forceD hile replacement method takes into account only 2orkersappointed against the vacancy

caused due to discharge or quitting of the organisationD278. hich of thefollo2ing statement is (R-# about +$K applied rates?

a. (hey are used to control overhead costsb. (hey are based on actual data for each periodc. (hey are predetermined in advance for each periodd. None of the given



279. Cost of oods!anufactured can be calculated as follo2

a. (otal factory Cost Add $pening ork in process inventory,ess Closing ork in process

inventoryb. (otal factory Cost ,ess $pening ork in process inventoryAdd Closing ork in processinventoryc. (otal factory Cost ,ess $pening ork in process inventory,ess Closing ork in processinventoryd. (otal factory Cost Add $pening ork in process inventoryAdd Closing ork in processinventory

280. is the time 2orked over and above the employee3s basic 2orking2eekD

a. +le) time

b. $vertimec. %hift allo2anced. Commission

281. In furniture manufacturing use of nail7 pins7 glue7 and polish 2hich useto increase itsesteemvalue that cost is treated asE

a. &irect material costb. Indirect material costc. +$K costd. Prime cost

282.

If labor is satisfied2ith high 2ages it may ultimately lead toE

a. Increased production and productivityb. Increased efficiencyc. Reduced labor and overhead costsd. All of the given options

283.

hich of the follo2ing is a mechanical device to record the e)act time of the2orkers?



a. Clock Cardb. %tore Cardc. (oken %ystemd. Attendance Register

284. hich of thefollo2ing is F are element F s of production payroll?

a. &irect labor force 2agesb. Administrative 2agesc. %elling 2agesd. All of the given options

285. If a predetermined +$K rate is not applied and the volume of production is reducedfrom the planned capacity level7 the cost per unit e)pected toE



a. Remain unchanged for fi)ed cost and increase for variable costb. Increase for fi)ed cost and remain unchanged for variable costc. Increase for fi)ed cost and decrease for variable costd. &ecrease for both fi)ed and variable costs

286. hich of the follo2ing is N$( an assumption of the basic economic*order quantitymodel?

a. Annual demand is kno2nb. $rdering cost is kno2nc. Carrying cost is kno2nd. Huantity discounts are available

287. In order to ensure efficient functioning of the stores department andsteady flo2 of materials to the production departments7 the restocking of stores is duty ofE

a. !anagers

b. %torekeeper c. Production In charge

d. %ales supervisor

288. In costAccounting7 abnormal loss is charged toE

a. +actory overhead control accountb. ork in process account

c. Income %tatementd. #ntire production

289. A high inventoryturnover may indicateE

a. An efficient use of the investment in inventoryb. A high risk of stock*outs

c. %tock position of store roomd. All of the given options

290. hich of

the follo2ing cost is used in the calculation of cost per unit?

a. (otal production cost



b. Cost of goods available for salesc. Cost of goods manufactured

d. Cost of goods %old

291. If7C$% 1 Q :67666 P !argin 1 8:Y of sales hat 2ill be the value of%ales?

a. Q 8667666b. Q >>7>>=c. Q >87:66


292. hen a manufacturing Company has highly automated manufacturing plant producing

manydifferent products7 the most appropriate basis for applying +$K cost to2ork in process isE



a. &irect labor hoursb. &irect labor costsc. !achine hours

d. Cost of material used

293. All of thefollo2ing are cases of labor turnover #SC#P(E

a. orkers appointed against the vacancy caused due to dischargeor quitting of the organi"ation

b. orkers employed under the e)pansion schemes of the

companyc. (he total change in the composition of labor force

d. orkers retrenched

294. (he (erm !inimum,evel RepresentsD

a. (he quantity belo2 2hich the stock of any item should not beallo2ed to fallb. (he quantity belo2 2hich the stock of any item should beallo2ed to fallc. (he estimated time period in number of days or in 2eeks or inmonthsD

d.(he ,ead time period in number of days or in 2eeks or inmonthsD

295. hich of the follo2ing 2ould be considered a ma'or aim of a 'oborder costing

system?

a. (o determine the costs of producing each 'ob or lotb. (o compute the cost per unit

c. (o include separate records for each 'ob to track the costsd. All of the given optionD

296. (he #conomicorder quantity can be calculated by

a. +ormula !ethod

b.(able !ethodc. raph !ethodd. All of the given

297.A chemical process has normal 2astage of 46Y of inputD In a period787:66 Ug of

material 2ere

input and there 2as abnormal loss of =: UgD hat quantity of good production 2as

achieved?

a. 874=: kgb. 878:6 kgc. 87<8: kg

d. 87:66 kg

298. hich of the follo2ing is likely to be classified as a direct materialcost of a motor car

2heel?

a. (he metal used to manufacture itD

b. (he metal used to manufacture one of the tools used in the car2heel factoryD

c. (he cost of operating the ra2 material stores in the factoryDd. (he cost of the quality operation on the finished car 2heelsD LKint Eb@ is part of the cost of either a fi)ed asset or an indirect costdepending upon the

amountinvolved c@ and d@ are factory indirect costsD

299. (he first in7 first out method of pricing ra2 material issues7 e)hibits

2hich one of thefollo2ingfeatures?

a. (he issue price is recalculated each time ne2 deliveries are madeinto stockD

b. (he issue price is al2ays at the latest priceD

c. (he goods are al2ays issued strictly in the physical order in 2hichthey are receivedD

d. (he issue price is al2ays at the earliest priceD

LKint E a@ refers to the continuous 2eighted average price methodDb@ this method is kno2n as the

last in7 first out methodD -nder c@ it 2ill rarely be possible to issuegoods to correspond 2ith the

physical order of receipt unless there is a stock control system dealing2ith7 for e)ample perishable

itemsD

300. hich of the follo2ing is not a method of pricing ra2 material issues fromstock?

a. %tandard costingDb. -nit costD

c.!arginal costDd. Continuous 2eighted averageD

0ns%ers:

864 b 868 b 869 d 86< a 86: d 86> a 86= d 86 a 86 b 846 a 844 b848 a 849 b 84< a 84: b 84> b 84= b 84 d 84 a 886 a 884 d 888 d889 a 88 c 88= a 88 b 88 d 896 a 894 d 898 a 899 d89< c 89: a 89> a 89= b 89 b 89 d 8<6 b 8<4 b 8<8 a 8<9 d 8<< a8<: a 8<> d 8<= d 8< a 8< c 8:6 a 8:4 a 8:8 d 8:9 d 8:< d 8:: a

8:> c 8:= d 8: c 8: b 8>6 a 8>4 d 8>8 a 8>9 d 8>: a 8>> a8>= b 8> d 8> d 8=6 d 8=4 d 8=8 b 8=9 b 8=< a 8=: b 8=> d 8== d8= c 8= a 86 b 84 b 88 d 89 a 8< d 8: b 8> d 8= b 8 b

8 a 86 c 84 b 88 b 89 d 8< a 8: d 8> d 8= a 8 a 8 d966 c

hich of the follo2ing is not a method of pricing ra2 material issues fromstock?

a. %tandard costingDb. -nit costDc. !arginal costDd. Continuous 2eighted averageD



301. hich of the follo2ing is a directlabour cost?

a. %upervisors1 salaries in the factoryDb. Costs of the payroll accounting sectionDc. A bonus paid to the storemanDd. (he 2ages of an operative paid on the basis of output achievedD

302. Production overheads are absorbed into production units by the use ofan overheadabsorptionrateD hich one of the follo2ing best describes ho2 the absorption rate iscalculated?

a. (otal number of units produced divided by the total cost centreoverheadsDb. (otal number of units produced multiplied by the unit overhead costDc. (otal cost centre overheads divided by the cost centre activity levelDd. (otal indirect costs for the business divided by the total number ofunits producedD

LKint E d@ 2ould produce an overhead absorption rate7 but it 2ould befar too generalised to be of any practical use to the business

303. %ales commissions are classified as

a. Prime costsb. Period costsc. Product costsd. Indirect labour

304. SGJ ,td has the follo2ing data relating to its assembly plant in theyear ended 94&ecember 8648EQ`666&irect material costs :66&irect labour cost 8:6

Assembly plant indirect costs 466In addition7 the stores department has total costs of Q 967666 and spends:6Y of its timeservicingthe assembly plantD (here 2ere :67666 labour hours 2orked and 8:7666machine hours runin theassembly plant in 8648D

(he overhead cost per direct labour hour 2asE

a. Q 8D6

b. Q <D6c. Q 8D9d. Q <D>

LKint E (he overhead cost per labour hour is Q 47667666 plus :6Y

of the stores costs Q4:76667 1Q474:7666 divided by :67666 hoursD

305. If a company uses predetermined overhead recovery rates and at theend of a periodfinds thatthere has been an under*recovery of overhead7 2hich of the follo2ing beste)plains ho2

theunder*recovery has occurred?

a. Actual overhead cost has e)ceeded the amount used as a basis for the establishment of the



predetermined rateDb. Actual overhead cost has been less than the amount used as a basisfor the establishment of the predetermined rateDc.

Actual activity levels 2ere higher than planned due to an increase indemandDd. An e)pected price increase in the overhead costs 2hich 2as built into the overhead recovery rate did not take placeD

LKint E b@7 c@ and d@ 2ould lead to over*recovery of overheadsD

306. If there has been an over recovery of overheads7 at the end of theaccounting period

the amountconcerned should be?

a. &ebited to the company profit and loss accountDb. Credited to the company profit and loss accountDc. Carried for2ard to the ne)t accounting period as a cost savingDd. -sed to reduce ne)t period1s overhead recovery rateD

LKint E /ariances should al2ays be dealt 2ith in the profit and lossaccount for the period theyrelate toD

307. A variable cost is?

a. $ne 2hich varies in proportion to the level of fi)ed cost incurredDb. $ne 2hich tends to vary 2ith the level of activityDc. $ne 2hich changes over timeDd. $ne 2hich cannot be estimated 2ith any great degree of accuracyD

308. (he term 1contribution1 refers to?

a. (he actual amount of profit made per unitDb. (he budgeted profit per unitDc. (he amount of profit 2hich goes to2ards meeting the overheads of the businessD

d. (he difference bet2een sales revenue and variable costs per unitDLKint E Contribution only becomes profit 2hen fi)ed costs have beencovered in fullD

309. (he break*even point is that at 2hichE

a. (he level of activity at 2hich the business operates most economicallyDb. (he level of activity at 2hich the business makes neither a profit nor alossDc. (he fi)ed costs are lo2estDd. (he variable cost per unit is minimi"edD



310. hen a business is faced 2ith a limiting factor one 2hich limits theactivity of anentity@ andthere

is a choice to be made bet2een options to follo27 2hich of the follo2ingstatementsdescribes theoptimal course of action?

a. Choose the option 2hich gives the highest unit profitDb. Choose the option 2hich gives the highest unit contributionDc. Aim to achieve a balance of activities covering all of the optionsDd. Choose the option 2hich gives highest contribution per unit of limitingfactorD



LKint E d@ 2ould give the optimal course of action in financial termsD%ometimes7 2here resourceconstraints operate in Tnot for profit organi"ationsT7 other non*financialfactors may mean that asub*optimal course of action is follo2edD

311. SGJ ,td has thefollo2ing alternative planned activity levelsE,evel A ,evel B ,evel C(otal costs Q 47667666 Q 47:67666 Q 87667666 Number of units produced :7666 467666 4:7666+i)ed overhead remains constant over the activity range sho2nD@(he fi)ed overhead cost per unit isE

a. Q 86D66b. Q4:D66c. Q49D99d. Q46D66

LKint E (he total cost increased by Q 47667666 in moving from ,evel A to,evel C7 therefore if fi)ed

overheads are constant7 variable costs are Q 47667666 for 467666 units72hich 1 Q46FunitD At ,evel A7total cost is Q 86Funit so fi)ed overheads absorbed on a unit basis are Q46D

312. hich ofthe follo2ing statements regarding marginal costing is incorrect?

a. It is a useful long*term planning techniqueDb. It assumes that fi)ed costs remain fi)ed over relevant activity rangesDc. It assumes that other costs vary in proportion to activityDd. It assumes that costs can be classified as variable or fi)edD

LKint E b@7 c@ and d@ are characteristics of the marginal costingapproach 2hich render it lessthan useful as a long*term decision*making technique7 hence a@ is correctD

313. hich

phrase best describes the current role of the managerial accountant?

a. !anagerial accountants prepare the financial statements for anorgani"ationDb. !anagerial accountants facilitate the decision*making process 2ithinan organi"ationDc. !anagerial accountants make the key decisions 2ithin anorgani"ationD

d. !anagerial accountants are primarily information collectorsD

314. , has incurred cost of Q >67666 for materialD +urther it incurred Q9:7666 for labor and

Q =67666 for factory overheadD (here 2as no beginning and ending 2ork in processD=7:66 units 2erecompleted and transferred outD hat 2ould be the unit cost for material?

a. Q 88b. Q 4>c. Q 4<d. Q

315. !anufacturing costs typically consistof

a. &irect materials7 direct labor7 and manufacturing overheadDb. Production and shipping costsDc. Production and marketing costsD

/ariable costs <7:66 =7666 >7666 4=7:66Contribution !argin :7:66 87666 >7666 497:66+i)ed costs 97:66 >7666 97666 487:66 Net income 87666 <7666@ 97666 47666

Product line B appears unprofitable7 and management is consideringdiscontinuing the lineDKo22ould the discontinuation of Product line B affect net income?

a. Increase by ;<7666b. &ecrease by ;<7666c. Increase by ;87666d. &ecrease by ;87666

321. Coed Novelties manufactures key chains for college bookstoresD &uring 86487 thecompany had the follo2ing costsE&irect materials used Q 947666 &irect labor Q 47666 +actory rent Q 487666

#quipmentdeprecation M factory Q 87666 #quipment depreciation M office Q =:6 !arketing e)pense Q87:66Administrativee)penses Q <676669:7666 units produced 2ere in 8669Dhat is the product cost per unit?

a. Appro)imately Q4D8<b. Q4D6c. Appro)imately Q 9D6<d. Q4D<6

322. (he Cape Cod Cotton Candy Company had the follo2ing informationavailableregarding last

year3s operationsE%ales 4667666 units@ Q 87667666 /ariable costs Q 47667666 Contributionmargin Q47667666 +i)edcosts Q :67666 Net Income Q :67666If sales 2ere to increase by 866 units7 2hat 2ould be the effect on netincome?

a. Q<66 increaseb. Q866 increasec. Q4:6 increased. Q 866 loss

323. If B ,imited sho2s required production of 486 cases of product for themonth7 directlabor per case is 9 hours at RsD 48 per hourD Budgeted labor costs for the

month should beE

a. Q 9>6b. Q 47<<6c. Q <7986d. Q :79<>

324. A firm7 2hich makes yachts7 has fi)ed costs of Q 8>67666 per monthD(he product sellsfor Q 9:7666 per boat7 and the variable costs of production are Q 4:7666 per boatD (he

boatyard canmanufacture 86 boats each monthD hat is the firmsT margin of safety atthe moment?

a. 86Yb. 9:Yc. :<Yd. :=Y

325. 5anet sells a product for Q >D8:D (he variable costs are Q 9D=:D 5anet3s break*even unitsare 9:7666D hat is the amount of fi)ed costs?

a. Q =7:66b. Q 9:7666c. Q 49478:6d. Q 46<7=:6

326. ood 5ob Plc makes one product 2hich sells for Q 6 per unitD+i)ed costs are Q 87666 per month and marginal costs are Q <8 a unitD

hat sales level in units 2ill provide a profit

of Q 467666?

a. 9:6 units

b. >>= unitsc. 47666 unitsd. 479:6 units

327. If computational and record*keeping costs are about the same under both +I+$ and2eightedaverage7 2hich of the follo2ing method 2ill generally be preferred?

a. eighted Averageb. +I+$c. (hey offer the same degree of informationd. Cannot be determined 2ith so little information

328. A business al2ays absorbs its overheads on labor hoursD In the th period7 47666hours 2ere

2orked7 actual overheads 2ere Q 8=7666 and there 2as Q 9>7666 over*absorptionD (heoverheadabsorption rate per hours 2asE

a. Q 4:D:6b. Q 4=D:6c. Q 4D66

d. Q 49D:6

329. Bharat ,td estimated that during the year =:7666 machine hours 2ould be used and ithas beenusing an overhead absorption rate of Q >D<6 per machine hour in itsmachining departmentD&uring

the year the overhead e)penditure amounted to Q <=87:>6 and =87>66machine hours 2ereusedDhich one of the follo2ing statements is correct?

a. $verhead 2as under*absorbed by Q =7<<6b. $verhead 2as under*absorbed by Q =786c. $verhead 2as over*absorbed by Q =7<<6

d. $verhead 2as over*absorbed by Q =786

330. Inventory of Q >7666 2as purchased during the yearD (he cost of

goods sold 2as Q 67666 and the ending inventory 2as Q 47666D hat2as the inventory turnover ratio for the year?

a. :D6b. :D9c. >D6d. >D<

331. (he +I+$ inventory costing method 2hen using under perpetualinventory system@ assumes that the cost of the earliest units purchased

is allocated in 2hich of the follo2ing2ays?

a. +irst to be allocated to the ending inventory

b. ,ast to be allocated to the cost of goods soldc. ,ast to be allocated to the ending inventoryd. +irst to be allocated to the cost of good sold

332. Kigh Class Interiors had beginning merchandise inventory of Q =:7666D

It made purchases of Q4>67666 and recorded sales of Q 8867666 during 5anuaryD Its estimated gross profit on sales2as96YD $n 5anuary 947 the store 2as destroyed by fireD hat 2as the value ofthemerchandiseinventory loss?

a. Q 4:<7666b. Q 4>67666c. QD 89:7666d. Q 47666

333. here there is mass production of homogeneous units or 2here fe2

products are produced in batches7 2hich of the follo2ing cost driver 2ould be regarded as best basefor thedetermination of +actory overhead absorption rate?

a. Number of units produced

b. ,abor hoursc. Prime costd. !achine hours

334. hich of the follo2ing is a factor that should be taken into account for fi)ing re*order level?

a. Average consumptionb. #conomic $rder Huantityc. #mergency lead timed. &anger level

335. (he contribution margin increases 2hen sales volume and price remain thesame andE

a. /ariable cost per unit decreasesb. /ariable cost per unit increasesc. +i)ed costs per unit increase



d. All of the given options

336. $pening 2ork in process inventory can be calculated under 2hich ofthe follo2ingmethod?

a. +I+$ and Average costingb. ,I+$ and Average costingc. +I+$ and ,I+$ costingd. None of given options

337. is a part of cost of production report thate)plains the cost

incurred during the processD

a. Huantity scheduleb. Cost accounted for as follo2c. Cost charged to the department

338. A company makes one product7 2hich has variable manufacturingcosts of Q 9D8: per unit and

variable selling and administrative costs of Q 4D4= per unitD +i)edmanufacturing costs are Q<87966 per month and fi)ed selling and administrative costs are Q 8766 per monthD(he company2antsto earn an average monthly profit of Q 4:7666 and they e)pect to produceand sell anaverage of <67666 units of the product per monthD hat is the minimum selling pricemanagement can bee)pected to set to meet their profitability goals?

a. Q <D>b. Q <D<8c. Q >D>6d. Q >D89

339. A cost that remains unchanged across the relevant range of units produced is 2hatkind of cost?

a. +i)ed cost

b. Product costc. !i)ed costd. Period cost

340. A company has thefollo2ing cost data for the monthEConversion costE QD =766 Prime CostE Q 44:7=66 Beginning ork inProcess InventoryE Q

<7=66#nding ork in Process InventoryE Q 8766 Beginning +inished oodsInventoryE Q 8=7>66#nding+inished oods InventoryE Q 87866 !anufacturing $verhead CostsE Q4<7:66Dhat is the Cost of oods %old for the month?

a.

Q 4987466b. Q 44>7666c. Q 4967866

d. Q 4967:66

341. !aterial cost 1 Q <D66 per unit ,abor cost 1 ReD 6D>6 per unit +actoryoverhead cost 1Q 4D66 per unit Administrative cost 1 Q 4D86 per unit %elling cost 1 4:Y of

sales Profit 1 Q4D68 per unitDhat 2ill be the sales price per unit?

a. >D6b. D8c. =D6d. None of the given option

342. ABC Company has maintained the follo2ing data of inventorycontrol -nder the periodicinventory systemE&ate -nits (otal5an 64 466 X Q 46 Q 46665an 6: 466 X Q 44 Q 4466

5an 46 4:6 X Q 48 Q 4>66

&uring the period 966 units 2ere soldDCalculate the cost of ending inventory under +I+$ methodD

a. >66b. :66c. <66d. 966

343. National chains of tyre fitters stock a popular tyre for 2hich thefollo2ing informationis availableEAverage usage 1 4<6 tyres per day!inimum usage 1 6 tyres per day

!a)imum usage 1 4=: tyres per day,ead time 1 46 to 4> daysRe*order quantity 1 9666 tyresBased on the above data calculate the ma)imum level of stock possibleE

a. 866b. 9666c. <66

d. :66

344. (he total labor cost incurred by a manufacturing entity includes 2hichone of thefollo2ingelementsE

a. &irect labor costb. Indirect labor costc. Abnormal labor costd. All of the given options345. If7 $pening stock 47666 units !aterial Purchase =7666 units Closing%tock :66 units!aterialconsumed Q =7:66Dhat 2ill be the inventory turnover ratio?

a. 46 (imesb. 48 timesc. 4<D: timesd. D: times PAP#R 8E

346. If -nits sold 1 467666 Closing finished goods 1 87666 $peningfinished goods 147:66

hat 2ill be the value of units manufactured?

a. 7:66

b. 467:66c. 497:66d. >7:66

347. Calculate the amount of direct labor ifE

&irect material 1 4:7666 &irect labor 1 =6Y of prime cost

a. >7<8b. 967666c. 467:66d. 9:7666

348. In increasing production volume situation7 the behavior of +i)ed cost /ariable cost2ill beE

a. Increases7 constantb. Constant7 increasesc. Increases7 decreasesd. &ecreases7 increases

349. hile calculating the finished goods ending inventory7 2hat 2ould bethe formula tocalculate per unit cost?

a. Cost of goods sold F number of units soldb. Cost of goods to be manufacturedF number of units manufacturedc. Cost of goods manufactured F number of units manufacturedd. (otal manufacturing cost F number of units manufactured

350. If the direct labor is RsD <87666 and +$K is <6Y of conversion costDhat 2ill be theamount of +$K?

a. >97666b. 967666c. 87666d. 4>766

351. hich one ofthe follo2ing centers is responsible to earn sales revenue?

a. Cost center b. Investment center c. Revenue center d. Profit center

352. hile preparing the Cost of oods %old and Income %tatement7 theover applied +$Kis

a. Add back7 subtractedb. %ubtracted7 add back c. Add back7 add back d. %ubtracted7 subtracted

353. hich of the follo2ing ratios e)pressed that ho2 many times theinventory is turningover to2ards the cost of goods sold?

a. Net profit ratiob. ross profit ratio

c. Inventory turnover ratiod. Inventory holding period

!CH 9:<7 9::7 9:> and 9:= are based on the follo2ing dataE(he follo2ing is the Income %tatement of a Company for last monthE

Particulars Q%ales <76667666,essE variable e)penses 47667666Contribution margin 878667666,essE fi)ed e)penses =867666 Net income 4<67666(he company has no beginning or ending inventoriesD A total of 67666units 2ere produced and

sold last monthD

354. hat is the company3scontribution margin ratio?

a. 96Yb. :6Yc. 4:6Yd. None of given options

355. hat is the company3s break*even inunits?

a. <7666 unitsb. =87666 unitsc. 67666 unitsd. None of the given options

356. Ko2 many units 2ould the company have to sell to attain target profits of Q>667666?

a. <7666 unitsb. 7666 unitsc. 46>7>> unitsd. None of given options

357. hat is the company3s margin ofsafety in Q?

a. Q 47>667666b. Q 87<667666c. Q 8:7>67666d. None of the given options

358. (he margin of safety can be defined asE

a. (he e)cess of budgeted or actual sales over budgeted or actual variablee)pensesb. (he e)cess of budgeted or actual sales over budgeted or actual fi)ede)pensesc. (he e)cess of budgeted sales over the break*even volume of salesd. (he e)cess of budgeted net income over actual net income

359. (hecontribution margin ratio is calculated by using 2hich one of the givenformula?

a. %ales * +i)ed #)penses@F%alesb. %ales * /ariable #)penses@F%ales

c. %ales * (otal #)penses@F%alesd. None of the given options

360. &ata of a company SGJ is given belo2Particulars Q%ales 4:7667666/ariable cost 7667666+i)ed Cost <7667666Break #ven %ales in Q

a. Q 47 667666b. QD 87 667666c. Q497 667666d. None of the given options

361. (he break*even point is the point2hereE



a. (otal sales revenue equals total e)penses variable and fi)ed@b. (otal contribution margin equals total fi)ed e)pensesc. (otal sales revenue equals to variable e)penses onlyd. Both a b

362. (he break*even point inunits is calculated using

a. +i)ed e)penses and the contribution margin ratiob. /ariable e)penses and the contribution margin ratioc. +i)ed e)penses and the unit contribution margind. /ariable e)penses and the unit contribution margin

363. !arginal costing is also kno2n asE

a. Indirect costingb. &irect costingc. /ariable costingd. Both b@ and c@

364. (he

difference bet2een total revenues and total variable costs is kno2n asE

a. Contribution marginb. ross marginc. $perating incomed. +i)ed costs

365. Pe

rcentage of !argin of %afety can be calculated in 2hich one of thefollo2ing 2ays?

a. Based on budgeted %alesb. -sing budget profitc. -sing profit Contribution ratiod. All of the given options

366. hich of the follo2ing

represents a C/P equation?

a. %ales 1 Contribution margin RsD@ 0 +i)ed e)penses 0 Profitsb. %ales 1 Contribution margin ratio 0 +i)ed e)penses 0 Profitsc. %ales 1 /ariable e)penses 0 +i)ed e)penses 0 profitsd. %ales 1 /ariable e)penses M+i)ed e)penses 0 profits

367. If 486 units produced7 466 units 2ere sold X Q 866 per unitD /ariable

cost related to production selling is Q 4:6 per unit and fi)ed cost is Q :7666D If the management 2ants



to decrease sales price by 46Y7 2hat 2ill be the effect of decreasing unit sales price on profitability of company?

a. Remains constantb. Profits 2ill increasedc. Company 2ill have to face lossesd. None of the given options

368. A disadvantage of an hourly2age plan is that itE

a. Provides no incentive for employees to achieve and maintain a highlevel of productionDb. Is hardly ever used and is difficult to applyDc. #stablishes a definite rate per hour for each employeeD



d. #ncourages employees to sacrifice quality in order to ma)imi"eearningsD

369. (he coste)pended in the past that cannot be retrieved on product or service

a. Relevant Costb. %unk Costc. Product Costd. Irrelevant Cost

370. hen a manufacturing process requires mostly human labor and thereare 2idely

varying 2agerates among 2orkers7 2hat is probably the most appropriate basis ofapplying factory coststo 2ork in process?

aD!achine hoursb. Cost of materials used

c. &irect labor hoursd. &irect labor dollars

371. (he main purpose of cost accountingis toE

a. !a)imi"e profitsDb. Kelp in inventory valuationc. Provide information to management for decision makingd. Aid in the fi)ation of selling price

372. (he combination of directmaterial and direct labor is

a. (otal production Costb. Prime Costc. Conversion Cost

d. (otal manufacturing Cost

373. method assumes that the goods received mostrecently in the storesor producedrecently are the first ones to be delivered to the requisitioning departmentD

a. +I+$b. eighted average methodc. !ost recent price methodd. ,I+$



374. +i)ed cost per unit decreases 2henE

a. Production volume increasesDb. Production volume decreasesDc. /ariable cost per unit decreasesDd. /ariable cost per unit increasesD

375. Prime cost 0 +actory overhead cost isE

a. Conversion costDb. Production costDc. (otal costDd. None of given optionD

376. +ind the value of purchases if Ra2 material consumed Q 67666$pening and closingstock of ra2 material is Q :67666 and 967666 respectivelyD

a. Q 467666b. Q 867666c. Q =67666d. Q 47>67666

377. If Cost of goods sold 1Q <67666 P !argin 1 86Y of sales

Calculate the ross profit marginDa. Q 987666b. Q <7666c. Q 7666d. Q467666

378. Annual requirement is =66 units consumption per 2eek is 4:6 unitsD-nit price Q :7

order cost Q 46 per orderD Carrying cost Q 4 per unit and lead time is 9 2eek7 (he #conomicorder quantity2ould beE

a. 9: unitsb. 966 units

c. 8:6 unitsd. 4:6 units

382. (he distinction bet2eendirect and indirect labour helps to E

a. !easure efficiency of performanceb. &etermine product cost more accuratelyc.

#nsure better cost analysis for decisions and controld. All of the above

383. hich 2ould be an implicitcost for a firm? (he costE

a. $f 2orker 2ages and salaries for the firmDb. Paid for leasing a building for the firmDc. Paid for production supplies for the firmD

d. $f 2ages foregone by the o2ner of the firmD

384. (he difference bet2een gate time and time booked for 'obs in respect



of a 2orker indue to thefollo2ing reasons e)cept E

a. Change*over timeb. Illnessc. aiting for materials7 instructions7 etcDd. Breakdo2n of machine

385. (he period of time for 2hich a 2ork station is available for production but is notutili"ed due toshortage of tooling7 materials7 operators7 etcD is kno2n as E

a. &o2n timeb. $peration time



c. Idle timed. %et*up time

386. (he ob'ective of 2ork study are E

a. !aterial conservationb. (ime savingc. Huality improvement and cost reductiond. All of the above

387. (ime study serves the follo2ing purposes e)cept E

a. %tandardi"ing 'obs7 operation etcDb. Assessing labour timec. +i)ation of factory overhead rated. +i)ation of 2age rates and introduction of incentive schemes

388. (he methods of 'ob evaluation include E

a. radingb. Rankingc. Points valued. All of the above

389. !erit rating helps the follo2inge)cept E

a. &etermining right 2orker for the right 'obF2ork b. &elinking re2ards 2ith merits

c. %implifying 2age structured. Improving labour relations and reducing labour turnover

390. (hefactors to be taken into consideration in formulating incentive schemesinclude E

a. Huantity and quality of outputb. Incidence of overhead7 and effect upon 2orkersc. %implicity and legal provisionsd. All of the above

391. Contribution margin contributes to meet 2hich one of the follo2ing options ?

a. /ariable costb. +i)ed cost

c. $perating costd. Net profit

392. +avourable conditions



for the operation of piece rates include E

a. Komogeneous productsb. ,ong7 uninterrupted run of productionc. Inspectiond. Kigh proportion of indirect labour

393. If time allo2ed for a 'ob is 46 hours7 time taken for the 'ob is hoursand rate of pay isQ 8 per hour7 he bonus to the 2orker is E

a. Q 4D86



b. Q 8D66c. Q 9D86d. None of the above

394. roup bonus schemes are generally

suitabl e 2here E

a. $utput depends on individual effortsb. $utput of individual 2orkers can be measured easilyc. It is necessary to create a collective interest in the 2ork d. Normal loss rate is high

395. In a

profit sharing scheme the available surplus is shared by the follo2inge)cept E

a. overnmentb. %hareholdersc. #mployeesd. +irm

396. Non*monetary

incentives may include the follo2ing e)cept E

a. Kealth and safetyb. Kousing facilitiesc. #ducation and trainingd. &earness allo2ance

397. (he purposes

served by preparation of payroll or 2ages sheet include E

a. %preading the volume of 2ork to be doneb. Computation of labour rate for each departmentc. Comparing actual 2ages 2ith budgeted 2ages for controld. All of the above

398. (heauthori"ed heads of deduction from 2ages payable include the follo2inge)cept E

a. Car allo2anceb. Income ta)c. Provident fundd. #mployees1 state insurance

399. ages analysis include E

a. ross 2ages per productb. ross 2ages per operation or department



c. ross 2ages per labour classificationd. Analysis of constituent of gross 2ages M directF lost time

400. In account ting for labour cost E

a. AD direct labour cost and indirect labour cost are charged to prime costb. &irect labour cost and indirect labour cost are charged to overheadsc. &irect labour cost is charged to prime cost and indirectlabour cost is charged to overheadsd. All of the above

0?@E'@:

4 d 968 c 969 b 96< c 96: a 96> b 96= b 96 d96 b 946 d 944 d 948 a 949 b 94<d 94: a 94> d 94= b 94 b 94 d986 d 984 b 988 b 989 c 98 c 98= b 98 b 98 a 996 c994 d 998 d 999 a 99a 99= c 99 c 99 a 9<6 d 9<4 b9<8 a 9<9 c 9<< d 9<: a 9<> b 9<=d 9 a 9:= c 9:c 9: b 9>6 d 9>4 d 9>8 c 9>9 d

9>< a 9>: d 9>> c 9>= c 9> a 9> b 9=6 c 9=4 c 9=8 b 9=9 d 9=< a9=: b 9=> c 9== d 9= b 9= a 96c 94 a 98 d 99 d 9 d 9= c 9 d 9 b 96 d 94 b 98 b 99 c 9< c 9: a 9> d9= d 9 a 9 a

<66 c

hich of the follo2ing is not a production cause of idle capacity ?

a. %et*up and change*over timeb. ,ack of supervision and instructionc. ,ack of materials and toolsd. %trike

451. +unctionally7 administration e)penses may comprise e)penses of thefollo2ingactivities E

a. %ecretarial and board of directorsb. Accounting7 financing7 ta) and legalc. Audit and personneld. All of these

452. hich of the follo2ing is not a possible method of accounting foradministrationoverheads ?

a. Include as part of production overheadsb. Apportion to production7 selling and distribution functionsc. (reat administration as a separate entity and treat the costs as suchd. (ransfer to costing profit and loss account

453. hich of the follo2ing is not used as a base for apportionment ofadministration



overheads ?



a. &irect 2agesb. orks costc. Conversion costd. %ales value

454. hich of thefollo2ing isFare the basic ob'ectFs of 'ob analysis?

a. &etermination of 2age ratesb. Ascertain the relative 2orth of each 'obc. Breaking up 'ob into its basic elementsd. All of the given options

455. Analysis of selling anddistribution overheads is done by E

a. Nature of e)penses and functionsb. Areas7 products and salesmenc. (ypes of customers and channels of distributiond. All of the above

456. +or e)ercising control over selling and distribution overheads7 thefollo2ingtechniques may beused E

a. Comparison 2ith past resultsb. Budgetary controlc. %tandard costing

d. All of the above

457. &epreciation is a E

a. !easure of consumption of assetsb. Process of allocation and not of valuationc. ear and tear due to use andFor lapse of timed. All of the above

458. hich of thefollo2ing does not influence the useful life of an asset ?

a. #)pected physical 2ear and tear b. Cost of the assetc. $bsolescenced. ,egal or other limits on the use of the asset

459. +or computing depreciation of an asset7 the factors that are taken intoconsiderationinclude the



follo2ing e)cept E

a. Kistorical costb. #)pected useful lifec. Insurance premiumd. #stimated residual value

460. &epreciation on plant and machinery isE

a. Not a cash cost7 so is ignored in the cost accountsb. Part of manufacturing overheads

c. Part of prime cost



d. Al2ays calculated using the straight*line method

461. hich of the follo2ing methods of depreciation results in fi)ed perunit cost of depreciation ?

a. %traight lineb. Reducing balancec. %inking fundd. Production unit

462. (ypes of maintenance includethe follo2ing e)cept E

a. Routineb. $verhaulc. #mergencyd. Periodic

463. hich of the follo2ing is not included in the ob'ectives ofmaintenance of plant andmachinery ?

a. Reducing idle timeb. Reducing breakdo2nc. !aintaining efficiencyd. Increasing life

464. Regular maintenance e)penses are E

a.

Capitali"edb. Part of manufacturing overheadsc. ritten*off to costing profit and loss accountd. Part of prime cost

465. $bsolescence isthe measure of the loss of value of an asset due to E

a. (echnological innovation

b. Changes in market conditionsc. Both a@ and b@ aboved. None of the above

466. Interest on o2n capital is aE

a. Cash costb. Notional cost

c. %unk costd. Part of prime cost

467. $b'ectives of research and



development costs include E

a. !aintaining present competitive positionb. Improving enterprise1s competitive positionc. #)ploring no2 marketFproductsd. All of the above

468. Normal stores losses are E

a. Part of prime costb. Part of production overheads



c. Part of selling and distribution overheadsd. ritten*off to costing and profit and loss account

469. %econdary packing e)penses are E

a. Part of prime costb. Part of production overheadsc. Part of distribution overheadsd. ritten*off to costing profit and loss account

470. If you kno2 that 2ith units of output7 average fi)ed cost is Q48D:6and averagevariable cost is 4D8:7 then total cost at this output level isE

a. Q 9D=:Db. Q =D=Dc. Q =:6Dd. Q 6D

471. (he methods oftreating cost of small tools in cost accounts include E

a. Charging to e)penseb. Charging to storesc. Capitali"ing in a small tools accountd. All of the above

472. -nder marginal costing E

a. All costs are classified into t2o groups M variable and fi)ed

b. /ariable costs form part of the product cost and inventory valuationc. +i)ed costs are treated as period costsd. All of the above

473. hich of the follo2ingdefinitions describe marginal cost ?

a. (he variable cost of one unit of product or serviceb. A principle 2hereby variable costs are charged to cost units

and the fi)ed costs attributable tothe relevant period are 2ritten*off in full against the contribution for that periodc. Costs appropriate to aiding the making of specific managementdecisionsd. (he price at 2hich material identical to that 2hich is used upcould be replaced on the dateof usage

474. According to Ro2an premium plan7 2hich of the follo2ing formula isused to



calculate the bonus rate?

a. (ime savedFtime allo2ed@ ) 466b. (ime allo2edFtime saved@ ) 466c. Actual time takenFtime allo2ed@ ) 466d. (ime allo2edFactual time taken@ ) 466

475. hich of the follo2ing is not an assumption underlying theaccountant1s break*evenchart ?

a. +i)ed costs remain fi)ed throughout the range chartedb. %elling prices do not change

c. /ariable costs fluctuate inversely 2ith volume

d. -nit variable costs remain constant throughout the range charted

476. ith regard to break Meven charts and break*even analysis7 2hich ofthe follo2ing istrue ?

a. It is assumed that variable cost fluctuates in direct proportion to outputb. (he break the break*even point is at the intersection of the sales lineand the variable cost linec. A break*even chart sho2n the ma)imum profit possibled. A break*even chart is capable of dealing 2ith any change of productmi)

477. (he follo2ing datarelate to t2o output levels of a department E!achine hours 4=7666 47:66$verheads Q@ 87<>7:66 87:47=:6(he variable overhead rate per hour is Q 9D:6D (he amount of fi)edoverheads isE

a. Q :78:6

b. Q :7:66c. Q 47=7666d. Q 87<>7:66

478. (he follo2ing data relate to t2o activity levels of an out*patients1department in ahospital E NoD of consultations per patient <7:66 :7=:6

$verheads Q 87>7=:6 Q 87748:+i)ed overheads are Q 87667666 per periodD (he variable cost perconsultation is E

a. Q 4:D:6b. Q <<D<<c. Q :D<d. Q none of the above

479. Break*even analysisassumes that over the relevant range E

a. (otal costs are unchangedb. -nit variable costs are unchangedc. /ariable costs are non*linear d. -nit fi)ed costs are unchanged

480. ABC ,tdD Kas fi)ed costs of Q >67666 pDaDD It manufactures a single product7 2hich it sells for Q 86 per unitD Its contribution to sales ratio is<6YD ABC ,tdTs break*even point in

units is E

a. 4766b. 97666c. :7666d. =7:66

481. %un ,tdD !akes a single product 2hich it sells for Q 46 per unitD+i)ed costs are Q <7666 per month and the product has a contribution tosales ratio of <6YD In a period 2henactual sales 2ere Q47<67666D %un ,tdDTs margin of safety in units 2as E

a. 87666b. >7666c. 7666d. 487666

482. Acompany produced :66 units of a product and incurred the follo2ing costs EQ&irect materials 7666&irect 2ages 467666$verheads 86Y fi)ed@ <:7666If the sales value of :66 units 2as Q 476876667 2hat is contribution margin ?

a. <<Yb. <=Yc. :9Yd. =<Y

-se the follo2ing data for questions <9 and <<EBudget data for the Kappy ,tdD%ales 47667666 units@ Q 467667666Costs E/ariable Q =7667666+i)ed Q 874676667467666 $perating

profit Q 67666

483. If fi)ed costs increased by Q 947:66 2ith no other cost or revenuefactors changing7 the break*even sales in units 2ould be E

a. 9<7:66b. 67:66

c. >7666d. <7:66

484. If Kappy ,tdD Is sub'ect to an effective income ta) rate of <6Y7 thenumber of unitsKappy ,tdDould have to sell to earn an after*ta) profit of Q 67666 is E

a. 47667666 unitsb. 47867666 unitsc. 47487666 unitsd. 47<:7666 units

485. %elling a product at a price equivalent to or belo2 marginal cost isrecommended for ashort period in certain special circumstances7 such as E

a. Introducing a ne2 productb. #)ploring foreign market



c. &riving out a 2eaker competitor d. All of the above

486. hi

ch of the follo2ing is not a relevant cost information in a make or buydecision ?

a. /ariable cost of makingb. eneral fi)ed costc. Purchase priced. ,oss of contribution to make the product

487. hich of the follo2ing factors are not qualitative factors in a make or buydecision ?

a. &oubt as to the ability of the subcontractor to meet delivery dates

b. &oubt as to ability of the subcontractor to maintain qualityc. (he case 2ith 2hich improvements can be made to the productd. (he effect of redundancy on labour relations

< D Raymond Corporation estimates factory overhead of Q 9<:7666 for ne)t

fiscal yearD Itis estimatedthat >67666 units 2ill be produced at a material cost of Q:=:7666DConversion 2ill require9<7:66direct labor hours at a cost of Q 46 per hour7 2ith 8:7=: machine hoursD+$K rate on the bases on Budgeted Production 2ould be?

a. Q :D=: per unitb. Q >D>: per unitc. Q >D6 per unitd. Q 4 per unit

489. In a shutdo2n decision7 one has toconsider E

a. Contributionb. Identifiable fi)ed cost7 if anyc. Impact of shutdo2n on other products7 if anyd. All of the above

490. hen a firm doubles its inputs and finds that its output has more thandoubled7 this iskno2n asE

a. #conomies of scaleDb. Constant returns to scaleDc. &iseconomies of scaleDd. A violation of the la2 of diminishing returnsD

491. (he firms monthly cost of production is Q 47<>7666 at an outputlevel of 7666 unitsD If it achieves an output level of 487666 units it 2illincur production cost of Q 47<7666 cost of

production for 4:7666 units is E

a. Q 4767666b. Q 87667666c. Q :67666d. Q 87967666

492. (he basic research cost should be

treated as Ea. Product costb. Production cost



c. Production overheadd. Period cost

493. A firm requires 4>7666 nosD of a certain component7 2hich is buys at Q>6 eachD (he

cost of placingan order and follo2ing it up is Q 486 and the annual storage charges 2orksout to 46Y of the cost of the itemD (o get ma)imum benefit the firm should place order forWWWWWWWWD-nits at a timeD

a. 47666b. 66c. 66

d. >66

494. About :6 items are required every day for a machineD A fi)ed costof Q :6 per order is incurred for placing an orderD (he inventory carryingcost per item amounts to ReD 6D68 per

dayD (he lead period is 98 daysD Compute reorder levelD

a. 47866 itemsb. 47<66 itemsc. 47>66 itemsd. 4766 items

495. (he standard time required per unit of a product is 86 minutesD In

a day of 2orking hours a 2orker given an output of 96 unitsD If hegets a time rate of Q 86FhrD7 his totalearnings under Kalsey bonus scheme 2as E

a. Q 866b. Q 48c. Q 46d. Q 4>6

496. Amaterial loss during production or storage due to evaporation or shrinkage iscalled E

a. %crapb. astec. %poilaged. !aterial loss

497. (he process of distribution of overheads allotted to a particulardepartment or costcentre over the units produced is called E

a. Allocationb. Apportionmentc. Absorptiond. &epartmentali"ation

498. Angle of incidence defines E

a. %ystematic risk in CAP! modelb. Post B#P relationship bet2een total cost and total revenuec. Incidental factors in investmentsd. !arginal cost of production

499. A ,tdD Kas sales of Q 878667 total fi)ed cost of Q :=67 variablecost of Q 47:<67 ra2 material consumed of Q 474667 number of units



sold 887666D hat shall be the B#P inunits@ if ra2 material price is reduced by 8Y?

a. 479=b. 47:>6c. 47=:6d. 47666

500. If an item of overhead e)penditure is charged specifically to a singledepartment this2ould be an e)ample ofE

a. Apportionmentb. Allocation

c. Re*apportionmentd. Absorption

0?@E'@:

<:4 d <:8 a <:9 a <: d <:= d <: b <: c <>6 b <>4

d <>8 b <>9 d <>: c <>> b<>= d <> b <> c <=6 c <=4 d <=8d <=9 a <=< a <=: c <=> a <== c<= a <= b <6 d <4 a <8 b <9 b < b <= d < a< d <6 a <4 d <8 c <9 c <<c <: c <> b <= c< b < a :66 b

(K# !AIN $B5#C( $+ AN A-&I( I%

A. #SPR#%%I$N $+ $PINI$N

B. &#(#C(I$N AN& PR#/#N(I$N $+ +RA-& AN& #RR$R

C. B$(K A@ AN& B@

D. &#P#N&% $N (K# (GP# $+ A-&I(D

2. (K# (I(,# $+ AA%8 I%%-#& BG C$-NCI, $+ICAI I%D

A. $B5#C(I/# AN& %C$P# $+ (K# +INANCIA, %(A(#!#N(%

B. $B5#C(I/# AN& %C$P# $+ (K# A-&I( $+ +INANCIA, %(A(#!#N(%

C. $B5#C(I/# AN& %C$P# $+ B-%IN#%% $+ AN #N(I(G

D. $B5#C(I/# AN& %C$P# $+ +INANCIA, %(A(#!#N(% A-&I(

3. KICK $+ (K#+$,,$IN I% N$( (R-# AB$-( $PINI$N $N +INANCIA, %(A(#!#N(%?

A. (K# A-&I($R %K$-,& #SPR#%% AN $PINI$N $N +INANCIA, %(A(#!#N(%D

B. KI% $PINI$N I% N$ -ARAN(## ($ +-(-R# /IABI,I(G $+ B-%IN#%%

C. K# I% R#%P$N%IB,# +$R &#(#C(I$N AN& PR#/#N(I$N $+ +RA-&% AN& #RR$R% IN+INANCIA, %(A(#!#N(%

D. K# %K$-,& #SA!IN# K#(K#R R#C$NIJ#& ACC$-N(IN PRINCIP,# KA/# B##NC$N%I%(#N(,G



4. A %A,# $+ R%D:6D666 ($ A A% #N(#R#& A% A %A,# ($ BD (KI% I% AN #SA!P,# $+

A. #RR$R $+ $!I%%I$N

B. #RR$R $+ C$!!I%%I$NC. C$!P#N%A(IN #RR$R

D. #RR$R $+ PRINCIP,#

5. 1$$&% %#N( $N APPR$/A, BA%I%` KA/# B##N R#C$R&#& A% 1CR#&I( %A,#%`D(KI% I% AN #SA!P,#

$+

A. #RR$R $+ PRINCIP,#B. #RR$R $+ C$!!I%%I$N

C. #RR$R $+ $!I%%I$N

D. #RR$R $+ &-P,ICA(I$N

6. KICK $+ (K# +$,,$IN %(A(#!#N(%I% N$( (R-#?

A. !ANA#!#N( +RA-& I% !$R# &I++IC-,( ($ &#(#C( (KAN #!P,$G## +RA-&

B. IN(#RNA, C$N(R$, %G%(#! R#&-C#% (K# P$%%IBI,I(G $+ $CC-RR#NC# $+ #!P,$G##

+RA-& AN&

!ANA#!#N( +RA-&

C. (K# A-&I($R`% R#%P$N%IBI,I(G +$R &#(#C(I$N AN& PR#/#N(I$N $+ #RR$R% AN&

+RA-&% I% %I!I,ARD

D. A,, %(A(#!#N(% AR# C$RR#C(D

7. A% P#R AA%< I+ A-&I($R &#(#C(% AN #RR$R

(K#N

A. K# %K$-,& IN+$R! (K# !ANA#!#N(D

B. K# %K$-,& C$!!-NICA(# I( ($ (K# !ANA#!#N( I+ I( I% !A(#RIA,

C. (K# A-&I($R %K$-,& #N%-R# +INANCIA, %(A(#!#N(% AR# A&5-%(#& +$R &#(#C(#&

#RR$R%D

D. B$(K B@ AN& C@

8. KICK $+ (K#+$,,$IN I% N$( A ,I!I(A(I$N $+ A-&I( A% P#R AA%<?

A. $B5#C(I/I(G $+ A-&I($R`% 5-&!#N(

B. %#,#C(I/# (#%(IN

C. P#R%-A%I/#N#%% $+ #/I&#NC#

D. ,I!I(A(I$N% $+ IN(#RNA, C$N(R$, %G%(#!D

9. K$ !ANG PRINCIP,#% AR# ,I%(#& IN AA%47 KICK $/#RN A-&I($R`%

PR$+#%%I$NA,$B,IA(I$N?

A. NIN#

B. +$-R(##N

C. %#/#N

D. #IK(

10. B$(K A-&I(IN AN& ACC$-N(IN AR# C$NC#RN#& I(K +INANCIA,%(A(#!#N(%D KICK $+

(K# +$,,$IN

A. A-&I(IN -%#% (K# (K#$RG $+ #/I&#NC# ($ /#RI+G (K# +INANCIA, IN+$R!A(I$N

!A&# A/AI,AB,# BG

ACC$-N(ANCG

B. A-&I(IN ,#N&% CR#&IBI,I(G &I!#N%I$N AN& H-A,I(G &I!#N%I$N ($ (K# +INANCIA,

%(A(#!#N(%

PR#PAR#& BG (K# ACC$-N(AN(D

C. A-&I($R %K$-,& KA/# (KR$-K UN$,#&# $+ ACC$-N(IN C$NC#P(% AN&

C$N/#N(I$N ($#NAB,# KI! ($ #SPR#%% AN $PINI$N $N +INANCIA, %(A(#!#N(%

D. A,, $+ (K# AB$/#D



11. (K# RI%U $+ !ANA#!#N(+RA-& INCR#A%#% IN (K# PR#%#NC# $+E

A. +R#H-#N( CKAN#% IN %-PP,I#%B. I!PR$/#& IN(#RNA, C$N(R$, %G%(#!

C. %-B%(AN(IA, INCR#A%#% IN %A,#%

D. !ANA#!#N( INC#N(I/# %G%(#! BA%#& $N %A,#% &$N# IN A H-AR(#R

12. A-&I(IN %(AN&AR&% &I++#R +R$! A-&I( PR$C#&-R#% IN (KA( PR$C#&-R#% R#,A(# ($

A. A-&I( A%%-!P(I$N%

B. AC(% ($ B# P#R+$R!#&

C. H-A,I(G CRI(#RI$N

D. !#(K$&% $+ $RU

49D KICK $+ (K# +$,,$IN +AC($R% ,IU#,G ($ B# I&#N(I+I#& A% A +RA-& +AC($RBG (K#

A-&I($R?

A. (K# C$!PANG I% P,ANNIN AN INI(IA, P-B,IC $++#R $+ H-A,I(G %KAR#% ($ RAI%#

A&&I(I$NA, CAPI(A,

+$R #SPAN%I$ND

B. BANU R#C$NCI,IA(I$N %(A(#!#N( INC,-&#% &#P$%I(%IN(RAN%I(D

C. P,AN( AN& !ACKIN#RG I% %$,& A( A ,$%%D

D. (K# C$!PANG KA% !A&# P$,I(ICA, C$N(RIB-(I$N%D

14. (K# !$%(&I++IC-,( (GP# $+ !I%%(A(#!#N( ($ &#(#C( +RA-& I% BA%#& $NE

A. R#,A(#& PAR(G P-RCKA%#% B@ R#,A(#& PAR(G %A,#%

C. (K# R#%(A(#!#N( $+ %A,#% &@ $!I%%I$N $+ A %A,#% (RAN%AC(I$N +R$! B#INR#C$R&#&D

15. KICK $+ (K# +$,,$IN %(A(#!#N(% I% C$RR#C( C$NC#RNIN (K# R#H-IR#&

&$C-!#N(A(I$N IN?$RUIN PAP#R% $+ +RA-& RI%U A%%#%%!#N( -N&#R(AU#N BG (K# A-&I($RD

A. A, RI%U +AC($R% A% !#N(I$N#& IN AA%<7 %K$-,& B# C$N%I&#R#& AN& &$C-!#N(#&A,$N I(K

R#%P$N%# ($ (K#!D

B. &$C-!#N( (K# I&#N(I+ICA(I$N $+ +RA-& RI%U +AC($R% A,$N I(K R#%P$N%# ($

(K#!D

C. &$C-!#N( !A(#RIA, +RA-&7 RI%U +AC($R% AN& R#%P$N%# ($ (K#!D

D. N$ &$C-!#N(A(I$N IN R#H-IR#&D

16. KICK $+ (K# +$,,$IN I% (K# !$%( APPR$PRIA(# P$(#N(IA, R#AC(I$N $+(K# A-&I($R ($

KI%?A%%#%%!#N( (KA( (K# RI%U $+ !A(#RIA, !I%%(A(#!#N( &-# ($ +RA-& I% KIK IN R#,A(I$N

($#SI%(#NC# $+ IN/#N($RG?



A. /I%I( ,$CA(I$N $N %-RPRI%# BA%I% ($ $B%#R/# (#%( C$-N(%

B. R#H-#%( IN/#N($RG C$-N( A( A &A(# C,$%# ($ G#AR#N&

C. /$-CK $$&% %#N( $N APPR$/A, /#RG CAR#+-, G

D. P#R+$R! ANA,G(ICA, PR$C#&-R#%D

17. KICK $+ (K# +$,,$IN I% N$( ,IU#,G ($ B# A +RA-& RI%U +AC($R R#,A(IN($

!ANA#!#N(`%? CKARAC(#RI%(IC%

A. (AS #/A%I$N B@ +AI,-R# ($ C$RR#C( UN$N #AUN#%% IN IN(#RNA, C$N(R$, %G%(#!



C. A&$P(I$N $+ C$N%#R/A(I/# ACC$-N(IN PRINCIP,#%

D. KIK !ANA#!#N( (-RN$/#R

18. PR$+#%%I$NA, %U#P(ICI%! R#H-IR#% (KA( (K# A-&I($R A%%-!# (KA( !ANA#!#N( I%

A. R#A%$NAB,G K$N#%(

B. N#I(K#R K$N#%( N$R &I%K$N#%(

C. N$( N#C#%%ARI,G K$N#%(

D. &I%K$N#%( -N,#%% PR$/#& $(K#RI%#

19. KICK $+ (K# +$,,$IN IN+$R!A(I$N %K$-,& A %-CC#%%$R A-&I($R $B(AIN&-RIN (K#

INH-IRG $+?(K# PR#&#C#%%$R A-&I($R B#+$R# ACC#P(IN #NA#!#N(?

4. IN+$R!A(I$N AB$-( IN(#RI(G $+ !ANA#!#N(

II@ &I%AR##!#N( I(K !ANA#!#N( C$NC#RNIN A-&I(IN PR$C#&-R#%

II@ R#/I# $+ IN(#RNA, C$N(R$, %G%(#!D

I/@ $RANIJA(I$N %(R-C(-R#

A. I@ AN& I@ B@ I@ AN& I I@ C@ I@7 I@ AN& I I@ &@ I@ AN& I I@

20. (K# A-&I( #NA#!#N( ,#((#R7 #N#RA, G7 %K$-,& INC,-&# A R#+#R#NC# ($#ACK $+ (K#

+$,,$IN #SC#P(

A. ,I!I(A(I$N% $+ A-&I(IN

B. R#%P$N%IBI,I(I#% $+ !ANA#!#N( I(K R#%P#C( ($ A-&I( $RU

C. #SP#C(A(I$N $+ R#C#I/IN A RI((#N !ANA#!#N( R#PR#%#N(A(I$N ,#((#RD

D. A &#%CRIP(I$N $+ (K# A-&I($R`% !#(K$& $+ %A!P,# %#,#C(I$ND

21. (K# -%# $+ AN A-&I( #NA#!#N( ,#((#R I% (K# B#%( !#(K$& $+ A%%-RIN(K# A-&I($R

I,, KA/# KICK $+ (K# +$,,$IN?

A. A-&I($R I,, $B(AIN %-++ICI#N( APPR$PRIA(# A-&I( #/I&#NC#D

B. !ANA#!#N( R#PR#%#N(A(I$N ,#((#R

C. ACC#%% ($ A,, B$$U%7 ACC$-N(% AN& /$-CK#R% R#H-IR#& +$R A-&I( P-RP$%#

D. C$$P#RA(I$N +R$! $(K#R A-&I($R%

22. (K# -%# $+AN A-&I( #NA#!#N( ,#((#R I% (K# B#%( !#(K$& $+ &$C-!#N(IN

I. (K# R#H-IR#& C$!!-NICA(I$N $+ %INI+ICAN( &#+ICI#NCI#% IN IN(#RNA, C$N(R$,

II@ %INI+ICAN(,G KIK#R C$N(R$, RI%U (KAN (KA( A%%#%%#& IN PRI$R A-&I(D

II@ $B5#C(I/# AN& %C$P# $+ A-&I($R`% $RU



I/@ N$(I+ICA(I$N $+ ANG CKAN#% IN (K# $RIINA, ARRAN#!#N(% $+ (K# A-&I(D

A. I@ AN& I@ B@ I@ AN& II@ C@ I AN& I/@ &@ I I AN& I/@

23. AN A-&I($R K$ ACC#P(% AN A-&I( B-( &$#% N$( P$%%#%% (K# IN&-%(RG

#SP#R(I%# $+ (K#B-%IN#%% #N(I(G %K$-,&



A. #NA# #SP#R(%

B. $B(AIN UN$,#&# $+ !A((#R% (KA( R#,A(# ($ (K# NA(-R# $+ #N(I(G`% B-%IN#%%

C. IN+$R! !ANA#!#N( AB$-( I(

D. (AU# K#,P $+ $(K#R A-&I($R%

24. (K# ,#A%( I!P$R(AN( #,#!#N( IN (K# #/A,-A(I$N $+ AN A-&I( +IR!`% %G%(#!$+ H-A,I(G

C$N(R$, $-,& R#,A(# ($

A. A%%IN!#N( $+ A-&I( A%%I%(AN(%

B. %G%(#! $+ &#(#R!ININ A-&I( +##%

C. C$N%-,(A(I$N I(K #SP#R(%

D. C$N+I&#N(IA,I(G $+ C,I#N(`% IN+$R!A(I$N

25. (K# PRI!ARG P-RP$%# $+ #%(AB,I%KIN H-A,I(G C$N(R$, P$,ICI#% AN&PR$C#&-R#% +$R

&#CI&IN $N C,I#N( #/A,-A(I$N I% ($

A. #N%-R# A&K#R#NC# ($ #N#RA, G ACC#P(#& A-&I(IN %(AN&AR&%

B. ACC#P(ANC# $R

R#(#N(I$N $+ C,I#N(% K$%# !ANA#!#N( &$#% N$( ,ACU IN(#RI(GC. #N%-R# A-&I( +##% I%CKAR#& ACC$R&IN ($ (K# (GP# $+ A-&I( $RU A%%IN#&

D. A,, $+ (K# AB$/#

26. KICK $+ (K# +$,,$IN I% N$( A H-A,I(G C$N(R$, C$N%I&#RA(I$N $NACC#P(IN A N#

C,I#N(?

A. A/AI,ABI,I(G $+ A-&I( A%%I%(AN(% I(K N#C#%%ARG %UI,, AN& C$!P#(#NC#D

B. PR$/I%I$N $+ $(K#R %#R/IC#% ($ (K# C,I#N( KICK !AG I!PAIR IN&#P#N&#NC#

C. PR#&#C#%%$R A-&I($R`% A&/IC# A% ($ K#(K#R A-&I( +##% #R# PAI& PR$!P(,G

D. R#/I# $+ A-&I( $RU &$N# BG $N# PAR(N#R BG (K# $(K#R

27. AN A-&I($R $B(AIN% UN$,#&# AB$-( A N# C,I#N(`% B-%IN#%% AN& I(%IN&-%(RG

($AR&

A. !AU# C$N%(R-C(I/# %-#%(I$N% C$NC#RNIN I!PR$/#!#N(% ($ (K# C,I#N(`%IN(#RNA, C$N(R$,

%G%(#!

B. #/A,-A(# (K# APPR$PRIA(#N#%% $+ A-&I( #/I&#NC# $B(AIN#&

C. -N&#R%(AN& (K# #/#N(% AN& (RAN%AC(I$N% (KA( !AG KA/# AN #++#C( $N C,I#N(`%

+INANCIA,

%(A(#!#N(%D

D. A,, $+ (K# AB$/#

I?T'6>J,TI6? T6 0J>ITI?A



1. & 8G B 3G C "G B (G A >G B -G & /G A G A 1G B 11G & 12G B 13G A 1"G & 1(G b

16. A 1-G C 1/G B 1G A 2G & 21G C 22G & 23G B 2"G B 2(G B 2+G

C 2-G c

C$NC#P(% $+ A-&I(IN



1. Audit of banks is an e)ample of

a. %tatutory audit

b. Balance sheet audit

c. Concurrent audit

d. Both a@ and b@

e. All of the above

2. Concurrent audit is a part

of

a. Internal check system

b. Continuous audit

c. Internal audit system

d. None

3. In Pakistan7 balance sheet audit is synonymous

toa. Annual audit

b. Continuous audit

c. &etailed audit

d. %tatutory audit4. Audit in depth is

synonymous for

a. Complete audit

b. Completed audit

c. +inal audit

d. &etailed audit

5. Balance sheet audit includesverification of

a. Assets

b. ,iabilities

c. Income and e)pense accounts 2here appropriate

d. All of the above

6. hich of thefollo2ing statements is not true about continuous audit?

a. It is conducted at regular interval

b. It may be carried out on daily basis

c. It is needed 2hen the organi"ation has a goodinternal control systemd. It is e)pensive



7. hich of the follo2ing is not a fact of #PA?

4. #conomic audit

b. #fficiency audit

c. #)penditure audit

d. #ffectiveness audit

8. (he &elhi overnment had constructed si) bungalo2s for itsministersD (hey are lying unoccupied for last three yearsD (his 2ould

be a matter of concernfor a. Propriety Auditor

b. Performance Auditor

c. +inancial Auditor

d. None of the above

9. +inancial auditor is not concerned 2ith propriety of business

transactionsD Ko2ever7 thee)ceptions to this rule are contained for audit of limited companies in

a. %ection 88= IA@ of the Companies Act7 4:>

b. %ection 88= IA@ and section 88=<A@ of the Act

c. CAR$7 8669

d. %ection 88= IA@ and CAR$7 8669

10. Balance %heet does not include ***a. /erification of assets and liabilitiesb. /ouching of income and e)pense accountsrelated to assets and liabilities

c. #)amination of ad'usting and closing entries

d. Routine checks

11. hich of the

follo2ing statements is not correct about materiality?

a. !ateriality is a relative concept

b. !ateriality 'udgments involve bothquantitative and qualitative 'udgments

c. Auditor`s consideration ofmateriality is influenced by the auditor`s perception of the needs

of an informed decision maker 2ho 2ill rely on the financial statements

d. At the planning state7 the auditorconsiders materiality at the financial statement level

only

48DWDDDthe audit risk7 the materiality and Wthe audit effort

a. ,o2er7 Kigher7 ,o2er

b. ,o2er7 ,o2er7 Kigher

c. Kigher7 ,o2er7 ,o2er d. ,o2er7 Kigher7 Kigher



13. hen issuing unqualified opinion7 the auditor 2ho evaluates the auditfindings should be

satisfied that the

a. Amount of kno2n misstatement is documented in2orking papers

b. #stimates of the total likely misstatement isless than materiality level

c. #stimate of the total likely misstatement ismore than material y level

d. #stimates of the total likely misstatement cannot bemade

14. Indetermining the level of materiality for an audit7 2hat should not beconsidered?

d. Prior year`s errors

e. (he auditor`s remuneration

f. Ad'usted interim financial statements

g. Prior year`s financial statements

15. Analytical procedures issued in the planning stage of an audit7 general y

a. helps to determine the nature7 timing ande)tent of other audit procedures

b. directs attention to potential risk areas

c. indicates important aspects of businessd. All of the above

16. hich of the follo2ing statements is most closely associated 2ith analytical procedure?

Applied at substantive stage?

a. It helps to study relationship among balance sheetaccounts

b. It helps to discover material misstatements inthe financial statements

c. It helps to identify possible oversights

d. It helps to accumulate evidencesupporting the validity of a specific account balance

17. +or al audits of financial statements made in accordance 2ith AA%4<7the use of analytical

procedures are at the discretion of the auditor in 2hich stage?

a. %ubstantive testing

b. Planning stage

c. $verall revie2 stage

d. All of the above



18. (he basicassumption underlying the use of analytical procedures isE

* It helps the auditor to study relationship among elements of financial information* Relationship among data e)ist and continue in the absence of kno2n condition to the

contrary

c. Analytical procedures 2ill not be able to detectunusual relationships


19. hat are analytical procedures?

a. %ubstantive tests designed to assess control risk

b. %ubstantive tests designed toevaluate the validity of management`s representation letter

c. %ubstantive tests designed to studyrelationships bet2een financial and nonfinancial



d. All of the above

20. hich of the follo2ing is notan analytical procedure?

a. (racing of purchases recurred in the purchase book to purchase invoicesD

b. Comparing aggregate 2ages paid to number ofemployees

c. Comparing the actual costs 2ith standard costs

d. All of them are analytical procedure

21. hen applying analytical procedures7 an auditor could developindependent estimate of

an

account balance to compare it to

a. client`s unedited account balance

b. client`s unedited account balance ad'usted for

trends in the industryc. Prior year audited balance

d. Prior year audited balance ad'usted for trends in theindustry

22. hat is the primary ob'ective of analytical procedures used in theoverall revie2 stageof an

Audit?

a. (o help to corroborate theconclusions dra2n from individual components of financial

statements

b. (o reduce specific detection risk

c. (o direct attention to potential risk areas

d. (o satisfy doubts 2hen questions ariseabout a client`s ability to continue

,6?,E8T@ 6 0J>ITI?A

1. # 2G C 3G A "G & (G & +G C -G C /G & G & 1G

d



2. (K# A-&I($R %K$-,& #SA!IN# %-B%#H-#N(R#A,IJA(I$N $+

R#/#N-# %-CK A% &I/I&#N&%7 IN(#R#%(7 C$!!I%%I$N7 #(C($

A. I&#N(I+G CA%#% $+ -NR#C$R&#& R#/#N-#

B. #N%-R# PR$P#R &I%C,$%-R# IN (K#BA,ANC# %K##(

C. R#C$!P-(# ACCR-#& INC$!#$N (K# &A(A $+ BA,ANC# %K##(

D. ANG $+ (K#%#

3. ($ (#%( K#(K#R %A,#% KA/# B##N R#C$R&#&7 (K#A-&I($R %K$-,&&RA A %A!P,# +R$! A +I,# $+

A. P-RCKA%# $R&#R%

B. %A,#% $R&#R%

C. %A,#% IN/$IC#%

D. BI,, $+ ,$A&IN

4. +$R /$-CKIN $+ KICK I(#!7 (K# A-&I($R I% !$%(,IU#,G ($

#SA!IN# C$%( R#C$R&%?

A. C$!!I%%I$N #ARN#&

B. BA& &#B(% R#C$R&#&C. CR#&I( %A,#%

D. %A,# $+ %CRAP

5. (K# ?-I&ANC# N$(# $N R#/#N-#? I%%-#& BG (K# ICAI&$#% N$(

&#A, I(K

A. %A,#% R#/#N-#

B. R#/#N-# R#N&#RIN %#R/IC#

C. R#/#N-# +R$! %A,# $+ +IS#& A%%#(%

D. INC$!# +R$! IN(#R#%(7 &I/I&#N&

6. AN A-&I($R C$N&-C(% A %-RPRI%# CK#CU $N (K#PAG &AG ID#@ (K# &AG A#% AN& %A,ARI#% AR# PAI&D(K# PRI!ARG P-RP$%# $+ (KI%

A-&I( PR$C#&-R#% I%

A. ($ #N%-R# (KA( (K#R# AR# N$ K$%(



$RU#R%

B. ($ #N%-R#(K# CA%-A, $RU#R% #!P,$G#& AR# A-(K$RIJ#& BG (K# %-P#R/I%$R

C. ($ (#%( PR$C#&-R#% +$R&I%(RIB-(IN PAG CK#H-#%

D. ($ $B(AIN -N&#R%(AN&IN $+

IN(#RNA, C$N(R$, %G%(#!

7. KICK $+ (K# +$,,$IN $-,& PR#/#N( &$-B,#PAG!#N( $+ (K#

%A!# /$-CK#R?

A. (K# P#R%$N

%ININ (K# CK#H-# %K$-,& CANC#, (K# %-PP$R(IN &$C-!#N(%

B. CK#H-#% %K$-,& B# %IN#& BG A(B#%( ($ P#R%$N%

C. (K# &A(A $+ PAG!#N( $+ /$-CK#R% $+ %I!I,AR NA(-R# %K$-,& B# (K# %A!#$R C,$%# ($

#ACK



$(K#R

D. A,, $+ (K# AB$/#

8. IN CA%# $+ -NC,AI!#& A#%7 (K# A-&I($R %K$-,&

#SA!IN#K#(K#R

A@(K# A!$-N( KA% B##N &#P$%I(#& IN A %#PARA(# BANU ACC$-N(

B. &#P$%I(#& I(K (K# CA%KI#R

C. K#,& IN A %A+# &#P$%I( B$S

D. A,, $+ (K#%#

9. KI,# /$-CKIN A#%7 A-&I($R %K$-,& #SA!IN#K#(K#R (K#R# I% PR$P#R %#R#A(I$N $+ &-(I#%DKICK $+ (K# +$,,$IN

AC(I/I(I#% %K$-,& N$( B# &$N# BG %A!# &#PAR(!#N(?

A. !AIN(AININP#R%$NN#, R#C$R&% AN& APPR$/IN CKANIN IN A#% RA(#%

B. PR$P$%IN PAG R$,,%-!!ARG AN& &I%B-R%#!#N( $+ A#%

C. !AUIN %A,ARG %(A(#!#N(% AN&+I,IN (AS R#(-RN%

D. C$!PARIN (I!# C,$CU R#C$R&% I(K (I!# R#P$R(% PR#PAR#& BG%-P#R/I%$R% AN&

PR#PARIN

,I%( $+ $RU#R% #!P,$G#& A,$N I(K (K# -NI(% $+ PR$&-C(I$N +$R #ACK $N#$+ (K#!

10. IN $R&#R ($ /$-CK7 KICK $+ (K# #SP#N%#%7 (K#A-&I($R I,,

#SA!IN# BI,, $+ #N(RG?

A. C-%($!

B. #SCI%# &-(I#%

C. %A,#% (AS

D. INC$!# (AS

44DKI,# /$-CKIN7 K$ I,, (K# A-&I($R #N%-R#KI!%#,+ (KA( A,,

CR#&I( %A,#% (RAN%AC(I$N% KA/# B##N R#C$R&#& BG (K##N(I(G?

A. #SA!ININ C-($++ P$IN(%

B. !A(CKIN #N(RI#% IN (K# %A,#% B$$U AAIN%( R#N-!B#R#& %A,#% IN/$IC#%AN& $$&%



$-(AR& N$(#%

C. C$-N(IN (K# N-!B#R $+ IN/$IC#% AN& !A(CKIN (K# N-!B#R I(K #N(RI#%$N %A,#%

B$$U

D. B$(K A@ AN& B@

48DIN CA%# $+ %A,#% R#(-RN7 (K# A-&I($R %K$-,& #SA!IN#KICK

&$C-!#N(%?

A. CR#&I( N$(#%7 A&/IC# N$(#% AN&INAR& R#(-RN N$(#%

B. &#BI( N$(#%7 A&/IC# N$(#% AN&INAR& R#(-RN N$(#%

C. P-RCKA%# IN/$IC#%7 A&/IC# N$(#% AN& INAR& R#(-RN N$(#%

D. CR#&I( N$(#%7 IN%P#C(I$NR#P$R( AN& INAR& R#(-RN N$(#%

49DAN IN(#RNA, A-&I($R &I%C$/#R#& (KA(+IC(I(I$-% P-RCKA%#% KA/# B##N R#C$R&#& BG (K#P-RCKA%# C,#RUD (KI% IN&ICA(#%AB%#NC# $+ KICK C$N(R$,?

A. P-RCKA%# IN/$IC#% AR# IN&#P#N&#N(,G !A(CK#& I(K P-RCKA%# $R&#R%AN& $$&%R#C#I/#&

N$(#%

B. $$&% R#C#I/#& N$(#% R#H-IR#% (K# %INA(-R# $+ IN&I/I&-A, K$A-(K$RIJ#& (K#

P-RCKA%#

C. R$-(IN# CK#CU% AR#

P#R+$R!#& BG IN(#RNA, A-&I($R +$R(NIK(,GDD. P-RCKA%# +-NC(I$N AN& PR$&-C(I$N +-NC(I$N AR# C,-BB#& IN $N#

&#PAR(!#N(

4<DKICK $+ (K# +$,,$IN I% !$%( CR-CIA, ($ AP-RCKA%#

&#PAR(!#N(?

A. R#&-CIN (K# C$%( $+ ACH-I%I(I$N

B. %#,#C(IN %-PP,I#%

C. A-(K$RIJIN (K# ACH-I%I(I$N $+ $$&%

D. A%%-RIN (K# H-A,I(G $+ $$&%

4:D(K# A-&I($R I% !$%( ,IU#,G ($ #SA!IN# R#,A(#& PAR(G

(RAN%AC(I$N% /#RG CAR#+-,,G KI,# /$-CKIN

A. CR#&I( %A,#%

B. %A,#% R#(-RN%C. CR#&I( P-RCKA%#%

D. CA%K P-RCKA%#%

4>DIN $R&#R ($ /$-CK B$-K( ,#&#R7 (K# A-&I($R$B(AIN C$N+IR!A(I$N% +R$! CR#&I($R%D (K# PRINCIPA,

R#A%$N +$R (K# A-&I($R ($ #SA!IN# %-PP,I#R%%(A(#!#N(% A( BA,ANC# %K##( &A(#

I% ($ $B(AIN #/I&#NC# (KA(

A. (K# %-PP,I#R #SI%(

B. (K#R# AR# N$ -NR#C$R&#& ,IABI,I(I#%

C. R#C$R&#& P-RCKA%#% AC(-A,,G $CC-RR#&

D. ($ ,INU CR#&I($R% I(K CA%K B$$U#N(RI#%



4=D(K# CR#&I($R% ACC$-N(%7 #N#RA,,G7 KA/# CR#&I(BA,ANC#D &#BI(BA,ANC# !AG B# &-# ($

A@A&/ANC# PAI& AAIN%( AN $R&#R

B. $$&% R#(-RN#&

C. R$N &#BI( ($ %-PP,I#R ACC$-N(

D. ANG $+ (K#%#

4DIN CA%# $+ /$-CKIN7 (K# A-&I($R I% ,#A%( ,IU#,G ($#SA!IN#

A-(K$RIJA(I$N BG APPR$PRIA(# A-(K$RI(G IN CA%# $+ M



A. BA& BA&% RI((#N $++B. %A,#% R#(-RN

C. P-RCKA%# R#(-RN

D. &I%C$-N( A,,$#& ($

C-%($!#R% A% P#R $RANIJA(I$NA, P$,ICG

4D/#N&$R% %K$-,& B# APPR$/#& BG !ANA#!#N(B#+$R# P-RCKA%# &#PAR(!#N( #S#C-(#% AN $R&#RD I+(KI% I% N$( &$N#7 (K#N KICK $+

(K# +$,,$IN %I(-A(I$N% !AG ARI%#

A@P-RCKA%#% C$-,& B# !A&# +R$! /#N&$R% K$%# PR$&-C( H-A,I(G !AG N$( B#$$&B. P-RCKA%#% !AG B# !A&# +R$! R#,A(#& PAR(I#% I(K$-( !ANA#!#N(`% UN$,#&#

C. P-RCKA%#% C$-,& B# !A&# +R$! /#N&$R% K$ !AG KA/# $++#R#& PRIC# ($ /IC#*PR#%I&#N(

P-RCKA%#%

D. ANG $+ (K#%#

0J>IT 6 ,0@KT'0?@0,TI6?

1. C 2G A 3G C "G & (G C +G C -G A /G A G B 1G A 11G & 12G & 13G 1"G

C 1(G C 1+G B 1-G & 1/G & 1G &

/#RI+ICA(I$N /A,-A(I$N $+ A%%#(%/#RI+ICA(I$N /A,-A(I$N $+ A%%#(%

1. KICK $+ (K# +$,,$IN I% N$( (R-# I(K R#AR& ($/#RI+ICA(I$N$+ A%%#(%?

A. I( IN/$IC#% %-B%(AN(IA(I$N $+$CC-RR#NC# $+ (RAN%AC(I$N%B. I(%$B5#C(I/# I% ($ #%(AB,I%K #SI%(#NC#7 $N#R%KIP7 P$%%#%%I$N7 /A,-A(I$N AN&&I%C,$%-R# $+

A%%#(%C. (K# A-&I($R KA% ($ +$R! AN$PINI$N $N &I++#R#N( A%P#C(%D. A,, AR# (R-#



2. KICK $+ (K#+$,,$IN %(A(#!#N(% I% N$( (R-# ?

A. /A,-A(I$N $+ A%%#(% I% (K#

R#%P$N%IBI,I(G $+ !ANA#!#N(B. (K#A-&I($R CAN R#,G $N A C#R(I+ICA(# I%%-#& BG AN A-(K$RIJ#& /A,-A(I$N#R A% ($(K#/A,-A(I$N $+ A%%#(% IN (K# BA,ANC# %K##(C. (K#A-&I($R %K$-,& /A,-# (K# A%%#( A% P#R #N#RA,,G ACC#P(#& ACC$-N(INPRINCIP,#D. /A,-A(I$N I% N$ PAR( $+ A-&I($R% &-(G

3. AN A-&I($R I% /#RI+GIN /A,-A(I$N $+ B-I,&IN

KICK KA% B##N%#,+ C$N%(R-C(#&BG (K# C,I#N(D KICK $+ (K# +$,,$IN &$C-!#N(% I%,#A%(R#,#/AN( ($ (K# A-&I($R +$R /#RI+ICA(I$N P-RP$%#%

14. BI,,% $+ C$N(RAC($R 15. !IN-(#% $+ !##(IN $+ B$AR& $+ &IR#C($R%16. C#R(I+ICA(#% $+ #NIN##R AN& ARCKI(#C(17. ,$AN AR##!#N(



4. KICK $+ (K# +$,,$IN A%%#(% I% ,#A%( ,IU#,G ($ B#%-B5#C(#& ($ ,I#N?

A. +R##K$,& ,AN&B. P,AN( AN& !ACKIN#RGC. ,#A%#K$,& PR$P#R(G

D. !$($R /#KIC,#%

5. AN ANA,G%I% $+ +IS#& A%%#(% ACC$-N( KA%R#/#A,#& P$%%IBI,I(G $+ -NR#C$R&#& %A,# $+ P,AN(AN& !ACKIN#RGD KICK $+ (K#+$,,$IN A-&I( PR$C#&-R#% !AG B# A&$P(#& ($&I%C$/#R I(?

A. #SA!INA(I$N $+ PR$P#R(G (AS +I,#%B. INH-IRG $+ P,AN( !ANA#R C. #SA!INA(I$N $+ &#BI(% ($ACC-!-,A(#& &#PR#CIA(I$ND. A,, $+ (K# AB$/#

6. (K# A-&I($R KA% N$(IC#& #SI%(#NC# $+ R#C-RRIN,$%%#% %A,# $++IS#& A%%#(% (KI% IN&ICA(#%

A. &#PR#CIA(I$N CKAR#% AR# IN%-++ICI#N(B. P$,ICG $+ %A,# $R&I%P$%A, $+ +IS#& A%%#(% N##&% ($ B# R#/I##&C. (K# %A,# $+ A%%#(% KA/# N$(B##N PR$P#R,G A-(K$RIJ#&D. ACC$-N(IN #RR$R%

7. KICK $+ (K# +$,,$IN +INANCIA, %(A(#!#N(%A%%#R(I$N% AR#

A&&R#%%#& BG (#%(IN (K# C-( $++ +$R P,AN( A%%#(A&&I(I$N

A. #SI%(#NC# AN& $N#R%KIPB. /A,-A(I$N AN& &I%C,$%-R#C. P$%%#%%I$N AN& $N#R%KIPD. C$!P,#(#N#%% AN& /A,-A(I$N

8. (K# A-&I($R KI,# /#RI+GIN PR#PAI& IN%-RANC# KA%C$NC,-&#&(KA( (K#R# I% INA&#H-A(# IN%-RANC# $+ B-I,&IN K#

%K$-,&

A. !$&I+G KI% A-&I( R#P$R(B. IN%I%( I( %K$-,& B#&I%C,$%#& IN (K# N$(#% ($ +INANCIA, %(A(#!#N(%C. RI(# I( IN ,#((#R $+ #AUN#%%D. B$(K B@ AN& C@

9. KI,# /#RI+GIN IN(ANIB,# A%%#(%7 ANA-&I($R $-,& R#C$!P-(# A!$R(IJA(I$N

CKAR#% AN& &#(#R!IN# K#(K#R A!$R(IJA(I$NP#RI$& I% R#A%$NAB,#D (K# A-&I($R (RI#% ($#%(AB,I%K WDBG &$IN I(



A. /A,-A(I$NB. #SI%(#NC#C. &I%C,$%-R#D. P$%%#%%I$N

46DK#N A-&I(IN PR#PAI& IN%-RANC#7 AN A-&I($R

&I%C$/#R% (KA( (K# IN%-RANC# P$,ICG B$N& $NB-I,&IN I% N$( A/AI,AB,# +$R IN%P#C(I$ND (KI% !AG IN&ICA(#

A. N$ IN%-RANC# KA% B##N -N&#R(AU#N+$R B-I,&INB. ,I#N $N B-I,&INC. IN%-RANC# PR#!I-! KA% N$( B##N PAI&D. IN%-RANC# PR#!I-! PAI& B-( N$(R#C$R&#&

44D#H-I(G %KAR#% $+ SG ,(&D K#,& BG ABC ,(&D AR# IN(K# C-%($&G $+ %($CU K$,&IN C$RP$RA(I$N $+ IN&IA,I!I(#&D (K# A-&I($R !ANG/#RI+G (KI% IN/#%(!#N( BG A@

A. R#/I#IN ,A%( G#AR`% $RUIN PAP#R%D



B. $B(AININ AC#R(I+ICA(# +R$! A R#%P$N%IB,# $++ICIA, $+ (K# ABC ,(&DC. $B(AININ A C#R(I+ICA(# +R$! %KCI,D. $B(AININ A C#R(I+ICA(# +R$! SG ,(&D

48DKICK $+ (K# +$,,$IN C$N(R$,% $-,& #N%-R#

(KA(%#C-RI(I#% AR# N$( ,$%(7 %($,#N $R &I/#R(#&?

A. #%(AB,I%K PKG%ICA, BARRI#R%$/#R IN/#%(!#N( %#C-RI(I#%B. !AIN(AIN +I,#% $+ A-(K$RIJ#& %INA(-R#%C. %#R#A(# IN/#%(!#N( APPR$/A, +$R! ACC$-N(IN AN& +R$! C-%($&G $+ %#C-RI(I#%D. A,, $+ (K# AB$/#

49DKICK $+ (K# +$,,$IN I% N$( A PR$P#R (KIR& PAR(G($ K$,&IN/#%(!#N(% $N B#KA,+ $+ (K# C,I#N(?

A. R#I$NA, ,#/#, C-%($&IANB. NA(I$NA, ,#/#, C-%($&IANC. IN&IA (RI,,% M NA(I$NA, ,#/#, %($CU BR$UIN +IR!D. A#J %#C-RI(I#% ,(&D A %($CU BR$UIN +IR!

A. %#N&IN &#B($R`% C$N+IR!A(I$N ,#((#R%

B. R#/I#IN %-B%#H-#N( C$,,#C(I$NC. /#RI+G &#B($R% AAIN%( %A,#% &$C-!#N(D. B$(K A@ AN& B@

4:DANA,G(ICA, PR$C#&-R#% AR# ,#A%( ,IU#,G ($ B# -%# IN(K# A-&I($+ M

A. CA%K BA,ANC#B. IN/#%(!#N(%C. BI,,% R#C#I/AB,#%D. &#B($R%

4>DKICK $+ (K# +$,,$IN %(A(#!#N(% I% N$( (R-# I(KR#AR& ($(##!IN AN& ,A&IN ?

A. I( R#%-,(% IN (K#&#,IB#RA(# !I%APPR$PRIA(I$N $+ CA%K R#C#IP(%B. I( I% A%%$CIA(#& I(K CA%K R#C#IP(%C. I+ %A!# IN&I/I&-A, !AIN(AIN% CA%K R#C#IP(% AN& CA%K PAG!#N(% (##!IN

AN& ,A&IN I%,IU#,G($ #SI%(D. ($ C$NC#A, (K# %K$R(A#7 (K# &#+RA-&7 -%-A,,G7 (RI#% ($ U##P BANU AN&B$$U A!$-N(%IN&AI,G AR##!#N( %$ (KA( A BANU R#C$NCI,IA(I$N I,, N$( &#(#C( (K#IRR#-,ARI(GD

4=D(K# BA,ANC# $+ CA%K IN $+(#N B#(##N $N# ($

+I/# P#RC#N( $+ ($(A, A%%#(%D (ICU (K# !$%(APPR$PRIA(# %(A(#!#N( I(K R#AR&($ /#RI+ICA(I$N $+ CA%K IN C$N(#S( $+ (KI%



A. A-&I($R%K$-,& A((#N& PKG%ICA, %($CU (AUIN $N,G I+ IN/#N($RG I% !A(#RIA,B. A-&I($R !AG N$( A((#N& PKG%ICA, /#RI+ICA(I$N $+ %($CU BG !ANA#!#N(7I+ K# &$#% N$(+IN& I(APPR$PRIA(# ($ R#,G $N I(C. I+ IN/#N($RG I% !A(#RIA,7 #/#N K#N (K# A-&I($R I% N$( P,ACIN R#,IANC#$N (K#PKG%ICA,/#RI+ICA(I$N BG (K# !ANA#!#N(7 K# %K$-,& A((#N& I(D. (K# PRI!ARG $B5#C(I/# $+ AN A-&I($R`% $B%#R/A(I$N $+ AN #N(I(G`%$B%#R/A(I$N $+ AN#N(I(G`%%($CU (AU# I% ($ $B(AIN &IR#C( UN$,#&# (KA( (K# %($CU AN& KA% B##NPR$P#R(GC$-N(#&

86DKI,# $B%#R/IN A C,I#N(`% ANN-A, PKG%ICA,IN/#N($RG7 AN A-&I($R C$N&-C(#& (#%( C$-N(% +$RC#R(AIN (#%( C$-N(% #R# KIK#R (KAN (K#R#C$R&#& H-AN(I(I#% IN (K# C,I#N(`% P#RP#(-A,R#C$R&%D (KI% %I(-A(I$N C$-,& B# (K# R#%-,( $+ (K#C,I#N(`%+AI,-R# ($ R#C$R& M

A. P-RCKA%# R#(-RN%

B. %A,#% R#(-RN%C. $$&% I(K C$N%IN$R D. P-RCKA%# &I%C$-N(%

84DIN%P#C(I$N R#P$R(FR#C#I/IN R#P$R( %-PP$R(% #N(RI#%IN

A. %A,#% B$$U AN& %A,#% R#(-RN B$$U B. P-RCKA%# B$$U AN& %A,#% R#(-RN B$$U C. CA%K B$$U AN& P-RCKA%# B$$U D. %A,#% B$$U AN& P-RCKA%# R#(-RN B$$U

LE'II,0TI6? 0?> L05J0TI6? 6 0@@ET@

1. A 2G C 3G B "G C (G & +G A -G & /G & G A 1G B 11G C 12G & 13G C 1"G & 1(G A

16.C 1-G A 1/G C 1G C 2G B 21G B

A-&I( PR#PARA(I$N

1. KICK $+ (K# +$,,$IN A-&I(IN A%%-RANC#%(AN&AR& &#A,% I(K A-&I( P,ANNIN?

A. AA%= B@ AA%C@ AA% &@ AA%9



2. A-&I( PR$RA!!# I% PR#PAR#& BG

A. (K# A-&I($R

B. (K# C,I#N(C. (K# A-&I( A%%I%(AN(%D. (K# A-&I($R AN& KI% A-&I( A%%I%(AN(%

3. (K# $RUIN PAP#R% KICK A-&I($R PR#PAR#%+$R +INANCIA, %(A(#!#N(% A-&I( AR#

A. #/I&#NC# +$R A-&I( C$NC,-%I$N%

B. $N#& BG (K# C,I#N(

C. $N#& BG (K# A-&I($R



D. R#(AIN#& IN A-&I($R`% $++IC# -N(I, A CKAN# INA-&I($R%

4. (K# H-AN(I(G $+ A-&I( $RUIN PAP#R% C$!P,I#& $N #NA#!#N( $-,&

!$%( B#A++#C(#& BG

A. !ANA#!#N(`% IN(#RI(G

B. A-&I($R`% #SP#RI#NC# AN&PR$+#%%I$NA, 5-&!#N(

C. A-&I($R`% H-A,I+ICA(I$N

D. C$N(R$, RI%U

5. KICK $+ (K# +$,,$IN B#%( &#%CRIB#% (K#

PRI!ARG P-RP$%# $+ A-&I( PR$RA!!# PR#PARA(I$N?

A. ($ &#(#C( #RR$R% $R +RA-&D

B. ($ C$!P,G I(K AAP

C. ($ A(K#R %-++ICI#N( APPR$PRIA(##/I&#NC#D. ($ A%%#%% A-&I( RI%U

6. KICK $+ (K# +$,,$IN I% N$( AN

A&/AN(A# $+ (K# PR#PARA(I$N $+ $RUINPAP#R?

A. ($ PR$/I&# A BA%I% +$R R#/I# $+ A-&I($RU

B. ($ PR$/I&# A BA%I% +$R %-B%#H-#N( A-&I(%

C. ($ #N%-R# A-&I( $RU I%B#IN CARRI#& $-( A% P#R PR$RA!!#

D. ($ PR$/I&# A -I&#+$R A&/I%IN AN$(K#R C,I#N( $N %I!I,AR I%%-#%

6. KICK $+ (K# +$,,$IN I% N$( ANA&/AN(A# $+ (K# PR#PARA(I$N $+ $RUINPAP#R?

A. ($ PR$/I&# A BA%I% +$R R#/I# $+ A-&I($RU

B. ($ PR$/I&# A BA%I% +$R %-B%#H-#N( A-&I(%

C. ($ #N%-R# A-&I( $RU I%B#IN CARRI#& $-( A% P#R PR$RA!!#

D. ($ PR$/I&# A -I&#+$R A&/I%IN AN$(K#R C,I#N( $N %I!I,AR I%%-#%

8. +$R KA( !INI!-! P#RI$& %K$-,& A-&I($RUIN PAP#R% B# R#(AIN#& BG A-&I( +IR!?

A. +$R (K# (I!# P#RI$& (K# #N(I(G R#!AIN% A C,I#N( $+ (K# A-&I( +IR!D B@ +$R AP#RI$& $+ (#N

G#AR%

C. +$R A P#RI$&



A-&I($R $PIN#% (K#! ($ B# -%#+-, IN %#R/ICIN (K# C,I#N(

D. +$R (K# P#RI$& (K# A-&I( +IR! I% IN#SI%(#NC#D

9. KICK $+ (K# +$,,$IN +AC($R% $-,& ,#A%(,IU#,G A++#C( (K# H-AN(I(G AN& C$N(#N( $+ AN

A-&I($R`% $RUIN PAP#R%

A. (K# A%%#%%#& ,#/#, $+ C$N(R$, RI%U

B. (K# P$%%IBI,I(G $+ P##R R#/I#

C. (K# NA(-R# $+ A-&I($R`% R#P$R(

D. (K# C$N(#N( $+ !ANA#!#N(R#PR#%#N(A(I$N ,#((#R

10. KICK $+ (K# +$,,$IN %(A(#!#N( I% (R-#R#AR&IN AN A-&I($R`% $RUIN PAP#R%?



A. (K#G &$C-!#N((K# ,#/#, $+ IN&#P#N&#NC# !AIN(AIN#& BG (K# A-&I($R

B. (K#G%K$-,& B# C$N%I&#R#& A% (K# PRINCIP,# %-PP$R( +$R (K# A-&I($R`% R#P$R(

C. (K#G %K$-,& N$( C$N(AIN &#(AI,% R#AR&IN #AUN#%%#% IN (K# IN(#RNA,C$N(R$,

%G%(#!

D. (K#G K#,P (K# A-&I($R ($ !$NI($R (K# #++#C(I/#N#%% $+ (K# A-&I( +IR!`%H-A,I(GC$N(R$,

11. KICK $+ (K# +$,,$IN %(A(#!#N( B#%(&#%CRIB#% (K# -N&#R%(AN&IN I(K R#%P#C(($?$N#R%KIP AN& C-%($&G $+ $RUIN PAP#R% PR#PAR#& BG AN A-&I($R?

A. (K# $RUIN PAP#R% !AG B# $B(AIN#& BG (KIR& PAR(I#% K#N (K#G APP#AR($ B#

R#,#/AN( ($

I%%-#% RAI%#& IN ,I(IA(I$N

B. (K# %A+# C-%($&G $+ $RUIN PAP#R% I% (K# R#%P$N%IBI,I(G $+ C,I#N(7 I+U#P( A( KI%

PR#!I%#%C. (K#$RUIN PAP#R% !-%( B# R#(AIN#& BG AN A-&I( +IR! +$R A P#RI$& $+ 46 G#AR%

D. %-CC#%%$R A-&I($R% !AG KA/# ACC#%% ($ $RUIN PAP#R% $+ (K#PR#&#C#%%$R A-&I($R%D

(K#

APPR$/A, $+ C,I#N( I% N$( R#H-IR#&D

12. (K# C-RR#N( +I,# $+ (K# A-&I($R`% $RUIN

PAP#R%7 #N#RA, G7 %K$-,& INC,-&#A. A +,$CKAR( $+ (K# IN(#RNA, C$N(R$,%

B. $RANIJA(I$N CKAR(%

C. A C$PG $+ +INANCIA, %(A(#!#N(%

D. C$PI#% $+ B$N& AN& &#B#N(-R#%

13. UN$,#&# $+ (K# #N(I(G`% B-%IN#%% &$#% N$(K#,P (K# A-&I($R ($A. R#&-C# INK#R#N( RI%U

B. I&#N(I+G PR$B,#! AR#A%

C. #/A,-A(# R#A%$NAB,#N#%% $+ #%(I!A(#%

D. #/A,-A(# APPR$PRIA(#% $+ AAPD

14. (K# !AIN A&/AN(A# $+ -%IN %(A(I%(ICA,%A!P,IN (#CKNIH-#% I% (KA( %-CK (#CKNIH-#%E

A. !A(K#!A(ICA,,G !#A%-R# RI%U

B. #,I!INA(# (K# N##& +$R 5-&!#N(A,%A!P,IN

C. &#+IN#% (K# /A,-#% $+ ($,#RAB,# #RR$R

D. A,, $+ (K# (K#!D



15. KICK $+ (K# +$,,$IN !#(K$&% $+ %A!P,#%#,#C(I$N I% ,#A%(%-I(AB,# +$R #S(RAP$,A(IN R#%-,(% ($ (K# P$P-,A(I$N?

A. %G%(#!A(IC %A!P,IN

B. RAN&$! %A!P,IN

C. KAPKAJAR& %A!P,IN



D. N$N#

16. KICK $+ (K# +$,,$IN %(A(#!#N(% I% C$RR#C(?

A. ,$#R (K# %A!P,IN RI%U R#A(#R(K# %A!P,# %IJ#

B. %!A,,#R (K# ($,#RAB,# #RR$R7R#A(#R (K# %A!P,# %IJ#

C. ,$#R (K##SP#C(#& #RR$R7 %!A,,#R (K# %A!P,# %IJ# &@ A,, AR# C$RR#C(

17. KICK $+ (K# +$,,$IN +#A(-R#% I% !$%(I!P$R(AN( +$R RAN&$! BA%#& %#,#C(I$N?

A. %A!P,# %K$-,& B# &RAN +R$!P$P-,A(I$N

B. #/#RG %(RA(A $+P$P-,A(I$N %K$-,& B# R#PR#%#N(#& IN (K# %A!P,#

C. #/#RGI(#! IN (K# P$P-,A(I$N KA% AN #H-A, CKANC# $+ B#IN %#,#C(#& IN (K# %A!P,#

D. I(#!% %K$-,& B# %#,#C(#& A( 1N` (K#IN(#R/A,

18. RI%U $+ -N&#R R#,IANC# I% (K# RI%U (KA( (K#%A!P,# %#,#C(#& ($ (#%( C$N(R$,%

A. &$#% N$( %-PP$R( (K# A-&I($R`% P,ANN#& A%%#%%#& ,#/#, $+ C$N(R$, RI%U K#N(K# (R-#

$P#RA(IN #++#C(I/#N#%% $+ (K# C$N(R$, %(R-C(-R# 5-%(I+I#% %-CK ANA%%#%%!#N(

B. %-PP$R(% (K# A-&I($R`% P,ANN#& A%%#%%#& ,#/#, $+ C$N(R$, RI%U K#N(K# AC(-A,

P$%I(I$N

&$#% N$( ARRAN( %-CK R#,IANC#

C. I% N$( %-PP$R(#& BG A&#H-A(# &$C-!#N(%

D. B$(K A@ C@

19.

KICK $+ (K# +$,,$IN +AC($R% I% AR#@C$N%I&#R#& IN &#(#R!ININ (K# %A!P,# %IJ#+$R (#%(% $+ C$N(R$,?

A. PR$5#C(#& #RR$R

B. ($,#RAB,# #RR$R

C. #SP#C(#& #RR$R & B$(K B@ AN& C@

86D($,#RAB,# #RR$R7 I% (K# !ASI!-! !$N#(ARG#RR$R (KA( (K# A-&I($R I% PR#PAR#& ($ ACC#P( IN



(K# P$P-,A(I$N AN& %(I,, C$NC,-&# (KA( A-&I($B5#C(I/# KA% B##N ACKI#/#&7 I% &IR#C(,G R#,A(#&($A. %A!P,# %IJ#B@ A-&I( RI%U C@ !A(#RIA,I(G &@ #SP#C(#& #RR$R



0J>IT 8'E80'0TI6?

1. B 2G & 3G C "G B (G C +G & -G A /G C G & 1G B

11. A 12G C 13G A 1"G A 1(G C 1+G & 1-G C 1/G A 1G & 2G C

CAP(IA, AN& R#/#N-# #SP#N&I(-R#

CAP(IA, AN& R#/#N-# #SP#N&I(-R#

1. KICK $+ (K# +$,,$IN #SP#N%#% %K$-,& N$(B# (R#A(#& A% CAPI(A, #SP#N&I(-R#?A. #SP#N%#% PAI& $N IN%(A,,A(I$N $+ A P,AN(DB. C$%( $+ &I%!AN(,IN A B-I,&IN IN CA%# A N# B-I,&IN I% ($ B#C$N%(R-C(#& $N (K#,AN&

C. ,#A, #SP#N%#% INC-RR#& ($ &#+#N& A %-I( R#,A(#& ($ (I(,# $+ PA(#N(D (K#%-I( KA% B##N,$%(D. (K# +##% PAI& ($ #NIN##R K$C$N%(R-C(#& (K# P,AN(D

2. KICK $+ (K# +$,,$IN I% N$( A R#/#N-# #SP#N%#?A. C$%( $+ RAI%IN A ,$ANB. C$%( $+ACC#%%$RI#% $+ !$($R /#KIC,#% %P#N( A( (K# (I!# $+ P-RCKA%#C. #SP#N%#% INC-RR#& +$R,GIN $+ %##R% $N ,AN& P-RCKA%#&D. IN%-RANC# PR#!I-!PAI& A( (K# (I!# $+ R#I%(RA(I$N $+ (K# %KIP

3. &#PR#CIA(I$N &$#% N$( ARI%# +$R! A. #++,-S I$N $+ (I!#B. -%#C. $B%$,#%C#NC# (KR$-K(#CKN$,$G B# !ARU#( CKAN#%D. R#!ARU#( #SP#C(A(I$N

4. KICK $+ (K# +$,,$IN %CK#&-,# $+ (K#C$!PANI#% AC(7 4:> &#A,% I(K &#PR#CIA(I$N%?A. %CK#&-,# SI/B. %CK#&-,# /C. %CK#&-,# SIIID. %CK#&-,# S

5. %CK#&-,# SI/ KA% PR#%CRIB#& RA(#% $+&#PR#CIA(I$N +$R &$-B,# %KI+( AN& (RIP,# %KI+(

$RUIN +$R KICK $N# $+ (K# +$,,$IN A%%#(%?

A. B-I,&INB. P,AN( AN& !ACKIN#RG



C. +-RNI(-R# AN& +I((IN%D. %KIP%

6. I+ (K# B$$U /A,-# $+ AN A%%#( %(AN&% A(WWDDP#R C#N( $+ (K# $RIINA, C$%(7 A C$!PANG N##&

N$( PR$/I&# &#PR#CIA(I$N $N I(DA. ($B. +I+(##NC. +I/#D. (#N

7. A C$!PANG KA% B$-K( PA(#N(%D KICK $+ (K#+$,,$IN !#(K$&% I% !$%( %-I(AB,# +$RPR$/I&IN &#PR#CIA(I$N $N (K#!?A. %,!

B. &/C. %-! $+ G#AR &II(%D. ANG $+ (K# AB$/#



8. KICK $+ (K# +$,,$IN I% A R#/#N-# R#%#R/#?A. CAPI(A, R#&#!P(I$N R#%#R/#B. %#C-RI(G PR#!I-! ACC$-N(C. &#B#N(-R# R#&#!P(I$N R#%#R/#D. CAPI(A, R#%#R/#

9. KICK $+ (K# +$,,$IN I,, N$( ,#A& ($CR#A(I$N $+ %#CR#( R#%#R/#?A. -N&#R/A,-A(I$N $+ C,$%IN %($CU B@ CKARIN CAPI(A, #SP#N&I(-R# ($ R#/#N-#C. $$&% %#N( $N C$N%IN!#N(B#IN %K$N A% AC(-A, %A,#%D. CKARIN KIK#R RA(#% $+ &#PR#CIA(I$N $N +IS#& A%%#(% (KAN AC(-A, G R#H-IR#&

,08TI05 0?> 'ELE?JE EM8E?>ITJ'E

1. B 2G & 3G C "G B (G C +G & -G A /G C G & 1G B#&P A-&I(

#&P A-&I(

1. KICK $+ (K# +$,,$IN %(A(#!#N( I% N$( &I%(IN-I%KIN +#A(-R# +$RC$!P-(#R BA%#&PR$C#%%IN

AN& !AN-A, PR$C#%%IN?

A. #RR$R%IN A CI% #N/IR$N!#N( AR# ,#%% %G%(#!IC A% C$!PAR#& ($ #RR$R% IN !AN-A,PR$C#%%IN

B. (K# P$(#N(IA, +$R K-!AN #RR$R IN (K# CI% #N/IR$N!#N( I% R#A(#R A%C$!PAR#& ($

!AN-A,

%G%(#!

C. IN A C$!P-(#R BA%#& ACC$-N(IN %G%(#!7 A-&I( (RAI, I% IN #,#C(R$NIC +$R!

D. C$!P-(#RPR$C#%%IN $++#R% !ANA#!#N( A /ARI#(G $+ ANA,G(ICA, ($$,%D

2. ($ A/$I& IN/A,I& &A(A INP-(7 A BANU A&&#& AN #S(RA N-!B#R A( (K##N& $+ #ACK ACC$-N( N-!B#R AN& %-B5#C(#& (K# N# N-!B#R ($ ANA,$RI(KA!D (KI% (#CKNIH-#% I%



UN$N A%

A. &-A, R#A&

B. (#%( +$R R#A%$NAB,#N#%%

C. CK#CU &II(D. $CC-RR#NC# C$RR#C(I$N

3. K#N C$!P-(#R PR$RA!!# $R +I,#% CAN B# ACC#%%#& +R$! (#R!INA,%7ACC#%% CAN B#

,I!I(#& ($ A-(K$RIJ#& IN&I/I&-A,% BG

A. APP$IN(IN A ,IBRARIANB. C$N(R$,,IN PA%%$R&%



C. APP$IN(IN #&P A-&I($R

D. B$(K A@ AN& B@

4. #RR$N#$-% &A(A KA% B##N &#(#C(#& BG C$!P-(#R PR$RA!

C$N(R$,%D I( KA% B##N #SC,-&#& +R$! PR$C#%%IN AN& PRIN(#&%#PARA(#,G O#RR$R R#P$R( D K$ %K$-,& !$%(‖

PR$BABI,I(G BG R#/I# AN& +$,,$ -P $N (KI% R#P$R(?

A. %G%(#!7 ANA,G%(

B. &A(A C$N(R$, R$-P

C. PR$RA!!#R

D. C$!P-(#R $P#RA($R

5. #N#RA, C$N(R$,% I,, B#IN#++#C(I/# K#N #&P &#PAR(!#N(

A. PAR(ICIPA(#% IN C$!P-(#R%$+(AR# ACH-I%I(I$N &#CI%I$N%B. &#%IN &$C-!#N(A(I$N +$RC$!P-(#RIJ#& $P#RA(I$N%D

C. $RIINA(# CKAN#% IN !A%(#R +I,#%D

D. PR$/I&# PKG%ICA, %#C-RI(G +$RPR$RA!!# +I,#%D

6. KICK $+ (K# +$,,$IN AC(I/I(I#% $-,& !$%( ,IU#,G B# P#R+$R!#& BG#&P

&#PAR(!#N(?

A. A-(K$RIJIN (RAN%AC(I$N%B. PARI(G CK#CU%

C. &I%(RIB-(IN $-(P-(D. C$RR#C(I$N $+ (RAN%AC(I$NA, #RR$R%

7. (K# C$!P,#(#N#%% $+ ?A#%? +I-R# CAN B# (#%(#& BG C$!PARIN (K# N-!B#R $+ (I!# CAR&% ($ B# PR$C#%%#& I(K (RAN%AC(I$N $N A#% %K##(D(KI% (GP# $+ C$N(R$, (#CKNIH-#

I% CA,,#&

A. CK#CU ($(A,

B. C$N(R$, ($(A,

C. $CC-RR#NC# C$RR#C(I$N

D. CK#CU &II(

8. KICK $+ +$,,$INI,, N$( A++#C( A-&I( IN A CI% #N/IR$N!#N(?

A. (K# $B5#C(I/# $+



#SPR#%%I$N $+ $PINI$N $N +INANCIA, %(A(#!#N(%

B. C$!P,IANC# PR$C#&-R#% A&$P(#& BG(K# A-&I($R

C. P#R+$R!ANC# $+ %-B%(AN(I/# PR$C#&-R#%

D. #/A,-A(I$N $+ INK#R#N( RI%U AN&C$N(R$, RI%U

9. KICK $+ (K# +$,,$IN %(A(#!#N(% I% N$( (R-# $+ (K# (#%( &A(AAPPR$ACK IN A (#%( $+

C$!P-(#RIJ#& ACC$-N(IN %G%(#!?

A. (#%( &A(A (#%(%$N,G (K$%# C$N(R$,% KICK (K# A-&I($R I%K#% ($ R#,G



B. (#%( &A(A %K$-,& C$N%I%( $+ &A(A R#,A(#& ($ A,, C$N(R$,% PR#/A,#N( IN(K#

$RANIJA(I$N

C. (K#R#%-,( $+ (#%( &A(A IN&ICA(#% (KA( A,, (K# APP,ICA(I$N AN& #N#RA, C$N(R$,%AR#

+-NC(I$NIN PR$P#R,G

D. (#%( &A(A PR$C#%%#& BG (K# C,I#N(`% C$!P-(#R PR$RA!!# -N&#R (K#A-&I($R`%C$N(R$,

46DKICK $+ (K# +$,,$IN CAA(% A,,$ +IC(I(I$-% (RAN%AC(I$N% P,AN(#& BG(K# A-&I($R

($ B# PR$C#%%#& A,$N I(K R#A, $N#% $N C,I#N(`% %G%(#!?

A. IN(#RA(#& (#%( +ACI,I(G

B. (#%( &A(A APPR$ACK

C. #N#RA,IJ#& A-&I( %$+(AR#

D. PARA,,#, %I!-,A(I$N

44DAN A-&I($R I% ,#A%( ,IU#,G ($ -%# C$!P-(#R %$+(AR# ($

A. ACC#%% C,I#N( &A(A +I,#%

B. A%%#%% C$N(R$, RI%U

C. P#R+$R!IN ANA,G(ICA, PR$&-C#R%

D. N$N# $+ (K# AB$/#

E>8 0J>IT

1. A 2G C 3G & "G A (G C >G C -G & /G A G B 1G A 11G &

$/#RN!#N( A-&I(

$/#RN!#N( A-&I(

1. A% P#R C A AC(7 4=4 (K# (#N-R# $+ (K#C$!P(R$,,#R AN&A-&I($R #N#RA, I% WWDG#AR%

A. +$-R B. +I/#C. %ISD. %#/#N

2. (K# PAR( $+ $/#RN!#N( A-&I(7 KICK I%C$NC#RN#& I(K #SA!ININ K#(K#R (K# !$N#GKA% B##N %P#N( +$R (K# P-RP$%#



%P#CI+I#& IN APPR$PRIA(I$N AC(7 I% CA,,#&D

A. A-&I( $+ %ANC(I$N%B. A-&I( $+ PR$/I%I$N $+ +-N&%C. A-&I( $+ R-,#% AN& $R&#R%D. A-&I( $+ +INANCIA, PR$PRI#(G

3. A-&I( $+(RAN%AC(I$N &$#% N$( INC,-&# M

A. PR$PRI#(G A-&I(B. #++ICI#NCG MC-! P#R+$R!ANC# A-&I(C. A-&I( $+ R#C#IP(%



D. A-&I( $+ #SP#N&I(-R#

4. (K# INC$!# (AS &#PAR(!#N( KA% %#N( !RD S&$-B,# R#+-N& $+ A&/ANC# (ASD (K# $/#RN!#N(A-&I($R &#(#C(#& (KI% KI,#

C$N&-C(INA. A-&I( $+ #SP#N&I(-R#B. P#R+$R!ANC# A-&I(C. A-&I( $+ %($R#% AN& %($CU D. A-&I( $+ R#C#IP(%

5. A-&I( $+&#B(7 &#P$%I(% AN& R#!I((ANC#% &$#% N$( C$/#R A. A-&I( $+ B$RR$IN%B. A-&I( $+ A!$R(IJA(I$N $+ &#B(C. A-&I( $+ %ANC(I$N%D. R#!I((ANC# A-&I(

6. A %(A(# $/#RN!#N( %P#N( R-P##% +I+(G ,AUK% $NR#N$/A(I$N $+ RA5 BKA/AN` +$R I(% $/#RN$RD IN (K# C A`% $PINI$N7 (KI% #SP#N&I(-R# A% !$R# (KAN KA($CCA%I$N &#!AN&#&? I( I% AN#SA!P,#& $+ M

A. PR$PRI#(G A-&I(B. P#R+$R!ANC# A-&I(C. A-&I( AAIN%( PR$/I%I$N $+ +-N&%D. N$N# $+ (K# AB$/#

7. A-&I( R#P$R(% $N P%- AR#

A. %-B!I((#&($ (K# PR#%I&#N(F$/#RN$R +$R B#IN ,AI& B#+$R# (K# PAR,IA!#N(B. %#N( ($ C$NC#RN#&!INI%(RI#%F&#PAR(!#N(%

C. %-B!I((#& ($ B$& $+ C$NC#RN#& P%-D. ANG $+ (K# AB$/#

8. (K# C A7 %$!# G#AR% A$7 A/# A&/#R%#C$!!#N(% $N #SP#N&I(-R# INC-RR#& $N B-GINC$++IN% +$R %$,&I#R% UI,,#& IN A ARD IN KI% $PINI$N7(K# C$++IN% CA%#% I!P$R(#& C$-,& KA/# B##NR#P,AC# I(K ,#%% #SP#N%I/#7 &$!#%(ICA,,GPR$&-C#& $N#%D (KI% I%AN A%P#C( $+ M

A. A-&I( $+ %ANC(I$N%B. A-&I( $+ %($R#% AN& %($CU%C. PR$PRI#(G A-&I(D. B$(K B@ AN& C@

9. K$ A!$N (K# +$,,$IN I% #,IIB,# ($ B#APP$IN(#& A% AN

A-&I( $+ $/#RN!#N( C$!PANG?A. A CKAR(#R#& ACC$-N(AN( IN PRAC(IC#B. A CKAR(#R#& ACC$-N(AN(K#(K#R IN PRAC(IC# $R N$(



C. AN A-&I($R APP$IN(#& BG (K# C AD. ANG $+ (K# AB$/#

46D(K# %(A(-($RG A-&I($R $+ A $/#RN!#N( C$!PANG%-B!I(% KI%

R#P$R( ($ A. (K# B$&% $+ (K# C$!PANGB. (K# C AC. (K# ,#I%,A(-R#

D. (K# C$!PANG %#CR#(ARG



A6LE'?*E?T 0J>IT

1. C 2G B 3G B "G & (G C +G A -G B /G & G A1GB

IN(#RNA, C$N(R$,

IN(#RNA, C$N(R$,

1. (ests of control are not concerned 2ith

a. #)istence of controls

b. #ffectiveness of controls

c. Continuity of controls

d. &esigning of controls

2. (hesequence of steps in the auditor`s consideration of internal control is asfollo2s M

a. $btain an understanding7 designsubstantive test7 perform tests of control7 make a

preliminary assessment of control risk b. &esign substantive tests7 obtain anunderstanding7 perform tests of control7 make a

preliminary assessment of control risk

c. $btain an understanding7 makea preliminary assessment of control risk7 perform tests of

control7 design substantive proceduresD

d. Perform tests of control7 obtainand understanding7 make a preliminary assessment of

control risk7 design

3. hich ofthe follo2ing is not an inherent limitation of internal control system?

a. !anagement override

b. Collusion among employees

c. Inefficiency of internal auditor

d. Abuse of authority

4. An auditor should study and



evaluate internal controls to

a. determine 2hether assets are safeguardedb. %uggest improvements in internal control

c. Plan audit procedures

d. e)press and opinion

5. SGJ ,tdD Conducts quarterly revie2 of operationsD It discovers thatunrest in a south

east

Asian country may affect the supply of ra2 materials to it the ne)t quarterD(his is ane)ample of E



a. risk assessment

b. control procedure

c. supervision

d. control environment

6. (he primary purpose of performing tests of control is to providereasonable assurance

that

a. there are no material misstatements dueto fraud or error in financial statement

b. accounting system is 2ell documented

c. ritten evidence is there to support transactionsd. if internal control is effective

7. If the auditor assesses control risk ashighWD

a. &ocument the conclusions

b. documents the reasons along 2ith conclusionsc. perform tests of control

d. perform 2alk through tests

8. (heoverall attitude and a2areness of an entity`s board of directors concerningthe

importance of internal control is reflected in

a. accounting controls

b. control environment

c. control procedures

d. supervision

9. hich of the follo2ing are

included in test of control?

a. Performance and observation

b. Inquiry and analytical procedures

c. Comparison and conformation

d. Inspection and verification

46DControl risk is assessed at

a. $verall financial statements level



b. +raud risk factor level

c. +inancial statement assertion level

d. Control environment level

44Dhich of the follo2ing is not an e)ample of a circumstance7 in 2hichadditional tests of

control 2ill not be performed after obtaining an understanding to plan theaudit?

a. Controls are kno2n to be cost ineffective

b. Controls are effective but auditoropines that performing tests of control and reduced

substantive tests 2ould not be cost effective

c. Controls are effective andevidence already obtained is adequate to support a plannedassessed level of control risk 2hich is less than high

d. Performing e)tensive substantive testing 2ouldnot lead to efficiency

48DAn auditor assesses control risk because it a@

affects the audit risk

b. affects the level of detection risk that auditor may accept

c. helps him to fi) materiality level for each financialassertion

d. is directly related to inherent risk

49DA flo2 chart7 made by the auditor7 of an entity`s internal control systemis a graphicrepresentation that depicts the auditor`sD

a. understanding of the system

b. understanding of fraud risk factors

c. documentation of assessment of control risk

d. Both a@ and c@

4<D(he performance of tests of control is documented in

a. audit programme

b. flo2 charts

c. 2orking papers

d. any of the above

4:Dhich of the follo2ing statements is not correct?

a. Intern risk and control risk cannot becontrolled by the management iDe are

uncontrollable

b. &etection risk is related directly to they

effectiveness of the auditor prosecutor c. &etection risk related inversely to control risk d. Internet risk and control risk are highly interrelated

4>D(he independence of an internal auditor 2ill most likely be assured if hereports to the

a. President +inanceb. President %ystem

c. !anaging &irector

d. C#$



17. In comparison to the independent auditor7 an internal auditor is morelikely to beconcerned 2ith

a. cost accounting system

b. internal control system

c. legal compliance



d. accounting system

4Dhen an independent auditor decides that the 2ork performed byinternal auditors may

have bearing on the nature7 timing and e)tent of planned audit procedures7the independentauditor should evaluate ob'ectivity of the internal auditorD (he mostimportant factor

influencing it 2ould be

a. organi"ational level to 2hich he reports

b. qualification of internal auditor

c. system of quality control of his 2ork

d. all of the above

4Dhen an independent auditor relies on the 2ork of an internal auditor7 he

or she should

a. e)amine the scope of internal auditor`s 2ork

b. e)amine the system ofsupervising revie2 and documentation of internal auditor`s 2ork

c. adequacy of related audit programme

d. all of the above

20. Proper segregation of duties reduces the opportunities in 2hich a person 2ould both

a. establish controls and e)ecutes them

b. records cash receipts and cash paymentsc. perpetuate errors and frauds and conceals them

d. record the transaction in 'ournal and ledgerD

I?TE'?05 ,6?T'65

1. & 2G C 3G C "G C (G A +G & -G A /G B G A 1G C 11G C 12G B 13G A

1"G C 1(G A



16. C 1-G B 1/G A 1G & 2G C

C$!PANG A-&I($R

C$!PANG A-&I($R

1. K$ I% R#%P$N%IB,# +$R (K# APP$IN(!#N( $+%(A(-($RG A-&I($R

$+ A ,I!I(#& C$!PANG?

A. &IR#C($R% $+ (K# C$!PANG

B. !#!B#R% $+ (K# C$!PANG

C. (K# C#N(RA, $/#RN!#N(

D. A,, $+ (K# AB$/#

2.

KICK $+ (K# +$,,$IN %#C(I$N% &#A, I(KH-A,I+ICA(I$N% $+(K# A-&I($R ?

A. %#C(I$N 88> 4@ AN& %#C(I$N 88>8@B. %#C(I$N 88< 4@ AN& %#C(I$N 88< 8@

C. %#C(I$N 88> 9@ AN& %#C(I$N 88><@

D. %#C(I$N 88<9@ %#CD88<

3. KICK $+ (K#+$,,$IN %(A(#!#N( I% N$( (R-#?

A. APAR(N#R%KIP +IR! CAN B# APP$IN(#& A% A %(A(-($RG A-&I($R $+ ,I!I(#& C$!PANG

B. APP$IN(!#N( CAN B# !A&# IN (K# NA!# $+ (K# +IR!

C. !A5$RI(G $+ (K# PAR(N#R%%K$-,& B# PRAC(ICIN IN IN&IA

D. A,, PAR(N#R% %K$-,& B# CKAR(#R#&ACC$-N(AN(%

4. A% P#R (K# R#H-IR#!#N(% $+ %#C(I$N 88>9@ AN& 88><@A P#R%$N I%

&I%H-A,I+I#& +R$! B#IN

APP$IN(#& A% A %(A(-($RG A-&I($R I+ K# K$,&%

A. #H-I(G %KAR#% $R &#B#N(-R#% $+ (K#C$!PANG

B. #H-I(G %KAR#% CARRGIN /$(IN $+(K# C$!PANG

C. %KAR#% CARRGIN /$(IN RIK(% $+(K# C$!PANG

D. %#C-RI(G CARRGIN /$(IN RIK(%$+ (K# C$!PANG

5. (K# B$AR& $+ &IR#C($R% %KA,, APP$IN( +IR%( A-&I($R $+ AC$!PANG

A. I(K IN$N# !$N(K $+ C$!P,#(I$N $+ CAPI(A, %-B%CRIP(I$N %(A(# $+ (K# C$!PANG

B. I(K IN $N# !$N(K $+ (K#PR$!$(I$N $+ (K# C$!PANG



C. I(K IN $N#!$N(K $+ (K# C$!!#NC#!#N( $+ (K# B-%IN#%% $+ (K# C$!PANG

D. I(K IN $N# !$N(K $+INC$RP$RA(I$N $+ (K# C$!PANG

6. (K# (#R! $+ (K# A-&I($R %KIP $+ +IR%( A-&I($R$-,& B# +R$!

(K# &A(# $+ APP$IN(!#N( (I,

A. (K# C$NC,-%I$N $+ %(A(-($RG !##(IN

B. (K# C$NC,-%I$N $+ +IR%( ANN-A,#N#RA, !##(IN

C. (K# C$NC,-%I$N $+ N#S( ANN-A,#N#RA, !##(IN

D. (K# &A(# $+ R#!$/A,

7. IN CA%# (K# &IR#C(I$N% +AI, ($ APP$IN( +IR%( A-&I($R%@7 (K#%KAR#K$,&#R% %KA,, APP$IN( (K#!A(WDDBG PA%%IN A R#%$,-(I$N

A. A #N#RA, !##(INB. +IR%( ANN-A, #N#RA, !##(IN

C. %(A(-($RG !##(IN

D. ANN-A, #N#RA, !##(IN

8. ,I+# IN%-RANC# C$RP$RA(I$N $+ IN&IA K$,&% (#N(G+I/# P#RC#N(

$+ %-B%CRIB#& CAPI(A, $+ SGJ,(&D (K# APP$IN(!#N( $+ %(A(-($RG A-&I($R IN SGJ ,(&D $-,& B# BG

A. $R&INARG R#%$,-(I$N

B. %P#CIA, R#%$,-(I$NC. A@ $R B@

D. N$N# $+ (K# AB$/#

9. ICICI PR-&#N(IA,7 A ,I+# IN%-RANC# C$!PANG7K$,&% (KIR(G*($ P#RC#N( $+ %-B%CRIB#& %KAR#CAPI(A, $+ &#,(A ,(&D (K# %(A(-($RG

A-&I($R $+ &#,(A ,(&D $-,& B# APP$IN(#& BG

A. $R&INARG R#%$,-(I$N

B. %P#CIA, R#%$,-(I$N

C. #I(K#R $+ (K# AB$/#

D. N$N#

46DKICK $+ (K# +$,,$IN %(A(#!#N( I% N$( (R-#

R#AR&INAPP$IN(!#N( $+ %(A(-($RG A-&I($R BG (K# C#N(RA,$/#RN!#N(?

A. %-CK P$#R% KA/# B##NC$N+#RR#& -P$N I( BG %#C(I$N 88<9@

B. I+ A C$!PANG +AI,% ($APP$IN( AN A-&I($R A( A #N#RA, !##(IN

C. I+ AN A-&I($R R#+-%#% ($ ACC#P( APP$IN(!#N(7 (K# P$#R% $+ (K# C#N(RA,$/#RN!#N(

CAN B#

#S#RCI%#&D

D. N$N# $+ (K# AB$/#

44DI+ A CA%-A, /ACANCG IN (K# $++IC# $+ A-&I($R ARI%#%BG KI%

R#%INA(I$N I( %K$-,& $N,G B# +I, #& BG(K# C$!PANG IN AWWDD

A. B$AR& !##(INB. #S(RA$R&INARG #N#RA, !##(IN

C. #N#RA, !##(IN

D. ANN-A, #N#RA, !##(IN

48D+$R (K# P-RP$%#% $+ %#C(I$N 88<IB@ (K# N-!B#R $+PAR(N#R% $+ A +IR! KICK %KA,, B# (AU#N IN($ACC$-N( $-,& B# A% $N (K# &A(#$+

A. C$!P,#(I$N $+ A-&I(

B. A-&I($R`% R#P$R(

C. ACC#P(ANC# $+ A-&I(

D. %(AR(IN $+ A-&I( $RU

49DKICK $+ (K# +$,,$IN I% C$-N(#& +$R (K#P-RP$%#% $+ %#C(I$N 88<IB@ (K# N-!B#R $+ PAR(N#R%$+ A +IR! KICK %KA,, B# (AU#N

IN($ ACC$-N( $-,& B# A% $N (K# &A(A $+

A. 5$IN( A-&I(

B. A-&I( ($ N$NPR$+I( C$!PANI#%

C. A-&I( $+ -N,I!I(#& C$!PANI#%D. A,, $+ (K# AB$/# #@ A@ AN& B@ $N,G

14. !RD NARAGAN7 A CKAR(#& ACC$-N(AN(7 KA% NIN#(##NA-&I(%7 $-(

$+ +$, $IN A-&I(% KICK A-&I(% %K$-,& K# ACC#P( ($ #N%-R#

K# &$#%N`(

/I$,A(# PR$/I%I$N% $+ %#C(I$N 88<IB@

A. A-&I( $+ J#BA ,(&D A PRI/A(# C$!PANG

B. A-&I( $+ BRANCK $+ P$IN(#C ,(&D A+$R#IN C$!PANG

C. A-&I( $+ ($ BRANCK#% $+/IR(-# ,(&D AN IN&IAN C$!PANG

D. A,, $+ (K#!

15. KICK A-&I( $-( $+ (K# +$,,$IN $-,& N$( B#R#AR&#& A%

$N# A-&I( +$R (K# P-RP$%#% $+ %#C(I$N 88<IB@?

A. A-&I( $+ $N# BRANCK #ACK $+($ &I++#R#N( C$!PANI#%

B. 5$IN( A-&I(

C. A-&I( K#A& $++IC# BRANCK#%D. A-&I( $+ $N# $R !$R# BRANCK#% $+ AC$!PANG

16. (K# A-&I($R $+ A $/#RN!#N( C$!PANG I% APP$IN(#&BG (K# C

AD KI% R#!-N#RA(I$N I% +IS#& BG

A. (K# C A

B. (K# %KAR#K$,&#R%C. (K# %KAR#K$,&#R% A( AN ANN-A,#N#RA, !##(IN

D. (K# B$AR& $+ &IR#C($R%

17. (K# %#C(I$N7 KICK C$N(AIN% PR$/I%I$N% R#AR&IN

R#!-N#RA(I$N $+ (K# A-&I($R I%

A. %#C(I$N 88<@

B. %#C(I$N88< =@

C. %#C(I$N88< @

D. %#C(I$N88< >@

18. (K# A-(K$RI(G ($ R#!$/# (K# +IR%( A-&I($R B#+$R#(K# #SPIRG

$+ (#R! I% I(K

A. (K# %KAR#K$,&#R% IN A #N#RA, !##(IN

B. (K# %KAR#K$,&#R% IN (K#+IR%( ANN-A, #N#RA, !##(INC. (K# B$AR& $+ &IR#C($R%

D. (K# C#N(RA, $/#RN!#N(

19. KICK $+ (K# +$,,$IN %(A(#!#N(% I% N$( C$RR#C(R#AR&IN

R#!$/A, $+ +IR%( A-&I($R B#+$R# #SPIRG $+ (K# (#R!?

A. K# I% R#!$/#& A( A #N#RA, !##(INB. (K# %KAR#K$,&#R% AR# A-(K$RIJ#& ($ &$%$

C. (K# APPR$/A,$+ (K# C#N(RA, $/#RN!#N( I% R#H-IR#& +$R %-CK R#!$/A,

D. (K# PR$/I%I$N% +$R

%-CK R#!$/A, AR# C$N(AIN#& IN %#C(I$N 88<=@

20. (K# R#(IRINA-&I($R &$#% N$( KA/# A RIK( ($ A. !AU# RI((#N R#PR#%#N(A(I$N%

B. #( KI% R#PR#%#N(A(I$N% CIRC-,A(#&D

C. B# K#AR& A( (K# !##(IN

D. %P#AU A% A !#!B#R $+ (K# C$!PANG

21. K$ $-( $+ (K# +$,,$IN CANN$( B# APP$IN(#& A%A %(A(-($RG

A-&I($R $+ (K# C$!PANG?

A. #R%(KI,# &IR#C($R

B. IN(#RNA, A-&I($R

C. R#,A(I/# $+ A &IR#C($R

D. $N,G B@ AN& C@

88DA %(A(-($RG A-&I($R KA% A RIK( $+ ACC#%% A( A,,(I!#% ($

A. B$$U% AN& ACC$-N(% $+ A C$!PANG B@ B$$U%7 ACC$-N(% AN& &$C-!#N(% $+ (K#

C$!PANGC. B$$U%7 ACC$-N(% AN& /$-CK#R% $+(K# C$!PANG

D. N$(IC#% AN& &$C-!#N(% $+ (K# C$!PANG



23. (K# A-&I($R KA% A RIK( ($A. $B(AIN IN+$R!A(I$N AN& #SP,ANA(I$N

B. $B(AININ+$R!A(I$N AN& #SP,ANA(I$N +R$! (K# #!P,$G##% AN& $++IC#R%C. $B(AININ+$R!A(I$N AN& #SP,ANA(I$N N#C#%%ARG +$R (K# P-RP$%# $+ A-&I(

D. B$(K B@ AN& C

24. (K# PRINCIPA, A-&I($R7 A% P#R C,ARI+ICA(I$N I%%-#&BG (K# ICAI7

&$#% N$( KA/# ANG RIK( ($

A. IN%P#C( $RUIN PAP#R% $+ (K#BRANCK A-&I($R

B. /I%I( BRANCK#%

C. %##U IN+$R!A(I$N N#C#%%ARG +$RA-&I( P-RP$%#%

D. INC$RP$RA(# (K# BRANCKA-&I( R#P$R( IN KI% A-&I( R#P$R(

8:D-N&#R KICK $+ (K# +$,,$IN %#C(I$N A-&I($R KA% A&-(G ($

#NH-IR# IN($ %IS %P#CI+I#& !A((#R% AN& R#P$R( BG#SC#P(I$N?

A. %#C(I$N 88=<A@

B. %#C(I$N 88= IA@

C. %#C(I$N 88= 8@D. %#C(I$N 88=9@

>D(K# A-&I($R KA% ($ #NH-IR#7 -N&#R %#C(I$N 88= IA@ IN($&I++#R#N(A%P#C(%7 R#,A(#& ($ %KAR#% A,,$((#& +$R CA%K +$R (K# P-RP$%# $+

A-&I($R

INC,-&#

4. %KAR#% AAIN%(K$%# A,,$(!#N( CA%K KA% AC(-A,,G B##N R#C#I/#&

5. %KAR#% A,,$((#& +$RC$N%I&#RA(I$N $(K#R (KAN CA%K

6. %KAR#% A,,$((#& AAIN%( A &#B( PAGAB,#

7. A,, $+ (K#!

8=DRIK( ($ /I%I( BRANCK#% KA% B##N I/#N ($ (K#

A-&I($R -N&#R KICK %#C(I$N?

A. %#C(I$N 8889@

B. %#C(I$N 888@

C. %#C(I$N 88<@

D. %#C(I$N 889@

8DKICK $+ (K# +$,,$IN %(A(#!#N(% I(K R#AR& ($R-,#%R#AR&IN #S#!P(I$N +R$! BRANCK A-&I( I% N$( (R-#?

A. ABRANCK $++IC# $+ A C$!PANG CAN B# RAN(#& #S#!P(I$N $N (K# BA%I% $+H-AN(-! $+

AC(I/I(G CRI(#RI$N

B. I+ A %A(I%+AC($RG ARRAN#!#N( $+ %CR-(ING CK#CU $+ (K# B$$U% $+ACC$-N( $+ A



BRANCK $++IC#

$+ A !AN-+AC(-RIN C$!PANG KA% B##N !A&#7 I( CAN B# #S#!P(#& +$R! BRANCKA-&I(

C. C$%( C$N%I&#RA(I$N %K$-,& B# C$N%I&#R#& A% AN I!P$R(AN(+AC($RFR$-N& +$R

#S#!P(I$N

+R$! BRANCK A-&I(

D. (K# A-&I($R %K$-,& %(A(# IN KI% A-&I( R#P$R( (KA( BRANCK $++IC# I%#S#!P(#& BG /IR(-#

$+

H-AN(-! $+ AC(I/I(G $R ANG $(K#R BA%I%

8D(K# BRANCK A-&I($R I% APP$IN(#& BG M

A. %KAR#K$,&#R% IN AN ANN-A, #N#RA,!##(IN

B. %KAR#K$,&#R% IN #N#RA, !##(IN

C. B$AR& $+ &IR#C($R% IN B$AR& !##(IN

D. ANG $+ (K# AB$/#

96DA-&I($R $+ A WWC$!PANG &$#% N$( KA/# RIK( ($

/I%I( +$R#INBRANCK#% $+ (K# C$!PANG

A. -N,I!I(#& ,IABI,I(G

B. !AN-+AC(-RIN

C. BANUIN

D. N$NPR$+I( !AUIN

94D%P#CIA, A-&I( I% C$N&-C(#& A( (K# $R&#R $+ (K#C#N(RA,$/#RN!#N(D KICK %#C(I$N I/#% %-CK P$#R%?

A. %#C(I$N 899A@

B. %#C(I$N 899A

C. %#C(I$N 8<8A@

D. %#C(I$N 8<8A

98DK$ A!$N (K# +$, $IN CAN B# APP$IN(#& A%%P#CIA, A-&I($R

BG (K# C#N(RA, $/#RN!#N(?A. (K# %(A(-($RG A-&I($R

B. CKAR(#R#& ACC$-N(AN( IN PRAC(IC#

C. ANG CKAR(#R#& ACC$-N(#& K$ I%

N$( IN PRAC(IC#D. B$(K A@ AN& B@

99D(K# %C$P# $+ (K# A-&I( INC,-&IN R#+#R#NC# ($ (K#

PR$N$-NC#!#N(% $+ (K# ICAI7 KICK (K#A-&I($R A&K#R#% ($7 #N#RA, G I% C$!!-NICA(#& ($ (K# C,I#N( IN (K#

I. A-&I($R`% R#P$R(II@ #NA#!#N( ,#((#R II @ R#PR#%#N(A(I$N ,#((#R

A. I@ $N,G B@ B$(K I@ AN& II@ C@B$(K I@ AN& I I@ &@ A,, (K# AB$/#

9<DI+ ANG &IR#C($R I% &I%H-A,I+I#& +R$! B#IN APP$IN(#&-N&#R

%#C(I$N 8=<4@ @7 (K# A-&I($R

%K$-,& !#N(I$N (KI% +AC( IN KI% A-&I( R#P$R(D +$R (KI%P-RP$%#7

K$ &$#% K# &#(#R!IN# (K#IR



#,IIBI,I(G EA. K# $B(AIN% A R#PR#%#N(A(I$N +R$!#ACK &IR#C($R

B. K# $B(AIN% A !ANA#!#N(R#PR#%#N(A(I$N

C. K# #NH-IRI#% +R$!R#I%(RAR $+ C$!PANI#% &@ ANG $N# $+ (K# AB$/#

9:DA% P#R (K# T%(A(#!#N( $N H-A,I+ICA(I$N INA-&I($R`% R#P$R(`% I%%-#& BG (K# ICAI7 (K# A-&I($R7-N&#R %#C(I$N 88=9@ KA% ($ A/# A%(A(#!#N( $+ +AC( $N

A. PR$P#R B$$U% $+ ACC$-N(

B. ACC$-N(IN %(AN&AR&%

C. C#%% PAGAB,# -N&#R %#C(I$N <<4A

D. N$N# $+ (K# AB$/#

9>D(K# &A(# $N A-&I($R`% R#P$R( %K$-,& N$( B#

A. (K# &A(A $+ A!B. ,A(#R (KAN(K# &A(# $N KICK (K# ACC$-N(% AR# APPR$/#& IN B$AR&`% !##(IN

C. #AR,I#R(KAN (K# &A(# $N KICK (K# ACC$-N(% AR# APPR$/#& BG (K# !ANA#!#N(

D. B$(K A@ AN& B@

9=D%#C(I$N 88=8@ $+ (K# C$!PANI#% AC(7 R#H-IR#%(K# A-&I($R ($ I/# KI% R#P$R( ($ (K# !#!B#R% $+(K# C$!PANG $N C#R(AIN

!A((#R%D KICK $+ (K# +$, $IN I% N$( INC,-&#& IN (K#AB$/#?

A. ACC$-N(% #SA!IN#& BG KI!

B. #/#RG BA,ANC# %K##( AN& PR$+I( AN& ,$%% ACC$-N( ,AI& B#+$R# A #N#RA,!##(IN

&-RIN KI%

(#N-R#

C. #/#RG &$C-!#N((KA( I% A PAR( $+ $R 1ANN#S#& ($` (K# BA,ANC# %K##(

D. #/#RG

&$C-!#N( KICK I% A((ACK#& ($ (K# PR$+I( AN& ,$%% ACC$-N(

9DK#N R#%(RIC(I$N% (KA( %INI+ICAN(,G A++#C( (K#%C$P# $+ (K#

A-&I( AR# I!P$%#& BG (K# C,I#N(7(K# A-&I($R #N#RA,,G %K$-,& I%%-# KICK $+ (K# +$,,$IN $PINI$N?

A. H-A,I+I#& $PINI$N

B. &I%C,AI!#R $+ $PINI$N

C. A&/#R%# $PINI$N

D. -NH-A,I+I#& R#P$R( I(K1AN #!PKA%I% $+ !A((#R` PARARAPK

9DKICK $+ (K# +$,,$IN R#P$R( N$( R#%-,( INH-A,I+ICA(I$N $+(K# A-&I($R`% $PINI$N &-# ($ A %C$P# ,I!I(A(I$N?

A. R#%(RIC(I$N% (K# C,I#N( I!P$%#&

B. R#,IANC# $N (K# R#P$R( $+ $(K#R A-&I($R

C. INABI,I(G ($ $B(AIN%-++ICI#N( APPR$PRIA(# #/I&#N(IA, !A((#R

D. INA&#H-ACG $+ ACC$-N(IN R#C$R&%

<6D(K# IN/#N($RG C$N%I%(% $+ AB$-( $N# P#R C#N( $+A, A%%#(%D (K# C,I#N( KA% I!P$%#& R#%(RIC(I$N $NA-&I($R ($ PR$KIBI( $B%#R/A(I$N $+ %($CU (AU#D (K#

A-&I($R CANN$( APP,G A,(#RNA(#A-&I( PR$C#&-R#%D

A. -NH-A,I+I#& $PINI$N

B. H-A,I+I#& $PINI$N

C. &I%C,AI!#R $+ $PINI$N

D. A&/#R%# $PINI$N

<4DI+ IN (K# AB$/# H-#%(I$N7 (K# IN/#N($RG C$N%I%(#&

$+ AB$-( (#N P#R C#N( $+ ($(A, A%%#(%7 $(K#RC$N&I(I$N% R#!AININ %A!#7 (K#A-&I($R %K$-,& I%%-#




D. A&/#R%# $PINI$N

42. (K# A-&I($R KA% %#RI$-% C$NC#RN AB$-( (K#$IN C$NC#RN $+ (K# C$!PANGD I( I% &#P#N&#N( $NC$!PANG`% $B(AININ A $RUIN CAPI(A, ,$AN +R$!A BANU KICK KA% B##N APP,I#& +$RD (K#!ANA#!#N( $+ (K# C$!PANG KA% !A&# +-,,&I%C,$%-R# $+ (K#%# +AC(% IN (K# N$(#% ($ (K#

BA,ANC# %K##(D (K# A-&I($R I% %A(I%+I#&I(K (K# ,#/#, $+ &I%C,$%-R#D K# %K$-,& I%%-#


B. -NH-A,I+I#& $PINI$NI(K R#+#R#NC# ($ N$(#% ($ (K# ACC$-N(%

C. H-A,I+I#& $PINI$N

D. &I%C,AI!#R $+ $PINI$N

<9DKICK $+ (K# +$,,$IN I% (R-# AB$-( #SP,ANA($RG N$(#%?

A. (K#%# AR# I/#N BG (K# &IR#C($R%$+ (K# C$!PANG

B. (K#%# AR# I/#N ($ A&K#R#($ R#H-IR#!#N(% $+ %#C(I$N 844D

C. (K#%# AR# I/#N BGA-&I($R% $+ (K# C$!PANG IN A-&I($R`% R#P$R(

D. A,, $+ (K# AB$/#

<<D(K# C,I#N( CKAN#& !#(K$& $+ &#PR#CIA(I$N +R$!%(RAIK( ,IN# ($ RI((#N &$N /A,-# !#(K$&D (KI%KA% B##N &I%C,$%#& A% A N$(# ($ (K# +INANCIA,%(A(#!#N(%D I( KA% AN I!!A(#RIA, #++#C( $N (K#

C-RR#N( +INANCIA, %(A(#!#N(%D I( I% #SP#C(#&7K$#/#R7 (KA( (K# CKAN# I, KA/# A %INI+ICAN(#++#C( $N +-(-R# P#RI$&%D KICK $+

(K# +$, $IN $P(I$N %K$-,& (K# A-&I($R #SPR#%%?

A. -NH-A,I+I#& $PINI$NB. H-A,I+I#& $PINI$N


D. A&/#R%# $PINI$N

<:DKICK $+ (K# +$, $IN I% N$( (R-# R#AR&INR#H-IR#!#N(%

-N&#R %#C(I$N 88=9@ +@ $+ (K# C$!PANI#% AC(7 4:>?

A. (K# A-&I($R KA% ($ %A(I%+G KI!%#,+ K#(K#R ANG $+ (K# &IR#C($R% $+ (K#C$!PANG7

K#(K#R

P-B,IC $R PRI/A(#7 AR# &I%H-A,I+I#& +R$! B#IN APP$IN(#& A% &IR#C($R% A% P#R%#C(I$N

8=<4@ @D

B. %#C(I$N 8=<4@ @ I% APP,ICAB,# ($ APP$IN(!#N( $+ &IR#C($R% B$(K IN P-B,IC AN&PRI/A(#C$!PANI#% B-( R#P$R(IN I% ,I!I(#& ($ $N,G (K$%# &IR#C($R% $+ A C$!PANG K$AR# A,%$

&IR#C($R% $+ A P-B,IC C$!PANG

C. (K# A-&I($R R#H-IR#% #/#RG &IR#C($R ($ %-B!I( A RI((#NR#PR#%#N(A(I$N IN R#%P#C( $+

#ACK

P-B,IC C$!PANG7 $+ KICK (K# I% A &IR#C($R7 A% ($ K#(K#R %-CK C$!PANG KA%&#+A-,(#&

IN

(#R!% $+ PR$/I%I$N% $+ %#C(I$N% 8=<4@ @

D. (K#&I%H-A,I+ICA(I$N %K$-,& B# C$N%I&#R#& $N (K# &A(# $+ A-&I( R#P$R(D

<>D(K# !ANA#!#N( $+ A C$!PANG7 ($ KICK A%9D I% N$( APP,ICAB,#7 &$#% N$( INC,-&# %(A(#!#N( $+ CA%K

+,$% IN I(% ANN-A, R#P$R(D(K# A-&I($R %K$-,& #SPR#%%



C. A&/#R%# $PINI$N

D. ANG $+ (K#%# &#P#N&IN -P$N !A(#RIA,I(G AN& P#R/A%I/#N#%% AN&A&#H-ACG $+

&I%C,$%-R#

<=DIN CA%# (K# A-&I($R I/#% A &I%C,AI!#R $+ $PINI$NIN (K# A-&I( R#P$R( KICK $+ (K# +$,,$INPARARAPK%@ $+ A %(AN&AR&-NH-A,I+I#& A-&I( R#P$R( AR# !$&I+I#&?

A. %C$P# PARARAPK

B. $PINI$N PARARAPK

C. %C$P# AN& $PINI$N PARARAPK%

D. IN(R$&-C($RG7 %C$P# AN& $PINI$NPARARAPK

<DA &#PAR(-R# +R$! R#C$NIJ#& ACC$-N(INPRINCIP,# I% &I%C,$%#& IN A N$(# ($ (K# +INANCIA,

%(A(#!#N(%D (K# A-&I($R %K$-,&

A. I%%-# A %(AN&AR& -NH-A,I+I#& A-&I(R#P$R(

B. I%%-# A H-A,I+I#& R#P$R(

C. I%%-# AN -NH-A,I+I#&R#P$R( I(K 1#!PKA%I% $+ !A((#R` PARARAPK

D. &I%C,AI! $PINI$N

<DAB C$7 CKAR(#R#& ACC$-N(AN(7 KA/# B##NR#H-#%(#& BG (K#IR C,I#N( SGJ ,(&D N$( ($ C$N+IR!ACC$-N(% R#C#I/AB,#% B#CA-%# $+ C$NC#RN% AB$-(CR#A%IN C$N+,IC(% I(K C-%($!#R% $/#R A!$-N(%$#&D (K# A-&I($R% #R# %A(I%+I#& C$NC#RNIN



R#C#I/AB,#% A+(#R APP,GIN A,(#RNA(I/# A-&I(PR$C#&-R#% AB

C$D`% A-&I($R% R#P$R( ,IU#,G C$N(AIN#&

A. H-A,I+I#& $PINI$N

B. &I%C,AI!#R $+ $PINI$N

C. -NH-A,I+I#& I $PINI$N I(K AN#SP,ANA($RG PARARAPK

D. -NH-A,I+I#& $PINI$N

:6D(K# A-&I($R %K$-,& %(A(# (K# R#A%$N% +$R KI%R#%#R/A(I$N% IN A-&I( R#P$R( AN& %K$-,& (RG ($

H-AN(I+G (K# #++#C( $N (K#!D (KI%%K$-,& B# &$N# IN CA%# K# KA% #SPR#%%#&

I. AH-A,I+I#& $PINI$N II@ AN -NH-A,I+I#& $PINI$N I(K #!PKA%I% $+ !A((#RPARARAPK

III@ AN A&/#R%# $PINI$N I/@ A &I%C,AI!#R $+ $PINI$N

A. I@ $N,G B@ I@ AN& I/@

$N,G C@ I@7 III@ AN& I/@ $N,G &@ A,, $+ (K# AB$/#

:4DC$!PANI#% #S#!P(#& +R$! APP,ICA(I$N $+ CAR$7 8669&$#% N$(

INC,-&#

A. A BANUIN C$!PANG

B. AN IN%-RANC# C$!PANG

C. A PRI/A(# ,I!I(#& C$!PANG I(K PAI& -P CAPI(A, AN& R#%#R/#% N$( !$R#(KAN +I+(G +I/#

,AUK

D. A ,IC#N%#& C$!PANG

:8D-N&#R CAR$7 86697 (K# A-&I($R`% R#P$R( %K$-,&INC,-&# R#P$R(

AB$-( !AIN(#NANC# $+ PR$P#R R#C$R&IN R#,A(IN($

A. +IS#& A%%#(% AN& C$%(

B. +IS#& A%%#(%7 C$%( AN& IN/#%(!#N(%

C. +IS#& A%%#(% 7 C$%( IN/#%(!#N(% AN&IN/#N($RI#%

D. +IS#& A%%#(%7 C$%( AN& IN/#N($RG

:9D-N&#R CAR$7 8669 (K# A-&I($R I% R#H-IR#& ($ R#P$R(



$N

A. ARR#AR% $+ C-!-,A(I/# PR#+#R#NC#&I/I&#N&%

B. PR#+#R#N(IA, A,,$(!#N( $+%KAR#% ($ R#,A(#& PAR(G

C. &I%P$%A, $+ +IS#& A%%#(%AN& I(% #++#C( $N $IN C$NC#RND

D. -N%#C-R#& ,$AN% RAN(#& ($ R#,A(#&PAR(GD

,6*80?N 0J>IT6'



1. B 2G A 3G C "G & (G & >G B -G A /G B G A 1G B 11G C 12G C 13G # 1"G

& 1(G A

16. B 1-G C 1/G A 1G C 2G & 21G B 22G C 23G & 2"G A 2(G B 2+G & 2-G C 2/G B 2G

B 3G B

31. C 32G B 33G B 3"G A 3(G C 3+G C 3-G & 3/G A 3G B "G A

32. C "2G B "3G A ""G A "(G & "+G A "-G C "/G B "G C (G A

33. C (2G C (3G A

,hapter 2 D Types of 0uditing

* .inds of 0uditing

* inal 0udit

* 0dvantages of inal 0udit

* >isadvantages of inal 0udit

* ,ontinuous 0udit

* 0dvantages of ,ontinuous 0udit

* >isadvantages of ,ontinuous 0udit

.inds of 0uditing

,ontinuous 0uditor 'unning 0udit

,ontinuous auditor also $no%n as running audit or detailed auditG In largeDscale business it is not

possible for the auditor to get the true and fair vie% about the business in a short time periodG @o for the

purpose of finding the correct information the continuous audit is conductedG ,ontinuous audit is the

audit that is conducted throughout the year %ith the fixed or nonDfixed periodG

Interim 0udit

In normal %ord Interim means half yearlyG It is conducted usually bet%een t%o annual general meetings and

only



one timeF not in intervalsG

inal 0udits or ,omplete 0udit or #alance @heet 0udit

inal audit is also called as the Balance sheet audit or the Periodical Audit . inal audit is started %hen the

boo$s of

accounts closed at the end of the yearG It is the most satisfactory form of audit from the point of vie% of

an auditorG In this audit there is cent percent chec$ing of the accountsG In case if the business has an

effective and proper

internal control systemG Then the audit sampling is possibleG

.inds of 0uditing



,ontinuous 0uditor 'unning 0udit ,ontinuous auditor also $no%n as running audit or detailed auditG

In largeDscale business it is not possible for the auditor to get the true and fair vie% about the business in

a short time periodG @o for the purpose of finding the correct information the continuous audit is

conductedG ,ontinuous audit is the audit that is conducted throughout the year %ith the fixed or nonD

fixed periodG

Interim 0udit

In normal %ord Interim means half yearlyG It is conducted usually bet%een t%o annual general meetings and

only

one timeF not in intervalsG

inal 0udits or ,omplete 0udit or #alance @heet 0udit

inal audit is also called as the Balance sheet audit or the Periodical Audit G inal audit is started %hen the

boo$s of

accounts closed at the end of the yearG It is the most satisfactory form of audit from the point of vie% of

an auditorG In this audit there is cent percent chec$ing of the accountsG In case if the business has an

effective and proper

internal control systemG Then the audit sampling is possibleG

inal 0udit

inal audit is also called as the "Balance sheet audit" or the 7 Periodical audit"G inal audit is started %hen the

boo$s

of accounts closed at the end of the yearG It is the most satisfactory form of audit from the point of

vie% of an auditorG In this audit there is cent percent chec$ing of the accountsG In case if the businesshas an effective and proper internal control systemG Then the audit sampling is possibleG

,haracteristics

The follo%ing are the main essentials or features or characteristics of the final auditG

In one session an auditor make only one visitD(his type of audit can be conducted on both the large and small type of

businessDIt is conducted 2hen the accounting period endedDIn this audit the auditor can do test checkingDAuditor report is a prerequisiteDIt is conducted to report to shareholdersD(he audit is completed on a short periodD

0dvantages of inal 0udit

1. 0lteration ,hances 5imited

In the other types of audit the alteration is possible in the auditG #ut in the final audit the alteration of any

type is not possible after the auditG

2. ,hec$ing of ,omplete 'ecord

In the final audit there is complete chec$ing of the boo$s of accountingG Ke can decide either to chec$

cent percent or by samplingG

3. 0dvantage for the @hareholders

inal audit serves the shareholders by giving them the most reliable financial information for the

investment purposeG

4. 0dvantage for the 6%ner

@ometimes the business is so large that even one o%ner doesn<t $no% the real position about the businessG

@o final audit thro%s light on the business position and provides him satisfactionG



5. ,onvenient or @uitable inal audit is very suitable for the auditor and client staffG It saves both

the parties from continuous disturbanceG

6. @aving of Time

In the continuous audit the %or$ of audit is continuous through out the yearG It ta$es a lot of timeG #ut

as compare to it final audit ta$es a very short timeG @oF in the final audit the time is savedG

7. 5egal >emand

inal audit is also helpful in chec$ing either the management has fulfilled the legal reuirements or

notG The management is bound to fulfill the legal reuirementG

8. Economical

inal audit is beneficial for the clientG It is not a regular burden on himF because it is conducted only once

in a year at the end of the accounting periodG @oF it gives the maximum benefit %ith minimum costG

9. Improves the Efficiency

In this audit the performance of the staff improves due to finding out the %ea$ points of the

employees by the auditor by overcome these %ea$ness the staff can improve his efficiencyG

10. @ubmission of 'eport

0bout the fairness and correctness of accounts final report is very important for the good %ill of the companyG

11. @taff >uties

In final audit there is no clash of duties bet%een the audit and accounting staffG They performed their

%or$ accordinglyG The accounting staff remains busy throughout the year in his %or$ and the audit staff

his %or$ %hen the accounting staff ends his %or$G

12. ,onvenient for *anagement

The benefit of final audit is that it is convenient for management as %ell as for audit staffG The auditor

can start and complete the audit at one sessionG The ueries can be cleared on the same dayG

13. *inimum Time 8eriod

The time reuired for final audit is less as compared to continuous auditG The auditors can start andcomplete many auditsG They can raise their income by means of ne% audit %or$G

Oimport 7=extensions=Aoogle0d@ense=Aoogle0d@enseGcss7P

14. 8lanned or$

The final audit has minimum timeG @oF the %or$ of audit is completed under planningG 0n audit

programme is maintained %hich provides the schedule of the %or$ing of the audit staff and the

principal auditor can control the audit %or$G

15. or$ ,ontinuity

In the final audit the %or$ of audit go through %ithout any brea$ and same %ay the auditor can be



satisfied for the doubtF %hich raise from his %or$ on the same timeG

16. @mall #usiness

The final audit is useful for smallDscale business unitsG The fee charged by auditor is less as compared to

continuous %or$G The small income of business can afford small audit feeG

17. ?o 'elations

The merit of final audit is that it provides no chance to audit staff to develop friendly relation %ith

accounting staffG The accounting staff is not in a position to get undue benefit from audit staffG

18. ull Information

The final audit is useful as it provides full information about business mattersG The auditor can ta$e

decision on the spot for completion of audit %or$ and submission of audit reportG

19. Income of 0uditor

This type of audit is also helpful for the auditorG #ecause this audit saves the time of the auditor and he can

conduct many other audit of other businessG

20. Information of ,lient

inal audit serves the shareholder by giving them the most reliable financial information for the

investment purposeG

21. Technical .no%ledge

0ccording to the la% all the companies are bound that a ualified and experienced person %ho must be a

chartered accountant can conduct the auditG Ke is a ualified person and there are no chances of fraud or

errorsG

22. Element of riendship

In final audit there is a short time for the auditor staffG @oF in the auditor staff or accountant staff no

friendship or soft corners created because their understanding is up to some limitsG @o there are no

chances of fraud created by the both staffsG

23. #eneficial for ,lient<s @taff

0s final audit is conducted at the close of the boo$s of 0ccountsG The client<s staff is not

distributed as in continuous auditG They can easily complete their %or$ and the records are

provided at the proper placeG

24. 8rotection

In any business the directors can change the figures according to their interest but the final audit protect

the rights of the shareholders by providing them correct informationG

25. Auidance

The auditor not only provides the true and fair information but also guide the management ho% can

they improve their accounting systemsG

26. Thread of or$

In the final audit there is no interval in the %or$ of auditor and it is carried on till its completionG @o the



audit staff cannot loose the thread of the %or$F %hich is performed by themG

27. *oral ,hec$

In the final audit there is moral chec$ of the person %ho performed the %or$G The signatures are specified on

that

%or$G



>isadvantages of inal 0udit

1. @hortage of Time

The auditor has many clients and their financial year ends on the same dateG @o it becomes very

difficult for the auditor to finish the %or$ in timeG It is a disadvantages of final auditG

2. >elay in 'eport

The decisions of the business are made on the basis of the audit reportG #ut this report is made one or t%o

months lateG @o there is also delay in the ma$ing of important decisionsG

3. ,omplete ,hec$ing ?ot 8ossible

It is very difficult for the auditor to chec$ the each and every entry made in the boo$s of accountG Ke

applies only test to save the timeG @o many mista$es remain untouchedG

4. *ay *isrepresent

There may be also a chance that audit report may not represent the correctness of accounts because

each and every transaction is not chec$edG

5. ?o *oral Influence

In this audit there is less pressure on the accounting staffG The audit staff comes once in the yearG

@o the employees are not altering in their %or$G

6. 5ate ,orrections

In this audit the errors are locate at the end of the accounting periodG @ome %ayF the corrections of

errors are also lateG 0nd the entire producer ta$es more timeG



7. 0udit 'eport

The demerit of final audit is that report is not presented in timeG It may be submitted one or t%o

months lateG The decisions are to be made on the basis of audited accountsG

8. 8lanned rauds

In this type of auditF the management has a %hole year to thin$ and decide ho% to ma$e the fraudsG @o they

commit



a planned fraudF %hich is very difficult to find by the auditorG

9. 8revious Near >ata

8ast data is provided to the auditor for audit in this type of businessG The errors and frauds are also

previous they have no concern %ith present or futureG

10. Thorough ,hec$ing

In the final audit there may not be thorough chec$ingG The auditor may select the samplingG In this %ay

the errors and frauds are not located and the purpose of audit diesG

11. 8lanning for uture

In the final audit the future planning is not prepared in time because audit %or$ start %hen the

accounting %or$ endsG The audit %or$ is completed late and the pro9ected financial statements are

also completed lateG

12. >elay in 0ccounting

or the accounting staff it is not possible to prepare the financial accounts 9ust at the end of the yearG

>ue to audit there is delay in finaliCing the accounting mattersG

13. *onthly 'eport

If in a business monthly or uarterly report are reuiredG In this type of business the final audit

cannot be conductedG

14. 8roper 0ttention



The auditor cannot pay the proper attention to%ards the audit because he is bound by the fixed timeG

15. 8roper >ecision

0s he is bound by the time period he cannot 9udge the %ea$ness of the business properly and cannot

give the proper decisions to %or$ersG

16. Interim >ividend

The businessF %hich conducts the final auditF it is very difficult for him to declare the interim dividendG



,ontinuous 0udit

The audit that remains continue throughout the financial year is called

continuous auditG ,haracteristics of ,ontinuous 0udit

* The auditor visits the business regularlyG

* It is conducted in the large business concernG

* It is conducted through the yearG

* Throughout chec$ing is possibleG

* It is an expensive auditG

* 0udit report is not prereuisiteG

* It is used to cover the deficiencies of the businessG

* @urprise visits are also possible by the auditorG

* The manager can fix the timeG



0dvantages of ,ontinuous 0udit

1. Early 5ocation of Errors and rauds

In the ,ontinuous 0uditF the audit visit the clients after a short periodG @oF he is in a position to chec$ the

information completely in detailG It is helpful in chec$ing the errors and frauds easilyG If the audit is

conducted after the year endedG It is not possible to find the errors or frauds easilyG



2. ,hec$ on rauds

In the ,ontinuous 0udit the errors are located earlierG @o it is also helpful in the early correction of

errors and frauds because it is located at the time %hen it can be corrected earlierG

3. Quic$ 'ectification

>ue to ,ontinuous 0udit errors are located easily and rectified at an early stageG

4. @pecial 0ttention

#efore the finaliCation of accounts an auditor has a sufficient time to pay proper attention to the

chec$ing of account and detection of frauds and errorsG

5. Auidance to ,lient

The auditor remains in touch %ith the business detailsF so he also indicates about the mista$es and gives

valuable suggestions to the client to $eep the accounts in proper mannerG

6. Jseful for >eclaration of >ividend

The continuous audit is also helpful for the declaration of the dividendG 0s the accounts are chec$ed

throughout the yearF so the audit accounts are ready for the declaration of dividendG

7. Jpto >ate 0ccounts

0ccounts of the business are $ept up to date by the staff because they $no% that auditor may visit and

chec$ the accounts at any timeG



8. ,hance of 6ver 5oo$ing 'educes

0uditor has a close contact %ith the details of the accounts and he has also sufficient time to chec$ the

recordsG @o the chances of over loo$ing are reduced in this type of auditG

9. Quic$ 8resentation of 0ccounts

,ontinuous audit is very useful because accounts are maintained regularlyG @o as the financial yearsend final audited accounts are presented before the shareholdersG

10. 0ccounts ,ompletion

0nother audit benefit is the early completion of the accounts chec$ingG The results of audit can be found

out 9ust at the end of the accounting periodG

11. *oral ,hec$

In the continuous audit the auditor ma$e the surprise visit in the businessG The cler$s are not a%are

about the visitG @o they are alert and efficient in their %or$G There is less chances of frauds in this type ofbusinessG

12. ,onvenient for 0uditors

In this auditF the several visits paid by the auditor to the client<s office in enable his %or$ to proceedeasily and smoothlyG It also increases his confidence in his capacity to do his %or$ efficiently and

effectivelyG

13. 'egular @taff

The regular visits performed by the auditorF ma$e the cler$s alert to maintain the accounts up to date

and accurate for fear that the auditor may land up in the office any timeG

14. @ufficient Time

,ontinuous audit provides sufficient time to the audit staffG The important and ambiguous matters

may reuire more time to dra% conclusionG There is ample time for such mattersG

15. ?o *issing Entries

,ontinuous audit is also helpful in $eeping the full recordG In the record there is no missing entriesG



16. Early ,orrection of Errors

The continuous audit is helpful for early correction of errorsG The auditor can point out

17. 8rompt iling of 'eturns

The continuous audit is also helpful for the prompt filing of returnsG The management can submit

audited account to the registrar as soon as the end of the yearG

18. Early *eetings

This audit is helpful for the early meeting of the shareholdersG The accounts are presented for the

distribution of profitG

19. @urprise Lisits

The continuous audit provided chances of surprise visit to audit staffG The accounting staff becomes

alert due to surprise visitG It is essential for eliminating the chances of error and fraudsG

20. Jpto >ate 'ecord

The continuous audit is useful for $eeping the up to date recordG @uch record is needed by

management for borro%ing fundsF settlement of tax and dealing %ith labour unionG

21. Even or$ 5oad

>ue to even %or$loadF the audit staff feels the satisfactionG The boo$s of accounts are maintained as

the routine mattersG 0nd there is less chances of errors and fraudsG

22. 0uditor 0dvice

In the continuous audit the auditor can find the %ea$ness of the business during the year and he can

ma$e the suggestion for the improvement of the businessG

23. ,lose and Extensive ,hec$

0s the auditor visits the client<s office after a month or soF but at regular intervalsF a detailed close and

exhaustive chee$ can be possibleG If the audit is to be under ta$en after the end of the yearF such detailed

chec$ing %ill be difficultG



24. Technical >etail

In a continuous auditF the auditor is more in touch %ith the technical details and business affairsG @oF

the auditor can help his clients by giving him the valuable suggestions to improve businessG

25. >istribution of or$

,ontinuous audit is also helpful in distribution of load of %or$ on the staffG The %or$ of audit continues the

%holeyearG The audit staff can easily ma$e the audit programme according the time reuiredG

>isadvantages of ,ontinuous 0udit

1. 0lteration of igures

The records and figures in the boo$s of accountsF %hich have already been chec$ed by the auditorF may

be altered after the audit is overG 0 dishonest cler$ can do it do defraud the accountsG

2. Expensive

,ontinuous audit is more expensive as compared to other $inds of auditF because the auditor has to

devote more time to this auditG

3. Inconvenience

In this auditF the auditor visits the client<s office at regular intervals to chec$ the accounts and

records these freuent visits made by the auditor may dislocate the %or$ of his client and cause

convenient to himG

4. *echanical or$

The %or$ of audit becomes too mechanical because it remains continue throughout the yearG

5. Queries 8roblem

If the auditor<s t%o visits interval is long then so many ueries remains outstandingG

6. @mall #usiness

,ontinuous audit is not fit for small business concernsG 0 small business has fe% transactions so there is

no need of audit for %hole one yearG The o%ner as manager can $no% facts behind boo$s as details audit

is burdenG



7. ,lient or$

The demerit of continuous audit is that the %or$ of the client suffers due to clash of duties and the client

staff remaining busy for the %hole yearsG hen the audit %or$ is started %or$ of accounting staff as boo$s

are not spareG

8. @taff Initimacy

The accounting staff and audit staff %or$ side by side for the %hole yearG riendship among the

employees and auditors may lead to error and fraudsG The sympathetic vie% of audit staff may fail to

sho% true and fair vie%G

9. *issing 5in$

In the audit the auditor has to come at regular interval to chec$ the accounts and hence the lin$

bet%een the past and present %or$ cannot be maintainedG ,onseuently the thread of %or$ is very

li$ely to be lostG

10. 5o% Income

The continuous audit $eeps the staff busy for one yearG They are not able to start and complete manyaudits at the same timeG The given to one business is much higher as compared to final auditG @o it is not

suitable for audit staff from financial point of vie%G

11. @poon eeding

reuent visits by the auditor may induce the client<s staff to depend upon him even for minor thingsG

12. Expensive

0 continuous audit is an expensive form of audit in that the more freuent visits by the auditor meansthe higher fees of auditorG

13. astage of Time

This type of audit is not helpful for the auditor because in this time period they cannot conduct any otherauditG @o this is lo%Dincome audit for the auditorG

14. ords of ,lient

0nother disadvantage of the audit is that the %or$s of the client staff suffer due to the %or$ of bothpositiveG The boo$s of the accounts are not free for the other party to doG

17. Extensive ?otes Ta$ing

In this type of audit possible alteration after audit can be avoided by ta$ing note on diary regarding audit

of internal controlG @o the continuous audit reuires the compilation of bundle of notesG

18. ,hances of ,ollusion

reuent visits of auditor may establish some unhealthy relationship bet%een the client<s staff and auditor<s

staffG

Thus there are chances of moral chec$G Jpon them and there may be collusion bet%een themG

,hapter 3 D Internal ,ontrol

* Internal 0udit

* Internal ,ontrol

* Internal ,hec$

* Larious Types of Internal ,ontrol

* 8rinciples of Internal ,ontrol

* 6b9ects of Internal ,ontrol

* 5imitations of Internal ,ontrol

* 8rinciples of Internal ,hec$

Internal 0udit

Internal audit is an evaluation and analysis of the business operation conducted by the internal audit staffG%ho are employee of the business)It is the part of over all system of internal control established in an

organiCationG 7Internal audit is the independent appraisal of activity %ith in an organiCation for the

revie% of accoutingF financial and other business practices as a protective and constructive arms of

managementG It is a type of control %hich functions by measuring and evaluating the effectiveness of other



type of controlsG7 8rofessor alter # *eigs define internal audit

Internal auditing consist of a continuousF critical revie% of financial and operating activities by a staff

of auditors functioning a full time salaried employeesG



Internal ,ontrol The concept of internal control has evolved gradually over the yearsF %ith the greatest

development occurring at the beginning of 1"G ?ot only the complexities of modern business techniues

but also the increased siCe of business units have encouraged the adoption of methods %hichF %hile

increasing the efficiency of the businessF also act as a safeguards against errors and fraudsG urthermoreF

the regulation of business activities under an efficient system of internal control may obviate the necessity

of protracted detailed %or$ by an independent auditor %ith beneficial results to all parties concernedG

Thus the inpetus for development of internal control has come from both management and auditorG The

effect on auditing has been to reduce the need of routine mechanical verification of boo$D$eepingF

accuracyF permitting substitution of a less timeDconsuming approach that involves

reasoning and 9udgment and stress on such activities as revie%F analysisF evaluation and statistical samplingG

Internal ,hec$

Internal chec$ is an arrangement of duties allocated in such a %ay that the %or$ of one employee is

automatically chec$ed by anotherG These are no separate staff engaged to carry out the system of

internal chec$G ItF in factF represents only the arrangements of duties of the staff in a %ayG The system of

internal chec$ is devised in such a %ay that the possibilities of errorsF frauds and irregularities are

minimiCedG

ollo%ing matters are included in the internal chec$

!atters relating to allocation of po2erD&ivision of 2orkD!ethods of recording transactions

Internal ,hec$

Internal chec$ is an arrangement of duties allocated in such a %ay that the %or$ of one employee is

automatically chec$ed by anotherG These are no separate staff engaged to carry out the system of

internal chec$G ItF in factF represents only the arrangements of duties of the staff in a %ayG The system of

internal chec$ is devised in such a %ay that the possibilities of errorsF frauds and irregularities areminimiCedG

ollo%ing matters are included in the internal chec$

!atters relating to allocation of po2erD&ivision of 2orkD!ethods of recording transactions

Types of Internal ,ontrol

1. 6rganiCation

6rganiCation is concerned %ith placement of %or$ers on their 9obsG 0uthority and responsibility gotogetherG The %or$ers are responsible for their activitiesG The head of department is responsible for

loo$ing after the %or$er of his o%n departmentG

2. @egregation of >uties

The segregation of duties is necessaryG There are many employeesG 0ll aspects of a transaction are not

complete by one personG The recording of transaction by many persons can reduce the ris$ of errors and

fraudsG The division of duties can improve the %or$ing of %or$ersG

3. 8hysical

The physical internal control is desirable to safeguard assetsG The access to assets must be limitedG The

authoriCed persons can be allo%ed to examine the assetsG The persons may visit the %arehouse or they may

release the assets through reuisition slipsG The assets reuire loc$ersF iron safe possession of $eys and use

of passes of %arehouseG

4. 0pproval 0ll transaction in any business reuires proper approval of responsible personG The limit

for approval may be fixedG The creditor recovery officer can approve credit salesG The foreman can

approve overtime %agesG 8urchase officer can approve the purchase of goodsG

5. 0ccountingThe accounting control is concerned %ith approval of transactionsF accurately processing and correctly

recordingG The control of totalF preparation of trail balance reconciliation<s and control accounts is

necessaryG There is examination of vouchers that every aspect is not over loo$ed so far this type of control

is concernedG

6. *anagement

The topDlevel management can apply certain controls beyond the routine %or$ing of businessG The

management controlF include internal audit revie% of management accounts comparing actual result

%ith budgetsF supervisory

control and many other revie% procedure of business functionsG

8rinciples of Internal ,ontrol

1. @imple 'ecord and #oo$s

The principal of the internal control is also the simple records such as the record of employeesF plant

register list of shareholders etc are $ept in usual simple manner boo$s should be $ept up to date and at

regular internals these should be balancedG Ke different persons should ma$e handling of cash

transactionsG or instance the cashier should not be allo%ed to record the cash in the accounts boo$G Ke

should have no concern %ith %ritten ledgersG

2. Independent ,hec$ing

0nother person should independently and automatically chec$ %or$ performed by one personG

3. 8rinciple 'elating to @taff It is also the part of the internal controlG The employees are placed on the business according to their

abilityG The employees are bound for the duties for %hich they are assignedG >uties of each staff member

should be clear and there should be no confusion and doubt in this regardG In case of any staff member

absence duties arrangements should be made in advanceG

4. ,hanging

It is also an important principle that no one should handle the transaction from beginning to endF

because in this situation there is a chance of fraudG Aenerally most of the frauds are committed due to

this reasonG

5. 8roper @upervision

It is also a principal of the internal controlG 0ll the senior officers have a right to supervise the

activities of their 9uniorsG It is necessary for the benefit of the businessG

6. ,lear 'ules

0ll those rules relating to cash stoc$ receipts and issuance of goods should be very clear and %ell

definedG It should be also chec$ed that the employees should follo% their rules properlyG



7. Instructions in riting

0ll the instructions should be in %ritten form according to the best internal control systemG

8. Qualified and ,ompetent @taff

or the better internal control system the ualified staff is necessaryG 0nd it should also necessary that the stuff

is

placed at a proper placeG

9. >ouble @ystem of 0ccounting

or the internal control the double accounting system is very helpfulG ?o doubtF it is an expensive

system but it helps a lot for the internal controlG

10. Incentive for Konest or$er

Konest and hard%or$ing person must be encouragedG Ke should be given some re%ard in the shape of

promotion and cashG This principle is also very effective in improving the internal controlG

11. Jse of *achines

It is also the principal of the internal control ho% to use the machinesG Ke has to chec$ either the proper

machines have been installed and if it does so the %or$ can be completed in timeG

12. 8erformance of >uties 'ecord

or the best internal control it is necessary that the performance of all the employees must be

recordedG Oimport 7=extensions=Aoogle0d@ense=Aoogle0d@enseGcss7P

13. 'ecord of Aoods and 0ssets

0ll the companies assets and property record should be maintained properlyG There should be also the

security measures for the propertyG

14. @urety #onds

To protect the company from fraud and to ma$e the internal control more effective surety bonds can be

ta$en from the employeesG

15. >ivision of >uties

>ivision of duties is a part of internal controlG The employees can be placed on 9obs according to their

abilitiesG The duties are assigned to %hich they are accountableG

16. 'otation of >uties

'otation of duties is a principle of internal controlG 0n employee must be from one seat anotherG It is

necessary for increasing the efficiency and avoiding the chances of errors and fraudG

17. >ivision of or$

>ivision of %or$ is a principle of internal controlG The total amount of %or$ is determinedG It is divided

among the department<s branches and sectionsG It has become possible due to specialiCation and

division of labourG

18. @ubsidiary 'ecord

@ubsidiary record is a principle of internal controlG The detail every account is maintainedG @toc$ of

goods may consist of many itemsG 0s a %hole it is called stoc$ account or stoc$ control account and every

group of items can be stated in subsidiary recordG



19. ,onfirmation rom 6utsiders

The confirmation from outsiders from outsiders is a principle of internal controlG The letters may be

%ritten to debtors to confirm their accounts balancesG There may be positive or negative approach in

collecting information from sundry debtorsG



20. ,hec$ing 8hysical Existence The auditor can chec$ the physical existenceG Ke can see the asset

in the possession of a responsible officerG Ke can touchF court and chec$ the items at business premiseG

21. >ependent or$

>ependent %or$ is a principle of internal controlG 6ne person cannot be allo%ed to do every aspects of a

transactionG The %or$ depends upon many personsG Every person is dependent upon others to perform

his dutiesG

22. @upervision

@upervision is a principle of internal controlG The officerF foreman or supervision has the right to loo$

after activities of 9unior %or$ersG The supervisory control is essential to ma$e the business effectiveG

23. Internal 0udit

Internal audit is a part of internal controlG The management can as$ expert employees to examine the

accounts of the businessG It helps the concern to chec$ and fraudsG The progress of the entity is disclosed

through itG

24. idelity #ond

It is an agreement bet%een the issuance of company and the employeeG In case of loss the insurance

company can pay compensation for loss of cash or goodsG The cashier can get insurance from the

insurance companyG

25. ,ontrol 0ccounts

,ontrol accounts are proposed to chec$ the accuracy of the accounting boo$s and other recordG The total

debtors accounts and total creditors accounts or sales ledger ad9ustments and purchase ledgerad9ustments accounts are

prepared

6b9ects of Internal ,ontrol in >etail

1. 0ssets 8rotection

The assets are the bac$bone of any businessG These assets are in the custody of some specific officers

of the businessG The internal control system chec$s the valuation and protect the assets of the

businessG

2. 0ccurate 'ecord

The main ob9ect of the internal control is to maintain all records and transactions of the business

according to the generally accepted accounting principalG

3. ollo% 8olicies

The purpose of internal control is follo% policies of managementG The policies are guidelines forobtaining the business ob9ectivesG 0ll employees try their best to follo% the rules of the gameG



4. 8revention of Error

The purpose of internal control is to prevent errorsG There may be unintentional mista$e due to

over%or$ or carelessnessG There is normal load %or$ %ith every personG 6thers chec$ the %or$ of

one personG

5. 8revention of rauds

The purpose of internal control is to prevent fraudG It is an intentional misrepresentation of financial

information by one or more individuals among managementF employees or their partiesG



6. #est Jse of 'esources The purpose of internal control is the best use of resourcesG There is a need

of optimum combination of resources for maximiCing profitsG Internal control can point out %ea$nessF

%hich can be removedG

7. ?ature of 0udit Test

The purpose of internal control is to determine nature and extent of audit testG hen there is

effective internal control there %ill be fe% audit test other %ise there is need of through chec$ingG

8. 'eliable 'ecord

The purpose of audit is to maintain reliable accounting recordG The eual distribution of %or$ among the

employees provides complete and reliable recordF as it is free from error and fraudG

9. 'educes or$ 5oad

The purpose of internal control is the reduction of %or$loadG The effective internal control can be

useful for auditorsG They can chec$ fe% items and remaining items %ill be treated as chec$ing by

the auditorG

10. 5ocation of Errors

The purpose of internal control is the location of errorsG There are many types of errorF %hich may befound in the accounting recordG The internal control procedures are useful to locate the error in

accountingG

11. >etection of raud

>etection of fraud is the purpose of internal controlG The compliance procedure and substantive

procedures can be applied to detect the fraudG #asically it is a management responsibilityG

12. 'ecord of #usiness

Internal control system is also reuired for the maintainers of the reliable accounting recordG >ue to

the internal control the records are %ithout the errors and fraudsG

13. 'ecord of Expenditures

@ame %ay the internal control system $eeps the records of all the expenditure of the business and there

are fe%er chances of errors and fraudsG

14. 'ecording of Transaction

>ue to the internal control system all the transactions are recorded properly in the correct account in

the proper periodG

15. 0ctual ,omparison

The assets and the other recordsF %hich are recordedF can be easily compared %ith the actual existed

informationG



16. 8reparation of @tatement

0nother ob9ect of the internal control is to ensure about the preparation of the financial statement at the

proper time as the balance sheet or profit and lossG

17. *anagement 6b9ectives

The ob9ectives of the system of internal control are to ensure the achieving of the other important management

control



5imitations of Internal ,ontrol

1. ,ost

The management thin$s that cost of a control procedures must not be in excess of potential loss due to

error or fraudsG

2. Transactions

The internal control tends to be directed a anticipated types of transactions and not at unusual transactionsG

3. Error

There is possibility of human error due to carelessness distractionF mista$e of 9udgement or the

misunderstanding of instructionsG

4. ,ircumstances

There may be collusion %ith parties outside the entity employees of the entityG >ue to such collusion

there is possibility of circumvention of controlG

5. 'esponsibility

There is chance that a person responsible for exercising control could abuse that responsibilityF for

exampleF a member of management overriding a controlG

6. ,onditions

There is possibility that procedure may become inadeuate due to changes in conditional and

compliance %ith procedure may deteriorateG



8rinciples of Internal ,hec$

1. @ufficient @taff

The principle of internal chec$ is sufficient staffG The employees can be appointed according to the

%or$loadG The management can determine the amount of %or$F %hich is distributes among the

departmentsG The persons are hired to perform their dutiesG The overloading can creates trouble for

managementG

2. >ivision of or$

>ivision of %or$ is a principle of internal chec$G The management can determine the total amount of

%or$G The %hole %or$ is divided among departmentsG The heads of such department are responsible for

completion of %or$ according to timetableG

3. ,oD6rdination

,oordination is a principle of internal chec$G 0ll departmental managers are bound to coordinates

%ith other in order to achieve organiCation ob9ectivesG hen there is fault in one departmentF the

%or$ of other department suffersG The ob9ectives cannot be achievedG Internal chec$ determines the

degree of coordination among the managersG

4. 'otation of >uties

'otation of duties is a principle of internal chec$G The %or$ers feel bore by doing the same %or$ from

year to yearG There is a need of rotation of dutiesG It is in the interest of concern as %ell as employeesG The

efficiency is improved due to changes is dutiesG

5. 'ecreation 5eave

The recreation leave is a principle of internal chec$G The employee can chec$ recreation leaveG It is

necessary for mental healthG Ke can commit fraud as the ne% employee in his place can disclosed teh

matterG The internal chec$ system can %or$ in the interest of businessG The %ea$ness is of one person is

disclosed due to leaveG



6. 'esponsibility

The responsibility is a principle of internal chec$G The employee can en9oy recreation leaveG It is

necessary for mental healthG Ke can en9oy recreation leaveG It is necessary for mental healthG Ke cannot

commit fraud as the ne% employee in his place can disclose the matterG There internal chec$ system can

%or$ in the interest of businessG The %ea$ness in of one person is disclosed due to leaveG



7. 0utomatic *achines

The principles of internal chec$ is that machines must be used to do accounting %or$ if permissibleG The

machines can do a lot %or$ %ithout delayG The changes of fraud and error are reduced to a minimumG

The %or$ing of machines improves efficiency of accounting staffG

8. ,hec$ing

The principle of internal chec$ is to chec$ the %or$ of other employeesG *any persons perform the

%or$G The officers can put his signatures to verify the %or$ done by his subordinateG In this %ay one%or$ passes many handsG The changes of error and fraud are minimiCed due to chec$ing and

counter chec$ingG

9. @imple

The principle of internal chec$ is simples in %or$ing the employees can understand the %or$ing of

internal chec$ systemG 0 person can %or$ under the supervision of other employeesG The line of

authority moves from top to bottom levelG 0ll %or$ers can understand their duties in the organiCationG

10. >ocuments ,lassification

The classification of documents is the principles of internal chec$G The business documents are preparedF

collectedF recorded and placed in proper filesG The index is prepared to compile the dataG The filing system

is useful to place the latterG In case of need the documents are traced at onceG

11. >ependent or$

>ependent %or$ is a principle of internal chec$G The %or$ of one employee is dependent upon othersG

6ne %or$ passes in the hand of t%o or three persons till it is completeG 0nother person chec$s the

passes done by one personG ?o person is all in all to start and complete the transactionsG

12. Karmony

The principles of internal chec$ are harmony among the employees and departmentsG The



understanding is essential for business goalsG The management is to achieve other social and national

ob9ectivesG The harmony is

basis for successful internal chec$G

,hapter " D Louching

* Louching

* 8rinciples of Louching

* Techniues of Louching

* 6b9ectives of Louching

* 8rocedures of Louching

Introduction

It means to test the truth of items appearing in the boo$s of original entryG It is an important part of an

auditor<s duty to certify as correct the transactions recorded in the loo$s of accountsG The 0ccountant of a

business is responsible for passing entries in the boo$s of prime entryG The uestion arises ho% and on

%hat basis such entries have been passedG The auditor<s primary duty is to chec$ these entries and only

then certify the accounts as correct and free from any error or fraudG

>efinition

0 careful examination of all original evidence such as invoice receipt of correspondence minutesF contracts etcG

Louching is very useful in proving the accuracy of the entries in the boo$s of accountsG It also indicates

about that transactionF %hich is omitted from the boo$s of accountG

Importance

Louching is called the essence of auditingG @o audit is not possible %ithout vouchingG The ob9ect of

vouching is to find out the accuracy of the entries appearing in the boo$s of accounts and detect that no

entry has been omitted from the boo$s of accountG

8rinciples of Louching



1. 0rranged Loucher

In the boo$s of accounts the vouchers are based an entryG 0 voucher is helpful to support any

transactionF %hich may be cash memo fillF voucherF tic$et or othersG

2. ,hec$ing of >ate

The voucher date can also be chec$edP it must be related to the current yearG The date of the last or

future year must not be adoptedG



3. ,hec$ing of 0uthority

The vouchers are considers correct only %hen the proper authority signs on themG or the approval of

the dealing the o%ner or the management must put the signatures for the approval of dealing if the

vouchers are %ithout the signatures of the proper authorityG They are not considers the trueG

4. ,utting or ,hange

There should be no changes in the vouchersG 0ny person for ma$ing the fraud can change the timeF

dateF amount and name of concernG @oF these changes cannot be acceptable till the approval authority

has made the signatureG

5. ,ompare the ords and igures

The auditor should satisfy himself amount %ritten on the vouchersF it figures and %ords are same or notG

6. Transaction *ust 'elate to #usiness

or the correctness of the vouchers it is necessary that it relate %ith the businessG ,oncernF the vouchers

must be in the name of the business and also the managerG If it does not the vouchers are not acceptable

and doubtfulG

7. ,ase of 8ersonal Louchers

The auditor should not accept the voucher in personal nameG There is a chance than an officer of the

company has purchased any item in his personal capacityG

8. ,hec$ing of 0ccount Kead

0uditor must be satisfied about the head of account in %hich cash is deposited and dra%nG Ke should

examine the documentary evidence in these regardsG

9. 'evenue @tamps

or the stampsF the stamps act 1/ is applicable %hile fixing the revenue stampsG The stamps are

reuired according to the valuation of the amount or cash memoG There is no need of vouchers if amount

is less than t%enty rupeesG

10. ,ase of ,ancelled Loucher



The auditor should not accept the cancelled vouchers because it has already served the purpose of

paymentG There %ill be a danger of double paymentsF if it is acceptedG

11. Important ?otes

or finding the correct decisionF the auditor can also ta$e help from the %or$ing papers of the previous

year and others paper or note related to business and available %ith the managementG

12.*inutes #oo$

hen the meeting of shareholders is heldG 0ll the resolutions and decisions of the directors and

shareholders are recorded in the minute<s boo$G This minutes boo$ must be examine by the auditorG Ke

has to chec$ that these decisions have been implemented in the boo$s of accounts or notG

13. #y 5a%s

In case of company the article of association and memorandum are basically the rules and regulationsG

#ut on the other hand in the societies and clubs the by la%s are used to determine the po%ers of

managementG The auditor goes through these rules and regulations to find the true and fair vie%G

14. 0greements

The auditor must examine all the related papers of the business such as the agreementF

correspondence and othersG The basic information can be received to the auditor by such papersG

15. >eed of *ortgage

@ome timesF you are the sale or purchase of any assetsF the management can enter into the agreement isprepare in this caseG If the agreement is prepare in this caseG If the agreement is made for a loan against

the immovable

property then the mortgage deed is signedG It is compulsory for the auditor to study the content of the deedG

Techniues of Louching

1. ,orrect 0ccounts

The auditor can chec$ the accounts debited and credited are correct in all respectsG The rules of debit

and credit can be follo%ed for dividing the transactions into accountsG

2. 0greements

The auditor must examine the agreementsF correspondence and other papers relating to business

activitiesG @uch agreement provides basic information to the auditorG Ke can vouch the transactions

based on such agreementsG

3. #yD5a%s



The memorandum and articles of association are rules and regulations in case to companyG The byDla%s

of societies and clubs and used to determine management po%erG The auditor has the right to go through

these rules and regulationG

4. *ortgage >eeds

The management may enter into agreement %ith any party for the purpose and sale of assetsG The deed

or agreement is preparedG In case of loan against immoavable property mortgage deed is signedG The

content of deed must be situatedG

5. *inutes #oo$

The auditor should examine the minute<s boo$G The resolution and decision of directors and

shareholder are recorded thereG Ke can see that such decision have been implemented in the boo$s

of accountsG

6b9ectives of Louching

1. 8roper Evidence

The purpose vouching is to note that proper evidence is available for every entryG The signaturesF

initials and rubber stamp are evidence that document has been authoriCed and chec$edG

2. 8roper 0uthority

The purpose of vouching is to note that there is proper authority behind every transactionG In the

absence of any signature of manager the transaction are not acceptable at allG

3. 'ight 8eriod



The purpose of vouching is to chec$ that date of the vouchers relate to accounting periodG The

ad9ustments in boo$s are made on the basis of current year record of transactionsG

4. ,orrect 0mount

The purpose of vouching is to chec$ that correct amounts have been recorded in the entryG The vouching

is useful to record only correct amounts in the boo$s of accountsG

5. ,apitals and 'evenue 0nalysis



The purpose of vouching is to examine the analysis of transaction into capital and revenueG The expense

relating to one year is treated as revenue other %ise it is called capitalG

6. 8urchase for #usiness

The purpose of vouching is to chec$ that purchase relate to the nature of businessG The private purchase

cannot be recorded as business due to vouchingG

7. 0rithmetical 0ccuracy

The purpose of vouching is to see the arithmetical accuracy of boo$s of accountsG The auditor to

confirm that boo$s are accurate can chec$ the total subtotalsF casting and postingG

8. 8ostings

The postings of total from 9ournal to the ledger can be voucher by the auditorG Ke can see through

vouchers that posting are complete and correctG

9. ?o Error

The purpose of total vouching is to chec$ that there are no errors in the boo$s of accountsG The errors are

the result of carelessness or over %or$G #ut audit staff is not over loaded so they can locate errorG

10. ?o raud

The purpose of vouching is to examine that no fraudulent payments are madeG The fraud can be

committed due to matching of minds of employees and customerG The auditor can vouch the entries top

disclosed such fraudsG

11. ,astings



The purpose of vouching is to chec$ castings or loadsG The auditor can calculate all total by

himselfG Ke can compare the totals %ith boo$s to maintain accuracyG

12. ,ast at #an$

The purpose of vouching is to determine true cash at ban$G Ke can vouch receipt and paymentsG The

result is that he can chec$ %hether cashboo$ is correct or notG



13. ,ash #alance

The purpose of vouching is to chec$ that cash in hand figures are factsG The cash can be countedG Ke can

compare it %ith cashboo$G Ke can apply test chec$ing to determine accuracyG

14. 'eporting

The purpose of vouching is to form an opinion for the purpose of reportingG In case of true and fair

vie% there is good reportG In the absence of such result there may be ualified reportG

8rocedures of Louching

1. 'eading 6ut

The vouching is a tas$ of the auditorG The 9unior audit can read out the contents of the vouchersG Ke can

inform the senior auditor about the data name of organiCationF number of voucher and amount ofvouchersG

2. ,omparison

The senior can head the contents called out by 9unior auditorG Ke tally each and every item stated inthe voucher %ith entries in the boo$s of accountsG Thus comparison is a part of vouching procedureG



3. Tic$ing

The senior auditor can use various tic$s or symbols to clear the items chec$edG The tic$s may be anabbreviation of %ordsG @uch tic$s or symbols may differ from auditor to auditor because these are code

%ordsG

4. @tamping

The senior auditor instead of signature or initials he can use stamps for chec$ing the vouchers can use

the rubber stampsG The rubber stamp may have the %ording chec$ing and cancelled on itG



5. @ignatures

The senior auditor can vouch the entries %ith the help of vouchersG Ke can put his signature or initials

on every voucher for safety measuresG The signed vouchers cannot be presented again for another

entryG

6. Query

The voucher may be missingG The entries may be doubtful due to over %riting and erasingG The audit staff can ma$e the %ord 7Q7 against such entryG This entry is recorded in %or$ing papersG

7. *anagement

The audit staff can be giving sometime to the management for clearing the ob9ectionsG The doubtfulentries are handed over in %ritten formG The management can examine the record in detailG

8. 'eply

The management may reply after one or t%o days about the doubtful entriesG The auditor can examinethe reply of the managersG The auditor can 9udge %hether the reply is right or %rongG

9. ,learance

The audit staff can clear the uery for %hich proper ans%er is made availableG The auditor may not besatisfied %ith the ans%er of ob9ectionsG Ke can inform the management about this ueryG

10. ?o @atisfactory

The auditor may re9ect the unsatisfactory replyG Ke has s$illF training and experienceG Ke can use allavailable means to test the truthG Ke can note do%n poor clarification in %or$ing papersG



11. 6b9ections

The ob9ection stated in the %or$ing papers can be discussed %ith the management at the end of auditG Ke can

form

an opinion on the basis of such ob9ectionsG Ke can submit his report either clear or ualifie

* 5iabilities of an 0uditor

5iabilities of an 0uditor0) ,ivil 5iabilities



,ivil liabilities arise %hen there are dispute bet%een t%o parties for a loss caused to one due to the act of

anotherG In this caseF the auditor is called upon to pay damages as decided by the courtG These may be of

the follo%ing types

1. 5iability of ?egligence

?egligence means acting carelessly or failing to perform a duty en9oyed upon a personG 0n auditor is

expected to perform his duties as an agent of the shareholders by exercising care and diligence in the

implementation of statutory reuirements for the maintenance and presentation of the financial

statementG 0uditor must be $ept himself up to date %ith the information if he commits some negligence

the purpose of audit is failedG

2. 5iability of 5iable

In the report the auditor may criticiCe any personG If it is based on the fact there is no liability of the

auditorG 6n the other hand the auditor is liable in order to avoid this liability the auditor should ta$e care

that the report is based on facts and is prepare %ith good intentionG

3. 5iability of the Third 8arty

The auditor is expert in finding out the errors and frauds and is a%are ho% to chec$ the boo$s of accountsG

*any third parties as the shareholdersF investorsF tax authoritiesF creditors and government rely upon his

reportsG @o if he ma$es any type of error or fraudF he is liable to pay the damagesG

4. *isstatement in 8rospectus

0ccording to section ( The civil liability of an auditor arises due to misstatement in prospectusG

here a prospectus invites person to subscribe for shares or debentures of a companyF the auditorshall be liable to pay compensation to every person %ho subscribe for a purchase any shares or

debentures on the faith of the prospectus for any loss or damage be may reason of any untrue

statementsG

5. #reach of ,ontract

If the auditor fails to fulfill the term of the contract the civil liability arises of an auditedG In case if he

omits the all or some conditions of contractF if he cannot ma$e the secrecyF if fails to provide the true and

fair vie% to the o%nerF he is liable to pay to the o%ner if sustain any finacial lossG



#) ,riminal 5iabilities

@ince for certain purpose of the companies 0ctF and auditor is deemed to be an officer of the

companyF he is a liable for suchG 0ct of omission or commission constituting offence under the 0ctG



6. *isstatement in 8rospectus @ecD+3)

Kere a prospectus containing any untrue or misstatement is issued %ith the consent of auditor %ho shall

be punished the %ith imprisonment %hich may extend up to t%o years or %ith fine %hich may extend up

to 'sG (F=D or bothG

7. 'euirements of 'eports @ecD22()

Kere the auditor does not confirm to the reuirement of reports as per secD22 he shall be punished %ith

fineF %hich may extend up to 'sG 1FG

8. 0ssistant to Investigate @ecD2")G

0uditor has statutory duty to assist any investigator appointed by the central Aovernment in collecting

any information of the company other%ise he shall be punished %ith imprisonment %hich may extendup to six month or %ith a fine up to 'sG 2F=D or both for continuous default 'sG 2=D per day may also

be chargedG

9. 0ssistance to 8rospectus @ecD2"2)

6n the basis of report of an inspector control Aovernment may prosecute any officerG 0uditor is to

assist in such prosecution other%ise he is to be punished for contempt of courtG

10. 'eturn #oo$sF 8apers 8roperty etcG @ecD"--)

0t the time of %inding up of a companyF court may as$ the auditor to return any property boo$s orpapers of the company other%ise he can be arrestedG

11. 8ublic Examination @ecD"-/)

6n the report of official liuidationF the audition of the companies to the publicly examinedG?otes of such examination shall be used as evidence in any civil or criminal proceeding against

the auditorG



12. alsification of #oo$s of 0ccounts @ecD(3)

here the auditor is guilty of destructionF multilationF alterationF falsification of any boo$s paperssecuritiesF he shall be imprisoned %hich may extend up to - years and shall also be liable to fineG

13. 8rosecution of 0uditor @ecD("()

here auditor is found be guilty of any criminal offence by the liuidator of the companyF he shall beprosecutedG



14. alse @tatement In 0ny 'eturn

here the auditor ma$es any false statements in any material respect in any return reportF

certificationF balance sheet etcF he shall be imprisoned %hich may extend up to 2 year and shall also be

liable to fineG

15. >isualified 0uditor @ecD2("+))

The company ordinance has clearly stated the persons %ho are not ualified as auditorF but if anunualified auditor may act as auditor of the companyG Ke is liable to fine up to 'sG (F=D rupeesG

16. ?onD,ompliance @ecD2+)

In case %hen the auditor ma$es any report or signed against the legal reuirement and the report maybe not true the auditor is liable to fine for 'upees 2F=D if it is %illful faultG

17. 0uditor 'eport

If the auditor ma$e the report %ith the extent to profit himself and the third party for any lossfor a material consideration it is a criminal liablityG Ke may be punished for six months and fine

upto 2F=D rupeesG

18. 0ssist Inspector @ecD2+/)

The auditor has to give all the necessary assistance in connection %ith investigation to the inspectorG

@ome times the auditor may fail to give itG In this case he shall be punishable up to one year and fixed up

to ten thousand rupeesG

19. 0uditor 0ccount @ecD3/""))

The auditor is liable to submit his report after or %ithin he t%o months at the end of the period to

%hich account relatesG If he fails there is a fine up to rupees (F=D



20. alse Evidence @ecD"1)

If any person provides false evidence he is punishable up to t%o years and liable for fine alsoG The

evidence may be affidavit oath or some affirmation etcG

21. inding @ecD"2)

The criminal liability of company officers including auditor may be composed may year before or during

liuidation



of company of criminal offences li$e concealing or removing propertyF concealing or falsifying

document and papersG The liuidation can go to the court of la% for proving the breach of dutyG

22. alse @tatement @ecD"2)

hoever ma$es a statement false or incorrect or omits any material fact shall be punishable %ith

imprisonment for a termF %hich may extend to three year and shall be liable to a fine not exceeding

t%enty thousand rupeesG

23. 8a$istan 8enal ,ode @ecD1-)

hoever ma$es a statement false or incorrect or omits any material fact shall be punishable %ith

imprisonment for a termF %hich may extend to three year and shall be liable to a fine not exceeding

t%enty thousand rupeesG

24. 8rofessional *isconduct

If the auditor fails to follo% the rules of their o%n profession he is liable for the criminal liabilityG or this

default the council can %ith dra% the certificate of practiceG The council can also go to the court of la% for

prosecuting the concerned auditorG The auditor can suffer the 9ail or fine or bothG

,) 6ther 5iabilities

25. Konorary 0udit

The auditor on the honorary basis may also accept an audit %or$G 0fter the completion of the audit

%or$ he is bound to submit his reportG

26. Boint 0udit

hen the t%o auditors carried out the %or$ of audit it is called as the 9oint auditG It is possible bythe t%o independent auditors under the agreementG @ometimesF a business concern may have t%o

or more than t%o business places in different cities or countries conduct the audit by one auditorG

@o this audit is conduct the



responsibilities lies on the head of every auditor %ho had done the %or$ of auditG It is also stated in the audit

reportG

,hapter + D 0udit or$ing 0udit ?ote #oo$ R >efinition of 0udit ?ote #oo$ R 0dvantages of 0udit

?ote #oo$ R >efinition of Test ,hec$ing R Essentials of Test ,hec$ing R 0dvantages of Test ,hec$ing R>isadvantages of Test ,hec$ing R 'outine ,hec$ing R Essentials of 'outine ,hec$ing R 0dvantages of

'outine ,hec$ing R >isadvantages

of 'outine ,hec$ing

>efinition of 0udit ?ote #oo$

0udit noteboo$ is a diary on %hich auditor scribble do%n all important inuiries to avoid the

possibility of unuestioned material factsG



Importance

Bustice illiam thro%s light on the importance of audit noteboo$ in the follo%ing %ordsF

The audit noteboo$ that contained detailed information proved to be very helpful to the auditor in

every critical momentG

or preparing the audit report it is very useful for that auditorG

In case of negligence charge against the auditorF but note boo$ good evidence can be presentedG It may be

also used for future guidance and referenceG It also enables to auditor to $no% that %hat %or$ his

assistant at each audit has doneG

0dvantages of 0udit ?ote #oo$

1. 0udit 'eport

The audit noteboo$ is helpful to prepare audit reportG The auditor can record the %ea$ness of accounting

recordsG The ueries not properly ans%ered are started in the audit report %hen the auditor is satisfied he

can submit a clear reportG

2. @taff Konesty

The audit noteboo$ is used to determine the integrity and honesty of audit cler$sG The moral and ethical

value can be examined through audit %or$G hen a person completes his %or$ in timeG Time period

auditor can appreciate himG If there is pending %or$ after the expiry of time periodF he can be held



responsible for itG The audit staff must be honest in his %or$G

3. Kelpful or *emory

The audit noteboo$ is help to $eep things fresh in memoryG The auditor can read the boo$ on daily

basisG Ke can note the %ea$ness on fingertipsG The auditor can retain the data in his memory for a

longer period of timeG Ke can as$ the management to clear the doubtful points before preparing audit

reportG



4. 'eference

The audit noteboo$ is useful for referenceG In future it can provide information to the audit staffG The past

data gives an insight into business mattersG The auditor can note the changesG Ke can form an opinion

about the changes in the nature and siCe of the businessG

5. ?e% 0uditor

The audit noteboo$ is useful for ne% auditorG They can see the %ea$ness of previous yearsG The old%ea$ points may not be repeated this yearG

6. ,ourt ,ases

The audit noteboo$ is helpful to defend an auditor in court casesG The people can go to court of la% in order tofix

liability for negligence of dutyG The audit noteboo$ is a %ritten proof of %or$ performed by an auditorG

>efinition of Test ,hec$ing

0ccording to 8rofessor *eigsF

"Test Checking means to select or examine a representative sample from a large number of similar items."

It is clear that test chec$ing is sample chec$ingG The %hole data must cannot be examinedG The audit

staffs can statistical techniue to chec$ the facts and figuresG 0 certain percentage of transaction can beselected for through

examinationG The remaining transactions are supposed as chec$edG

Essentials of Test ,hec$ing

1. @ample

The sample items selected from %hole data must be representativeG The selection can be made by anymethodG The entire data must be presented in the form of sampleG

2. 5ast *onth

The last month of the accounting year is most importantG The items appearing in the last month must

be given maximum importance at the time of selecting the sampleG

3. irst *onth

The first month of accounting year provides essentials informationG The transactions recorded in the

first month must be assigned high %eight age in order to select the sampleG

4. @urprise Testing

The auditors include the element of surprise in selection of testG The accounting staff must be



una%are of test chec$ing so that he should not ma$e arrangement for test chec$ingG

5. ,hec$ing *ethod

The auditor can change his method of selecting the sampleG 0t one time he can one use alternate

methodG The selection method must be charged in time to timeG

6. Every Type of Transaction

The auditor must select every type of transaction in test chec$ingG There is a need to include each type of

dealing in the sampleG



7. Every Employee The auditor can select the %or$ of every employeeG The test chec$ing can

be used to examine the %or$ of all employees in the organiCationG

8. Through 6ut The Near

The test chec$ing can be applied to all items appearing in the boo$s through out the yearG The recurringitems are most suitable for test chec$ingG

9. ,ash #oo$

The cash boo$ entries must not be used for test chec$ingG There is a need of cent percent chec$ing of all cash

items appearing in cashboo$G The control over cash is essential for efficient business %or$ingG

0dvantages of Test ,hec$ing

1. Time @aving

The benefit of test chec$ing is available in the shape of time savingG 0 simple of items is chec$ed and

remaining items are treated as chec$edG In this %ay there is saving in timeG

2. 5ess 5abour

The test chec$ing is useful for saving in labourG 0 lot of %or$ reuires many cler$s for completing the

auditG #ut test chec$ing is used to test fe% items so there is less labour %or$G

3. 0ccurate #oo$s

The test chec$ing is useful to note the accuracy of accounting boo$s and other recordG There is a demand

of error free boo$sG The test chec$ing is a step in the right direction to prove accuracyG

4. @taff Efficiency

The efficiency of accounting staff improves due to test chec$ingG The %ea$ness of employee is

reported to managementG The employees try to improve their %or$ by overcoming their

deficienciesG

5. Timely 'eport

The benefit of test chec$ing is that timely report can be submitted to the managementG The large number

of figures can be chec$ed in short period of time so there is no delayG

6. *any 0udits

Test ,hec$ing is useful to complete many audits in one yearG It saves sufficient timeF %hich can be used

to chec$ the boo$s of ne% clientsG The auditor is able to raise more incomeG

7. @pecial 0ttention

The auditor can pay special attention to important mattersG Test ,hec$ing reduces the labour %or$ on the part

of

audit staffG There is sufficient time period to settle the important mattersG

>isadvantages of Test ,hec$ing



1. Errors

The demerit of test chec$ing is that errors are not disclosed by itG In the presence of error true and fair

vie% is not possibleG ?o doubt the location of errors is the duty of management but it effects the audit

%or$G

2. rauds



The demerit of test chec$ing is that planned frauds may not be disclosedG The fraud discovers is the

responsibility of managementG The audited accounts cannot sho% true and fair vie% %hen fraud exists in

boo$sG

3. 'esponsibilityThe demerit of test chec$ing is that auditor cannot shift his responsibility of managementG The errors of

fraud can be discovered through cent percent chec$ingG @o auditor is responsible for test chec$ingG

4. 'eport

The auditor report may fail to disclose true and fair vie% of business mattersG 0fter test the auditor signs

chec$ing

the auditor reportG The auditor is responsible for audit report based on test chec$ingG

'outine ,hec$ing

The auditors chec$ the arithmetic accuracy of 9ournals and ledgersG It is called routine chec$ingG The

purpose is detected the error and fraud of simples natureG The audit staff can chec$ the balance

appearing in 9ournal and ledgersG The subDtotal and total are examinedG The differences are calculatedG

These balance are transfered from one page to anotherG The amounts carries for%ard should be the sameG

The chec$ing is useful for determine the accuracy of the boo$s of accountsG The accounting staff cannot

chance the figures after routine chec$ingG The ledger posting is also tested by means of routine chec$ingG

The errors may be loc$ed and frauds may be disclosed by itG The auditor is able to give his opinion about

the fairness of the financial statementsG The auditor can fix the

responsibility of the accounting staff for negligence of dut

Essentials of 'outine ,hec$ing

1. @ubD,ast

@ubD,ast is a part of routine chec$ingG @ubDtotal is possible in accounts mattersG The subDcast must be correctG

2. ,asts

,ast is part of routing chec$ingG Total in 9ournal and ledger accounts should be examined for accurate resultsG

3. ,arry or%ard

,arry for%ard is a part of routing chec$ingG The balance of one page can be transfered to the next pageG

4. 8osting

8osting is a part of routing chec$ingG The entries are posted in to the ledger accountsG 8osting must be

properly examinedG

5. #alancing

#alancing is a part of routing chec$ingG Ta$ing the difference of debit and credit in the accounts is called

balancingG

6. ,arry >o%n

The amounts in an account can be transferred to next pageG The carry do%n is a part of routing chec$ingG

7. Transfer

Transfer is part of routing chec$ingG The amount is one accounts can be transferred to another accountGdvantages of 'outine ,hec$ing



1. 0ccuracy

The benefit of routine chec$ing is that there is accuracy of accounting boo$s and recordsG The subDtotalF

casts and carry for%ard postingF balancing and transfer are stated as correctG

2. rauds



'outine chec$ing is useful to chec$ing fraud in the boo$s of accountsG The responsibility lies on the

head of management for location of fraudG The management can use this tool to meet its dutyG

3. 8ositive Lerification

'outine chec$ing helps to verify positive made in the ledgerG The correct posting can provide true and

fair vie% of financial statementsG The management can verify posting through itG

4. ?o ,hange in igures

'outine chec$ing is useful to eliminate the alternation of figuresG The management can meet its

obligation %ith the help of routine chec$ingG The employees cannot alter figuresG

5. inal ,hec$ing

The benefit of routine chec$ing is that final chec$ing %or$ is reducedG The final chec$ing become early

as ma9or %or$ has already been completed through routine chec$ingG

>isadvantages of 'outine ,hec$ing

1. ?o ,are

The %or$ of routine chec$ing is given to 9unior employeeG They do not consider it as important matterG

Therefore the expected result cannot be produced for audit purposeG

2. raud

The demerit of routine chec$ing is that planned frauds are not disclosedG The responsibility of fraud lies

on head of managementG The audited accounts may fail to provide true and fair vie%G



3. Error

The demerit of routine chec$ing is that errors of principle are not disclosedG The responsibility or

error can be placed on the head of managementG The audited accounts may fail to provide true and

fair vie%G

4. *onotony

The %or$ is routine chec$ing is boring and time consumingG The cler$s go on chec$ing the totals and subD

totals

and balancesG It does not improve the performance of employee rather it bring monotaryG

,hapter - D Lerification



* Lerification

* 0dvantages of Lerification

* 6b9ects of Lerification

* Techniues of Lerification

Lerification

It means to prove the fact and confirmation about the both sides of the balance sheet as the assets and

liabilitiesG The auditor not only chec$s the accuracy of the accounts in the arithmetic %ay but also chec$

the existence of the actual items and their actual possessionG0dvantages of Lerification

1. Jse of 0ssets

The merit of the verification is to chec$ that management had used the assets of the business properlyG

Through verification the auditor can find out if the management has misused the assetsG #y the

verification the efficiency of the business is improve because it is used properly for the business purpose

onlyG

2. True and air Lie%

#y the verification the auditor can sho% the facts of the businessG or the report the auditor has to depend

upon the verification techniue as %ell as on the other techniuesG

3. 8rotection of 5enders

or the lender also it is beneficialF because the auditor has to chec$ the o%nershipF existence and the

possession and valuation of the business assetsG @o the tender can rely upon this reportG

4. 'is$ for ,reditors

0s the auditor accounts provide the true and fair vie% about the affair of business so it is also the

protection for the creditorsG The creditors are those %ho provide the goods and services to the businessG

0nd for them the ris$ of loss is eliminatedG

5. 5ocation of 0ssets

Through the verification the correct vie% about the assets of the business can be find outG The auditor can

visit the assets personallyG Ke can chee$ that the assets are not stolen or destroyedG @o the auditor beings

the fair vie% about the assetsG



6. 8erformance of *anagement

The verification is also very useful for the o%nersF because by the verification the auditor can

chec$ the performance of the managementG @o the management can improve the efficiency of

his %or$G

7. 5oan 0rranged

The verification is also helpful for the protection of the life of the businessG Through verification the

assets are physically examined and these assets are used to ta$e the loan from the financial institutionF

%hich save the life of the businessG



verificationG

1. ,ertify the 6%nership

The ob9ect of verification is to certify the o%nershipG The document deedsF vouchers and agreements etc

can obtain the real o%nershipG



2. 8osition of 0ssets The audit by the verification of the assets in the business the assets may be

mortgaged or pledged for borro%ing moneyG The auditor has to chec$ that the same has been %ritten in

the balance sheet in the proper %ayG

3. Existence of 0ssets

The ob9ect of the verification is to ascertain the existence of the assetsG The existence of assets is stated

in the proper but there may be the assets be soldF stolen or destroyedG In this case the auditor has to

chec$ the assets physicallyG

4. >etect raud

0nother purpose of verification is to find out the frauds if conductedG In come cases the assets may be

stole or misusedG The auditor can verify the real position of assetsG The responsibilities of fraud are to bethe managementG

5. Lerify 8ossesssion

The purpose of verification is to chec$ the possession of the assetsG The assets should be safeguarded the

assets of the business is used for the business onlyG The possessions of the assets are in the managementG

6. True and air Lie%0nother ob9ect of the verification is to determine the true and fair vie% about the business financial

statementsG 0fter the verification it is confirmed that the financial statements are according to the

reuirements and is factG

7. >epreciation 8lans

0nother purpose of the verification is the examination of the depreciation of assets of the businessG The

auditor has to chec$ that the proper state the depreciation is charge on the assets according to the

accounting principalG 0s the life of each assets is differentF so the depreciation is charged as per ruleG

8. Laluation of 0ssets

The ob9ect of the verification is also to chec$ the assets valuationG hich does the management valueG

The auditor has to fine that the valuation is true and according to the accounting principalG

9. Laluation of 5iabilities

The management determines the valuations of the liabilityG The ob9ect of verification is to chec$ that thevaluation is the true and according to the accounting principalsG

10. Evaluation *ethods

The ob9ect of the verification is to the chec$ the methods of evaluationG To evaluate the recorded items

the compliance and substantive test are appliedG 0ccording to the business reuirements the auditor

can rely upon anyone method from aboveG

11. 'ecording *ethods

The ob9ect of the verification is to determine the method of recording of the both sides of the balance

sheet as the assets and liabilitiesG The auditor has chec$ that all types of assets recorded separately and



the depreciation is deducted and the value of asset is charged according to the ruleG

12. Internal ,ontrol

To evaluate the internal control is also the ob9ect of the verificationG The business management is efficient if

the



sho%n on the balance sheetF overstated or understated liabilities do not give a true picture about the

financial positionG

7. ,orrect Laluation

0uditor should pay special attention to this pointF because profit and loss account also depends upon theaccuracy of valuation of assets and liabilitiesG Laluation main ob9ect is that balance sheet should sho% a

true and correct

accounting & auditing solved mcqs

Documents