PRACTICAL AUDITING MCQ
Auditing typically refers to financial statement audits or an objective examination and evaluation of a company’s financial statements – usually performed by an external third party. Audits can be performed by internal parties and a government entity, such as the Internal Revenue Service (IRS)
131. Share Premium Account should be shown in Balance sheet under
a. Paid-up capital
b. Subscribed capital
c. Reserves and surpluses
Answer:- c. Reserves and surpluses
132. Auditor should see that amount received for premium on issue of shares should be shown in
a. Subscribed capital
b. Capital Reserve Account
c. Share Premium Account
Answer:- c. Share Premium Account
133. A company can issue redeemable preference shares if authorized by
a. Memorandum of Association
b. Articles of Association
c. Companies Act-1956
Answer:- b. Articles of Association
134. A company can issue bonus shares if authorized by
a. Memorandum of Association
b. Articles of Association
c. Companies Act-1956
Answer:- b. Articles of Association
135. Interest on calls paid in advance according to table A, should not exceed
a. 6%
b. 5%
c. 10%
Answer:- a. 6%
136. For the forfeiture of shares, the auditor should check that it is permitted
a. Memorandum of Association
b. By articles of association
c. Under Companies Act 1956
Answer:- b. By articles of association
137. Profits on reissue of forfeited Shares should be transferred to
a. Share forfeited Account
b. Capital Reserve Account
c. Profit and Loss Account
Answer:- b. Capital Reserve Account
138. Shares issued for consideration other than cash should be vouched with the help of
a. Director’s minute Book
b. Shareholder’s minute Book
c. Contact with the party concerned
Answer:- c. Contact with the party concerned
139. While checking the allotment of shares, the auditor should see that it is made within
a. 100 days of issue of prospectus
b. 120 days of issue of prospectus
c. 150 days of issue of prospectus
Answer:- c. 150 days of issue of prospectus
140. Which of the following percentage of nominal amount of shares should be received with application
a. 10
b. 15
c. 5
Answer:- c. 5
