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)
71. For restriction regarding allotment of shares, the auditor should refer to section
a) 25
b) 75
c) 64
d) 69
Answer:- d) 69
72. For checking that allotment of shares has been properly made, an auditor should refer to
a) Cash Book
b) Shares Ledger
c) Directors minutes book
d) Shareholders minutes Book
Answer:- c) Directors minutes book
73. Auditor should see that the return of allotment has been sent to Registrar within
a) 1 month
b) 2 months
c) 3 months
d) 40 days
Answer:- a) 1 month
74. Application money should not be withdrawn unless
a) Allotment is made
b) Cash book has been prepared
c) Certificate to commence business obtained
d) Certificate of incorporation obtained
Answer:- c) Certificate to commence business obtained
75. Shares issued for consideration other than cash should be vouched with the help of
a) Directors minutes book
b) Shareholders minutes book
c) Contract with the party concerned
d) Cash book
Answer:- c) Contract with the party concerned
76. A company can issue Redeemable Preference shares, if authorized by
a) Memorandum of association
b) Articles of association
c) Companies Act, 1956
d) None of the above
Answer:- b) Articles of association
77. 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
d) Paid- up capital account
Answer:- c) Share Premium account
78. Share premium account should be shown in the Balance sheet under
a) Paid-up capital
b) Subscribed capital
c) Reserves & surplus
d) Reserved capital
Answer:- c) Share Premium account
79. Amount of share premium may be utilized for
a) Payment of dividend
b) Writing of preliminary expenses
c) Routine expenses
d) Purchase of fixed assets
Answer:- b) Writing of preliminary expenses
80. Shares can be issued at discount under section
a) 76
b) 75
c) 79
d) 89
Answer:- c) 79
