Audit Mcqs 150 Merged

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III B.COM ECOMMERCE[2015-2018]

VI Semester
Core:AUDITING - 604B
Multiple Choice Questions.
1. An employee cannot be an auditor of the company because __________.

A. he cannot find his own mistakes
B. a person cannot audit his own account
C. he may give bias and subjective views
D. it is prohibited by company law
ANSWER: C
2. Which of the following are not objectives of auditing?

A. Ascertain the profit and preparation of P/L Account, Balance sheet
B. Detection and prevention of frauds and errors
C. Give a true and fair view of financial amount
D. To submits the accounts to Government of India
ANSWER: D
3. An audit which is compulsory by the law is __________.

A. Government Audit
B. Internal Audit
C. Cost Audit
D. Statutory Audit
ANSWER: D
4. Instruction of audit issued by controller and auditor general of India ________.

A. Statutory audit
B. Final Audit.
C. Management audit
D. Government audit
ANSWER: D
5. Audit done by the employees of the business undertaking is called _______.

A. Final audit
B. Management Audit
C. Government Audit
D. Internal Audit
ANSWER: B
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6. This kind of audit is conducted generally between two annual audit ______.
A. Internal Audit
B. Interim audit
C. Final Audit
D. Continuous Audit
ANSWER: B
7. Management audit otherwise called as _______.

A. Efficiency Audit
B. Final audit
C. Cost Audit
D. Cash audit
ANSWER: A
8. Before the work of audit is commenced, the auditor plans out the whole of audit work is
called _________.
A. Audit Plan
B. Audit Note
C. Audit Control
D. Audit Programme
ANSWER: D
9. A number of checks and controls exercised in a business to ensure its efficient working are
known as ________.
A. Internal Check
B. Interim Check
C. Internal Audit
D. Internal Control
ANSWER: D
10. A Voucher is a _______.

A. Document is support of an entry made in books of accounts
B. Invoice received from suppliers
C. Receipt issued to a customer for cash
D. Dispatch Receipt
ANSWER: A
11. Voucher relates to _________.

A. Cash receipt & payments, credit transactions
B. Cash payment only
C. Credit transactions only
D. Cash receipt only
ANSWER: A
12. Internal check is meant for ___________.

A. Prevention of frauds
B. Detection of frauds
C. Helping audit is depth
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D. Detection of errors
ANSWER: A
13. Internal auditor is appointed by ________.

A. The Management
B. The Shareholders
C. The Government
D. The Statutory Body
ANSWER: A
14. Auditing begins where ______ ends.

A. Selling
B. Inventory Valuation
C. Purchases
D. Accounting
ANSWER: D
15. A kind of audit conducted for a part of the accounting year is called _______.
A. Periodical Audit
B. Partial Audit
C. Cost Audit
D. Interim Audit
ANSWER: A
16. For which of the following, Audit is optional?

A. Trusts
B. Joint stock companies
C. Proprietorship concern
D. Private Limited Companies
ANSWER: C
17. The audit that is made compulsory under statute is called _________.
A. Statutory audit
B. Partial audit
C. Complete Audit
D. Continuous Audit
ANSWER: A
18. The receipt of goods must be entered in _________.

A. Goods inward book
B. Goods outward book
C. Receipt of Stores & Goods outward book
D. Receipt issue and balance of stores
ANSWER: A
19. Auditing standards differ from auditing procedures in that procedures relate to ________.
A. Measure of performance
B. Audit principles
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C. Acts to be performed
D. Audit judgments
ANSWER: C
20. Confirmation of the court is necessary for __________.

A. increasing the share capital
B. reduction of share capital
C. conversion of shares into stock
D. issue of new shares
ANSWER: B
21. Profit prior to incorporation may be utilized to ___________.

A. write of goodwill
B. pay interest on purchase consideration
C. writing off fixed assets
D. pay interest on secured loans
ANSWER: A
22. Which of the following is not true about opinion on financial statements?
A. The auditor should express an opinion on financial statements
B. His opinion is no guarantee to future viability of business
C. He is responsible for detection and prevention of frauds and errors in financial statements
D. He should examine whether recognized accounting principles have been consistently
followed
ANSWER: A
23. Audit means ___________.

A. recording business transactions
B. preparing the final accounts
C. examination of books, accounts, vouchers etc.
D. preparing final accounts
ANSWER: C
24. Audit programme is prepared ______________.

A. to help the auditor and his staff about the work to be done while auditing
B. to help the accountant to prepare the balance sheet
C. to help the company to submit its accounts
D. to help the shareholders to file the returns
ANSWER: A
25. Auditor shall report on the accounts examined by him __________.

A. to the proprietor
B. to the court
C. to the bank
D. to the general public
ANSWER: A
26. Purchase of machinery is a ____________.
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A. revenue receipt
B. capital receipt
C. capital expenditure
D. revenue expenditure
ANSWER: C
27. Sale of land is a __________.

A. revenue receipt
B. capital receipt
C. capital expenditure
D. revenue expenditure
ANSWER: B
28. Shares are forfeited on the non-payment of ____________.

A. share calls amount
B. calls in advance
C. minimum share capital
D. debenture amount
ANSWER: A
29. Secret reserve can be created by _______________.

A. public limited company only
B. banking and financial companies only
C. private limited company only
D. Co-operative societies
ANSWER: B
30. General reserve is __________.

A. an appropriation from the profit
B. a must item in the debit side of the P&L account
C. an appropriation from the share capital
D. important item in the balance sheet
ANSWER: A
31. When a transaction has not been recorded in the books of account either wholly or partially
such errors are called as _________.
A. errors of commission
B. error of principle
C. compensating error
D. errors of omission
ANSWER: D
32. Verification of the value of assets, liabilities, the balance of reserves, provision and the
amount of profit earned or loss suffered a firm is called _________.
A. continuous audit
B. partial audit
C. interim audit
D. balance sheet audit.
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ANSWER: D
33. A sale of Rs. 50000 to Mr. A was entered as a sale to Mr. B. This is an example of what?
A. Error of omission
B. Error of commission
C. Compensating error
D. Error of principle
ANSWER: B
34. Recording a transaction twice in the books of original entry is an error of __________.
A. principle
B. commission
C. omission
D. duplication
ANSWER: D
35. Errors and frauds already committed can be discovered under the system of ________.
A. internal audit, internal check, internal control
B. external check
C. statutory audit
D. interim audit
ANSWER: A
36. Treating revenue expenditure as capital expenditure is a case of _________.

A. fraud
B. misappropriation of cash
C. misappropriation of goods
D. manipulation of accounts
ANSWER: D
37. Vouching of the balances of all incomes and expenses account is known as vouching of
______.
A. personal ledger
B. impersonal ledger
C. cash
D. sales
ANSWER: B
38. Stock in trade is valued _________.

A. at cost price
B. at market price
C. at cost price or market price whichever is less
D. at cost price less depreciation
ANSWER: B
39. Goods sent on approval basis have been recorded as credit sales. This is an example of
what?
A. Error of principle
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B. Error of commission
C. Error of omission
D. Error of duplication
ANSWER: A
40. Preliminary expenses are the best example for _________.

A. fictitious asset
B. intangible asset
C. wasting asset
D. floating asset
ANSWER: B
41. The profits that can be legally distributed to shareholders are called _________.
A. revenue profits
B. capital profits
C. divisible profits
D. divisible profits
ANSWER: D
42. Errors of principle are due to ___________.

A. wrong entry of the transaction in the books of original entry
B. wrong allocation of expenditure between capital and revenue
C. mistake in the payment of commission
D. mistake in the payment of salary
ANSWER: A
43. Periodical audit is also called as _________.

A. final audit
B. interim audit
C. balance sheet audit
D. income statement audit
ANSWER: C
44. An audit programme is ___________.

A. a description, memorandum or an outline of the work to be done in a business
B. the rules and regulations prescribed for writing up the books of accounts
C. to gain knowledge of clients accounting system
D. a trial work
ANSWER: B
45. The auditor of a government company shall be appointed by ________.

A. the government company itself
B. the central government
C. the share holders
D. the debenture holders
ANSWER: B
46. The main object of the audit of the cash book may be ________.
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A. to verify the assets and liabilities

B. to know that all receipts and payments have been properly recorded
C. to check the internal control system in business
D. to check the bank balance
ANSWER: B
47. The purpose of the audit of wage payment is to determine that __________.
A. the work is executed completely for which the workers are paid wages
B. the workers are paid the correct amount of wages under proper authorization
C. the workers are working regularly
D. the workers are not overpaid
ANSWER: B
48. One of the audit procedures to check the issue of share capital of the newly formed
company is __________.
A. the memorandum of association and articles of association
B. the share transfer register
C. the issue of debenture
D. certificate of commencement
ANSWER: A
49. Capital reserves are created out of profits of __________.

A. a revenue nature
B. a capital nature
C. a secret reserve
D. contingency reserve
ANSWER: B
50. A good audit report must at least meet one of the following qualifications __________.
A. it should offer constructive and timely suggestions to the management
B. it should not point out mistakes
C. it should not be based on factual information
D. it should not be based on balance sheet
ANSWER: A
51. The work of one clerk is automatically check by another clerk is called _________.
A. internal control
B. internal check
C. internal audit
D. interim audit
ANSWER: B
52. The owners of the company are called __________.

A. debenture holders
B. debtors
C. equity shareholders
D. creditors
ANSWER: C
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53. Verification is __________.

A. the art of recording the business transaction
B. an examination of the books of accounts
C. the act of establishing the accuracy of entries in the books of accounts
D. authorizing books of accounts
ANSWER: C
54. Depreciation is _________.

A. the decrease in the value of an asset
B. the increase in the value of an asset
C. an appreciation to the company
D. a credit to shareholders
ANSWER: A
55. The main objects of investigation is _________.

A. to discover errors and frauds
B. to prevent errors and frauds
C. to verify statements
D. all the above
ANSWER: D
56. Internal controls and internal check are ____________.

A. one and the same
B. different
C. internal control includes internal check
D. both are not related
ANSWER: C
57. Share may be issued _____________.

A. at par
B. at premium
C. at discount
D. all the above
ANSWER: D
58. Special audit is necessary for _________.

A. inefficient concern
B. processing concern
C. trading concern
D. manufacturing concern
ANSWER: A
59. The first auditors appointed by headd office ____________.

A. for a period of one year
B. for a period of two years
C. for a period of three years
D. till the conclusion of the first annual general meeting
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ANSWER: D
60. Audit of Joint stock company account is _____________.

A. compulsory
B. unnecessary
C. avoidable
D. depends upon directors
ANSWER: A
61. The company's auditor is expected to give _____________.

A. his expert opinion about the accounts
B. a factual position about the accounts
C. a critical review of the accounts
D. financial assistance
ANSWER: A
62. Auditors of a joint stock company are appointed by ______________.

A. directors of the company
B. annual general meeting
C. election at the annual general meeting
D. debenture holders
ANSWER: C
63. A company auditor can be removed by _________________.

A. board of directors
B. managing director
C. any director
D. general meeting
ANSWER: D
64. A vacancy caused by resignation of an auditor is filled by _________.

C. general meeting
D. central government
ANSWER: C
65. Cost audit under section 233(b) of the companies act is ___________.
A. voluntary
B. compulsory
C. avoidable
D. advisable
ANSWER: D
66. Duties of a company auditor are defined by __________.

A. memorandum of Association
B. articles of Association
C. Companies Act 1956
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D. agreement between company and the auditor

ANSWER: C
67. When at an annual general meeting of a company no auditor is appointed or reappointed. In

that case ________.
A. the central government appoints a person to fill the vacancy
B. the board of directors appoints a person to fill the vacancy
C. the board of directors appoints a person to fill the vacancy
D. none of these can appoint a person to fill the vacancy
ANSWER: A
68. Audit in depth means __________.

A. audit of each and every item
B. intensive audit of each and every item
C. intensive audit of a few items
D. audit of a few selected items
ANSWER: C
69. When a company engages a Chartered Accountant as its internal auditor, the external
auditor _____________.
A. need not check the areas covered by internal audit
B. should ignore the existence of internal audit
C. should incorporate the internal auditor's report with his own
D. should examine the system and efficiency of internal audit and devise a suitable audit
programme
ANSWER: D
70. Which of the following factors likely to be identified as a fraud factor by the auditor?
A. The company is planning a initial public offer of quality shares to raise additional capital
for expansion
B. Bank reconciliation statement includes deposits-in-transit
C. Plant and machinery is sold at a loss
D. The company has made political contributions
ANSWER: A
71. The most difficult type of misstatement to detect fraud is based on __________.
A. related party purchases
B. related party sales
C. the restatement of sales
D. omission of a sales transaction from being recorded
ANSWER: D
72. The audit engagement letter, generally, should include a reference to each of the following
except ___________.
A. limitations of auditing
B. responsibilities of management with respect to audit work
C. expectation of receiving a written management representation letter
D. a description of the auditor's method of sample selection
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ANSWER: D
73. The least import element in the evaluation of an audit firm's system of quality control would
relate to ___________.
A. assignment of audit assistants
B. assignment of audit assistants
C. consultation with experts
D. confidentiality of clients information
ANSWER: B
74. Audit of banks is an example of __________.

A. statutory audit
B. balance sheet audit
C. concurrent audit
D. all of the above
ANSWER: D
75. Concurrent audit is a part of ______________.

A. internal check system
B. continuous audit
C. internal audit system
D. final audit
ANSWER: C
76. In India, balance sheet audit is synonymous to _______________.

A. annual audit
B. continuous audit
C. detailed audit
D. statutory audit
ANSWER: A
77. Which of the following 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 when the organization has a good internal control system
D. It is expensive
ANSWER: C
78. Of the following, which is the least persuasive type of audit evidence?
A. Bank statements obtained from the client
B. Documents obtained by auditor from third parties directly
C. Documents obtained by auditor from third parties directly
D. Computations made by the auditor
ANSWER: C
79. Which of the following statement is generally, correct about the reliability of audit
evidence?
A. To be reliable, evidence should conclusive rather than persuasive
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B. Effective internal control system provides reliable audit evidence

C. Evidence obtained from outside sources routed through the client
D. Information collected within in organization can be accepted
ANSWER: B
80. Audit Programme is prepared by ___________.

A. the auditor
B. the client
C. the audit assistants
D. the auditor and his audit assistants
ANSWER: D
81. The working papers which auditor prepares for financial statements audit are _______ .
A. evidence for audit conclusions
B. owned by the client
C. owned by the auditor
D. retained in auditor's office until a change in auditors
ANSWER: C
82. The quantity of audit working papers complied on engagement would most be affected by
_________________.
A. management's integrity
B. auditor's experience and professional judgment
C. auditor's qualification
D. control risk
ANSWER: B
83. The auditor's permanent working paper file should not normally, include ________ .
A. extracts from clients bank statements
B. past year's financial statements
C. attorney's letters
D. debt agreements.
ANSWER: A
84. Who is responsible for the appointment of statutory auditor of a limited company?
A. Directors of the company
B. Members of the company
C. The central government
D. The state government
ANSWER: B
85. The board of directors shall appoint first auditor of a company ___________.
A. within one month of completion of capital subscription state of the company
B. within one month of the promotion of the company
C. within one month of the commencement of the business of the company
D. within one month of incorporation of the company
ANSWER: D
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86. In case the directions fail to appoint first auditors, the shareholders shall appoint them at
_______ by passing a resolution.
A. a general meeting
B. first annual general meeting
C. statutory meeting
D. annual general meeting
ANSWER: A
87. The authority to remove the first auditor before the expiry of term is with ___________.
A. the shareholders in a general meeting
B. the shareholders in the first annual general meeting
C. the board of directors
D. the central government
ANSWER: A
88. A statutory auditor has a right of access at all times to ___________.

A. books and accounts of a company
B. books, account and documents of the company
C. books, accounts and vouchers of the company
D. notices and documents of the company
ANSWER: C
89. Auditor of a _______ company does not have right to visit foreign branches of the company.
A. unlimited liability
B. manufacturing
C. banking
D. non-profit making
ANSWER: B
90. Who among the following is eligible to be appointed as an audit of Government Company?
A. A chartered accountant in practice
B. A chartered accountant whether in practice or not
C. An auditor appointed by the A & AG
D. An unsound mind person
ANSWER: A
91. General Controls will be ineffective when EDP Department ___________.

A. participates in computer software acquisition decisions
B. design documentations for computerized operations
C. originate changes in master files
D. provide physical security for programme files
ANSWER: C
92. Which of the following activities would most likely be performed by EDP department?
A. Authorizing transactions
B. Parity checks
C. Distributing output
D. Correction of transaction errors
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ANSWER: C
93. Which of the following documents is not relevant for vouching cash sales?
A. Daily cash summary
B. A salesman's summary
C. Monthly statements sent to customers
D. Bank statement
ANSWER: C
94. To test whether sales have been recorded, the auditor should draw a sample from a file
______.
A. purchase orders
B. sales orders
C. sales invoices
D. bill of lading
ANSWER: C
95. The 'Guidance Note on Revenue' issued by the ICAI does not deal with _________.
A. sales revenue
B. revenue rendering service
C. revenue from sale of fixed assets
D. income from interest, dividend etc
ANSWER: C
96. Which of the following would prevent double payment of the same voucher?
A. The person signing the cheque should cancel the supporting documents
B. Cheques should be signed by at best two persons
C. The data of payment of vouchers of similar nature should be the same or close to each
other
D. Cheques should not be signed by any one person
ANSWER: A
97. In case of unclaimed wages, auditor should examine whether _________.

A. the amount has been deposited in a separate bank account
B. deposited with the cashier
C. held in a safe deposit box
D. held with the company accountant
ANSWER: A
98. While vouching wages, auditor should examine whether there is proper segregation of
duties. Which of the following activities should not be done by same department?
A. Maintaining personnel records and approving changing in wages rates
B. Proposing pay roll summary and disbursement of wages
C. Making salary statements and filing returns
D. Comparing time clock records with the time reports prepared by the supervisor
ANSWER: B
99. In order to vouch, which of the expenses, the auditor will examine Bill of entry?
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A. Custom
B. Excise duties
C. Sales tax
D. Income tax
ANSWER: A
100. In case of sales return, the auditor should examine which documents?
A. Credit notes, advice notes and inward return notes
B. Debit notes, advice notes and inward return notes
C. Purchase invoices, advice notes and inward return notes
D. Credit notes, inspection report and inward return notes
ANSWER: D
101. Which of the following is most crucial to a purchase department?

A. Reducing the cost of acquisition
B. Selecting supplies
C. Authorizing the acquisition of goods.
D. Assuring the quality of goods
ANSWER: C
102. The auditor is most likely to examine related party transactions very carefully while
vouching __________.
A. credit sales
B. sales returns
C. credit purchases
D. cash purchases
ANSWER: C
103. The creditor's accounts generally, have credit balance. Debit balance may be due to
__________.
A. advance paid against an order
B. goods returned
C. wrong debit to supplier account
D. any of the above
ANSWER: D
104. In case of vouching the auditor is least likely to examine authorization by appropriate
authority in case of _____________.
A. bad debts written off
B. sales return
C. discount allowed to customers as per organizational policy
D. purchase return
ANSWER: C
105. Which of the following is not true with regard to verification of assets?
A. It invoices substantiation of occurrence of transactions
B. Its objective is to establish existence, ownership, possession, valuation and disclosure of
assets.
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C. The auditor has to form an opinion on different aspects

D. The auditor has to form an opinion on managerial aspects.
ANSWER: A
106. A chartered Accountant is not disqualified to be an auditor of a company if he is _____.

A. an employee of the company
B. the managing director of the company
C. indebted to the company for Rs. 1000
D. a shareholder in that company
ANSWER: D
107. For granting subsidy to the sick units, the audit required would be ___________.
A. financial audit
B. internal audit
C. management audit
D. statutory audit
ANSWER: A
108. Surprise checks are part of ____________.

A. an auditor's working papers
B. an audit programme
C. an auditor's report
D. an accounting standard
ANSWER: B
109. Physical verification of fixed assets is a primary responsibility of the _________.

A. auditor
B. management
C. government
D. shareholders
ANSWER: A
110. Statutory auditor of a company is the case of a casual vacancy may be appointed by the
___________.
C. extraordinary general meeting
D. government concerned
ANSWER: A
111. The scope of external audit in the case of a partnership firm is decided by the ________.
A. Companies Act
B. Partnership Act
C. Letter of appointment of the auditor
D. Income Tax Act
ANSWER: C
112. When the auditor examines and tests the clients accounting and other control systems to
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see whether or not they constitute a reliable base for the preparation of accounts, then it is
known as ______________.
A. Balance sheet audit
B. System audit
C. Continuous audit
D. Internal audit
ANSWER: D
113. Audit Note Book is a ____________.

A. personal notebook of an auditor
B. record of important points and enquires which an auditor has to refer to his clients
C. records of mistake and errors detected during the course of audit of account books
D. record of work performed by an auditor
ANSWER: C
114. Which one of the following statements regarding the internal check system is correct?
A. Have an accurate record of all the business transactions.
B. Know the accounting method followed in the business
C. Plan for future audit works
D. Ascertain the profit earning capacity of the business
ANSWER: B
115. By observing, testing and assessing, an auditor examines the system of ___________.
A. internal audit
B. internal control
C. continuous audit
D. statutory audit
ANSWER: B
116. An auditor of a partnership firm is appointed as per _____________.

A. status
B. government orders
C. agreement
D. convention
ANSWER: C
117. Internal auditor is appointed by the _____________.

A. shareholders of the company
B. statutory auditor
C. Institute of internal auditors of India
D. Board of directors of the company
ANSWER: D
118. Which one of the following is true of the position of an auditor regarding the system of
internal check in the organisation?
A. He should acquaint himself with the system of internal check
B. He should monitor and supervise the system of internal check
C. He himself should lay down the system of internal check
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D. He has nothing to do with the system of internal check

ANSWER: B
119. Working papers which contain a record of the audit work are the property of _________.
A. Company
B. Government of India
C. Registrar of companies
D. Auditor
ANSWER: D
120. A continuous audit is not suitable where the _____________.

A. transactions are few but complicated
B. there is no urgency to finalize the accounts on a particular date
C. internal work is being carried on in a satisfactory manner
D. system of internal check in operation is not satisfactory
ANSWER: C
121. The Audit report along with annual accounts is given by _________.
A. statutory auditor
B. internal auditor
C. government auditor
D. secretarial auditor
ANSWER: A
122. Special audit of the accounts of a company is directed by ______________.

A. shareholders of the company
B. Comptroller and auditor general of India
C. company law board
D. Central government
ANSWER: D
123. In verifying debits to perpetual inventory records of a non-manufacturing company, the

auditor would investigate the _________.
A. purchase journal
B. purchase requisitions
C. purchase orders
D. vendors invoices
ANSWER: D
124. A voucher is a document _________.

A. i support of an entry made in the books of accounts
B. it is an extra-ordinary meeting
C. when all other directors are out of station
D. one person can never constitute the quorum
ANSWER: A
125. The auditor shall inform the Registrar of Companies in writing about his acceptance of
appointment within ______ days.
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A. 20
B. 45
C. 40
D. 30
ANSWER: D
126. An auditor of a company gives __________.

A. his expert opinion about the accounts
B. critical review of accounts
C. factial position about the accounts
D. Loan to the company
ANSWER: A
127. Test checking implies ________.

A. checking only a few items in detail
B. checking each and every item
C. checking a representative sample of items
D. checking a part of books
ANSWER: C
128. The duties of auditor of a partnership firm are regulated by ______.

A. Partnership Act
B. partnership deed
C. agreement between partnership and auditor
D. Companies Act
ANSWER: C
129. Audit of sole proprietorship is _________.

A. compulsory
B. advisable
C. not compulsory
D. applicable
ANSWER: C
130. Verification of assets involves _________.

A. physical verification of assets
B. verification of proper values of assets
C. verifying that assets are free from any charge
D. All of the above
ANSWER: D
131. The existence of a good system of internal check reduces to a great extent ________.
A. the work of the auditor
B. the liability of the auditor
C. neither work nor liability of the auditor
D. both work and liability of an auditor
ANSWER: A
20 of 23 1/22/2018, 10:50 AM
132. Internal check is meant for __________.

A. prevention of frauds
B. detection of frauds
C. helping audit in depth
D. the existence of a good system of internal check reduces to a great extent
ANSWER: A
133. The internal auditor of a joint stock company _________.

A. need not possess the qualification laid down in the Companies Act
B. should be a chartered accountant
C. should be a chartered accountant or a cost accountant
D. should hold some other professional qualification
ANSWER: A
134. The main object of audit of account of a joint stock company is __________.
A. detection and prevention of frauds
B. detection and prevention of errors
C. detection and prevention of errors and frauds
D. d. To find whether the financial statements are drawn up according to the companies Act
ANSWER: D
135. The main object of audit of accounts of a partnership firm is to _______.

A. meet the statutory requirements
B. increase the profits
C. increase the goodwill
D. detect errors and frauds
ANSWER: D
136. Balance sheet audit is useful where _____.

A. the concern is a small one
B. the internal check is weak
C. the concern is a big one
D. the concern is banned
ANSWER: A
137. Accountancy work is done throughout the accounting period although auditing work is
done ____________.
A. after the end of accounting period
B. in the middle of accounting period
C. from the second month of accounting period
D. after the end of one month
ANSWER: A
138. Audit at the end of the year is known as ___________.

A. specific audit
B. general audit
C. government audit
D. periodical audit
21 of 23 1/22/2018, 10:50 AM
ANSWER: B
139. __________ is a technical term which refers to the inspection of documentary evidence
supporting and substantiating a transaction.
A. Checking
B. Vouching
C. Valuation
D. Routine checking
ANSWER: A
140. An auditor submits a _________ report during the audit period on some specific matters.
A. opinion
B. qualified
C. find
D. interim
ANSWER: D
141. An auditor submits a _______ report when the whole of the audit process is completed for
a particular audit period of the business concern.
A. final
B. interim
C. first
D. second
ANSWER: D
142. _________ audit is that branch of auditing in which the process of audit is used to evaluate
the social objectives of a company.
A. Management
B. Cost
C. Income tax
D. Interim
ANSWER: A
143. __________ audit is a comprehensive critical review of all aspects or processes of

management.
A. Company
B. Management
C. Conventional
D. Computerized
ANSWER: A
144. Which of the following is the most detailed audit?

A. Continuous audit.
B. Statutory audit
C. Interim audit
D. Balance sheet audit
ANSWER: D
22 of 23 1/22/2018, 10:50 AM
145. An auditor can be held liable under CA act 1949 for _________.
A. breach of control
B. negligence
C. criminal officer
D. professional misconduct
ANSWER: A
146. __________ is a systematic examination of the books and records or a business.

A. Vouching
B. Checking
C. Verification
D. Auditing
ANSWER: D
147. Test Checking reduces the _________.

A. power of an auditor
B. expenses of auditor
C. work of an auditor
D. liability of an auditor
ANSWER: C
148. The most important objective of internal audit is ____________.

A. early detection of errors and fraud
B. facilitating final audit
C. early finalization of annual account
D. ensuring systematic accounting
ANSWER: A
149. An arrangement in which the accounting work of each individual is checked by other
members is known as ________.
A. internal audit
B. external audit
C. test checking
D. internal check
ANSWER: D
150. Audit techniques are concerned with _____________.

A. examination of those evidences which have been traced by audit procedures
B. application of generally accepted accounting principles to particular phases or a financial
statement
C. accuracy and validity of management authorization to the account section employees
D. methods of conducting a business affair and reporting in annual report
ANSWER: A
Staff Name
Venkatesh R.
23 of 23 1/22/2018, 10:50 AM
1
T.Y. B. Com
Auditing (MCQ’s)
By Asst. Prof. Pravin Kad (M. Com., SET, NET)
8788167249 (pravinkad25@gmail.com)
1. An auditor is like a
a) Blood haunt b) Watch dog c) May both according to situation d) None of these
2. The term ‘Audit’ is derived from a Latin word “audire” which means;
a) To inspect b) To examine c) To hear d) To investigate
3. Process of verifying the documentary evidences of transactions are known as:
a) Auditing b) Testing c) Vouching d) Verification
4. The main object of an audit is
a) Expression of expert opinion b) Detection and Prevention of fraud and error
c) Both (a) and (b) d) Depends on the type of audit.
5. Concealment of shortage by delaying the recording of cash receipts is known as
a) Embezzlement b) Misappropriation c) Lapping d) None of these
6. The title of AAS2 issued by Council of ICAI is
a) Objective and Scope of the Financial Statements
b) Objective and Scope of the Audit of Financial Statements
c) Objective and Scope of Business of an Entity
d) Objective and Scope of Financial Statements Audit
7. Internal audit is undertaken
a) By independent auditor b) Statutorily appointed auditor
c) By a person appointed by the management d) by a government auditor
8. The scope of internal audit is decided by the :
a) Shareholders b) Management c) Government d) Law
9. Audit of banks is an example of –
a) Statutory audit b) Balance sheet audit c) Concurrent audit d) All of the above
2
10. Concurrent audit is a part of
a) Internal check system b) Continuous audit c) Internal audit system d) None
a) It is conducted at regular interval b) It may be carried out on daily basis
c) It is needed when the organization has a good internal control system
d) It is expensive
12. Internal check is carried on by
a) Staff specially appointed for the purpose b) Internal auditor
c) Supervisor of the staff d) Members of the staff
13. Errors of Omission are
a) Technical errors b) Errors of principle c) Compensating errors d) None of the above
14. Window dressing implies:
a) Curtailment of expenses b) Checking of Wastages
c) Under valuation of assets d) Over Valuation of assets
15. Test Checking refers to
a) Testing of accounts and records b) Checking of selected number of transactions
c) Examination of adjusting and closing entries d) Checking of all transactions recorded
16. Which of the following statements is not correct about materiality?
a) Materiality is a relative concept
b) Materiality judgments involve both quantitative and qualitative judgments
c) Auditor’s consideration of materiality is influenced by the auditor’s perception of the needs of an

informed decision maker who will rely on the financial statements
d) At the planning state, the auditor considers materiality at the financial statement level only
17. A sale of Rs. 25,000 to A was entered as a sale to B. This is an example of _
a) Error of omission b) Error of commission c) Compensating error d) Error of principle
18. ‘Goods sent on approval basis’ have been recorded as ‘Credit sales’. This is an example of _
a) Error of principle b) Error of commission c) Error of omission d) Error of duplication

3
19. the audit risks… the materiality and ……the audit effort
a) Lower, Higher, Lower b) Lower, Lower, Higher
c) Higher, Lower, Lower d) Lower, Higher, Higher
20. When issuing unqualified opinion, the auditor who evaluates the audit findings should be
satisfied that the
a) Amount of known misstatement is documented in working papers
b) Estimates of the total likely misstatement is less than materiality level
c) Estimate of the total likely misstatement is more than materially level
d) Estimates of the total likely misstatement cannot be made
21. In determining the level of materiality for an audit, what should not be considered?
a) Prior year’s errors b) The auditor’s remuneration
c) Adjusted interim financial statements d) Prior year’s financial statements
22. Analytical procedures issued in the planning stage of an audit, generally
a) Helps to determine the nature, timing and extent of other audit procedures
b) Directs attention to potential risk areas c) Indicates important aspects of business
d) All of the above
23. Which of the following statements is most closely associated with analytical procedure applied
at substantive stage?
a) It helps to study relationship among balance sheet accounts
b) It helps to discover material misstatements in the financial statements
c) It helps to identify possible oversights
d) It helps to accumulate evidence supporting the validity of a specific account balance
24. Verification refers to:
a) Examining the physical existence and valuation of assets. b) Examining the journal and ledger
c) Examination of vouchers related to assets. d) None of the above.
a) Bank statements obtained from the client b) Documents obtained by auditor from third parties directly.
4
c) Carbon copies of sales invoices inspected by the auditor d) Computations made by the auditor
26. Which of the following statements is, generally, correct about the reliability of audit evidence?
a) To be reliable, evidence should conclusive rather than persuasive
b) Effective internal control system provides reliable audit evidence
c) Evidence obtained from outside sources routed through the client
d) All are correct.
27. In an audit of financial statements, substantive tests are audit procedures that
a) May be eliminated for an account balance under certain conditions
b) Are designed to discover significant subsequent events
c) Will increase proportionately when the auditor decreases the assessed level of control risk
d) May be test of transactions, test of balance and analytical procedures
28. The nature, timing and extent of substantive procedures is related to assessed level of control
risk
a) Randomly b) Disproportionately c) Directly d) Inversely
29. Which of the following factors is most important in determining the appropriations of audit
evidence?
a) The reliability of audit evidence and its relevance in meeting the audit objective
b) The objectivity and integrity of the auditor
c) The quantity of audit evidence
d) The independence of the source of evidence
30. When is evidential matter, generally, considered sufficient?
a) When it constitutes entire population
b) When it is enough to provide a basis for giving reasonable assurance regarding truthfulness
c) When it is objective and relevant
d) When auditor collects and evaluates it independently
31. Which of the following is not corroborative evidence?
a) Minutes of meetings b) Confirmations from debtors

5
c) Information gathered by auditor through observation
d) Worksheet supporting consolidated financial statements
32. Audit programme is prepared by
a) The auditor b) The client c) The audit assistants d) The auditor and his audit assistants
33. The working papers which auditor prepares for financial statements audit are: _
a) Evidence for audit conclusions b) Owned by the client
c) Owned by the auditor d) Retained in auditor’s office until a change in auditors
34. The quantity of audit working papers complied on engagement would most be affected by
a) Management’s integrity b) Auditor’s experience and professional judgment
c) Auditor’s qualification d) Control risk
35. Which of the following best describes the primary purpose of audit programme preparation?
a) To detect errors or fraud. b) To comply with GAAP
c) To gather sufficient appropriate evidence d) To assess audit risk
36. Which of the following is not an advantage of the preparation of working paper?
a) To provide a basis for review of audit work
b) To provide a basis for subsequent audits
c) To ensure audit work is being carried out as per programme
d) To provide a guide for advising another client on similar issues
37. The auditor’s permanent working paper file should not normally, include
a) Extracts from client’s bank statements b) Past year’s financial statements
c) Attorney’s letters d) Debt agreements
38. For what minimum period should audit working papers be retained by audit firm?
a) For the time period the entity remains a client of the audit firm.
b) For a period of ten years
c) For a period auditor opines them to be useful in servicing the client
d) For the period the audit firm is in existence.

6
39. Which of the following factors would least likely affect the quantity and content of an auditor’s
working papers?
a) The assessed level of control risk b) The possibility of peer review
c) The nature of auditor’s report d) The content of management representation letter
40. Which of the following statement is true regarding an auditor’s working papers?
a) They document the level of independence maintained by the auditor
b) They should be considered as the principle support for the auditor’s report
c) They should not contain details regarding weaknesses in the internal control system
d) They help the auditor to monitor the effectiveness of the audit firm’s quality control
41. The current file of the auditor’s working papers, generally, should include
a) A flowchart of the internal controls b) Organization charts
c) A copy of financial statements d) Copies of bond and debentures
42. Knowledge of the entity’s business does not help the auditor to
a) Reduce inherent risk b) Identify problem areas
c) Evaluate reasonableness of estimates d) Evaluate appropriates of GAAP.
43. Payment for wages should be vouched with the help of
a) Piece Work Statement. b) Wage sheets c) Minutes book d) Bank pass book.
44. Payment for building purchased should be vouched with the help of
a) Title Deed b) Correspondence with the brokers c) Building Account d) Cash book
45. Purchase returns should be vouched with the help of
a) Bought notes b) Credit notes c) Goods inward book d) Cash book
46. Receipts from sale of investments should be vouched with the help of
a) Brokers bought notes b) Brokers Sold notes c) Minutes book d) Inventory of investment
47. Which of the following expenses should not be treated as capital expenditure?
a) Expenses paid on installation of a plant.
b) Cost of dismantling a building in case a new building is to be constructed on the land
c) Legal expenses incurred to defend a suit related to title of patent. The suit has been lost
7
d) The fees paid to engineer who constructed the plant.
48. Which of the following is not a revenue expense?
a) Cost of raising a loan
b) Cost of accessories of motor vehicles spent at the time of purchase
c) Expenses incurred for lying of sewers on land purchased
d) Insurance premium paid at the time of registration of the ship
49. Depreciation does not arise form
a) Effluxion of time b) Use
c) Obsolescence through technology be market changes d) Remarket expectation
50. Who is responsible for the appointment of statutory auditor of a limited company?
a) Directors of the company b) Members of the company
c) The Central Government d) All of the above
51. A statutory auditor has a right of access at all times to
a) Books and accounts of a company
b) Books, accounts and documents of the company
c) Books, accounts and vouchers of the company
d) Notices and documents of the company
52. The auditor has a right to
a) Obtain information and explanation
b) Obtain information and explanation from the employees and officers
c) Obtain information and explanation necessary for the purpose of audit
d) Both (b) and (c)
53. When restrictions that significantly affect the scope of the audit are imposed by the client, the
auditor generally should issue which of the following opinion?
a) Qualified opinion b) Disclaimer of opinion
c) Adverse opinion d) Unqualified report with ‘an emphasis of matter’ paragraph;

8
54. Which of the following report not result in qualification of the auditor’s opinion due to a scope
limitation?
a) Restrictions the client imposed b) Reliance on the report of other auditor
c) Inability to obtain sufficient appropriate evidential matter
d) Inadequacy of accounting records
55. The inventory consists of about one per cent of all assets. The client has imposed restriction on
auditor to prohibit observation of stock take. The auditor cannot apply alternate audit procedures.
a) Unqualified opinion b) Qualified opinion c) Disclaimer of opinion d) Adverse opinion
56. The management of a company, to which AS3 is not applicable, does not include statement of
cash flows in its annual report. The auditor should express
a) Unqualified opinion b) Qualified opinion c) Adverse opinion
d) Any of these depending upon materiality and pervasiveness and adequacy of disclosure
57. In case the auditor gives a disclaimer of opinion in the audit report which of the following
paragraph(s) of a standard unqualified audit report are modified?
a) Scope paragraph b) Opinion paragraph
c) Scope and opinion paragraphs d) introductory, scope and opinion paragraph
58. A departure from recognized accounting principle is disclosed in a note to the financial
statements. The auditor should
a) Issue a standard unqualified audit report b) Issue a qualified report
c) Issue an unqualified report with ‘emphasis of matter’ paragraph d) Disclaim opinion
59. An internal auditor discovered that fictitious purchases have been recorded by the purchase
clerk. This indicates absence of which control?
a) Purchase invoices are independently matched with purchase orders and goods received notes
b) Goods received notes requires the signature of individual who authorized the purchase
c) Routine checks are performed by internal auditor fortnightly.
d) Purchase function and production function are clubbed in one department
a) Reducing the cost of acquisition b) Selecting supplies
c) Authorizing the acquisition of goods d) Assuring the quality of goods

9
61. The auditor is most likely to examine related party transactions very carefully while vouching
a) Credit sales b) Sales returns c) Credit purchases d) Cash purchases
62. The creditor’s accounts, generally, have credit balance. Debit balance may be due to
a) Advance paid against an order b) Goods returned
c) Wrong debit to supplier account d) Any of these
63. In case of vouching, the auditor is least likely to examine authorization by appropriate authority
in case of –
a) Bad debts written off b) Sales return
c) Purchase return d) Discount allowed to customers as per organizational policy
a) It invoices substantiation of occurrence of transactions
b) Its objective is to establish existence, ownership, possession, valuation and disclosure of assets
c) The auditor has to form an opinion on different aspects
d) All are true
65. Which of the following statements is not true?
a) Valuation of assets is the responsibility of management
b) The auditor can rely on a certificate issued by an authorized valuer as to the valuation of assets in the
balance sheet
c) The auditor should value the asset as per generally accepted accounting principle
d) Valuation is no part of auditor’s duty
66. Tests of control are not concerned with_
a) Existence of controls b) Effectiveness of controls
c) Continuity of controls d) Designing of controls
67. The sequence of steps in the auditor’s consideration of internal control is as follows–
a) Obtain an understanding, design substantive test, perform tests of control, and make a preliminary
assessment of control risk
b) Design substantive tests, obtain an understanding, perform tests of control, and make a preliminary
assessment of control risk
10
c) Obtain an understanding, make a preliminary assessment of control risk, perform tests of control,
design substantive procedures.
d) Perform tests of control, obtain and understanding, make a preliminary assessment of control risk,
design
68. Which of the following is not an inherent limitation of internal control system?
a) Management override b) Collusion among employees
c) Inefficiency of internal auditor d) Abuse of authority
69. An auditor should study and evaluate internal controls to
a) Determine whether assets are safeguarded b) Suggest improvements in internal control
c) Plan audit procedures d) Express and opinion
70. The primary purpose of performing tests of control is to provide reasonable assurance that_
a) There are no material misstatements due to fraud or error in financial statement
b) Accounting system is well documented
c) Written evidence is there to support transactions d) if internal control is effective
71. If the auditor assesses control risk as high….
a) Document the conclusions b) Documents the reasons along with conclusions
c) Perform tests of control d) Perform walk through tests
72. The overall attitude and awareness of an entity’s board of directors concerning the importance
of internal control is reflected in
a) Accounting controls b) Control environment
c) Control procedures d) Supervision
73. Which of the following are included in test of control?
a) Reperformance and observation b) Inquiry and analytical procedures
c) Comparison and conformation d) Inspection and verification
74. Control risk is assessed at
a) Overall financial statements level b) Fraud risk factor level
c) Financial statement assertion level d) Control environment level

11
75. An 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 fix materiality level for each financial assertion
d) Is directly related to inherent risk
76. A flow chart, made by the auditor, of an entity’s internal control system is a graphic
representation that depicts the auditor’s.
a) Understanding of the system b) Understanding of fraud risk factors
c) Documentation of assessment of control risk d) Both (a) and (c)
77. The performance of tests of control is documented in
a) Audit programme b) Flow charts
c) Working papers d) Any of the above
78. The independence of an internal auditor will most likely be assured if he reports to the
a) President Finance b) President System
c) Managing Director d) CEO
79. In comparison to the independent auditor, an internal auditor is more likely to be concerned
with
a) Cost accounting system b) Internal control system
c) Legal compliance d) Accounting system
80. When an independent auditor relies on the work of an internal auditor, he or she should
a) Examine the scope of internal auditor’s work
b) Examine the system of supervising review and documentation of internal auditor’s work
c) Adequacy of related audit programme
d) all of the above
81. Proper segregation of duties reduces the opportunities in which a person would both
a) Establish controls and executes them b)Records cash receipts and cash payments
c) Perpetuate errors and frauds and conceals them d) Record the transaction in journal and ledger
12
82. Analytical procedures are least likely to be use in the audit of –
a) Cash balance b) Investments
c) Bills receivables d) Debtors
83. Before the work of audit is commenced, the auditor plans out the whole of audit work is called
A. Audit Plan B. Audit Note C. Audit Programme D. Audit Control
84. A number of checks and controls exercised in a business to ensure its efficient working are
known as
A. Internal Check B. Internal Control C. Internal Audit D. Interim Check
85. A Voucher is a .
A. Document is support of an entry made in books ofaccounts
B. Invoice received from suppliers
C. Receipt issued to a customer for cash D. Dispatch Receipt
86. Voucher relates to .
A. Cash receipt & payments, credit transactions B. Cash payment only
C. Credit transactions only D. Cash receipt only
87. Internal check is meant for .
A. Prevention of frauds B. Detection of frauds C. Helping audit is depth D. Detection of errors
88. Purchase of machinery is a .
A. revenue receipt B. capital receipt C. capital expenditure D. revenue expenditure
89. Sale of land is a .
A. revenue receipt B. capital receipt C. capital expenditure D. revenue expenditure
90. When a transaction has not been recorded in the books of account either wholly or partially
such errors are called as .
A. errors of commission B. errors of omission
C. compensating error D. error of principle
91. Verification of the value of assets, liabilities, the balance of reserves, provision and the amount
of profit earned or loss suffered a firm is called .
A. continuous audit B. balance sheet audit. C. interim audit D. partial audit

13
92. A sale of Rs. 50000 to Mr. A was entered as a sale to Mr. B. This is an example of what?
A. Error of omission B. Error of commission
C. Compensating error D. Error of principle
93. Recording a transaction twice in the books of original entry is an error of .
A. principle B. commission C. duplication D. omission
94. Errors and frauds already committed can be discovered under the system of .
A. internal audit, internal check, internal control B. external check
C. statutory audit D. interim audit
95. Treating revenue expenditure as capital expenditure is a case of .
A. fraud B. misappropriation of cash
C. misappropriation of goods D. manipulation of accounts
96. Special audit is necessary for .
A. inefficient concern B. processing concern
C. trading concern D. manufacturing concern
Answer Key:- (Auditing & Assurance)
1-b 11-c 21-b 31-d 41-c 51-c 61-c 71-a 81-c 91-b
2-c 12-d 22-d 32-d 42-a 52-d 62-d 72-b 82-a 92-b
3-c 13-a 23-d 33-c 43-b 53-a 63-d 73-a 83-c 93-c
4-d 14-d 24-a 34-b 44-a 54-b 64-a 74-c 84-b 94-a
5-c 15-b 25-c 35-c 45-b 55-c 65-c 75-a 85-a 95-d
6-b 16-d 26-b 36-d 46-b 56-a 66-d 76-a 86-a 96-a
7-c 17-b 27-d 37-a 47-c 57-c 67-c 77-c 87-a
8-b 18-a 28-c 38-c 48-b 58-b 68-c 78-c 88-c
9-d 19-a 29-a 39-d 49-d 59-a 69-c 79-b 89-b
10-c 20-c 30-b 40-b 50-b 60-c 70-d 80-d 90-b
AUDITING AND TAXATION
1. The primary objective of periodical audit is to-----------------
a) Verify whether cash balance as per day book tallies with the cash balance
b) Verify whether all receipts and payments are recorded properly
c) Verify whether all assets and liabilities are recorded properly
Answer: c) Verify whether all assets and liabilities are recorded properly,
because periodical audit is the other name for balance sheet audit.
2. The type of audit to be done, when there is not legal obligation to do so, it is known as --
---------
a) Independent Audit
b) Voluntary Audit
c) Statutory Audit
Answer c) Voluntary Audit
3. The main approach of and External Auditor is to -------------
a) Collect adequate and reliable evidences

b) To ensure that the statement prepared are in compliance with the prevailing law
c) Both a and b
Answer c) Both a and b – Auditor needs to primarily check that the

enterprise has prepared the financial statements considering all the
statutory requirements, and they convey a true and fair results.
1
Page
4. --------------- Audit is done to satisfy the legal obligation.

TY BCOM – AUDITING AND TAXATION – MCQ – QUESTION BANK - COMPILED BY MANOJ
VORA.
a) Internal
b) Voluntary
c) Statutory
Answer : c) Statutory Audit
5. ---------------- Auditor is the employee of the organization and appointed by the

management.
a) External
b) Interim
c) Internal
Answer: c) Internal Auditor
6. ----------------- Audit comprises of instructions given by the Controller and Auditor

General of India
a) Statutory Audit
b) Management Audit
c) Government Audit
Answer: c) Government Audit.
7. Audit conducted between two annual Audits is known as ------------.
a) External Audit
b) Internal Audit
c) Interim Audit
Answer: c) Interim Audit
8. Planning What, How and by Whom, before commencing the Audit is known as ----------
---
2
Page
a) Audit plan

VORA.
b) Audit note
c) Audit program
Answer: c) Audit Program
9. Internal Auditors are required to do -------------- Audit to ensure completeness, accuracy

and correctness.
a) Full and Complete Audit

b) Partial Audit
c) Test Audit
Answer: a) Full and complete audit.
10. -------------------- Audit becomes compulsory under law.
a) Statutory Audit
b) Government Audit
c) Internal Audit
Answer: a) Statutory Audit
11. Internal Audit is mainly concerned with ------------------
a) Evaluation of Internal Control

b) Quality of actual performance
c) Both a and b
Answer: c) both a and b – Internal audit mainly aims at strengthening

the Audit system. It mainly focuses on improving the overall efficiency and
productivity of the organization.
12. Following is the merit of continuous audit
a) Detection and prevention or errors and frauds at an early stage

3
b) Suitable for large firms

Page

VORA.
c) Disrupts client’s work frequently
Answer: a) Detection and prevention or errors and frauds at an early stage.

Accounts are checked in the whole financial period during which the
transactions and events are occurring.
13. The other name for continuous audit is -----------------
a) Concurrent audit
b) Final Audit
c) Independent Audit
Answer: a) Concurrent audit – It takes place simultaneously as and

when the actual transactions and events are taking place.
14. Final audit means-------------------
a) It begins when the final books of accounts closed at the end of the accounting
period
b) It is the last audit
c) None of the above
Answer: a) Final audit – Final audit begins after the completion of the
accounting period when the financial statements are prepared after closing
the books of accounts.
15. Final audit is also known as -------------------
a) Completed Audit
b) Continuous Audit
Answer: a) Completed audit – Final audit begins after the completion of the
accounting period when the financial statements are prepared after closing
the books of accounts.
4
Page

VORA.
16. Locate, which one is an example of statutory audit-------------
a) Audit of a partnership firm having a turnover of Rupees 5 Crores

b) Audit of Manish Stores – Sole proprietor firm
Answer: a) Audit if a partnership frim having a turnover of above 5 crores –

The above audit is compulsory under sec 44AB – Tax Audit.
17. Locate, which one is an example of statutory audit-------------
a) Audit of ICICI Bank

b) Audit of HUF
Answer: a) Audit if a ICICI Bank is statutory. Every bank irrespective of its

turnover, net worth, years of establishment etc has to get its annual accounts
audited as per the provisions of Banking Act of 1949.
5
Page

VORA.
1. Income from Salary includes ---------------
a) Monetary and non-monetary benefits due from employer to employee

b) Monetary and non-monetary benefits paid to employee by the employer
c) Monetary and non-monetary benefits paid by partnership firm to its partners
Answer: c) Monetary and non-monetary benefits due from employer to

employee -. Basic Pay, allowances, perquisites
2. Mr. Mohan working with Mohit Applliances & Co, receives Rupees 625000/- as salary
and the employer has deducted Rs62500/- towards TDS but not yet remitted to Income
Tax Authority. Find the amount of salary which Mr. Mohan has to fill in his return. An
amount of Rs6500/-Interest on 5 years Tax Saver FD has accrued in the current PY.
a) Rs 6,25,000/-
b) Rs 6,99,000/-
c) Rs 6,31,500/-
Answer: a) Rs. 6,99,000/- The total amount due, received and deducted will
have to be included in the return.
3. Mr. Kaustub, who retired in 2018, shifted to Tokyo. He was an employee in Tokyo and
receiving Salary. Additionally he also was paid pension from Indian Company. Which
Income will be taxable in India, under the head Salary.
a) Both amount of salary in Tokyo and the pension from Indian Company.
b) Pension will be taxable in India under the head Income from Salary
Answer: b) Pension arising and payable out of Indian company only can be
taxed under the head salary.
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VORA.
4. Mr. Kamlesh is a Government Employee earning a salary of Rs680000 pa; for the PY
18-19. He received an amount of Rs120000/- as additional pay pertaining to PY16-17 in
the FY 18-19. What will the total income of Mr. Kamlesh if his income from other
sources is Rs180000/- for PY 18-19.
a) Rs. 840000/-
b) Rs. 980000/-
c) Rs. 680000/-
Answer: b) Rs 980000/- Salary pertaining to previous years but received during

the year which was not due in the previous year will be taxable in the year it is
received.
5. Mr.X receives a gross salary of Rs50000/- per month. In the PY 19-20, the salary of
February and March 2020 was paid in the month of May 2020. Find the total taxable
salary of Mr X for the AY 20-21
a) Rs 600000/-
b) Rs 500000/-
c) Rs 100000/-
Answer: a) Rs 600000/- Salary has to be the amount due and not the amount
actually received.
6. Mr Y is given Rs 6000 pm as additional amount along with basic salary for the purpose
of meeting the cost of travel between the office and his residence. Rs 72000/- should be
shown as------------------
a) Perquisite
b) Allowance
c) Bonus
Answer: b) Allowance – Allowance refers to any additional amount given

regularly to meet some specific expenditure.
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VORA.
7. Mr, Z working in XYZ ltd, along with the salary was offered accommodation at a
concessional rate. The compensation can be termed as ------------------ under the head
income from salary
a) Allowance
b) Bonus
c) Perquisite
Answer: c) Perquisite – Any benefit which not in cash but in kind can be
termed as a perk or perquisite. Rent free accommodation, or accommodation at
a concessional rate is an example of a perquisite.
8. “Salary” includes Basic pay + DA (part forming for retirement benefit) + commission at
fixed % in the calculation of --------------------
a) Rent free accommodation

b) House Rent Allowance
Answer: b) HRA – for the purpose of calculating HRA salary includes Basic
pay plus Dearness Allowance plus fixed percentage of commission.
9. Salary for the purpose of Entertainment allowance includes-------------
a) Basic Pay
b) Basic Pay + DA + fixed % of Commission
c) Basic Pay + DA + Bonus + Commission + All taxable Allowances
Answer: a) 20% of the Basic Pay only is considered for deduction for
Government Employees.
10. Salary for the purpose of employer’s contribution to RPF includes-------------

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a) Basic Pay

VORA.
b) Basic Pay + DA + fixed % of Commission
c) Basic Pay + DA + Bonus + Commission + All taxable Allowances
Answer: b) Basic Pay + DA + fixed % of Commission – 12% of Salary is

exempt for employer’s contribution to RPF. Salary will include Basic Pay
plus part of Dearness Allowance forming the part of retirement benefit plus
fixed percentage of commission.
.
11. Employer’s contribution to the following --------------- provident fund can be exempted
upto 12% of Salary
a) Recognized
b) Unrecognized
c) Public provident fund
Answer: a) Recognized Provident Fund (RPF) – Contribution made to RPF by

the employer is exempted upto 12% of salary.
12. Employer’s contribution to the following --------------- provident fund is fully exempt
from tax
a) Recognized
b) Unrecognized
c) Statutory
Answer: a) Statutory provident fund – Usually Government as an employer and

selected other companies have to statutorily contribute to statutory provident
fund. Entire contribution made by the central Government to such
contributions is fully exempt from tax.
13. The following amounts, pertaining to Statutory Provident Fund are fully exempt from
tax.
a) Employer’s contribution to Statutory Provident Fund.

b) Interest credited to SPF, Lump sum amount payable on retirement.
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c) Both a and b

VORA.
Answer: c) Both a and b. - It is EEE – amount contributed, interest earned on it

and the maturity amount all are exempt in the hands of employee.
14. An Employer does not contribute to the following------------------ provident fund for his
employees
a) Recognized or Unrecognized Provident Fund

b) Public Provident Fund
c) Statutory Provident Fund
Answer: c) Public Provident Fund – An employer can contribute to Recognized

or unrecognized provident fund. Government Employers contribute to
Statutory Provident Fund. Any person whether and employee or otherwise can
contribute a maximum of Rupees One lakh fifty thousand pa. in a PPF.
15. The maximum amount of exemption an Government Employee can avail for
Entertainment Allowance p.a is ---------------
a) Rupees Five Thousand

b) 20% of Basic Pay
c) Actual amount of Allowance spent for Entertainment purpose
Answer: b) Rupees Five Thousand only- maximum of the above three is

exempt for entertainment allowance restricted to Government Employees
only.
16. Mr. X working in Reliance Industries along with Basic pay and other allowance also
received Rs1000/- pm for entertainment expenses. How much of entertainment
allowance can he exempt under his salary. He spent Rupees Five thousand towards
entertainment in the year.
a) Rupees Twelve Thousand

b) Nil
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c) Rupees Five Thousand

VORA.
Answer: b) Nil – There is no exemption for non-Government Employees.
17. An employee can claim exemption on transport allowance upto a maximum of -----------
----- pa.
a) Rupees Nineteen Thousand Two Hundred
b) Rupees Nine Thousand Six Hundred
c) Nil
Answer: c) Nil – Exemption on Transport Allowance is disallowed as employees

can claim Standard Deduction under Sec 16(i)
18. Mr. Z working in a private organization was given education allowance of Rs 400 per
month per child for his three children. Maximum amount he can claim exemption for
children education allowance is ----------.
a) Rupees Two Thousand Four Hundred p.a.

b) Rupees Four Thousand Eight Hundred p.a.
c) Rupees Three Thousand Six Hundred p.a.
Answer: c) Rupees Two Thousand Four Hundred p.a - Rs100 per month per
child for a maximum of two children is only exempted.
19. Mr. Fernandes an employee of a semi- Government firm received Hostel allowance of
Rs 15000/- for his three children. What amount of exemption can he claim under hostel
expenditure allowance?
a) Rupees Fifteen Thousand p.a

b) Rupees Seven Thousand Two Hundred p.a
c) Rupees Ten Thousand Eight Hundred p.a
Answer b): Rupees Seven Thousand Two Hundred p.a - Maximum of Rupees
Three Hundred per month per child for a maximum of two children.
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VORA.
20. Following are examples of fully Taxable Allowances
a) Servant Allowance, Tiffin Allowance, Fixed Medical Allowance.

b) Child Education Allowance, Hostel Expenditure Allowance
Answer a): Servant, Tiffin, Medical Allowances are fully taxable. There is no
exemption on these allowances. The amount needs to be included in the salary.
21. XYZ Limited had a practice of distributing a silver medal worth Rs . 4999/- to its
employees on the occasion of Diwali. How would Mr. X include the same in the
computation of his income.-------------------
a) Not include in the computation of Income under any head.

b) Will include under the Head Income from Other Sources
c) Will include under the Head Income from Salaries as a perquisite.
Answer a): Gifts made in kind not exceeding Rs. 5000/- (total amount of all gifts
not exceeding in the previous year) are exempt and not taxable, in the hands of
the employee.
22. XYZ Limited had a practice of distributing a Gift Cheque (bearer) worth Rs . 4001/- to
its employees on the occasion of Marriage. How would Mr. X include the same in the
computation of his income.-------------------
a) Not include in the computation of Income under any head.

b) Will include under the Head Income from Other Sources
c) Will include under the Head Income from Salaries as a perquisite.
Answer a): Gifts made in kind not exceeding Rs. 5000/- (total amount of all gifts
not exceeding in the previous year) are exempt and not taxable, in the hands of
the employee. Mr.X has received a bearer cheque; which is equivalent to cash.
Any amount paid in cash will form a part of salary. Hence Mr. X has to include
it as perquisite under the head Income from Salary.
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VORA.
1. The term Auditing includes ---------------
a) Assessing the significant estimates made by the management in the preparation of

financial statements
b) Assessing accounting principles used in the preparation of the financial statements.
c) Both a and b
Answer: c) both a and b Auditing here refers to financial audit. It is done to give
the opinion on compliance of various laws related to the activities and the
principles of accounting.
2. --------------- is the example of fictitious Asset.
a) Cash and Bank Balance

b) Preliminary Expenses
c) Land & Building
Answer: b) Preliminary Expenses
3. When Audit is in the form of investigation the main objective is to ----------
a) Detect and prevent errors and frauds

b) Vouch the cash book
c) Prepare a systematic audit program
Answer c) Prepare a systematic audit program. Financial Audit is

examination and verification of books of accounts, documents and financial
statements.
Whereas, Investigation is in-depth enquiry, based on suspicion of illegal,
immoral, negligent or fraudulent act. It is focused on specific scrutiny to
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collect the evidences of the fraud.

VORA.
4. Financial statements prepared by the company should be ---------------
a) As per financial reporting framework

b) Should agree with the books of accounts, and supported by the documentary
evidences
c) Both a and b
Answer c) An Auditor needs to verify whether the financial statements have

been prepared taking into consideration all the accounting principles,
provisions of various regulations, and are in agreement with the actual
transactions.
5. ---------------------- refers to the critical and analytical examination of financial records.
a) Auditing
b) Accounting
c) Investigation
Answer: a) Auditing
6. The process of ---------------- begins, when the process of Accounting completes
a) Book Keeping
b) Investigating
c) Auditing
Answer: c) Auditing
7. Auditing begins when accountancy ends means--------------
a) Auditor has to start the Audit work only after the financial statements are
prepared by the client.
b) Auditing requires all the documentary evidences, books of accounts and all
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other relevant documents at the time of auditing.

VORA.
Answer: b) Auditing requires all the documentary evidences, books of

accounts and all other relevant documents at the time of auditing.
8. Auditing begins and continues until --------------
a) The audit work gets completed.

b) The Central Government removes them
c) The next AGM takes place.
Answer: c) Auditing has to continue till the next Annual General Meeting
takes place. The main purpose of preparing the audit report is to inform the
facts and figures to the members or the owners of the company. Officially
shareholders meet in AGM. The Auditor needs to present and clarify all
queries of the shareholders in regards to the Audit work in the AGM.
9. While Auditing the books of an entity, the auditors must ensure that they----------------
a) Follow the Accounting principles and standards

b) Follow the Auditing Standards
c) Follow the Generally Accepted Audit Procedure
Answer: c) Auditors have the follow the Generally Accepted Audit

Procedure.
10. On signing the Audit engagement, Auditors prepare an Audit program to ensure that
complete audit takes place in a systematic manner. The work is allocated and distributed
on the basis of ---------------
a) Identifiable units or books of accounts or assets and liabilities

b) Months or days or number of transactions
c) Both a and b
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VORA.
Answer: c) Both a and b. Auditor plans the work in some systematic
manner. The Auditor evaluates the quantum or work and then allocates the
work among the staff in a flexible manner to cover every materially
important area on whose basis a true and fair report and opinion can be
concluded.
11. ---------------, means the information based on which the Auditor gives his opinion and
prepares the Audit report.
a) Audit Note book

b) Audit working papers
c) Audit Evidence
Answer: c) Audit Evidence refers to the information which may be in form

or documents, vouchers, explanations, minutes of meetings, or explanation
and clarification given by employees, management and third party in
arriving at a conclusion.
12. ---------------, refers to a process adopted by the auditor to authenticate the truthiness and
correctness by way of examining the records or documents or physical examination of
an object or asset
a) Inspection
b) Audit
c) Vouching
Answer: a) Inspection of physical assets, documents, records and any other

evidence means to believe the truthiness of occurrence of an event.
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VORA.
Commerce Pk - QUALITY EDUCATION BEYOND YOUR
IMAGINATION
MCQ‛S QUESTION BANK - AUDITING

INTRODUCTION TO AUDITING
1. The main object of an audit is ___
a) Expression of opinion b) Detection and Prevention of fraud and error
c) Both (a) and (b) d) Depends on the type of audit.
2. The title of AAS-2 issued by Council of ICAI is ___

a) Objective and Scope of the Financial Statements
b) Objective and Scope of the Audit of Financial Statements
c) Objective and Scope of Business of an Entity
d) Objective and Scope of Financial Statements Audit
3. Which of the following is not true about opinion on financial statements?

a) The auditor should express an opinion on financial statements.
b) His opinion is no guarantee to future viability of business
c) He is responsible for detection and prevention of frauds and errors in financial statements
d) He should examine whether recognised accounting principle have been consistently
4. A sale of Rs. 50.000 to A was entered as a sale to B. This is an example of _

a) Error of omission b) Error of commission c) Compensating error d) Error of principle
5. ‘Goods sent on approval basis’ have been recorded as ‘Credit sales’. This is an example of _
a) Error of principle b) Error of commission c) Error of omission d) Error of duplication
6. Which of the following statements is not true?

a) Management fraud is more difficult to detect than employee fraud
b) Internal control system reduces the possibility of occurrence of employee fraud and
management fraud
c) The auditor’s responsibility for detection and prevention of errors and frauds is similar.
d) All statements are correct.
7. As per AAS-4 if auditor detects an error then –

a) He should inform the management.
b) He should communicate it to the management if it is material
c) The auditor should ensure financial statements are adjusted for detected errors.
d) Both (b) and (c)
8. Which of the following is not a limitation of audit as per AAS-4?

a) Objectivity of auditor’s judgment b) Selective testing
c) Persuasiveness of evidence d) Limitations of internal control system.
9. How many principles are listed in AAS1 which govern auditor’s professional obligation?
a) Nine b) Fourteen c) Seven d) Eight
10. Both auditing and accounting are concerned with financial statements. Which of the
following
a) Auditing uses the theory of evidence to verify the financial information made available by
Accountancy
b) Auditing lends credibility dimension and quality dimension to the financial statements
prepared by the accountant.
c) Auditor should have through knowledge of accounting concepts and convention to enable
him to express an opinion on financial statements
d) All of the above.
11. The risk of management fraud increases in the presence of :
a) Frequent changes in supplies b) Improved internal control system c) Substantial
increases in sales
d) Management incentive system based on sales done in a quarter
AUDITING MCQS________________________1
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12.Auditing standards differ from audit procedures in that procedures relate to

a) Audit assumptions b) acts to be performed c) quality criterion d) methods of work
13. Which of the following factors likely to be identified as a fraud factor by the auditor?
a) The company is planning a initial public offer of quality shares to raise additional capital
for expansion.
b) Bank reconciliation statement includes deposits-in-transit.
c) Plant and machinery is sold at a loss.
d) The company has made political contributions.
14.The most difficult type of misstatement to detect fraud is based on:

a) Related party purchases b) Related party sales
c) The restatement of sales d) Omission of a sales transaction from being recorded.
15. Which of the following statements is correct concerning the required documentation in
working papers of fraud risk assessment undertaken by the auditor?
a) All risk factors as mentioned in AAS-4, should be considered and documented along with
response to them.
b) Document the identification of fraud risk factors along with response to them.
c) Document material fraud, risk factors and response to them.
d) No documentation in required.
16. Which of the following is the most appropriate potential reaction of the auditor to his
assessment that the risk of material misstatement due to fraud is high in relation to
existence of inventory?
a) Visit location on surprise basis to observe test counts
b) Request inventory count at a date close to year-end
c) Vouch goods sent on approval very carefully
d) Perform analytical procedures.
17. Which of the following is not likely to be a fraud risk factor relating to management’s
characteristics
a) Tax evasion b) Failure to correct known weakness in internal control system c)
Adoption of conservative accounting principles
d) High management turnover
18. Professional skepticism requires that the auditor assume that management is
a) reasonably honest b) Neither honest nor dishonest
c) Not necessarily honest d) Dishonest unless proved otherwise
19. Which of the following information should a successor auditor obtain during the inquiry of
the predecessor auditor before accepting engagement?
i) Information about integrity of management
ii) Disagreement with management concerning auditing procedures
iii) Review of internal control system.
iv) Organisation structure
a) (i) and (ii) b) (ii) and (iii) c) (i) , (ii) and (iii) d) i) and (iii)
20.The audit engagement letter, generally, should include a reference to each of the following
except
a) limitations of auditing b) responsibilities of management with respect to audit work
c) expectation of receiving a written management representation letter.
d) a description of the auditor’s method of sample selection.
21. The use of an audit engagement letter is the best method of assuring the auditor will have
which of the following?
a) Auditor will obtain sufficient appropriate audit evidence.
b) Management representation letter
c) Access to all books, accounts and vouchers required for audit purpose
d) Cooperation from other auditors
AUDITING MCQS_______________________2
www.commercepk.com
22. The use of an audit engagement letter is the best method of documenting
i) the required communication of significant deficiencies in internal control
ii) significantly higher control risk than that assessed in prior audit.
iii) Objective and scope of auditor’s work
iv) Notification of any changes in the original arrangements of the audit.
a) (i) and (ii) b) (i) and (iii) c) ii and (iv) d) (iii and (iv)
23. An auditor who accepts an audit but does not possess the industry expertise of the business
entity should
a) engage experts
b) obtain knowledge of matters that relate to the nature of entity’s
business c) inform management about it d) take help of other auditors
24. The least important element in the evaluation of an audit firm’s system of quality control
would relate to-
a) assignment of audit assistants b) system of determining audit fees
c) consultation with experts d) confidentiality of client’s information
25. The primary purpose of establishing quality control policies and procedures for deciding on
client evaluation is to-
a) ensure adherence to generally accepted auditing standards
b) acceptance or retention of clients whose management does not lack integrity
c) ensure audit fees is charged according to the type of audit work assigned
d) all of the above
26. Which of the following is not a quality control consideration on accepting a new client?
a) Availability of audit assistants with necessary skill and competence.
b) Provision of other services to the client which may impair independence
c) Predecessor auditor’s advice as to whether audit fees were paid promptly
d) Review of audit work done by one partner by the other
27. An auditor obtains knowledge about a new client’s business and its industry to
a) Make constructive suggestions concerning improvements to the client’s internal control
system.
b) Evaluate the appropriateness of audit evidence obtained
c) Under stand the events and transactions that may have an effect on client’s financial
statements.
d) All of the above
CONCEPTS OF AUDITING
1. Audit of banks is an example of –
a) Statutory 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 India, balance sheet audit is synonymous to-

a) Annual audit b) Continuous audit c) Detailed audit d) Statutory audit
4. Audit in depth is synonymous for-

a) Complete audit b) Completed audit c) Final audit d) Detailed audit
5. Balance sheet audit includes verification of_

a) Assets b) Liabilities
c) Income and expense accounts where appropriate d) All of the above
AUDITING MCQS________________________3
WWW.COMMERCEPK.COM

a) It is conducted at regular interval b) It may be carried out on daily basis c) It is needed
when the organization has a good internal control system
d) It is expensive
7. Which of the following is not a fact of EPA?

a) Economic audit b) Efficiency audit c) Expenditure audit d) Effectiveness audit
8. The Delhi Government had constructed six bungalows for its ministers. They are lying
unoccupied for last three years. This would be a matter of concern for-
a) Propriety Auditor b) Performance Auditor c) Financial Auditor d) None of the above
9. Financial auditor is not concerned with propriety of business transactions. However, the
exceptions to this rule are contained for audit of limited companies in_
a) Section 227 (IA) of the Companies Act, 1956
b) Section 227 (IA) and section 227(4A) of the Act
c) CARO, 2003 d) Section 227 (IA) and CARO, 2003
10. Balance sheet does not include-

a) Verification of assets and liabilities
b) Vouching of income and expense accounts related to assets and liabilities
c) Examination of adjusting and closing entries d) Routine checks
11. Which of the following statements is not correct about materiality?

a) Materiality is a relative concept
b) Materiality judgments involve both quantitative and qualitative judgments
c) Auditor’s consideration of materiality is influenced by the auditor’s perception of the
needs of an informed decision maker who will rely on the financial statements
d) At the planning state, the auditor considers materiality at the financial statement level
only
12. …..the audit risk,….. the materiality and ……the audit effort
a) Lower, Higher, Lower b) Lower, Lower, Higher
c) Higher, Lower, Lower d) Lower, Higher, Higher
13. When issuing unqualified opinion, the auditor who evaluates the audit findings should be
satisfied that the
a) Amount of known misstatement is documented in working papers
b) Estimates of the total likely misstatement is less than materiality level c)
Estimate of the total likely misstatement is more than materially level
d) Estimates of the total likely misstatement cannot be made
14. In determining the level of materiality for an audit, what should not be considered?
a) Prior year’s errors b) The auditor’s remuneration
c) Adjusted interim financial statements d) Prior year’s financial statements
15. Analytical procedures issued in the planning stage of an audit, generally

a) helps to determine the nature, timing and extent of other audit procedures
b) directs attention to potential risk areas
c) indicates important aspects of business d) All of the above
16. Which of the following statements is most closely associated with analytical procedure
applied at substantive stage?
a) It helps to study relationship among balance sheet accounts
b) It helps to discover material misstatements in the financial statements
c) It helps to identify possible oversights
d) It helps to accumulate evidence supporting the validity of a specific account balance
AUDITING MCQS_______________________4
COMMERCE PK- QUALITY EDUCATION BEYOND YOUR IMAGINATION
17. For all audits of financial statements made in accordance with AAS-14, the use of analytical
procedures is at the discretion of the auditor in which stage?
a) Substantive testing b) Planning stage c) Overall review stage d) All of the above
18.The basic assumption underlying the use of analytical procedures is :

a) It helps the auditor to study relationship among elements of financial information
b) Relationship among data exist and continue in the absence of known condition to the
contrary
c) Analytical procedures will not be able to detect unusual relationships
d) None of the above.
19. What are analytical procedures?

a) Substantive tests designed to assess control risk
b) Substantive tests designed to evaluate the validity of management’s representation letter
c) Substantive tests designed to study relationships between financial and non-financial
d) All of the above
20. Which of the following is not an analytical procedure?

a) Tracing of purchases recurred in the purchase book to purchase invoices.
b) Comparing aggregate wages paid to number of employees
c) Comparing the actual costs with standard costs
d) All of them are analytical procedure
21. When applying analytical procedures, an auditor could develop independent estimate of an
account balance to compare it to-
a) client’s unedited account balance
b) client’s unedited account balance adjusted for trends in the industry
c) Prior year audited balance
d) Prior year audited balance adjusted for trends in the industry
22. What is the primary objective of analytical procedures used in the overall review stage of an
audit?
a) To help to corroborate the conclusions drawn from individual components of financial
statements
b) To reduce specific detection risk
c) To direct attention to potential risk areas
d) To satisfy doubts when questions arise about a client’s ability to continue
AUDIT EVIDENCE
a) Bank statements obtained from the client
b) Documents obtained by auditor from third parties directly.
c) Carbon copies of sales invoices inspected by the auditor
d) Computations made by the auditor
2. Which of the following statements is, generally, correct about the reliability of audit
evidence?
a) To be reliable, evidence should conclusive rather than persuasive
b) Effective internal control system provides reliable audit evidence
c) Evidence obtained from outside sources routed through the client
d) All are correct.
3. In an audit of financial statements, substantive tests are audit procedures that __

a) may be eliminated for an account balance under certain conditions
b) are designed to discover significant subsequent events
c) will increase proportionately when the auditor decreases the assessed level of control risk
d) may be test of transactions, test of balance and analytical procedures
AUDITING MCQS________________________5
WWW.COMMERCEPK.COM
4. The nature, timing and extent of substantive procedures is related to assessed level of
control risk
a) randomly b) disproportionately c) directly d) inversely
5. Which of the following factors is most important in determining the appropriations of audit
evidence?
a) The reliability of audit evidence and its relevance in meeting the audit objective
b) The objectivity and integrity of the auditor
c) The quantity of audit evidence d) The independence of the source of evidence
6. When is evidential matter, generally, considered sufficient?

a) When it constitutes entire population
b) When it is enough to provide a basis for giving reasonable assurance regarding
truthfulness
c) When it is objective and relevant
d) When auditor collects and evaluates it independently
7. Which of the following is not a corroborative evidence?

a) Minutes of meetings b) Confirmations from debtors c) Information gathered
by auditor through observation
d) Worksheet supporting consolidated financial statements
8. Which of the following statements is not true with respect to management representations
obtained as per AAS-11?
a) Authenticated copy of relevant minutes of meetings may be regarded as management
representation
b) It should always be in working
c) It may be dated prior to the report date d) It should be addressed to the auditor
9. What would most appropriately describe the risk of incorrect rejection in terms of
substantive testing?
a) The auditor concludes balance is materially correct when in actual fact it is not
b) The auditor concludes that the balance is materially misstated when in actual fact it not
c) The auditor has rejected an item for sample which was material
d) None of the above
10.Which of the following affects audit effectiveness?

a) Risk of over reliance b) Risk of incorrect rejection
c) Risk of incorrect acceptance d) Both (a) and (c)
11. What would most effectively describe the risk of incorrect acceptance in terms of substantive
audit testing?
a) The auditor has ascertained that the balance is materially correct when in actual fact it is
not
b) The auditor concludes the balance is materially misstated when in actual fact is not
c) The auditor has rejected an item from sample which was not supported by documentary
evidence
d) He applies random sampling on data which is inaccurate and inconsistent
AUDIT PREPARATION
1. Which of the following Auditing Assurance Standard deals with Audit Planning?
a) AAS-7 b) AAS-8 c) AAS-9 d) AAS-3
2. Audit programme is prepared by-

a) the auditor b) the client c) the audit assistants
d) the auditor and his audit assistants
AUDITING MCQS_______________________6
3. The working papers which auditor prepares for financial statements audit are : _
a) evidence for audit conclusions b) owned by the client
c) owned by the auditor d) retained in auditor’s office until a change in auditors
4. The quantity of audit working papers complied on engagement would most be affected by-
a) management’s integrity b) auditor’s experience and professional judgment
c) auditor’s qualification d) control risk
5. Which of the following best describes the primary purpose of audit programme preparation?
a) To detect errors or fraud. b) To comply with GAAP
c) To gather sufficient appropriate evidence d) To assess audit risk
6. Which of the following is not an advantage of the preparation of working paper?

a) To provide a basis for review of audit work
b) To provide a basis for subsequent audits
c) To ensure audit work is being carried out as per programme
d) To provide a guide for advising another client on similar issues
7. The auditor’s permanent working paper file should not normally, include
a) extracts from client’s bank statements b) past year’s financial statements
c) attorney’s letters b) debt agreements
8. For what minimum period should audit working papers be retained by audit firm?
a) For the time period the entity remains a client of the audit firm.
b) For a period of ten years
c) For a period auditor opines them to be useful in servicing the client
d) For the period the audit firm is in existence.
9. Which of the following factors would least likely affect the quantity and content of an
auditor’s working papers
a) The assessed level of control risk b) The possibility of peer review
c) The nature of auditor’s report d) The content of management representation letter
10. Which of the following statement is true regarding an auditor’s working

papers? a) They document the level of independence maintained by the auditor
b) They should be considered as the principle support for the auditor’s report
c) They should not contain details regarding weaknesses in the internal control system
d) They help the auditor to monitor the effectiveness of the audit firm’s quality control
11. Which of the following statement best describes the understanding with respect to
ownership and custody of working papers prepared by an auditor?
a) The working papers may be obtained by third parties when they appear to be relevant to
issues raised in litigation
b) The safe custody of working papers is the responsibility of client, if kept at his premises
c) The working papers must be retained by an audit firm for a period of 10 years
d) Successor auditors may have access to working papers of the predecessor auditors. The
approval of client is not required.
12. The current file of the auditor’s working papers, generally, should include
a) a flowchart of the internal controls b) Organisation charts
c) a copy of financial statements d) copies of bond and debentures
13.Knowledge of the entity’s business does not help the auditor to-
a) reduce inherent risk b) identify problem areas
c) evaluate reasonableness of estimates d) evaluate appropriates of GAAP.
14.The main advantage of using statistical sampling techniques is that such techniques:
a) mathematically measure risk b) eliminate the need for judgmental sampling
c) defines the values of tolerable error d) all of the them.
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15. Which of the following methods of sample selection is least suitable for extrapolating results
to the population?
a) Systematic sampling b) Random sampling c) Haphazard sampling d) None
16. Which of the following statements is correct?

a) Lower the sampling risk greater the sample size
b) Smaller the tolerable error, greater the sample size
c) Lower the expected error, smaller the sample size d) All are correct
17. Which of the following features is most important for random-based selection?
a) Sample should be drawn form population
b) Every strata of population should be represented in the sample
c) Every item in the population has an equal chance of being selected in the sample
d) Items should be selected at ‘n’ th interval
18. Risk of under reliance is the risk that the sample selected to test controls___
a) Does not support the auditor’s planned assessed level of control risk when the true
operating effectiveness of the control structure justifies such an assessment
b) Supports the auditor’s planned assessed level of control risk when the actual position
does not warrant such reliance
c) Is not supported by adequate documents d) both (a) & (c)
19. Which of the following factors is (are) considered in determining the sample size for tests of
control?
a) Projected error b) Tolerable error c) Expected error d) Both (b) and (c)
20.Tolerable error, is the maximum monetary error that the auditor is prepared to accept in the
population and still conclude that audit objective has been achieved, is directly related to
a) Sample size b) Audit risk c) Materiality d) Expected error
CAPTIAL AND REVENUE EXPENDITURE

1. Which of the following expenses should not be treated as capital expenditure?
a) Expenses paid on installation of a plant.
b) Cost of dismantling a building in case a new building is to be constructed on the land
c) Legal expenses incurred to defend a suit related to title of patent. The suit has been lost
d) The fees paid to engineer who constructed the plant.
2. Which of the following is not a revenue expense?

a) Cost of raising a loan
b) Cost of accessories of motor vehicles spent at the time of purchase
c) Expenses incurred for laying of sewers on land purchased
d) Insurance premium paid at the time of registration of the ship
3. Depreciation does not arise form _______

a) effluxion of time b) use
c) obsolescence through technology be market changes d) remarket expectation
4. Which of the following Schedule of the Companies Act, 1956 deals with depreciations?
a) Schedule XIV b) Schedule V c) Schedule XIII d) Schedule X
5. Schedule XIV has prescribed rates of depreciation for double shift and triple shift working
for which one of the following assets?
a) Building b) Plant and Machinery c) Furniture and fittings d) Ships
6. If the book value of an asset stands at ……..per cent of the original cost, a company need not
provide depreciation on it.
a) two b) fifteen c) five d) ten
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7. A company has bought patents. Which of the following methods is most suitable for
providing depreciation on them?
a) SLM b) WDV c) Sum-of year digits d) Any of the above
8. Which of the following is a revenue reserve?

a) Capital redemption reserve b) Security premium account
c) Debenture redemption reserve d) Capital reserve
9. Which of the following will not lead to creation of secret reserve?

a) Undervaluation of closing stock b) Charging capital expenditure to revenue
c) Goods sent on consignment being shown as actual sales
d) Charging higher rates of depreciation on fixed assets than actually required
COMPANY AUDITOR
1. Who is responsible for the appointment of statutory auditor of a limited company ?
a) Directors of the company b) Members of the company
c) The Central Government d) All of the above
2. Which of the following sections deal with qualifications of the auditor ?

a) Section 226 (1) and section 226(2) b) Section 224 (1) and section 224 (2)
c) Section 226 (3) and section 226(4) d) Section 224(3) & Sec.224
3. Which of the following statement is not true?

a) A partnership firm can be appointed as a statutory auditor of limited company
b) Appointment can be made in the name of the firm
c) Majority of the partners should be practicing in India
d) All partners should be chartered accountants
4. As per the requirements of section 226(3) and 226(4) a person is disqualified from being
appointed as a statutory auditor if he holds-
a) Equity shares or debentures of the company
b) Equity shares carrying voting of the company
c) Shares carrying voting rights of the company
d) Security carrying voting rights of the company
5. The board of directors shall appoint first auditor of a company

a) With in one month of completion of capital subscription state of the company
b) With in one month of the promotion of the company
c) With in one month of the commencement of the business of the company
d) With in one month of incorporation of the company
6. The term of the auditor ship of first auditor would be from the date of appointment till__
a) the conclusion of statutory meeting
b) the conclusion of first annual general meeting
c) the conclusion of next annual general meeting d) the date of removal
7. In case the directions fail to appoint first auditor (s), the shareholders shall appoint them
at…..by passing a resolution
a) a general meeting b) first annual general meeting
c) statutory meeting d) annual general meeting
8. Life Insurance Corporation of India holds twenty five percent of subscribed capital of XYZ
Ltd. The appointment of statutory auditor in XYZ Ltd. Would be by__
a) ordinary resolution b) special resolution c) (a) or (b) d) none of the above
9. ICICI prudential, a life insurance company, holds thirty-two percent of subscribed share
capital of Delta Ltd. The statutory auditor of Delta Ltd. would be appointed by__
a) ordinary resolution b) Special resolution c) either of the above d) none
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10. Which of the following statement is not true regarding appointment of statutory auditor by
the Central Government?
a) Such powers have been conferred upon it by section 224(3)
b) If a company fails to appoint an auditor at a general meeting
c) If an auditor refuses to accept appointment, the powers of the Central Government can be
exercised.
11. If a casual vacancy in the office of auditor arises by his resignation it should only be filled by
the company in a……..
a) Board meeting b) extraordinary general meeting
c) General meeting d) annual general meeting
12. For the purposes of section 224(IB) the number of partners of a firm which shall be taken
into account would be as on the date of _
a) completion of audit b) auditor’s report
c) acceptance of audit d) Starting of audit work
13. Which of the following is counted for the purposes of section 224(IB) the number of partners
of a firm which shall be taken into account would be as on the data of ___
a) Joint audit b) Audit to non-profit companies
c) Audit of unlimited companies d) All of the above e) (a) and (b) only
14. Mr. Narayan, a Charted Accountant, has nineteen audits, Out of following audits which
audits should he accept to ensure he doesn’t violate provisions of section 224(IB) __
a) Audit of Zeba Ltd. a private company
b) Audit of branch of Pointec Ltd. a foreign company
c) Audit of two branches of Virtue Ltd. an Indian company d) All of them
15.Which audit out of the following would not be regarded as one audit for the purposes of
section 224(IB)?
a) Audit of one branch each of two different companies
b) Joint audit c) Audit head office & branches
d) Audit of one or more branches of a company
16. The auditor of a Government company is appointed by the C & AG. His remuneration is
fixed by__
a) the C & AG b) the shareholders
c) the shareholders at an annual general meeting d) the board of directors
17.The section which contains provisions regarding remuneration of the auditor is_
a) Section 224(9) b) Section224(7) c) Section224(8) d) Section224(6)
18.The authority to remove the first auditor before the expiry of term is with_
a) the shareholders in a general meeting
b) the shareholders in the first annual General meeting
c) the board of directors d) the Central Government
19. Which of the following statements is not correct regarding removal of first auditor before
expiry of the term?
a) He is removed at a general meeting
b) The shareholders are authorized to do so
c) The approval of the Central Government is required for such removal
d) The provisions for such removal are contained in section 224(7)
20. The retiring auditor does not have a right to___

a) make written representations b) get his representations circulated.
c) be heard at the meeting d) speak as a member of the company
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21.Who out of the following cannot be appointed as a statutory auditor of the company?
a) Erstwhile director b) Internal auditor c) Relative of a director d) Only (b) and (c)
22.A statutory auditor has a right of access at all times to

a) Books and accounts of a company b) Books, accounts and documents of the company c)
Books, accounts and vouchers of the company
d) Notices and documents of the company
23. The auditor has a right to-

a) Obtain information and explanation
b) Obtain information and explanation from the employees and officers
c) Obtain information and explanation necessary for the purpose of audit
d) Both (b) and (c)
24. The principal auditor, as per clarification issued by the ICAI, does not have any right to-
a) Inspect working papers of the branch auditor b) Visit branches
c) Seek information necessary for audit purposes
d) Incorporate the branch audit report in his audit report
25. Under which of the following section auditor has a duty to enquire into six specified matters
and report by exception?
a) Section 227(4A) b) Section 227 (IA) c) Section 227 (2) d) Section 227(3)
26. The auditor has to enquire, under section 227 (IA) into different aspects, related to shares
allotted for cash for the purpose of auditor include-
a) Shares against whose allotment cash has actually been received
b) Shares allotted for consideration other than cash
c) Shares allotted against a debt payable d) All of them
27.Right to visit branches has been given to the auditor under which section?
a) Section 222(3) b) Section 228(2) c) Section 228(4) d) Section 228(3)
28. Which of the following statements with regard to rules regarding exemption from branch
audit is not true?
a) A branch office of a company can be granted exemption on the basis of quantum of
activity criterion
b) If a satisfactory arrangement of scrutiny check of the books of account of a branch office
of a manufacturing company has been made, it can be exempted form branch audit
c) Cost consideration should be considered as an important factor/ground for exemption
from branch audit
d) The auditor should state in his audit report that branch office is exempted by virtue of
quantum of activity or any other basis
29. The branch auditor is appointed by –

a) Shareholders in an annual general meeting b) Shareholders in general meeting
c) Board of directors in board meeting d) Any of the above
30.Auditor of a ……company does not have right to visit foreign branches of the company
a) Unlimited liability b) Manufacturing c) Banking d) Non-profit making
31.Special audit is conducted at the order of the Central Government. Which section gives such
powers?
a) Section 233(A) b) Section 233A c) Section 242(A) d) Section 242A
32.Who among the following can be appointed as special auditor by the Central Government?
a) The statutory auditor b) chartered accountant in practice
c) Any chartered accounted who is not in practice d) Both (a) and (b)
33. The scope of the audit including reference to the pronouncements of the ICAI, which the
auditor adheres to, generally is communicated to the client in the ____
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i) auditor’s report ii) engagement letter iii) representation letter

a) i) only b) Both (i) and (ii) c) Both (i) and (iii) d) All the above
34. If any director is disqualified from being appointed under section 274(1) (g), the auditor
should mention this fact in his audit report. For this purpose, how does he determine their
eligibility :
a) He obtains a representation from each director
b) He obtains a management representation
c) He enquiries from Registrar of Companies d) Any one of the above
35. As per the ‘Statement on Qualification in Auditor’s Report’s issued by the ICAI, the auditor,
Under section 227(3) has to gave a statement of fact on_
a) proper books of account b) accounting standards
c) cess payable under section 441A d) None of the above
36. The date on auditor’s report should not be__

a) the data of AGM
b) later than the date on which the accounts are approved in board’s meeting
c) earlier than the date on which the accounts are approved by the management
d) Both (a) and (b)
37. Section 227(2) of the Companies Act, requires the auditor to give his report to the members
of the company on certain matters. Which of the following is not included in the above?
a) Accounts examined by him
b) Every balance sheet and profit and loss account laid before a general meeting during his
tenure
c) Every document that is a part of or ‘annexed to’ the balance sheet
d) Every document which is attached to the profit and loss account
38.When restrictions that significantly affect the scope of the audit are imposed by the client,
the auditor generally should issue which of the following opinion?
a) Qualified opinion b) Disclaimer of opinion c) Adverse opinion
d) Unqualified report with ‘an emphasis of matter’ paragraph;
39. Which of the following report not result in qualification of the auditor’s opinion due to a
scope limitation?
a) Restrictions the client imposed b) Reliance on the report of other auditor
c) Inability to obtain sufficient appropriate evidential matter
d) Inadequacy of accounting records
40. The inventory consists of about one per cent of all assets. The client has imposed restriction
on auditor to prohibit observation of stock take. The auditor cannot apply alternate audit
procedures.
a) unqualified opinion b) qualified opinion c) disclaimer of opinion d) adverse opinion
41.If in the above question, the inventory consisted of about ten per cent of total assets, other
conditions remaining same, the auditor should issue __
a) unqualified opinion b) qualified opinion c) disclaimer of opinion d) adverse opinion
42. The auditor has serious concern about the going concern of the company. It is dependent on
company’s obtaining a working capital loan from a bank which has been applied for. The
management of the company has made full disclosure of these facts in the notes to the
balance sheet. The auditor is satisfied with the level of disclosure. He should issue_
a) unqualified opinion b) unqualified opinion with reference to notes to the accounts
c) qualified opinion d) disclaimer of opinion
43.Which of the following is true about explanatory notes?

a) These are given by the directors of the company
b) These are given to adhere to requirements of section 211.
c) These are given by auditors of the company in auditor’s report d) All of the above
AUDITING MCQS_______________________12
44. The client changed method of depreciation from straight line to written down value method.
This has been disclosed as a note to the financial statements. It has an immaterial effect on
the current financial statements. It is expected, however, that the change will have a
significant effect on future periods. Which of the following option should the auditor
express?
a) Unqualified opinion b) Qualified opinion c) Disclaimer of opinion d) Adverse opinion
45. Which of the following is not true regarding requirements under section 227(3) (f) of the
Companies Act, 1956?
a) The auditor has to satisfy himself whether any of the directors of the company, whether
public or private, are disqualified from being appointed as directors as per section 274(1) (g).
b) Section 274(1) (g) is applicable to appointment of directors both in public and private
companies but reporting is limited to only those directors of a company who are also
directors of a public company
c) The auditor requires every director to submit a written representation in respect of each
public company, of which the is a director, as to whether such company has defaulted in
terms of provisions of sections 274(1) (g)
d) The disqualification should be considered on the date of audit report.
46. The management of a company, to which AS-3. is not applicable, does not include statement
of cash flows in its annual report. The auditor should express-
a) Unqualified opinion b) Qualified opinion c) Adverse opinion
d) Any of these depending upon materiality and pervasiveness and adequacy of disclosure
47. In case the auditor gives a disclaimer of opinion in the audit report which of the following
paragraph(s) of a standard unqualified audit report are modified?
a) Scope paragraph b) Opinion paragraph
c) Scope and opinion paragraphs d) Introductory, scope and opinion paragraph
48.A departure from recognized accounting principle is disclosed in a note to the financial
statements. The auditor should
a) issue a standard unqualified audit report b) issue a qualified report
c) issue an unqualified report with ‘emphasis of matter’ paragraph d) disclaim opinion
49. AB & Co, chartered accountant, have been requested by their client XYZ Ltd. not to confirm
accounts receivables because of concerns about creasing conflicts with customers over
amounts owed. The auditors were satisfied concerning receivables after applying alternative
audit procedures AB & Co.’s auditors report likely contained
a) Qualified opinion b) Disclaimer of opinion
c) Unqualified I opinion with an explanatory paragraph d) Unqualified opinion
50.The auditor should state the reasons for his reservations in audit report and should try to
quantify the effect on them. This should be done in case he has expressed _
i) a qualified opinion ii) an unqualified opinion with emphasis of matter paragraph
iii) an adverse opinion iv) a disclaimer of opinion
a) i) only b) i) and (iv) only c) i), iii) and (iv) only d) All of the above
51.Companies exempted from application of CARO, 2003 does not include_

a) a banking company b) an insurance company
c) a private limited company with paid up capital and reserves not more than fifty five lakh
d) a licensed company
52. Under CARO, 2003, the auditor’s report should include report about maintenance of proper
recording relating to____
a) Fixed assets and cost b) Fixed assets, cost and investments
c) Fixed assets , cost investments and inventories d) Fixed assets, cost and inventory
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53. Under CARO, 2003 the auditor is required to report on __

a) arrears of cumulative preference dividends
b) Preferential allotment of shares to related party
c) disposal of fixed assets and its effect on going concern.
d) unsecured loans granted to related party.
GOVERNMENT AUDIT
1. As per C & AG Act, 1971 the tenure of the Comptroller and Auditor General is …….Years
a) Four b) five c) six d) seven
2. The part of Government Audit which is concerned with examining whether the money has
been spent for the purpose specified in Appropriation Act is called.
a) audit of sanctions b) audit of provision of funds
c) audit of rules and orders d) audit of financial propriety
3. Audit of transaction does not include –

a) Propriety audit b) efficiency –cum performance audit
c) audit of receipts d) audit of expenditure
4. The income Tax Department has sent Mr. X double refund of advance tax. The Government
Auditor detected this while conducting
a) audit of expenditure b) performance audit
c) audit of stores and stock d) audit of receipts
5. Audit of debt, deposits and remittances does not cover-

a) audit of borrowings b) audit of amortization of debt
c) audit of sanctions d) remittance audit
6. A state Government spent rupees fifty lakhs on renovation of Raj Bhavan’ for its Governor.
In the C & AG’s opinion, this expenditure was more than what occasion demanded? It is an
exampled of –
a) Propriety audit b) Performance audit
c) Audit against provision of funds d) None of the above
7. Audit reports on PSU are

a) submitted to the President/Governor for being laid before the parliament
b) sent to concerned ministries/departments
c) Submitted to BOD of concerned PSU d) Any of the above
8. The C & AG, some years ago, gave adverse comments on expenditure incurred on buying
coffins for soldiers killed in a war. In his opinion, the coffins cases imported could have been
replace with less expensive, domestically produced ones. This is an aspect of –
a) Audit of sanctions b) Audit of stores and stocks c) Propriety audit d) Both (b) and (c)
9. Who among the following is eligible to be appointed as an audit of Government Company?

a) A chartered accountant in practice b) A chartered accountant whether in practice or not
c) An auditor appointed by the C & AG d) Any of the above
10.The statutory auditor of a Government Company submits his report to_

a) the BODs of the company b) the C & AG
c) the Legislature d) the company secretary
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EDP AUDIT
1. Which of the following statement is not distinguishing feature for computer based processing
and manual processing?
a) Errors in a CIS environment are less systemic as compared to errors in manual
processing
b) The potential for human error in the CIS environment is greater as compared to manual
system
c) In a computer based accounting system, audit trail is in electronic form
d) Computer processing offers management a variety of analytical tools.
2. To avoid invalid data input, a bank added an extra number at the end of each account
number and subjected the new number to an algoritham. This techniques is known as
a) Dual read b) Test for reasonableness c) Check digit d) Occurrence correction
3. When computer programme or files can be accessed from terminals, access can be limited to
authorized individuals by__
a) appointing a librarian b) controlling passwords
c) appointing EDP auditor d) Both (a) and (b)
4. Erroneous data has been detected by computer program controls. It has been excluded from
processing and printed separately “Error Report”. Who should most probability by review
and follow up on this report?
a) system, analyst b) Data control group c) Programmer d) Computer operator
5. General controls will be ineffective when EDP department-

a) Participates in computer software acquisition decisions
b) Design Documentation for computerized operations.
c) Originate changes in master files. d) Provide physical security for programme files.
6. Which of the following activities would most likely be performed by EDP department?
a) Authorising transactions b) Parity checks
c) Distributing output d) Correction of transactional errors
7. The completeness of “wages” figure can be tested by comparing the number of time cards to
be processed with transaction on wages sheet. This type of control technique is called
a) check total b) control total c) occurrence correction d) check digit
8. Which of following will not affect audit in a CIS environment?

a) The objective of expression of opinion on financial statements
b) Compliance procedures adopted by the auditor
c) Performance of substantive procedures
d) Evaluation of inherent risk and control risk
9. Which of the following statements is not true of the test data approach in a test of
computerised accounting system?
a) Test data tests only those controls which the auditor wishes to rely
b) Test data should consist of data related to all controls prevalent in the organization
c) The result of test data indicates that all the application and general controls are
functioning properly
d) Test data processed by the client’s computer programme under the auditor’s control
10. Which of the following CAATs allow fictitious transactions planted by the auditor to be
processed along with real ones on client’s system?
a) Integrated test facility b) Test data approach
c) Generalised audit software d) Parallel simulation
11.An auditor is least likely to use computer software to-
a) access client data files b) assess control risk
c) performing analytical producers d) None of the above
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AUDIT OF CASH TRANSACTION

1. Which of the following documents is not relevant for vouching cash sales?
a) Daily cash sales summary b) Salesmen’s summary
c) Monthly statements sent to customers d) Bank statement
2. The auditor should examine subsequent realization of revenue such as dividends, interest,
commission, etc to-
a) identify cases of unrecorded revenue
b) ensure proper disclosure in the balance sheet
c) recompute accrued income on the data of balance sheet d) Any of these
3. To test whether sales have been recorded, the auditor should draw a sample from a file of
a) purchase orders b) sales orders c) sales invoices d) bill of loading
4. For vouching of which item, the auditor is most likely to examine cost records?
a) Commission earned b) Bad debts recorded c) Credit sales d) Sale of scrap
5. The “Guidance Note on Revenue” issued by the ICAI does not deal with
a) Sales revenue b) Revenue rendering service
c) Revenue from sale of fixed assets d) Income from interest, dividend
6. An auditor conducts a surprise check on the pay day (i.e) the day wages and salaries are
paid. The primary purpose of this audit procedures is
a) to ensure that there are no ghost workers
b) to ensure the casual workers employed are authorized by the supervisor
c) to test procedures for distributing pay cheques
d) to obtain understanding of internal control system
7. Which of the following would prevent double payment of the same voucher?
a) The person signing the cheque should cancel the supporting documents
b) Cheques should be signed by at best two persons
c) The data of payment of vouchers of similar nature should be the same or close to each
other
d) All of the above
8. In case of unclaimed wages, the auditor should examine whether-

a) the amount has been deposited in a separate bank account
b) deposited with the cashier c) held in a safe deposit box d) All of these
9. While vouching wages, auditor should examine whether there is proper segregation of
duties. Which of the following activities should not be done by same department?
a) Maintaining personnel records and approving changing in wages rates
b) Proposing pay roll summary and disbursement of wages
c) Making salary statements and filing tax returns
d) Comparing time clock records with time reports prepared by supervisors and preparing
list of workers employed along with the units of production for each one of them
10. In order to vouch, which of the expenses, the auditor will examine Bill of Entry?
a) Custom b) Excise duties c) Sales tax d) Income tax
11. While vouching, how will the auditor ensure himself that all credit sales transactions have
been recorded by the entity?
a) Examining cut-off points
b) Matching entries in the sales book against renumbered sales invoices and goods outward notes
c) Counting the number of invoices and matching the number with entries on sales book
d) Both (a) and (b)
AUDITING MCQS_______________________16
12. In case of sales return, the auditor should examine which documents?
a) Credit notes, advice notes and inward return notes
b) Debit notes, advice notes and inward return notes
c) Purchase invoices, advice notes and inward return notes
d) Credit notes, inspection report and inward return notes
13. An internal auditor discovered that fictitious purchases have been recorded by the purchase
clerk. This indicates absence of which control?
a) Purchase invoices are independently matched with purchase orders and goods received
notes
b) Goods received notes requires the signature of individual who authorized the purchase
c) Routine checks are performed by internal auditor fortnightly.
d) Purchase function and production function are clubbed in one department

a) Reducing the cost of acquisition b) Selecting supplies
c) Authorizing the acquisition of goods d) Assuring the quality of goods
15. The auditor is most likely to examine related party transactions very carefully while
vouching
a) credit sales b) sales returns c) credit purchases d) cash purchases
16. In order to vouch bought ledger, the auditor obtain confirmations from creditors. The
principal reason for the auditor to examine suppliers statements at balance sheet date is to
obtain evidence that
a) the supplier exist b) there are no unrecorded liabilities
c) recorded purchases actually occurred d) to link creditors with cash book entries
17.The creditors accounts, generally, have credit balance. Debit balance may be due to-
a) advance paid against an order b) goods returned
c) wrong debit to supplier account d) Any of these
18.In case of vouching, the auditor is least likely to examine authorization by appropriate
authority in case of –
a) bad bads written off b) sales return c) purchase return d) discount
allowed to customers as per organizational policy
19. Vendors should be approved by Management before purchase department executes an

order. If this is not done, then which of the following situations may arise-
a) purchases could be made from vendors whose product quality may not be good
b) Purchases may be made from related parties without management’s knowledge
c) Purchases could be made from vendors who may have offered price to vice-president
purchases d) Any of these
VERIFICATION & VALUATION OF ASSETS

a) It invoices substantiation of occurrence of transactions
b) Its objective is to establish existence, ownership, possession, valuation and disclosure of
assets
c) The auditor has to form an opinion on different aspects d) All are true
2. Which of the following statements is not true ?

a) Valuation of assets is the responsibility of management
b) The auditor can rely on a certificate issued by an authorized valuationer as to the
valuation of assets in the balance sheet
c) The auditor should value the asset as per generally accepted accounting principle
d) Valuation is no part of auditor’s duty
AUDITING MCQS________________________17
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3. An auditor is verifying valuation of building which has been self-constructed by the client.
Which of the following documents is least relevant to the auditor for verification purposes?
a) Bills of contractor b) Minutes of meeting of board of directors
c) Certificates of engineer and architect d) Loan agreement
4. Which of the following assets is least likely to be subjected to lien?

a) Freehold land b) Plant and machinery c) Leasehold property d) Motor vehicles
5. An analysis of fixed assets account has revealed possibility of unrecorded sale of plant and
machinery. Which of the following audit procedures may be adopted to discover it?
a) Examination of property tax files b) Inquiry of plant manager
c) Examination of debits to accumulated depreciation d) All of the above
6. The auditor has noticed existence of recurring losses sale of fixed assets this
indicates a) Depreciation charges are insufficient
b) Policy of sale or disposal of fixed assets needs to be reviewed
c) The sale of assets have not been properly authorized d) Accounting errors
7. Which of the following financial statements assertions are addressed by testing the cut off
for plant asset addition
a) Existence and ownership b) Valuation and disclosure
c) Possession and ownership d) Completeness and valuation
8. The auditor while verifying prepaid insurance has concluded that there is inadequate
insurance of building He should__
a) Modify his audit report
b) Insist it should be disclosed in the notes to financial statements
c) Write it in letter of weakness d) Both (b) and (c)
9. While verifying intangible assets, an auditor would recompute amortization charges and
determine whether amortization period is reasonable. The auditor tries to establish ….by
doing it
a) valuation b) existence c) disclosure d) possession
10. When auditing prepaid insurance, an auditor discovers that the insurance policy bond on
building is not available for inspection. This may indicate__
a) No insurance has been undertaken for building b) Lien on building
c) Insurance premium has not been paid d) Insurance premium paid but not recorded
11. Equity shares of XY Ltd. held by ABC Ltd. are in the custody of Stock Holding Corporation of
India Limited. The auditor many verify this investment by -
a) Reviewing last year’s working papers.
b) Obtaining a certificate from a responsible official of the ABC Ltd.
c) Obtaining a certificate from SHCIL d) Obtaining a certificate from xy ltd.
12. Which of the following controls would ensure that securities are not lost, stolen or diverted?
a) Establish physical barriers over investment securities
b) Maintain files of authorized signatures
c) Segregate investment approval form accounting and from custody of securities
d) All of the above
13.Which of the following is not a proper third party to hold investments on behalf of the client?
a) Regional level custodian b) National level custodian
c) India trills – National level stock broking firm d) AEZ Securities Ltd. a stock broking firm
14. Which of the following would give the assurance that debtors mentioned on the date of
balance sheet actually exist?
a) Sending debtor’s confirmation letters b) Reviewing subsequent collection
c) Verify debtors against sales document d) Both (a) and (b)
AUDITING MCQS_______________________18
15.Analytical procedures are least likely to be use in the audit of –

a) cash balance b) investments c) bills receivables d) debtors
16. Which of the following statements is not true with regard to teeming and lading ?
a) It results in the deliberate misappropriation of cash receipts
b) It is associated with cash receipts
c) If same individual maintains cash receipts and cash payments teeming and lading is likely
to exist
d) To conceal the shortage, the defraud, usually, tries to keep bank and book amounts in
daily agreement so that a bank reconciliation will not detect the irregularity.
17. The balance of cash in often between one to five percent of total assets. Tick the most
appropriate statement with regard to verification of cash in context of this
a) Cash in always material as materiality is qualitative concept
b) No audit of cash is needed when, in auditor’s opinion, cash is immaterial. Materiality is a
relative concept
c) The cash balance need only be audited if the balance is in overdraft
d) Cash is to be verified if control risk is assessed as high
18. When counting cash on hand the auditor should ___

a) ensure presence of somebody from management
b) obtain a receipt from custodian as to its return
c) ensure postage and revenue stamps are not counted in physical count
d) temporary advances to employees are counted to calculate balance of cash in hand
19. Which of the following statement is not true regard to auditor’s attendance at stock taking?
a) Auditor should attend physical stock taking only if inventory is material
b) Auditor may not attend physical verification of stock by management, if he does not find it
appropriate to rely on it
c) If inventory is material, even when the auditor is not placing reliance on the physical
verification by the management, he should attend it
d) The primary objective of an auditor’s observation of an entity’s observation of an entity’s
stock take is to obtain direct knowledge that the stock and has been property counted
20. While observing a client’s annual physical inventory, an auditor conducted test counts for
certain test counts were higher than the recorded quantities in the client’s perpetual
records. This situation could be the result of the client’s failure to record –
a) purchase returns b) sales returns c) goods with consignor d) purchase discounts
21.Inspection report/receiving report supports entries in

a) sales book and sales return book b) purchase book and sales return book
c) cash book and purchase book d) Sales book and purchase return book
INTERNAL CONTROL
1. Tests of control are not concerned with_
a) Existence of controls b) Effectiveness of controls
c) Continuity of controls d) Designing of controls
2. The sequence of steps in the auditor’s consideration of internal control is as follows –

a) Obtain an understanding, design substantive test, perform tests of control, make a
preliminary assessment of control risk
b) Design substantive tests, obtain an understanding, perform tests of control, make a
preliminary assessment of control risk
c) Obtain an understanding, make a preliminary assessment of control risk, perform tests of
control, design substantive procedures.
d) Perform tests of control, obtain and understanding, make a preliminary assessment of
control risk, design
AUDITING MCQS________________________19
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3. Which of the following is not an inherent limitation of internal control system?

a) Management 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 whether assets are safeguarded b) Suggest improvements in internal control
c) Plan audit procedures d) express and opinion
5. XYZ Ltd. Conducts quarterly review of operations. It discovers that unrest in a south east
Asian country may affect the supply of raw materials to it the next quarter. This is an
example of :
a) risk assessment b) control procedure c) supervision d) control environment
6. The primary purpose of performing tests of control is to provide reasonable assurance that_
a) there are no material misstatements due to fraud or error in financial statement
b) accounting system is well documented
c) Written evidence is there to support transactions
d) if internal control is effective
7. If the auditor assesses control risk as high….

a) Document the conclusions b) documents the reasons along with conclusions
c) perform tests of control d) perform walk through tests
8. The overall attitude and awareness of an entity’s board of directors concerning the
importance of internal control is reflected in-
a) accounting controls b) control environment c) control procedures d) supervision
9. Which of the following are included in test of control?

a) Reperformance and observation b) Inquiry and analytical procedures
c) Comparison and conformation d) Inspection and verification
10.Control risk is assessed at-

a) Overall financial statements level b) Fraud risk factor level
c) Financial statement assertion level d) Control environment level
11. Which of the following is not an example of a circumstance, in which additional tests of
control will not be performed after obtaining an understanding to plan the audit?
a) Controls are known to be cost ineffective
b) Controls are effective but auditor opines that performing tests of control and reduced
substantive tests would not be cost effective
c) Controls are effective and evidence already obtained is adequate to support a planned
assessed level of control risk which is less than high
d) Performing extensive substantive testing would not lead to efficiency
12. An 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 fix materiality level for each financial assertion
d) is directly related to inherent risk
13. A flow chart, made by the auditor, of an entity’s internal control system is a graphic
representation that depicts the auditor’s.
a) understanding of the system b) understanding of fraud risk factors
c) documentation of assessment of control risk d) Both (a) and (c)
14.The performance of tests of control is documented in-

a) audit programme b) flow charts c) working papers d) any of the above
15. Which of the following statements is not correct?

a) Intern risk and control risk cannot be controlled by the management i.e are
uncontrollable
AUDITING MCQS_______________________20
b) Detection risk is related directly to they effectiveness of the auditor prosecutor

c) Detection risk related inversely to control risk
d) Internet risk and control risk are highly interrelated
16.The independence of an internal auditor will most likely be assured if he reports to the
a) President Finance b) President System c) Managing Director d) CEO
17. In comparison to the independent auditor, an internal auditor is more likely to be concerned with-
a) cost accounting system b) internal control system
c) legal compliance d) accounting system
18. When an independent auditor decides that the work performed by internal auditors may
have bearing on the nature, timing and extent of planned audit procedures, the independent
auditor should evaluate objectivity of the internal auditor. The most important factor
influencing it would be-
a) organizational level to which he reports b) qualification of internal auditor
c) system of quality control of his work d) all of the above
19. When an independent auditor relies on the work of an internal auditor, he or she should-
a) examine the scope of internal auditor’s work
b) examine the system of supervising review and documentation of internal auditor’s work
c) adequacy of related audit programme d) all of the above
20.Proper segregation of duties reduces the opportunities in which a person would both-
a) establish controls and executes them b) records cash receipts and cash payments c)
perpetuate errors and frauds and conceals them
d) record the transaction in journal and ledger.
INTRODUCTION TO AUDITING
1. d 2. b 3. c 4. b 5. a
6. b 7. d 8. a 9. a 10. b
11. d 12. b 13. a 14. d 15. b
16. a 17. c 18. b 19. a 20. d
21. c 22. d 23. b 24. b 25. b
26. c 27. c
CONCEPTS OF AUDITING
1. e 2. c 3. a 4. d 5. d
6. c 7. c 8. d 9. d 10. d
11. d 12. a 13. b 14. b 15. d
16. d 17. a 18. b 19. c 20. a
21. d 22. a
AUDIT EVIDENCE
1. c 2. b 3. d 4. c 5. a
6. b 7. d 8. b 9. b 10. d
11. a
AUDIT PREPARATION
1. b 2. d 3. c 4. b 5. c
6. d 7. a 8. c 9. d 10. b
11. a 12. c 13. a 14. a 15. c
16. d 17. c 18. a 19. d 20. c
AUDITING MCQS________________________21
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CAPTIAL AND REVENUE EXPENDITURE
1. b 2. d 3. c 4. b 5. c
6. d 7. a 8. c 9. d 10. b
COMPANY AUDITOR
1. b 2. a 3. c 4. d 5. d
6. b 7. a 8. b 9. a 10. b
11. c 12. c 13. e 14. d 15. a
16. b 17. c 18. a 19. c 20. d
21. b 22. c 23. d 24. a 25. b
26. d 27. c 28. b 29. b 30. b
31. c 32. b 33. b 34. a 35. c
36. c 37. d 38. a 39. b 40. a
41. c 42. b 43. a 44. a 45. d
46. a 47. c 48. b 49. c 50. a
51. c 52. c 53. a
GOVERNMENT AUDIT
1. c 2. b 3. b 4. d 5. c
6. a 7. b 8. d 9. a 10. b
EDP AUDIT
1. a 2. c 3. d 4. a 5. c
6. c 7. d 8. a
9. b 10. a 11. d
AUDIT OF CASHTRANSACTION
1. c 2. a 3. c 4. d 5. c
6. c 7. a 8. a 9. b 10. a
11. d 12. d 13. a 14. c 15. c
16. b 17. d 18. d 19. d
VERIFICATION AND VALUATION OF ASSETS
1. a 2. c 3. b 4. c 5. d
6. a 7. d 8. d 9. a 10. b
11. c 12. d 13. c 14. d 15. a
16. c 17. a 18. c 19. c 20. B
21. B
INTERNAL CONTROL
1. d 2. c 3. c 4. c 5. a
6. d 7. a 8. b 9. a 10. c
11. c 12. b 13. a 14. c 15. a
16. c 17. b 18. a 19. d 20. c
AUDITING MCQS_______________________22
BCOM - SEMESTER V1
CM06BAA02 – PRACTCAL AUDITING
MULTIPLE CHOICE QUESTIONS
1. Auditing refers to
a) Preparation and checking of account
b) Examination of accounts of business units only
c) Examination of accounts of professional accountants
d) Checking of vouchers
2. Main object of auditing is
a) Detection of errors
b) To find out whether P&L a/c & B/S show true and fair state affairs
c) Detection of frauds
d) Detection and prevention of frauds and errors.
3. Auditing is luxury for a
a) Joint stock company
b) Partnership firm
c) Small shop-keeper
d) Government company
4. Auditing is compulsory for
a) Small scale business enterprises
b) All partnership firms
c) All joint stock companies
d) All proprietary concerns
5. Propriety audit refers to
a) Verification of accounts
b) Examination accounts of propriety concerns
c) Enquiry against justification and necessity of expresses
d) Audit of Govt. companies
6. Propriety is normally undertaken in case of
a) Joint stock company
b) Government company
c) Statutory corporation
d) Govt. departments
7. Interim audit refers to
a) Examination of accounts continuously
b) Examination of accounts intermittently
c) Audit work to find out and check interim profits of a company
d) Carrying on audit for bonus purposes at the end of the year
8. Final audit implies
a) Audit of accounts at the end of the year
b) Finally checking of accounts to reveal frauds
c) Audit for submitting report immediately at the end of the year
d) Audit of banking companies
9. A continuous audit is specially needed for
a) Any trading concern
b) Smaller concerns
c) Banking companies
d) Any manufacturing companies
10. Joint audit implies
a) Audit of two concerns together
b) Audit of joint stock companies
c) Audit of joint sector companies
d) Audit by two firms of C.A
11. Management audit means
a) Audit undertaken on behalf of the management
b) Evaluating performance of various management processes and functions
c) Audit undertaken on behalf of Govt. to punish management
d) Compulsory audit
12. Systems audit implies
a) Systematic examination of accounts
b) Audit undertaken to improve auditing systems
c) Enquiring accounting and control systems
d) Checking the performance of management
13. Internal audit means
a) Audit undertaken to ascertain truth and fairness of state of affairs
b) Audit undertaken internally to evaluate management functions
c) Audit undertaken by employees of the organization to check financial irregularities
d) Audit by independent auditor to improve internal affairs
14. Internal audit is
a) Compulsory for a company with paid-up capital of Rs. 25 lakh and above
b) Voluntary for a company
c) Not necessary for a company
d) Necessary for a company
15. Internal audit is undertaken
a) By independent auditor
b) Statutorily appointed auditor
c) By a person appointed by the management
d) By Government auditor
16. Internal auditor is appointed by the
a) Management
b) Shareholders
c) Government
d) C & A-G
17. The object of internal check is to
a) Control wastage of resources
b) Prevent errors and frauds
c) Verify the cash receipts and payments
d) Facilitate quick decision by the management
18. Effective internal check system reduces
a) The liability of auditor
b) Work of auditor
c) Both work as well as auditor
d) Responsibilities of an auditor
19. Internal check is a part of
a) Internal audit
b) Internal accounting
c) External audit
d) Internal control
a) Special staff
b) Internal auditor
c) Accountant
21. Internal check is suitable for
a) Larger concerns
b) Smaller concerns
c) Petty shop- keepers
a) Staff specially appointed for the purpose
b) Internal auditor
c) The members of the staff among themselves
d) Supervisor of the staff
23. Internal check is essential for
a) Petty traders
b) Cash transactions in a large concern
c) A concern using automatic equipments
24. Misappropriation of goods may be checked by
a) Proper supervision over stock
b) Checking of employees
c) Punishment of employees
25. Window dressing implies
a) Curtailment of expenses
b) Checking wastages
c) Under- valuation of assets
d) Over- valuation of assets
26. Falsification of accounts is undertaken by
a) Auditors
b) Clerks
c) Accountants
d) Responsible officials
27. Errors of omission are
a) Technical errors
b) Error of principle
c) Compensating errors
28. Test checking refers to
a) Testing of accounting records
b) Testing of honesty of employees
c) Intensive checking of a selected number of transactions
d) Checking of all transactions recorded
29. Test checking should not be applied to
a) Sales book
b) Purchase book
c) Bank reconciliation statement
d) Bills book
30. Test checking should not be applied to
a) Purchase book
b) Sales book
c) Stock book
d) Cash book
31. Vouching implies
a) Inspection of receipts
b) Examination of vouchers to check authenticity of records
c) Surprise checking of accounting records
d) Examining the various assets
32. Payment for goods purchased should be vouched with the help of
a) Creditors statement
b) Correspondence with suppliers
c) Cash memos
d) Ledger accounts
a) Piece work statement
b) Wage sheets
c) Minute book
d) Bank pass book
34. Payment for building purchased should be vouched with the help of
a) Title deed
b) Correspondence with Brokers
c) Building account
d) Cash book
35. Investment should be vouched with the help of
a) Commission book
b) Brokers book
c) Sales deeds
d) Minute book
36. Receipt from debtors should be vouched with the help of
a) Counterfoil Receipts cash book
b) Suppliers statement
c) Sales Deeds
d) General Ledger
37. Receipt from sale of investment should be vouched with the help of
a) Brokers Budget Notes
b) Brokers Sold Notes
c) Minute Book
d) Inventory of investment
38. Purchases returns should be vouched with the help of
a) Bought Notes
b) Credit Notes
c) Goods inward Book
d) Cash Book
39. Verification refers to
a) Examination of journal and ledger
b) Examination of vouchers related to assets
c) Examining the physical existence and valuation of assets
d) Calculation of value of assets
40. Object of verification of assets
a) Physical verification of assets
b) Checking value of assets
c) Examining the authority of their acquisition
d) All of the above
a) Valuation is a part of verification
b) Verification is a part of valuation
c) Valuation has nothing to do with verification
d) Auditor is a valuer
42. Stock should be valued at
a) Cost
b) Market price
c) Cost price or market price whichever is lower
d) Cost less depreciation
43. Valuation of Fixed Assets is based on the concept
a) Going concern
b) Conservation
c) Money measurement
d) Dual aspect
44. Valuation means
a) Calculating value of assets
b) Checking the value of assets
c) Checking the physical existence of assets
d) Examining the authenticity of assets
45. “ Auditor is not valuer” was stated in
a) Kingston Cotton Mills case
b) London & General Bank case
c) Lee . V . Neuchatel Co. Ltd case
d) London oil Storage Co. case
46. Fixed assets are valued at
a) Cost
b) Market price
c) Cost price or market price whichever is less
47. Floating assets are valued at
a) Cost
b) Market price
48. The scope of work of internal audit is decided by the
a) Share holders
b) Management
c) To improve financial control
d) All of the above
49. Outstanding expenses should be verified with the help of
a) Cash book
b) Balance book
c) Journal proper
50. Book debts should be verified with the help of
a) Balance sheet
b) Amount received from Debtors
c) Debtors schedule
d) Certificate from the management
51. Investments in hand should be verified with the help of
a) Schedule of investments
b) Balance sheet
c) Inspection of securities
d) Certificate from the bank
52. First auditor of a company is appointed by the
a) Shareholders
b) Central Govt.
c) Company Law Board
d) Board of Directors
53. Which of the following persons is qualified to be a company auditor?
a) An employee of the company
b) A body corporate
c) A person who is indebted to the company for an amount exceeding Rs. 1000
d) A practicing chartered accountant
54. The first auditor of a company will hold office
a) For a period of one year
b) Till holding of statutory meeting
c) Till the conclusion of first annual general meeting
d) Till a new auditor is appointed
55. Normally, a company auditor is appointed by the
a) Central Government
b) Shareholders
c) Board of Directors
d) Company Law board
56. An auditor in a casual vacancy is appointed by the
a) Board of Directors
b) Shareholders
c) Central Government
57. If an auditor is not appointed at annual general meeting, he is appointed by the
a) The Central Government
b) Board of Directors
c) Shareholders
58. A vacancy caused by resignation of the auditor is filled by
a) Board of Directors
b) At the general meeting of shareholders
c) By the Central Government
d) By the Company Law board
59. A special auditor is appointed by the
a) Shareholders
d) C & A - G
60. A government Co. auditor may be appointed by the
a) C & A – G
b) Shareholders
61. A company auditor can be removed before expiry of his term by
a) Shareholders
d) State Government
62. Remuneration of a company auditor is fixed by the
a) Shareholders
d) Appointing authority
63. A company auditor, in general has to submit his report to
a) Shareholders
d) C & A – G
64. An auditor of Government company has to submit his report to the
a) Shareholders
b) Central Government
c) C & A – G
d) Ministry concerned
65. Internal auditor has to submit report to
a) Shareholders
b) Government
c) Company Law board
66. Auditor should be dutiful like a
a) A watch dog
b) A blood hound
c) A detective
d) An insurer
67. Auditor, in general is an
a) Employee of the company
b) Agent of the company
c) Agent of the shareholders
68. While checking 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
d) 80 days of issue of prospectus
69. Which of the following percentage of nominal amount of shares should be received with application
a) 10 b) 15 c) 5 d) 6
70. While checking allotment, auditor should see that amount
a) Equal to estimated fixed capital is received
b) Equal to estimated working capital is received
c) Necessary for purchase of land & building has been received
71. For restriction regarding allotment of shares, the auditor should refer to section
a) 25 b) 75 c) 64 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
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
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
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
76. A company can issue Redeemable Preference shares, if authorized by
a) Memorandum of association
b) Articles of association
c) Companies Act, 1956
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
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
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
80. Shares can be issued at discount under section
a) 76 b) 75 c) 79 d) 89
81. Interest on calls paid in advance, according to Table A, should not exceed
a) 6% b) 5% c) 10% d) 14%
82. Shares can be issued at premium, under section
a) 76 b) 75 c) 78 d) 79
83. A company can accept calls in advance from its shareholders under section
a) 82 b) 79 c) 92 d) 78
84. Shares can be issued at discount only after
a) 2 years of the commencement of the business
b) 1 year of the commencement of the business
c) 3 years of the commencement of the business
d) 5 years of the commencement of the business
85. With regard to issue of share warrants to the bearers, the auditor should see that is it
a) Permitted by Memorandum of Association
b) Sanctioned by the Central Government
c) Permitted by the Board of Directors
86. For the for festure of shares, the auditor should check that it is permitted
a) by Memorandum of Association
b) by articles of association
c) under Companies Act, 1956
87. Premium received on issue of shares, later forfeited, should be transferred to
a) Capital reserve
b) Shares forfeited Account
c) Capital Account
88. With regard to issue of share certificates, the auditor should refer to section
a) 110 b) 113 c) 114 d) 123
89. Increase in share capital is permitted by
a) Memorandum of Association
c) Court
d) Companies Act, 1956
90. Divisible profit should not include
a) Interest on capital
b) Capital
c) Depreciation
91. Dividend can not be paid out of
a) Capital profit
b) Capital receipts
c) Revenue receipts
92. Capital profit imply profit earned
a) Through business transaction
b) From capital
c) From sale of fixed assets
d) From sale of current assets
93. Capital profits
a) Can be paid by way of dividends
b) Cannot paid by way of dividends
c) Can be paid by way of dividend under certain conditions
94. If there is capital loss, the auditor should
a) Not allow payment of dividend
b) Allow payment of dividends
c) Allow payment of dividends after making such losses good
95. A company auditor should see that the dividend should be paid
a) After charging depreciation
b) Without charging depreciation
c) Out of capital
96. In his report, the auditor gives his
a) Judgment
b) Opinion
c) Guarantee to correctness of accounts
d) True state of affairs
97. Civil liability of an auditor implies liability for
a) Misappropriation of cash
b) Misappropriation of goods
c) Fraud
d) Misfeasance
98. An auditor can be held liable under companies Act 1949 for
a) Negligence
b) Criminal offence
c) Professional misconduct
d) Breach of contract
99. Investigation of books of accounts and records is :
a. Not legally compulsory
b. Compulsory
c. Compulsory as per companies act
d. Compulsory as Income Tax Act
100. Investigation is carries on behalf of
a. Manager
b. Employee
c. Client
d. On behalf of owner and third parties
101. Examination of accounting records undertaken for a special purpose is called
a. Auditing
b. Internal check
c. Investigation
d. Internal control
102. The prime importance of investigation on behalf of an individual or firm intending to
purchase an existing business is to
a. Ascertain value of asset
b. Ascertain the earning capacity of the concern
c. Estimation of value of good will
d. Extend of liabilities
103. Inflation of closing stock results is :-
a. Inflation of loss
b. Deflation of loss
c. Inflation of profit
d. Deflation of profit
104. Inflation of profit is possible due to :
a. Overvaluation of closing stock
b. Overstating purchase
c. Overstating opening stock
d. Overstating expenses
105. Charging excessive provision for depreciation results in
a. Less profit
b. More profit
c. No change in profit
d. No change in loss
106. The main purpose of management audit is to
a. Review the management operations
b. Check arithmetical accuracy
c. Prevent travel
d. Prevent error
107. Management audit is
a. Compulsory
b. Not compulsory
c. Compulsory under Income Tax Act
d. Compulsory under Indian Contract Act.
108. Special resolution means -------------------
a. 1/3 majority
b. 2/3 majority
c. ½ majority
109. Ordinary resolution means -----------------------
a. 1/3 majority
b. 2/3 majority
c. More than 1/2
110. The chartered Accountants Act is in -----------------
a. 1956
b. 1959
c. 1949
111. Section 633 of the companies Act deals with
a. Liability of auditor
b. Relief to the auditor
c. Punishment to the auditor
112. Auditor is an --------------- of a shareholder
a. Owner
b. Agent
c. Employer
113. Cost audit means audit of --------------- records
a. Financial
b. Cost
c. Tax
114. Financial auditor submits reports to the ----------------
a. Shareholder
b. Board of director
c. Employees
115. Cost auditor submits reports to the ---------------
a. Share holder
b. Board of directors
c. Employees
116. --------------- audit is forward looking -
a. Financial
b. Cost
c. Tax
117. Cost auditor of a company is -----------
a. Chartered Accountant
b. Cost Accountant
c. Tax Accountant
118. Auditor finds that there is change in the method of valuation of stock whether he should
a. Allow it
b. Disallow it
c. Allow it with a note to this effect
119. Audit under any statute in a country is called ------------------
a. Final audit
b. Internal audit
c. Statutory audit
120. Books of Accounts are prepared and audited as per the provisions of the ---------------
a. Income Tax Act,1961
b. Companies Act 1956
c. Chartered Accountants Act 1949
121. CAATTS is also known as -----------
a. Cost And Accounts Treatments
b. Computer Assisted Audit Tools and Techniques
c. Classification and Accounting of Tax Tools
122. Auditor has got no lien on -------------
a. Audit Note Nook
b. Audit working papers
c. Books to Accounts of Client
123. Statutory Report should be sent to registrar before ------------------- days of statutory meeting
a. 30 days
b. 14 days
c. 21 days
124. The meeting held by the company with in a period of not less than one month and not more
than 6 months is called -------------
a. Statutory
b. Annual
c. General
125. -------------------- audit is not a statuary requirement
a. Management
b. Financial
c. Tax Audit
126. ----------------- audit refers to the evaluation of company’s performance against planned
goals in the areas of social responsibility.
a. Cost audit
b. Social audit
c. Management audit
127. Bonus shares are issued to ----------------
a. New members
b. Existing share holders
c. Employees
128. -------- Section of the Companies Act deals with Appointment of Company auditor.
a. Sec-226
b. Sec-224
c. Sec-227
129. -------- Section of the Companies Act deals with qualification of Company auditor.
a. Sec-226
b. Sec-224
c. Sec-227
130. Amount of Share premium may be utilized for
a. Payment of dividend
b. Writing of preliminary expenses
c. Routine expense
131. Share Premium Account should be shown in Balance sheet under
a. Paid-up capital
b. Subscribed capital
c. Reserves and surpluses
a. Subscribed capital
b. Capital Reserve Account
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
134. A company can issue bonus shares if authorized by
b. Articles of Association
c. Companies Act-1956
135. Interest on calls paid in advance according to table A, should not exceed
a. 6%
b. 5%
c. 10%
136. For the forfeiture of shares, the auditor should check that it is permitted
b. By articles of association
c. Under Companies Act 1956
137. Profits on reissue of forfeited Shares should be transferred to
a. Share forfeited Account
b. Capital Reserve Account
c. Profit and Loss 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
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
140. Which of the following percentage of nominal amount of shares should be received with
application
a. 10
b. 15
c. 5
141. Accounting standards are prepared by
a. SEBI
b. RBI
c. ICAI
d. ITA
142. Which of the following is referred to confirm the allotment of shares to the vendor
a. Cash book
b. Pass book
c. Director’s minute
143. Share premium Account is shown on the _______________
a. Asset side of Balance sheet
b. Liability side of Balance sheet
c. Credit side of profit and loss Account
144. Issue of shares at discount should be sanctioned by the ________________
a. Board of directors
b. Share holders
c. Company Law Board
145. The maximum rate of discount on shares shall not exceed________________
a. 20%
b. 15%
c. 10%
146. Discount on issue of shares not written of is shown separately in Balance sheet under the
head_____________
a. Miscellaneous expenditure
b. Preliminary expanses
c. Current assets
147. __________________section of Companies Act deals with share Capital
a. 69
b. 60
c. 50
148. Which among the following is not a function of the author
a. Checking errors and frauds
b. Vouching with original documents
c. Preparing final Accounts
149. Audit conducted as per the provisions of law is _____________
a. Statutory Audit
b. Continuous Audit
c. Social Audit
150. The scope of auditing does not cover.
a. Vouching
b. Checking arithmetical accuracy
c. Ledger posting
151. Internal audit is conducted
a. Periodically
b. Throughout the year
c. Once in a year
152. The amount of application money received shall be deposited in a scheduled bank
until________
a. Annual general meeting
b. General meeting
c. Certificate to commencement obtained
153. Amount received as premium can be used to ___________
a. Purchase Assets
b. Pay of liabilities
c. Issue bonus shares
154. The auditors are liable under
a. Companies Act Only
b. Income Tax Act Only
c. All above
155. The maximum number of audit assignment an auditor can accept is limited to --------------
companies
a. 10
b. 15
c. 20
156. Auditors can be appointed by -------------- when the shareholders fail to appoint auditors at the
general meeting
a. Board of directors
b. Central government
c. Company Low board
157. The examinations of financial transactions with supporting evidences is called
a. Verification
b. Vouching
c. Auditing
158. Which among the following is an example of intangible asset?
a. Goodwill
b. Patents
c. All of these
159. Which of the following is not an item current asset?
a. Stock
b. Sundry debtors
c. Furniture
160. The term inventories stands for
a. Raw materials
b. Work in progress
c. All of these
161. Sales day book is used for recording
a. Credit sales
b. Cash sales
c. All sales
162. --------------- audit is more suitable for small business houses
a. Continuous
b. Annual
c. Partial
163. Vouching is an examination of ----------- to ascertain the accuracy and authenticity of transactions in
the book of accounts
a. Audit files
b. Audit note book
c. Documents
164. --------------- is a written plan containing details with regard to the conduct of a particular audit
a. Audit Note book
b. Audit programme
c. Audit files
165. --------------- is the verification of books of accounts from Income tax point of view
a. Cost audit
b. Tax audit
c. Management audit
166. Investigation is conducted
a. Regularly
b. Quarterly
c. As and when required
167. Investigation is required when
a. Fraud is suspected in business
b. On acquisition of running business
c. All of them
168. Which among the following is not a right of company auditors
a. Right to access the book accounts
b. Right to seek explanations
c. Right to lies on books of accounts
169. Test checking is done when there is an effective system of --------------
a. Internal control
b. Internal audit
c. Internal check
170. Test checking means
a. Checking of all transactions
b. Checking of half of the transactions
c. Checking of selected items
171. Audit working papers are --------------------------
a. Important information about audit
b. Appointment letters regarding audit
c. Letter of notice
172. Current audit file consists of
a. Matters of future importance
b. Matters relations to post years
c. Matters relating to the year of audit
173. ------------------- begins where accounting ends
a. Bookkeeping
b. Auditing
c. Internal check
174. ---------------- audit is compulsory for joint stock companies
a. Statutory
b. Final
c. Continuous
175. Treating revenue expenditure as capital expenditure is an example of error of -------------------
a. Principle
b. Compensating
c. Clerical
176. Financial statements are prepared by
a. The accountant
b. The auditor
c. Managing director
177. Preliminary expanses not written off are treated as
a. Fixed assets
b. Intangible assets
c. Fictitious assets
178. Verification of assets involves a critical examination of
a. Ownership
b. Existence
c. All of these
179. Finished goods are valued for a balance sheet purpose
a. At cost price
b. At market price
c. At lower of cost or market price
180. ---------------- includes financial and non-financial control
a. Internal check
b. Internal control
c. Internal audit
181. ---------------- is concerned with the allocation of work among employees
a. Internal control
b. Internal check
c. Internal audit
182. The duties of internal auditor is prescribed by
a. Companies act
b. Company law board
c. Management
183. Internal audit is considered as a service to -------------------
a. Share holders
b. Board of directories
c. Management
184. Pre-arranging and coordinating the audit work is called ------------------
a. Audit planning
b. Vouching
c. Verification
185. A fixed audit programme is also called a --------- programme
a. Tailor made
b. Man made
c. Auditor made
186. Share holders minute book should be vouched for
a. Payment to vendors
b. Payment to promoters
c. Issue of bonus shares
187. ---------------- is deducted from called up capital to get paid up capital
a. Subscribed capital
b. Issued capital
c. Calls in arrears
188. Discount on issue of shares is shown under the --------------- lead
a. Current asset
b. Preliminary expanses
c. Miscellaneous expanses
189. To forfeit shares --------------- days notice to the share holder’s given
a. 40
b. 14
c. 24
190. -------------- of the companies Act 1956 prescribes the duty of preparing a report by an auditor
a. Sec-227(2)
b. Sec-273(1)
c. Sec-224(2)
191. A --------------- report is one which contains the opinion of the auditor subject to certain conditions
a. Unqualified
b. Qualified
c. Clean
192. --------------- is made out of reserves or share premium
a. Preference shares
b. Bonus shares
c. Debentures
193. ---------------- shares cannot be issued if the company makes any default in the payment of its
obligation
a. Preference
b. Equity
c. Bonus
194. Capitalization of reserves means -------------------------
a. Creation of provision
b. Declaration of dividend
c. Issue of bonus shares
195. Provisions regarding bonus issue should be given in -------------------- document
a. Memorandum of association
b. Articles of association
c. Prospectus
196. Balance remaining in the forfeited Account after reissue is transferred to --------------- account
a. General reserve
b. Capital reserve
c. Premium account
197. If reissue of shares are more than face value of shares, the excess amount is transferred to ----------
account.
a. General reserve
b. Capital reserve
c. Premium account
198. Share call amount due is credited to ------------------ account
a. Share application account
b. Share allotment account
c. Share capital account
199. When excess applications money is refunded to applicants it is vouched with cash book and -------
a. Letter of allotment
b. Letter of call
c. Letter of regreat
200. Partial auditing is usually done by
a. Sole trading concern
b. Joint stock company
c. Govt. department
ANSWERS
1) C 2) B 3) C 4) C 5) C 6) D 7) C 8) A
9) C 10) D 11) B 12) C 13) C 14) B 15) C 16) A
17) B 18) B 19) D 20) D 21) A 22) C 23) B 24) A
25) D 26) D 27) A 28) C 29) C 30) D 31) B 32) A
33) B 34) A 35) B 36) A 37) B 38) B 39) C 40) D
41) A 42) C 43) A 44) B 45) A 46) D 47) C 48) D
49) C 50) C 51) C 52) D 53) D 54) C 55) B 56) A
57) A 58) B 59) C 60) A 61) A 62) D 63) A 64) B
65) D 66) A 67) C 68) B 69) C 70) D 71) D 72) C
73) A 74) C 75) C 76) B 77) C 78) C 79) B 80) C
81) A 82) C 83) C 84) B 85) B 86) B 87) D 88) B
89) B 90) D 91) B 92) C 93) C 94) B 95) A 96) B
97) D 98) C 99) A 100) D 101) C 102) B 103) C 104)A
105) A 106) A 107) B 108) B 109)C 110)B 111)B 112)B
113)b 114)a 115)B 116)B 117)b 118)C 119)C 120)B
121)B 122)C 123)C 124)A 125)A 126)B 127)B 128)B
129)A 130)B 131)C 132)C 133)B 134)B 135)A 136)B
137)B 138)C 139)B 140)C 141)C 142)C 143)B 144)C
145)C 146)A 147)A 148)C 149)A 150)C 151)B 152)C
153)C 154)C 155)C 156)B 157)B 158)C 159)C 160)C
161)A 162)B 163)C 164)B 165)B 166)C 167)C 168)C
169)C 170)C 171)A 172)C 173)B 174)A 175)A 176)A
177)C 178)C 179)C 180)B 181)B 182)C 183)C 184)a
185)A 186)C 187)C 188)C 189)B 190)A 191)B 192)B
193)C 194)C 195)B 196)B 197)C 198)C 199)c 200)a
B COM SEMESTER 6
AUDITING AND ASSURANCE

Multiple Choice Questions
1. Which of the following is not a kind of audit?
A. Statutory and private.
B. Government and continuous audit.
C. Interim audit.
D. None of these
2. This kind of audit is conducted generally between two annual audits.
A. Internal audit.
B. Interim audit.
C. Final audit.
D. Continuous audit.
3. Voucher relates to ______.
A. Cash receipt.
B. Cash payment.
C. Credit transactions
D. All of the above.
4. Auditing begins where _____ends.
A. Selling.
B. Inventory valuation.
C. Accounting.
D. Purchases.
5. In the case of a company in which not less than _______% of the subscribed share
capital is held whether singly or in combination by certain special institutions and
bodies, the appointment or re-appointment of auditors shall be made at each annual
general meeting by a special resolution.
a. 25%
b. 30%
c. 20%
d. 15%
b) A body corporate
d) A practicing-chartered accountant
7. When the auditor is an employee of the organization being audited, the audit is
classified as _____
a. Internal
b. External
c. Compliance
d. Both A&B
a) Shareholders
d) State Government
10. Auditor should see that amount received for premium on issue of shares should be
shown in ______
11. Sec.143 of Companies Act 20913 deals with _____
a) Powers and rights of an auditor
b) Removal of an auditor
c) Appointment of an auditor
d) Remuneration of an auditor
12. Internal auditor is appointed by______
a) Management
b) Shareholders
c) Government
d) Statutory body
13. Share premium account should be shown in the Balance sheet under
a) Paid-up capital
b) Subscribed capital
c) Reserves & surplus
d) Reserved capital
14. ______ is the medium through which an auditor expresses his opinion on the state of
affairs of the client’s business.
a) Audit report
b) Audit certificate
c) Audit programme
d) Audit planning
15. _______ is the specific guidelines and directions for efficient and effective
completion of the audit work on timely and daily basis, so as to minimise audit risk.
a) Audit planning
b) Audit report
c) Audit programme
d) Audit certificate
16. _______ is a method of organising the accounting system of a business concern or a
factory by which the duties of various clerks are arranged in such a way that the work
of one person is automatically checked by another.
a) Internal control
b) Internal check
c) Internal audit
d) All of the above
17. Internal check is a part of
a) Internal audit
b) Internal accounting
c) External audit
d) Internal control
18. Civil liability of an auditor implies liability for
a) Misappropriation of cash
b) Misappropriation of goods
c) Fraud
d) Misfeasance
c) Shareholders
20. The audit that is made compulsory under statute is called ________
a) Statutory audit
b) Partial audit
c) Complete audit
d) Continuous audit
21. Audit means _______.
a) Recording business transactions
b) Preparing final accounts
c) Examination of books, accounts or vouchers
d) Decision making
22. When a transaction has not been recorded in the books of account either wholly or
partially such errors are called _______.
a) Error of commission
b) Error of omission
c) Compensating error
23. The liabilities of an auditor can be ________.
a) Civil
b) Criminal
c) Civil & Criminal
d) Financial
24. Duties of an auditor is _______.
a) Statutory duties imposed by the Companies Act
b) Duties imposed by legal or court decisions
c) Duties arising out of professional etiquette
d) All of the above
25. Internal auditor of a company must be _______.
a) Cost accountant
b) Chartered accountant
c) ICWA
d) Need not possess any professional qualification
26. Sec.139 (7) provides that in the case of a Government Company or any other
company owned or controlled by the Central Government, or by any State
Government, the first auditor shall be appointed by _________
a) Comptroller and Auditor-General of India
c) State Government
27. Objectives of internal audit includes _________.
a) Proper control
b) Perfect accounting system
c) Asset protection
d) All of the above
28. Internal control includes ________.
a) Internal audit
b) Internal check
c) Both internal audit and internal check
d) Internal check and external audit
29. _______ is the examination of all documentary evidence which are available to
support the authenticity of transactions entered in the client’s records.
a) Accounting
b) Vouching
c) Internal check
30. Sec.140 of the Companies Act 2013 deals with ________.
a) Removal of an auditor
b) Appointment of an auditor
c) Remuneration of an auditor
31. Management audit otherwise called as _______.
a) Financial audit
b) Efficiency audit
c) Cost audit
d) Cash audit
32. Audit done by the employees of the business undertaking is called ______.
a) Final audit
b) Internal audit
c) Company audit
d) Statutory audit
a) Statutory and private audit
b) Government and continuous audit
c) Final, Interim, management audit
34. Effective internal check system reduces
a) The liability of auditor
b) Work of auditor
c) Responsibilities of an auditor
36. Auditor has no lien on
a) Audit note book
c) Books of accounts of clients
d) All of the above
a) SEBI
b) RBI
c) ASB
d) ITA
38. Cost auditor submits reports to the:
a) Shareholder
b) Board of directors
c) Employees
d) Creditors
39. Bonus shares are issued to _______.
a) New members
b) Existing share holders
c) Employees
a) Checking wastages
b) Under valuation of assets
c) Over valuation of assets
41. Internal check is suitable for _______.
a) Larger concerns
b) Smaller concerns
c) Petty-shop keepers
42. Final audit implies
a) Finally checking of accounts to reveal frauds
b) Audit for submitting report immediately at the end of the year
c) Audit of banking companies
d) Audit of accounts at the end of the year
43. Remuneration of an internal auditor is fixed by ______.
a) Management
b) Shareholders
c) Government
d) Statutory body
44. The objective of the audit planning is ________
a) To give appropriate attention to all important areas of audit
b) To identify potential problems
c) To coordinate work with other auditors and experts
d) All of the above
45. Audit papers are the property of ______.
a) Client
b) Auditor
c) Both the client and the auditor
d) The audit committee
46. The term “Audit” originated from the Latin word
a) Audire
b) Adhere
c) Adihere
47. Sole proprietary concerns are ______ to get their financial statements audited by
independent financial auditors.
a) Legally required
b) Not legally required
c) Ethically required
d) Not ethically required
48. The performance audit may be initiated by the organisation or by ____.
a) Government
b) Employees & Management
c) Shareholders
d) External interested parties
49. Balance sheet audit is also known as
a) Continues audit
b) Annual audit
c) Internal audit
d) Financial audit
50. ______ lays out the strategies to be followed to conduct an audit.
a) An action plan
b) An audit plan
c) An audit programme
d) All of the above
51. Auditor should determine the ______ and the timing of the audit report.
a) Nature
b) Actual
c) Nature & actual
d) Form
52. ______ followed by the enterprise affect the audit plan.
a) Accounting policies
b) Audit policies
c) Accounting and Audit policies
d) Management policies
53. While framing an audit plan auditor should ascertain his _____ cast by various
legislations on him.
a) Limitations
b) Duties and obligations
c) Rights and powers
d) Term of appointment & responsibilities
54. An audit programme is a set of _______ which are to be followed for proper
execution of audit.
a) Rules
b) Policies
c) Instructions
d) Actions
55. Audit programme provides instructions to the audit staff and reduces scope for
a) Understanding
b) Misunderstanding
c) Negligence
d) Liabilities
56. Audit programme helps in fixing the ______for the work done among the audit staff
as work done may be traced back to the individual staff members.
a) Remuneration
b) Liabilities
c) Negligence
d) Responsibility
57. On completion of an audit _______serves the purpose of audit record which may be
useful for future reference.
a) Audit programme
c) Audit plan
d) Audit notes
58. Audit programme is prepared by _____
a) The auditor
b) The client
c) The audit assistant
d) The auditor and his audit assistants
59. The auditor has to obtain _______ to substantiate his opinion on the financial
statements.
a) Internal evidence
b) External evidence
c) Internal and external evidence
d) Sufficient and appropriate evidence
60. The quality of information generated by the audited organization is directly related to
the strength of the organization’s ______
a) Internal check
b) Internal control
c) Internal audit
d) All of the above
61. _______ are the documents prepared or obtained by the auditors in connection with
the audit.
a) Audit notes
c) Audit report
d) All of the above
62. Working papers helps in proper _______ of audit.
a) Planning
b) Performance
c) Planning and performance
d) Execution
63. The Auditors Working Papers are divided into two parts
a) Permanent audit file and current audit file
b) Permanent audit file and temporary audit file
c) temporary audit file and current audit file
d) current audit file and transitory audit file
64. On appointment of subsequent auditors, the company must give intimation within 7
days of such appointment to ______
a) The board of directors
b) The registrar of companies
c) The auditor so appointed
d) The central government
65. In case the Board of Directors fails to appoint the first auditors within one month of
its incorporation the _______ may appoint the first auditors.
a) Chairman of the company
b) Managing directors
c) Members of the company in general meeting
d) Central government
66. Examples of casual vacancy are vacancy arising due to _______
a) Resignation of the auditor
b) Death of the auditor
c) Disqualification of the auditor
d) All of the above
67. If no auditors are appointed or re-appointed at the annual general meeting, the ______
may appoint a person to fill the vacancy.
a) Board of directors
b) Company in general meeting
d) Comptroller and Auditor General of India (C&AG)
68. Failure to give notice regarding filling of casual vacancy to the Central government is
an offence punishable with fine, who of the following are the persons on whom such
fine can be imposed.
a) Directors
b) Company
c) Every officer of the company
d) Company or every officer of the company
69. A statutory auditor-------- also as internal auditor of the company.
a) Can act
b) Cannot act
c) Though can act but ethically should not act
70. A person shall not be qualified to be appointed as an auditor of the company if he is in
the employment of ____
a) An officer of the company
b) An employee of the company
c) Both (a) and (b)
71. In case of insolvency or unsound mind, a person will automatically be disqualified for
appointment as an auditor, because
a) He is not a person of repute
b) He cannot take decision properly
c) He is not wealthy
d) He ceases to be a member of ICAI
72. The auditors have the right to attend
a) Board meeting
b) Annual general meeting
c) Extraordinary general meeting
d) Any general meeting
73. The retiring auditor does not have a right to______
a) To make written representation
b) Get his representation circulated
c) Be heard at the meeting
d) Speak as a member of the company
74. In comparison to the independent auditor, an internal auditor is more likely to be
concerned with _______
a) Cost accounting system
b) Internal control system
c) Legal compliance
d) Accounting system
75. Whether the management can restrict the scope of work of an external auditor?
a) Yes
b) No
c) In some cases
d) If shareholders permit
76. It is the duty of the auditor to ________ to the members of the company on the
Accounts examined by him.
a) Give suggestions
b) Comment
c) Refer certain points
d) Make a report
77. Auditor’s report is the expert’s opinion expressed by the auditor as to the fairness
of_________
a) Financial position
b) General position
c) Financial statements
d) Balance sheet and profit and loss account
78. Auditor report is addressed to the members of the company and is considered at
the________ of the company.
a) Board Meeting (BM)
b) Annual General Meeting (AGM)
c) Extraordinary General Meeting (EGM)
d) All of the above
79. Due to lack of audit evidence, auditor issues a________
a) Qualified opinion
b) Unqualified opinion
c) Adverse opinion
d) Disclaimer of opinion
80. When auditor does not have any objection regarding the information under audit then
he issues an _________
a) Qualified opinion
b) Adverse opinion
c) Unqualified opinion
d) Negative opinion
81. Auditor has to report to_________
a) Management
b) Owners
c) Government
d) Appointing Authority
82. The auditor must have a thorough understanding of the entity, the client’s business
strategies, processes, and measurement indicators for critical success. This analysis
helps the auditor to.
a) Decide if they want to accept the engagement
b) Identify risks associated with the client’s strategy that could affect the financial
statements
c) Assess the level of materiality that is appropriate for the audit
d) Identify the potential for fraud in the financial reporting process
83. Which of the following are performed as risk assessment procedures?
a) Observation
b) Inquiry
c) Analytical Review
d) All of these
84. Proper segregation of duties reduces the opportunities in which a person would both
a) Establish controls and executes them
b) Records cash receipts and cash payments
c) Perpetuate errors and frauds and conceals them
d) Record the transaction in journal and ledger
85. Misstatements may result from ______.
a) An inaccuracy in gathering or processing data from which financial statements are
prepared
b) An omission of an amount or disclosure
c) An incorrect accounting estimates
d) All of above
86. Misstatements can arise from ______.
a) Error
b) Fraud
c) Both (a) and (b)
87. Sufficient audit evidence is a measurement of ______
a) Quality of audit evidence
b) Quantity of audit evidence
c) Both of (a) and (b)
d) None of these
88. Depending upon nature audit evidence can be classified as_______
a) Visual evidence
b) Oral evidence
c) Documentary evidence
d) All of these
89. Depending upon source audit evidence can be classified as
a) Internal audit evidence
b) External audit evidence
c) Both (a) and (b)
90. Which of the following is not internal audit evidence?
a) Bank Reconciliation Statement
b) Bank Statement
c) Copy of Sales Invoice
d) Voucher
91. Which of the following is not external audit evidence?
a) Bank Statements
b) Purchase Invoice
c) External Confirmation
d) Salary Sheet
92. Techniques to obtain audit evidence are
a) Inspection
b) Recalculation
c) External confirmation
d) All of these
93. The reliability of audit evidence is influenced by its
a) Source
b) Nature
c) Circumstances
d) All of the above
94. Which of the following item is not suitable for test checking?
a) Purchase transactions
b) Sale transactions
c) Balance Sheet items
d) All of above
95. A related party transaction may have the following features
a) A person or entity under common control
b) Owners who are close family members
c) Common key management
d) All of the above
96. The books of account etc. of the company shall be kept at the _________ of the
company.
a) Corporate office
b) Branch office
c) Registered office
d) Head office
97. Every company shall preserve in good order the books of account together with the
relevant vouchers. The time period of preservation shall be not less than______
financial years immediately preceding the relevant financial year.
a) 7
b) 5
c) 8
d) 9
98. If the financial statements do not comply with the accounting standards, the company
shall disclose in its financial statements.
a) The deviation from the accounting standards
b) The reasons for such deviation, and
c) The financial effects, if any, arising out of such deviation
d) All of these
99. The auditor’s report shall be attached to_________.
a) Annual report
b) Board report
c) Cost audit report, if any
d) Every financial statement
100. Propriety audit refers to
b) Verification of accounts
c) Examination accounts of propriety concerns
d) Enquiry against justification and necessity of expresses
e) Audit of Govt. companies
101. Joint audit implies
a) Audit of two concerns together
b) Audit of joint stock companies
c) Audit of joint sector companies
d) Audit by two firms of C.A
102. Systems audit implies
a) Systematic examination of accounts
b) Audit undertaken to improve auditing systems
c) Enquiring accounting and control systems
d) Checking the performance of management
a) Special staff
b) Internal auditor
c) Accountant
104. Errors of omission are
a) Technical errors
b) Error of principle
c) Compensating errors
105. Payment for goods purchased should be vouched with the help of
a) Creditors statement
b) Correspondence with suppliers
c) Cash memos
d) Ledger accounts
106. Investment should be vouched with the help of
a) Commission book
b) Brokers book
c) Sales deeds
d) Minute book
107. Object of verification of assets
a) Physical verification of assets
b) Checking value of assets
c) Examining the authority of their acquisition
d) All of the above
108. “Auditor is not valuer” was stated in
a) Kingston Cotton Mills case
b) London & General Bank case
c) Lee. V. Neuchatel Co. Ltd case
d) London oil Storage Co. case
109. Book debts should be verified with the help of
a) Balance sheet
b) Amount received from Debtors
c) Debtors schedule
d) Certificate from the management
110. A special auditor is appointed by the
a) Shareholders
d) C & A – G
e) Shareholders
f) Board of Directors
g) Central Government
h) State Government
112. An auditor of Government company has to submit his report to the
a) Shareholders
c) C & A – G
d) Ministry concerned
113. While checking 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
d) 80 days of issue of prospectus
114. A company can issue Redeemable Preference shares, if authorized by
c) Companies Act, 1956
115. Premium received on issue of shares, later forfeited, should be transferred to
a) Capital reserve
b) Shares forfeited Account
c) Capital Account
116. Special resolution means ________.

a) 1/3 majority
b) 2/3 majority
c) ½ majority
117. Auditor is an ________ of a shareholder
a) Owner
b) Agent
c) Employer
118. _______ audit is forward looking -
a) Financial
b) Cost
c) Tax
d) Final
119. The meeting held by the company with in a period of not less than one month
and not more than 6 months is called _______.
a) Statutory
b) Annual
c) General
120. __________ audit is not a statuary requirement
a) Management
b) Financial
c) Tax Audit
d) All of the above
121. Which among the following is not a function of the auditor?
a) Checking errors and frauds
b) Vouching with original documents
c) Preparing final Accounts
d) Both a&b
122. The scope of auditing does not cover.
a) Vouching
b) Checking arithmetical accuracy
Ledger posting
123. Which among the following is an example of intangible asset?
a) Goodwill
b) Patents
c) All of these
124. Investigation is required when
a) Fraud is suspected in business
b) On acquisition of running business
c) All of them
125. Preliminary expanses not written off are treated as
a) Fixed assets
b) Intangible assets
c) Fictitious assets
126. A fixed audit programme is also called a _____ programme
a) Tailor made
b) Man made
c) Auditor made
d) Skeleton
127. A progressive audit programme is also called a _____ programme
a) Tailor made
b) Man made
c) Auditor made
d) Skeleton
128. Current audit file consists of _________.
a) Matters of future importance
b) Matters relations to post years
c) Matters relating to the year of audit
129. Test checking is done when there is an effective system of ________.
a) Internal control
b) Internal audit
c) Internal check
d) External audit
130. Partial auditing is usually done by
a) Sole trading concern
b) Joint stock company
c) Govt. department
131. Balance remaining in the forfeited Account after reissue is transferred to
_______ account
a) General reserve
b) Capital reserve
c) Premium account
132. Criminal liability of an auditor implies liability for
a) Misstatement in prospectus
b) Failure to assist investigation
c) Failure to assist prosecution of guilty officers
d) All of the above
133. Statutory liabilities of an auditor include ________.
a) Liability under Companies Act 2013
b) Liability under the Indian Penal Code
c) Both a&b
134. Powers and rights of an auditor include ________.
a) Right of access to the books of account
b) Right to obtain information and explanation from officers
c) Right to attend general meeting
d) All of the above
135. ______ assets are those which may or may not materialise as assets in the
future.
a) Tangible assets
c) Contingent assets
136. Copy right should be revalued at the date of the ________.
a) Balance sheet
b) Audit report
c) Internal check
137. ______ assets are those assets which have no value but represent only
expenditure or loss
a) Wasting assets
b) Fictitious assets
c) Intangible assets
d) Circulating assets
138. _____ is the value which would be realised if a particular asset is sold when it
has become out of date or unserviceable.
a) Replacement value
b) Scrap value
c) Market value
d) Book value
139. Vouching is done ______.
a) End of the year
b) Throughout the year
c) Beginning of the year
140. The auditing standards consist of ________.
a) Basic postulates
b) General standards
c) Field standards
d) All of the above
141. ______ audit is the process of evaluating a firm’s various operating
procedures, code of conduct, and other factors to determine its effect on the society.
a) Cost audit
b) Performance audit
c) Social audit
d) Tax audit
142. ______ is an audit based on ownership
a) Financial audit
b) Secretarial audit
c) Trust audit
143. ______ is a method of obtaining audit evidence.
a) Observation
b) Inspection
c) Computation
d) All of the above
144. _______ determine whether the layout satisfies certain rules specified by the
fabrication team
a) Logical Equivalence Checking
b) Design Rule Check
c) Layout Versus Schematic
145. ______ is a type of voucher.
a) Template voucher
b) Adjustment voucher
c) Reversal voucher
d) All of the above
146. ______ is a method of valuing the assts on the basis of purchase price of the
assets.
a) Base stock method
b) Market value method
c) Cost method
147. What are the techniques of verification?
a) Inspection
b) Observation
c) Confirmation
d) All of the above
148. If the statutory time limit of _____ years is over, the money being in
Unclaimed Dividend Account is transferred to the Central Government with details of
shareholders who have not claimed the dividend.
a) 3
b) 4
c) 1
d) 7
149. Total fixed deposits should not exceed ____% of paid up share capital and
free reserves.
a) 20
b) 25
c) 15
d) 10
150. Fixed deposits received along with accrued and due interest would be shown
under _______.
a) Unsecured loans
b) Secured loans
c) Doubtful debts
151. An auditor of a company has a right to be indemnified, out of the assets of the
company, for any liability incurred by him in defending himself against any civil or
criminal proceedings by the company, provided the judgment is in his favour.
a) True
b) False
152. Government have established the __________, a specialized, multi-
disciplinary organization to deal with cases of corporate fraud.
a) Fraud Investigation Office (FIO)
b) Serious Frauds Investigation Office (SFIO)
c) Corporate Frauds Investigation Office (CFIO)
153. Where the investigation is to be done on behalf of a limited company desiring
to buy another established concern, the investigator will be required to examine
________.
a) Corporate security
b) Goodwill
c) Human resources
154. An audit conducted throughout the year or at the regular intervals of time is
known as _________.
a) Continuous audit
b) Internal audit
c) Statutory audit
d) External audit
155. __________ is a risk that the practitioner expresses an inappropriate
conclusion when the subject matter information is materially misstated.
a) Assurance Engagement Risk
b) Assurance Relevance Risk
c) Assurance judgment Risk
156. _______ refer to specific accounting controls relating to particular transactions
and data in each computer-based application system.
a) General controls
b) Application controls
c) System control
157. The time spent by each worker should be correctly recorded in the _________.
a) Attendance card
b) Time record book
c) Time recording clock
158. Objective of internal check with regard to wages is __________.
a) To avoid inclusion of dummy workers in the list of workers
b) To avoid errors in the wage sheet
c) To ensure the correctness of time cards and piece work cards
d) All of the above
159. In big organizations, generally ___________ employed to push sales and to
collect debt.
a) Travelling agents
b) Marketing executive
c) Salesman
160. Cash sales can be done through ________.
a) Sales at the counter
b) Sales by travelling agents
c) Postal sales
d) All of the above
a) Piece work statement
b) Wage sheets
c) Minute book
d) Bank pass book
a) Valuation is a part of verification
b) Verification is a part of valuation
c) Valuation has nothing to do with verification
d) Auditor is a valuer
163. Valuation of Fixed Assets is based on the concept
a) Going concern
b) Conservation
c) Money measurement
d) Dual aspect
164. Outstanding expenses should be verified with the help of
a) Cash book
b) Balance book
c) Journal proper
165. Investments in hand should be verified with the help of _______.
a) Schedule of investments
b) Balance sheet
c) Inspection of securities
d) Certificate from the bank
166. 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
b) Capital
c) Depreciation
168. The prime importance of investigation on behalf of an individual or firm intending to
purchase an existing business is to
a) Ascertain value of asset
b) Ascertain the earning capacity of the concern
c) Estimation of value of good will
d) Extend of liabilities
169. Auditor finds that there is change in the method of valuation of stock whether he
should
a) Allow
b) Disallow it
170. The duties of internal auditor are prescribed by
a) Companies act
b) Company law board
c) Management
171. Method of physical verification includes ___________.
a) Layout versus schematic
b) Design rule check
c) Logical equivalence checking
d) All of the above
172. Shareholders minute book should be vouched for
a) Payment to vendors
b) Payment to promoters
c) Issue of bonus shares
173. Floating assets are valued at
a) Cost
b) Market price
174. A continuous audit is specially needed for
a) Any trading concerns
b) Smaller concerns
c) Banking companies
d) Any manufacturing companies
175. Falsification of accounts is undertaken by
a) Auditors
b) Clerks
c) Accountants
d) Responsible officials
176. Auditor should be dutiful like a
a) A watch dog
b) A blood hound
c) A detective
d) An insurer
177. 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
178. Auditor should see that amount received for premium on issue of shares should be
shown in
b) Capital
c) Depreciation
180. Capital profits
a) Can be paid by way of dividends
b) Cannot paid by way of dividends
c) Can be paid by way of dividend under certain conditions
181. Investigation of books of accounts and records is:
a) Not legally compulsory
b) Compulsory
c) Compulsory as per companies act
d) Compulsory as Income Tax Act
182. Investigation is carries on behalf of
a) Manager
b) Employee
c) Client
d) On behalf of owner and third parties
183. Charging excessive provision for depreciation results in
a) Less profit
b) More profit
c) No change in profit
d) No change in loss
184. An invitation to the public to subscribe the shares of the company is called______.
c) Prospectus
d) Certificate of incorporation
185. Auditing around the computer is also known as ________.
a) Black box approach
b) Blue box approach
c) Green box approach
d) Red box approach
186. Manipulation of accounts is done by _______.
a) Responsible & senior officers
b) Owners
c) Directors of the business
d) All of the above
187. The term ________ implies an examination of accounts and rewards for some special
purpose.
a) Investigation
b) Internal check
c) Audit programme
188. Essentials of good audit report includes _______.
a) Simplicity
b) Clarity
c) Firmness
d) All of the above
189. ________ are the assets which may arise on the happening of an uncertain event.
a) Fixed assets
c) Contingent assets
d) Wasting assets
190. Unless a contingent liability is quite negligible, its existence should be disclosed by an
appropriate note in the _______.
a) Audit report
b) Balance sheet
c) Audit working note
191. Investment may be classified as ________.
a) Investment in Govt. securities
b) Investment in shares
c) Investment in immovable property
d) All of the above
192. The auditor has a right to _________.
a) Take legal & technical advice
b) Sign the audit report
c) Receive remuneration
d) All of the above
193. Compensating errors are also known as _______.
a) Offsetting error
b) Error of commission
c) Error of duplication
d) Error of principle
194. ________ is the cash purchase related voucher.
a) Cash bill
b) Cash memo
c) \Goods inward book
d) All of the above
195. The value or the reputation of the firm is represented in the form of _______.
a) Patent
b) Goodwill
c) Fictitious assets
196. _________ is a systematic process of obtaining and objectively evaluating the
evidence relating to performance of an organisation as reflected in the environment
statement.
a) Efficiency audit
b) Environmental audit
c) Occasional audit
d) Cost audit
197. _______ committee acts as a laison between the auditors of the company and its bord
of directors.
a) Audit committee
b) Internal check committee
c) Internal control committee
198. ______ contains information pertaining to financial history, memorandum of
association, articles of association of a company.
a) Permanent audit file
b) Current audit file
c) Test audit file
199. The auditor gives a ________ report when he is unable to give an opinion on the
financial statement taken as a whole, but he believes that he can express an opinion on
certain items in the statements.
a) Adverse report
b) Qualified report
c) Piecemeal report
d) Clean report
200. Approach to computer auditing is known as _______.
a) Auditing around the computers
b) Auditing with the computers
c) Internet auditing
d) Electronic auditing
ANSWER KEY
1. D 26. A 51. D 76. D 101. D 126. A 151. A 176. A

2. B 27. D 52. C 77. C 102. C 127. D 152. B 177. C
3. D 28. C 53. D 78. B 103. D 128. C 153. B 178. C
4. C 29. B 54. C 79. A 104. A 129. A 154. A 179. D
5. A 30. A 55. C 80. C 105. A 130. A 155. A 180. C
6. D 31. B 56. D 81. D 106. B 131. B 156. B 181. A
7. A 32. B 57. A 82. B 107. D 132. D 157. B 182. D
8. A 33. D 58. A 83. D 108. A 133. C 158. D 183. C
9. B 34. B 59. D 84. C 109. C 134. D 159. A 184. C
10. C 35. B 60. D 85. D 110. C 135. C 160. D 185. A
11. A 36. C 61. D 86. C 111. A 136. A 161. B 186. D
12. A 37. C 62. C 87. B 112. B 137. B 162. A 187. A
13. C 38. B 63. A 88. D 113. B 138. B 163. A 188. D
14. A 39. B 64. C 89. C 114. B 139. B 164. C 189. C
15. A 40. C 65. C 90. B 115. D 140. D 165. C 190. B
16. B 41. A 66. D 91. D 116. B 141. C 166. C 191. D
17. D 42. D 67. C 92. D 117. B 142. C 167. D 192. D
18. D 43. A 68. D 93. D 118. B 143. D 168. B 193. A
19. A 44. D 69. B 94. C 119. A 144. B 169. C 194. D
20. A 45. B 70. C 95. D 120. A 145. D 170. C 195. B
21. C 46. A 71. D 96. C 121. C 146. C 171. D 196. B
22. B 47. B 72. D 97. C 122. C 147. D 172. C 197. A
23. C 48. D 73. D 98. D 123. C 148. A 173. C 198. A
24. D 49. D 74. B 99. D 124. C 149. B 174. C 199. C
25. D 50. A 75. B 100. C 125. C 150. A 175. D 200. A
T.Y.B.COM. - INDIRECT TAXES - GST
1
CHAPTER - 1 : INTRODUCTION [S. 1]

1. GST Stands for
(a) Goods and Supply Tax (b) Government Sales Tax
(c) Goods and Services Tax (d) Good and Simple Tax
2. GST is levied in India on the basis of Principle.
(a) Origin (b) Destination
(c) Either a or b (d) Both a or b
3. The main objective of GST implementation is .
(a) To consolidate multiple indirect tax levies into single tax
(b) Overcoming limitation of existing indirect tax structure
(c) Creating efficiencies in tax administration
(d) All of above
4. Which of the following is not a bill passed by parliament for the implementation of GST in India?
(a) The Central GST Act, 2017 (b) The State GST Act, 2017
(c) The Integrated GST Act, 2017 (d) None of above
5. Petroleum products have been temporarily been kept out of GST.
(a) One (b) Two
(c) Three (d) Five
6. In India, GST structure is in nature.
(a) Single (b) Dual
(c) Triple (d) (a) & (b) both
7. GST is not levied on which of the following ?
(a) Alcoholic Liquor for Human Consumption (b) Five Petroleum Products
(c) Immovable Property (d) All of above
8. GST is not levied on which of the following ?
(a) Motor Spirit (b) High speed diesel
(c) Natural gas (d) All of above
9. is levied on Intra-State Supply of goods and/or Services.
(a) CGST (b) SGST
(c) IGST (d) Both a & b
10. is levied on Inter State Supply of Goods and/or Services.
(a) CGST (b) SGST
(c) IGST (d) Both a & b
11. is levied on Intra State Supply of Goods and/or Services in Union Territory.
(a) SGST (b) IGST
(c) UTGST (d) GST is not levied
12. Goods and Services Tax is a tax levied on goods and services imposed at each point of .
(a) Sale (b) Service
(c) Supply (d) Manufacturing
13. GST is a national level tax based on .
(a) First point tax principle (b) Value Added principle
(c) Last point tax principle (d) All of the above
14. The following tax has been subsumed into Central GST.
(a) Central Sales Tax (b) Custom Duty
(c) Service Tax (d) All of the above
15. GST was introduced in India on
(a) 1-4-2017 (b) 1-5-2017
(c) 1-6-2017 (d) 1-7-2017
3
ANSWERS
1. (c) 6. (b) 11. (c)

2. (b) 7. (d) 12. (c)
3. (d) 8. (d) 13. (b)
4. (b) 9. (d) 14. (d)
5. (d) 10. (c) 15. (d)
Indirect Taxes - Goods and Services Tax Act (T.Y.B.Com.: SEM-VI)
CHAPTER - 3 : SCOPE OF SUPPLY [S. 7 - 8]
A. Scope of Supply (Section 7)

1. What are different types of supplies covered under the scope of supply?
(a) Supplies made with consideration (b) Supplies made without consideration
(c) Both of the above (d) None of the above
2. The activities to be treated as supply of goods or supply of services as referred to in of
CGST Act, 2017.
(a) Schedule I of CGST Act (b) Schedule II of CGST Act
(c) Schedule III of CGST Act (d) Section 7
3. Which of the following taxes will be levied on Imports?
(a) CGST (b) SGST
(c) IGST (d) None of the above
4. Which of the following is not a supply as per section 7 of the CGST Act ?
(a) Management consultancy services not in course or furtherance of business
(b) Import of service for consideration not in course or furtherance of business
(c) Both (a) and (b)
(d) None of the above
5. specifies the activities to be treated as supply even if made without Consideration
(c) Schedule III of CGST Act (d) All of the above
6. Which of the following activity is outside the scope of supply and not taxable under GST?
(a) Services by an employee to the employer in the course of or in relation to his employment
(b) Services of funeral
(c) Actionable claims, other than lottery, betting and gambling.
(d) All of the above
7. Which of the following activities is a supply of services?
(a) Transfer of right in goods/ undivided share in goods without transfer of title in goods
(b) Transfer of title in goods
(c) Transfer of title in goods under an agreement which stipulates that property shall pass at a
future date
8. Supply includes import of services for a consideration .
(a) Only if in the course or furtherance of business
(b) Only if not in the course or furtherance of business
(c) Whether or not in the course or furtherance of business
9. specifies the activities which are neither to be treated as supply of goods nor a supply
of services.
(c) Schedule III of CGST Act (d) All of the above
10. Activities or transactions undertaken by the Central Government, a State Government or any
local authority in which they are engaged as public authorities, as may be notified by the
Government on the recommendations of the Council, shall treated as .
(a) Supply of goods (b) Supply of services
(c) Neither as a supply of goods nor a supply of services
(d) Either as a supply of goods or a supply of services
11. Transfer of the title in goods shall be considered as .

(a) Supply of goods (b) Supply of services
12. Transfer of right in goods or of undivided share in goods without the transfer of title thereof shall
be considered as .
(a) Supply of goods
(b) Supply of services
13. Transfer of title in goods under an agreement which stipulates that property in goods shall pass
at a future date upon payment of full consideration as agreed shall be considered as .
(a) Supply of goods
14. Lease, tenancy, easement, licence to occupy land shall be considered as .
(a) Supply of goods
15. Lease or letting out of the building including a commercial, industrial or residential complex for
business or commerce, either wholly or partly shall be treated as .
(a) Supply of goods
16. Any treatment or process which is applied to another person‟s goods shall be treated as .
(a) Supply of goods
17. Where goods forming part of the assets of a business are transferred or disposed of by or under
the directions of the person carrying on the business so as no longer to form part of those
assets, whether or not for a consideration, such transfer or disposal is a by the person.
(a) Supply of goods
18. Where, by or under the direction of a person carrying on a business, goods held or used for the
purposes of the business are put to any private use or are used, or made available to any person
for use, for any purpose other than a purpose of the business, whether or not for a consideration,
the usage or making available of such goods is a .
(a) Supply of goods
19. Renting of immovable property is .
(a) Supply of goods
20. Construction of a complex, building, civil structure or a part thereof, including a complex or
building intended for sale to a buyer, wholly or partly, except where the entire consideration has
been received after issuance of completion certificate, where required, by the competent authority
or after its first occupation, whichever is earlier, shall be treated as .
8 Indirect Taxes - Goods and Services Tax Act (T.Y.B.Com.: SEM-VI)
(a) Supply of goods
21. Temporary transfer or permitting the use or enjoyment of any intellectual property right shall be
treated as .
(a) Supply of goods
22. Development, design, programming, customisation, adaptation, upgradation, enhancement,
implementation of information technology software shall be treated as .
(a) Supply of goods
23. Agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act
is .
(a) Supply of goods
24. Transfer of the right to use any goods for any purpose (whether or not for a specified period) for
cash, deferred payment or other valuable consideration shall be treated as .
(a) Supply of goods
1. (c) 9. (c) 17. (a)

2. (b) 10. (c) 18. (b)
3. (c) 11. (a) 19. (b)
4. (a) 12. (b) 20. (b)
5. (a) 13. (a) 21. (b)
6. (d) 14. (b) 22. (b)
7. (a) 15. (b) 23. (b)
8. (c) 16. (b) 24. (b)
CHAPTER - 4 : LEVY AND COLLECTION OF TAX [S. 9]
A. Levy and Collection (CGST - Section 9)

1. What are the taxes levied on an intra-State supply?
(a) CGST (b) SGST
(c) CGST and SGST (d) IGST
2. What is the maximum rate prescribed under CGST Act?
(a) 12% (b) 28%
(c) 20% (d) 18%
3. Who will notify the rate of tax to be levied under CGST Act?
(a) Central Government suo moto
(b) State Government suo moto
(c) GST Council suo moto
(d) Central Government as per the recommendations of the GST Council
4. Which of the following taxes will be levied on imports?
(a) CGST (b) SGST
(c) IGST (d) CGST and SGST
5. What is the maximum rate prescribed under UTGST Act?
(a) 14% (b) 28%
(c) 20% (d) 30%
B. Levy and Collection of Tax [IGST] (Section 5 to 6)
6. Supply shall attract IGST?
(a) Intra-State (b) Inter-State
(c) Both
7. Is there any ceiling limit prescribed on the rate under IGST?
(a) 14% (b) 40%
(c) 26% (d) 30%
8. What if an e-commerce operator having no physical presence in the taxable territory, does not
have a representative in the taxable territory?
(a) His will have to discharge his tax liability in foreign currency
(b) He will not be liable to tax
(c) He has to appoint a person in the taxable territory for the purpose of paying tax on his behalf
9. Unless and until notified, IGST shall not be levied on the inter-State supply of which of the
following:
(a) Industrial alcohol (b) Works contract
(c) Petroleum (d) None of the above
C. Reverse Charge
10. What are the supplies on which reverse charge mechanism would apply at present?
(a) Notified categories of goods or services or both under section 9(3)
(b) Inward supply of goods or services or both from an unregistered dealer under section 9(4)
(c) Both the above
11. Which of the following services are covered under Reverse Charge Mechanism of CGST Act,
2017?
(i) Legal Consultancy (ii) Goods Transport Agency
(iii) Manpower Supply (iv) Rent-a-Cab
Manan Prakashan 13
(a) i & iii (b) i & iv
(c) i & ii (d) All the above
12. In case of sponsorship services provided by Mr. A to M/s AB Ltd., liability to pay GST is on:
(a) Mr. A (b) M/s AB Ltd.
(c) Both (d) None of the above
13. In case of renting of land, inside an Industrial estate, by State Government to a registered
manufacturing company, GST is:
(a) Exempted (b) Applicable under Normal Charge
(c) Applicable under Reverse Charge (d) None of the above
14. In case of services by an insurance agent to Ms. ABC Insurance Co. Ltd., GST is to be paid by:
(a) Insurance Agent (b) ABC Insurance Co. Ltd.
(c) Both (d) None of the above
15. Sitting fees received by director of XYZ Ltd., is liable for GST in the hands of the
(a) Director (b) XYZ Ltd.
(c) Both of above (d) None of the above
16. Services by a recovery agent to M/s ZZZ Bank Ltd., are liable for GST in the hands of:
(a) M/s ZZZ Bank Ltd. (b) Recovery agent
(c) Both the above (d) None of the above
17. In case of lottery procured from State Government by a lottery distributor, GST is payable by:
(a) Lottery distributor (b) State Government
(c) Both the above (d) None of the above
18. Reverse charge under section 9(3) of the CGST Act is applicable:
(a) Only on notified services (b) Only on notified goods
(c) On Notified goods & services (d) On None of the above
19. If Tobacco leaves procured from an Agriculturist by a registered person, then:
(a) Reverse charge is applicable (b) Normal charge is applicable
(c) Joint charge is applicable (d) None of the above
20. In case M/s. PQR Ltd., a registered person, has availed rent-a-cab service from M/s ABC Travels
(Proprietor) service then which one of the following is true:
(a) Reverse charge is applicable as this is a notified service
(b) Reverse charge is applicable if ABC Travels is not registered
(c) Joint charge is applicable
21. Reverse charge is applicable:
(a) Only on intra-State supplies (b) Only on inter-State supplies
(c) Both intra-State and inter-State supplies (d) None of the above
ANSWERS
1. (c) 4. (c) 7. (b) 10. (a) 13. (c) 16. (a) 19. (a)
2. (c) 5. (c) 8. (c) 11. (c) 14. (b) 17. (a) 20. (b)
3. (d) 6. (b) 9. (c) 12. (b) 15. (b) 18. (c) 21. (c)
CHAPTER - 5 : COMPOSITION LEVY [S. 10]

1. Which of the following persons can opt for composition scheme?
(a) Person making any supply of goods which are not leviable to tax under this Act
(b) Person making any inter-State outward supplies of goods and services (except restaurant
services)
(c) Person effecting supply of goods through an e-commerce operator liable to collect tax at
source
(d) Person providing restaurant services
2. What is the threshold limit of turnover in the preceding financial year for opting to pay tax under
composition scheme for States other than special category States?
(a) ` 20 lacs (b) ` 10 lacs
(c) ` 50 lacs (d) ` 1.5 crore
composition scheme for special category states?
(a) ` 25 lacs (b) ` 50 lacs
(c) ` 75 lacs (d) ` 1 crore
4. What is the rate applicable under CGST to a registered person being a manufacturer opting to
pay taxes under composition scheme?
(a) 2.5% (b) 1%
(c) 0.5% (d) No composition for manufacturer
5. What is the rate applicable under CGST to a registered person being a hotelier (providing
restaurant and accommodation services) opting to pay taxes under composition scheme?
(a) 1% (b) 0.5%
(c) 2.5%
(d) Not eligible for composition scheme thus liable to pay normal tax
6. Mr. Richard, a trader in Delhi has opted for composition scheme of taxation under GST. Determine
the rate of total GST payable by him under composition scheme:
(a) 0.5% CGST & 0.5% SGST (b) 2.5% CGST & 2.5% UTGST
(c) 5% IGST (d) 5% UTGST
7. Can a registered person opt for composition scheme only for one out of his 3 business places
having same Permanent Account Number?
(a) Yes
(b) No
(c) Yes, subject to prior approval of the Central Government
(d) Yes, subject to prior approval of the concerned State Government
8. Can composition scheme be availed if the registered person effects inter-State supplies?
(a) Yes
(b) No
(c) Yes, subject to prior approval of the Central Government
(d) Yes, subject to prior approval of the concerned State Government
9. Can a registered person under composition scheme claim input tax credit?
(a) Yes
(b) No
(c) Input tax credit on inward supply of goods only can be claimed
(d) Input tax credit on inward supply of services only can be claimed
10. Can a registered person opting for composition scheme collect tax on his outward supplies?
(a) Yes
(b) No
(c) Yes, if the amount of tax is prominently indicated in the invoice issued by him
(d) Yes, only on such goods as may be notified by the Central Government
15
11. Which of the following will be excluded from the computation of „aggregate turnover‟?
(a) Value of taxable supplies
(b) Value of exempt Supplies
(c) Non-taxable supplies
(d) Value of inward supplies on which tax is paid on reverse charge basis
12. What will happen if the turnover of a registered person opting to pay taxes under composition
scheme during the year 2019-20 crosses threshold limit?
(a) He can continue under composition scheme till the end of the financial year
(b) He will be liable to pay tax at normal rates of GST on the entire turnover for the financial year
2019-20
(c) He will cease to remain under the composition scheme with immediate effect
(d) He will cease to remain under the composition scheme from the quarter following the quarter
in which the aggregate turnover exceeds threshold limit
(a) Person making any supply of goods which are not leviable to tax under this Act;
(b) Person making any inter-State outward supplies of goods;
(c) Person effecting supply of goods through an e-commerce operator liable to collect tax at
source
(e) None of the above
composition scheme for a trader in Mumbai?
(a) ` 30 lacs (b) ` 10 lacs
(c) ` 150 lacs (d) ` 75 lacs
15. For certain Special category States, the reduced limit of ` 75 lakhs for opting composition scheme
is available. The reduced limit of ` 75 Lakhs is not available for?
(a) Manipur (b) Meghalaya
(c) Himachal Pradesh (d) Jammu & Kashmir
16. ABC Ltd is manufacturer of goods opting for Composition Scheme has effected turnover of ` 60
Lakhs during the financial year 2019-20. The CGST portion for composition tax payable by ABC
Ltd is
(a) ` 30,000 (b) ` 60,000
(c) ` 30,000 (d) ` 1,50,000
17. GST Ltd. has business places at Lucknow, UP and Kanpur, UP having the same PAN; and
Aggregate Turnover in the financial year not exceeding ` 75 lakhs. Can it opt composition levy
for Lucknow and normal levy at Kanpur?
(a) No
(b) Yes
(c) Up-to an Aggregate Turnover of ` 75 lakhs at Lucknow only
(d) Subject to the approval of GST Council
CHECK YOUR ANSWERS
1. (d) 4. (c) 7. (b) 10. (b) 13. (e) 16. (a)

2. (d) 5. (d) 8. (b) 11. (d) 14. (c) 17. (a)
3. (c) 6. (a) 9. (b) 12. (c) 15. (d)
CHAPTER - 6 : EXEMPTION FROM TAX [S. 11]
A. Exemption
1. Which one of the following is true?
(a) Entire income of any trust is exempted from GST
(b) Entire income of a registered trust is exempted from GST
(c) Incomes from specified/defined charitable activities of a trust are exempted from GST
(d) Incomes from specified/defined charitable activities of a registered trust (u/s 12AA of Income
Tax Act)are exempted from GST
2. Select the correct statement?
(a) Transfer of a going concern wholly is not exempt from GST
(b) Transfer of a going concern is partly exempt from GST
(c) Transfer partly as going concern is exempted from GST
(d) Transfer of a going concern is exempt from GST
3. Service by whom, by way of any activity in relation to any function entrusted to a municipality
under Article 243 W of the Constitution, is exempted?
(a) Central Government or State Government or Union territory or Local authority
(b) Governmental authority
(c) Municipality under Article 243 W of the Constitution
(d) All of above
4. Which is a wrong statement?
(a) All services of Department of Post are exempted
(b) All services by State/Central Governments/local authorities in relation to an aircraft or a
vessel in a Port or an Airport are exempted
(c) All services by State/Central Governments/local authorities in relation to transport of
passengers are exempted
(d) All the above mentioned
5. Services to a single residential unit is, exempted if:
(a) It is pure labour service only
(b) It is works contract only
(c) It is a part of residential complex only
(d) It is on ground floor without further super structure
6. Which exemption option is right from the following?
(a) For letting out any immovable property
(b) For letting out any residential dwelling for use as residence
(c) For letting out any residential property irrespective of its use
(d) For none of the above
7. Services by a hotel, inn, guest house, club or campsite are exempted for residential / lodging
purposes -
(a) If the actual tariff for a unit of accommodation is below ` 10,000
(b) If the actual tariff for a unit of accommodation is below ` 1,000
(c) If the actual tariff for a unit of accommodation is exactly ` 1,000
(d) If the actual tariff for a unit of accommodation is above ` 1,000
8. Transportation of passengers exempted if -
(a) It is by air-conditioned stage carriage
(b) It is by air-conditioned contract carriage
(c) It is by non-air-conditioned stage carriage for tourism, charter or hire
(d) None of the abov
7
9. Transportation of passengers is exempted -
(a) In an air-conditioned railway coach
(b) In a vessel for public tourism purpose between places in India
(c) In a metered cab/auto rickshaw / e rickshaw
(d) In all the above mentioned
10. Transportation of goods is not exempted if it is -
(a) by a goods transport agency / courier agency
(b) by inland waterways
(c) by an aircraft from a place outside India upto the customs station of clearance in India
(d) by all the above mentioned
11. Transportation of agricultural produces, milk, salt and food grain including flour, pulses and rice,
„relief materials meant for victims of natural or man-made disasters, calamities, accidents or
mishap‟, newspaper or magazines registered with the Registrar of Newspapers - is exempted –
(a) If it is by a goods transport agency
(b) If it is by a rail - within India
(c) If it is by a vessel - within India
(d) If it is by all of the above
12. Which of the following is exempted –
(a) Services by way of loading, unloading, packing, storage or warehousing of rice
(b) Services by way of loading and unloading of jute
(c) Services by way of packing and storage or warehousing of rubber
1. (d) 5. (a) 9. (c)
2. (d) 6. (b) 10. (a)
3. (d) 7. (b) 11. (d)
4. (d) 8. (d) 12. (a)
CHAPTER - 7 : TIME OF SUPPLY [S. 12-14]
[A] TIME OF SUPPLY OF GOODS (SECTION 12)
A.1 Forward Charge

1. What is time of supply of goods, in case of forward charge?
(a) Date of issue of invoice
(b) Due date of issue of invoice
(c) Date of receipt of consideration by the supplier
(d) Earlier of (a) & (b)
2. The date on which the supplier receives the payment shall be
(a) the date on which the payment is entered in his books of account
(b) the date on which the payment is credited to his bank account
(c) the date on which the payment is entered in his books of account or the date on which the
payment is credited to his bank account whichever is earlier
(d) the date on which the payment is entered in his books of account or the date on which the
payment is credited to his bank account whichever is later
3. Mr. A sold goods to Mr. B. Determine the TOS in accordance with the provisions of Section 12 of
the CGST Act, 2017 in case supply involves movement of goods.
Date of removal - 1st Oct. 2019
Date of Invoice - 2nd Oct. 2019
Date when goods made available to the recipient - 3rd Oct. 2019
Date of receipt of payment - 15th Nov. 2019
(a) 1st Oct. 2019 (b) 2nd Oct. 2019
(c) 3rd Oct. 2019 (d) 15th Nov. 2019
4. Mr.A sold goods to Mr. B. Determine the TOS in accordance with the provisions of Section 12 of
the CGST Act, 2017 in case supply involves movement of goods.
Date of removal - 3rd Oct. 2019
Date of Invoice - 1st Oct. 2019
Date when goods made available to the recipient - 4th Oct. 2019
(a) 3rd Oct. 2019 (b) 1st Oct. 2019
(c) 4th Oct. 2019 (d) 25th Nov. 2019
5. Determine the Time of supply in accordance with provisions of Section 12 of the CGST Act,
2017 in case supply involves movement of goods.
Date of Invoice : 02-10-2019
Date goods made available to recipient : 03-10-2019
Date of receipt of payment : 15-11-2019
(a) Date of Invoice : 02-10-2019
(b) Date goods made available to recipient : 03-10-2019
(c) Date of receipt of payment : 15-11-2019
Date of Removal of goods : 03-10-2019
(a) Date of Removal of goods : 03-10-2019

(b) Date of Invoice : 01-10-2019
(c) Date goods made available to recipient : 04-10-2019
(d) Date of receipt of payment : 25-11-2019
Date of Removal of goods : 05-11-2019
(a) Date of Removal of goods : 05-11-2019
(b) Date of Invoice : 04-11-2019
(c) Date goods made available to recipient : 06-11-2019
(d) Date of receipt of payment : 01-10-2019
8. Mr. A sold goods to Mr. B. Determine the TOS in accordance with the provisions of Section 12 of
the CGST Act, 2017 in case supply does not involve movement of goods.
Date of delivery - 2nd Oct. 2019 (Date when the goods made available to the recipient)
Date of Invoice - 3rd Oct. 2019
(a) 2nd Oct. 2019 (b) 3rd Oct. 2019
(c) 15th Nov. 2019 (d) 1st Nov. 2019
9. Determine the Time of supply in case goods are supplied on approval basis
Removal of goods : 01-12-2019
Issue of Invoice : 15-12-2019
Accepted by recipient : 05-12-2019
Receipt of payment : 25-12-2019
(a) Removal of goods : 01-12-2019 (b) Issue of Invoice : 15-12-2019
(c) Accepted by recipient : 05-12-2019 (d) Receipt of payment : 25-12-2019
10. Where the supplier of taxable goods receives an amount upto in excess of the amount
indicated in the tax invoice, the time of supply to the extent of such excess amount shall, at the
option of the said supplier, be the date of issue of invoice in respect of such excess amount.
(a) 1,000 (b) 5,000
(c) 10,000 (d) 50,000
11. The time of supply to the extent it relates to an addition in the value of supply by way of interest,
late fee or penalty for delayed payment of any consideration shall be the date on which
(a) The supplier receives such addition in value
(b) The original invoice was issued
(c) The supplier issues revised invoice
(d) The original payment was received
A.2 Tax Invoice
12.Tax invoice must be issued by on supplies made by him.
(e) Every supplier
(f) Every taxable person
(g) Every Registered person not paying tax under composition scheme
(h) All the above
12. An invoice must be issued
(a) At the time of removal of goods
(b) On transfer of risks and rewards of the goods to the recipient
(c) On receipt of payment for the supply
13. In case of goods sent on sale on approval basis, invoice has to be issued
(a) While sending the goods; another Invoice has to be issued by the recipient while rejecting
the goods
(b) When the recipient accepts the goods or ten months from the date of supply whichever is earlier
(c) When the recipient accepts the goods or six months from the date of supply whichever is
earlier
(d) When the recipient accepts the goods or three months from the date of supply whichever is
earlier
14. Where the goods being sent or taken on approval for sale or return are removed before the
supply takes place, the invoice shall be issued
(a) before/at the time of supply (b) 6 months from the date of removal
(c) earlier of (a) or (b) (d) none of the above
15. GST a dealer has sent some goods to CST, another dealer, for Sales on Approval Basis. In
absence of any confirmation even after 6 months, it will be treated as
(a) Sales Return (b) Deemed Supply of Goods
(c) Purchase return (d) None of the Above
A.3 Reverse Charge
16. What is time of supply of goods liable to tax under reverse charge mechanism?
(a) Date of receipt of goods
(b) Date on which the payment is made
(c) Date immediately following 30 days from the date of issue of invoice by the supplier
(d) Earlier of (a) or (b) or (c)
2017 in case recipient of goods is liable to pay tax under reverse charge mechanism.
Date of receipt of goods : 15-10-2019
Date of payment in books : 10-10-2019
Date of debit of payment in Bank A/c : 12-10-2019
(a) Date of Invoice : 01-10-2019 (b) Date of receipt of goods : 15-10-2019
(c) Date of payment in books : 10-10-2019
(d) Date of debit of payment in Bank A/c : 12-10-2019
ANSWERS
1. (d) 9. (b) 17. (d)

2. (c) 10. (a)
3. (a) 11. (a)
4. (b) 12. (c)
5. (a) 13. (a)
6. (b) 14. (c)
7. (b) 15. (c)
8. (a) 16. (b)
CHAPTER - 8 : NATURE AND PLACE OF SUPPLY

[S. 7 - 13 : IGST ACT]
A. Inter-State, Intra-State Supply

1. Which of the following is an inter-State supply?
(a) Supplier of goods located in Delhi and place of supply of goods is to an SEZ located in Delhi
(b) Supplier of goods located in Delhi and place of supply of goods in Jaipur
(c) Supplier of goods located in Delhi and place of supply of goods is to an SEZ located in
Chandigarh
(d) All the above
2. Which of the following is an intrastate supply?
(a) Supplier of goods located in Delhi and place of supply of goods SEZ located in Delhi
(b) Supplier of goods located in Delhi and place of supply of goods in Jaipur
(c) Supplier of goods located in Delhi and place of supply of goods in Delhi
(d) All the above
3. Which of the following transaction is inter-state supply of goods?
(a) Location of supplier is in Lucknow, UP and location of recipient is in Mumbai.
(b) Location of supplier is in Lucknow, UP and place of supply is Mumbai
(c) Location of supplier and place of supply is Lucknow, UP
4. Which of the following transaction is inter-state supply of goods involving movement of goods?
(1) Location of supplier is in Bangalore and location of recipient is in Mumbai and goods are
shipped to Kolkata
(2) Location of supplier is in Bangalore and place of supply is Mumbai
(3) Location of supplier and place of supply is Bangalore
(4) None of the above
(a) 1 and 2 (b) 1 and 3
(c) 2 and 3 (d) 4
5. Supply of goods in the course of import into the territory of India is
(a) Intrastate supply (b) Inter-State supply
(c) Export (d) Neither Export nor Import
6. Place of supply of a transaction in territorial waters is
(a) Location of the supplier
(b) Location of the recipient
(c) Coastal state where the nearest point of the appropriate baseline is located
7. is levied on inter-state supply of goods and services.
(a) CGST (b) SGST
(c) IGST (d) Both (a) and (b)
8. IGST means
(a) Inter-state GST (b) Integrated GST
(c) Import GST (d) International GST
9. supply shall attract IGST.
(a) Intra-State (b) Inter-State
(c) Intra state and inter-state (d) Local
10. Unless and until notified, IGST shall not be levied on the inter-State supply of which of the
following.
(a) Industrial alcohol (b) Works contract
(c) Petroleum (d) None of the above
Manan Prakashan 27
11. What is rate of tax of IGST?
(a) CGST rate (b) SGST rate
(c) CGST + SGST rate (d) VAT rate
12. is levied on imports of goods and services.
(a) SGST (b) CGST
(c) IGST (d) VAT
13. Import/Export is treated as in GST.
(a) Intra-state supply (b) Inter-state supply
(c) Non-taxable supply (d) Exempted supply
14. “Inter-State supplies” means
(a) Any supply where the location of the supplier and the place of supply are in the same state
(b) Any supply where the location of supplier and the place of supply are in the different states
(c) Any supply where location of the supplier and place of supply are outside the country
(d) None of these
15. “Import of services” means the supply of any service, where -
(a) The supplier of service is located outside India
(b) The recipient of service is located in India
(c) The place of supply of service is in India
16. Zero rated supply includes
(a) Export of goods or/and services
(b) Supply of goods or/and services to a SEZ developer or SEZ Unit
(c) Supply of goods or/and services by a SEZ developer or SEZ Unit
(d) Both (a) and (b)
17. The supply of goods to SEZ unit is treated as in the hands of the supplier for eligibility of
ITC.
(a) Exempt Supply (b) Deemed Taxable Supply
(c) Export of Supplies (d) Non-taxable supply
B. POS of Goods : Within India
18. Place of supply in case of installation of elevator is
(a) Where the movement of elevator commences from the supplier‟s place
(b) Where the delivery of elevator is taken
(c) Where the installation of elevator is made
(d) Where address of the recipient is mentioned in the invoice
19. Place of supply of food taken on board at Delhi for an aircraft departing from Delhi to Bangalore
via Hyderabad is
(a) Address of the aircraft carrier mentioned on the invoice of the supplier
(b) Delhi
(c) Jaipur
(d) Hyderabad
20. What is location of supply in case of importation of goods?
(a) Customs port where the goods are cleared
(b) Location of the importer
(c) Place where the goods are delivered after clearance from customs port
(d) Owner of the goods
21. Place of supply of goods, other than supply of goods imported into, or exported from India, when
supply involves movement of goods is the
(a) Location of the goods at the time at which the movement terminates for delivery
(b) Location of the goods at the time at which the movement starts for delivery
(c) Location of the principal place of business of the recipient
(d) Location of the principal place of business of the supplier
22. Place of supply of goods, other than supply of goods imported into, or exported from India, when
supply does not involve movement of goods is the
(a) Location of the supplier
(b) Location of the goods at the time of the delivery to the recipient
(c) Location of the goods at the time of purchase order
(d) Location of the recipient
23. Place of supply of goods, other than supply of goods imported into, or exported from India,
where the goods are assembled or installed is the
(a) Location of the agent of the recipient (b) Location of the recipient
(c) Location of the supplier (d) Place of the such assembly or installation
24. Place of supply of goods, other than supply of goods imported into, or exported from India,
where the goods are supplied on board a conveyance such as vessel, an aircraft, a train or
motor vehicle is the
(a) Location of the recipient
(b) Location of the supplier
(c) Location at which such goods are taken on board
25. Where will be the place of supply when the goods are supplied on the direction of the third
party?
(a) Location of the supplier (b) Location of the recipient
(c) Location of the third party (d) Any of the above
26. Where will be the place of supply of goods supplied in a train which is heading towards Delhi
from Chennai, if the goods are taken on board at Coimbatore?
(a) Delhi (b) Chennai
(c) Coimbatore (d) None of the above
27. In case of any ambiguity where the place of supply cannot be determined as provided in IGST
Act, 2016 who will determine place of supply?
(a) Central Government or State Government on the recommendation of the Council
(b) Central Government and State Government on the recommendation of the Council
(c) In a manner as may be prescribed
(d) Central Government
C. POS : Imports / Exports
28. The place of supply of goods imported into India shall be the
(a) Location of the importer (b) Location of the exporter
(c) Location of the agent of exporter (d) None of the above
29. The place of supply of goods exported from India shall be the
(a) Location of the importer (b) Location of the exporter
(c) Location of the agent of exporter (d) Location outside India
D. POS : Services
30. Real estate agent in Delhi charges brokerage fee to Company A located in Chandigarh for
assistance in getting a commercial property in Kolkata. Which is the place of supply in this case?
(a) Delhi (b) Chandigarh
(c) Kolkata (d) None of the above
31. What is the place of supply of service where a restaurant provides catering service at the premise
of the customer?
(a) Address of the restaurant from where the food is supplied
(b) Customer premise where catering service is provided
32. Mr. X a resident from Pune conducts training for employees of P Ltd. being a registered person
under GST based out in Chennai at a resort in Darjeeling. The place of supply in this case is:
(a) Chennai (b) Pune
(c) Darjeeling (d) None of the above
ANSWERS
1. (d) 8. (b) 15. (d) 22. (b) 29. (d)

2. (c) 9. (b) 16. (d) 23. (d) 30. (c)
3. (b) 10. (c) 17. (b) 24. (c) 31. (b)
4. (a) 11. (c) 18. (c) 25. (c) 32. (a)
5. (b) 12. (c) 19. (b) 26. (c)
6. (c) 13. (b) 20. (b) 27. (c)
7. (c) 14. (b) 21. (a) 28. (a)
CHAPTER - 9 : VALUE OF SUPPLY [S. 15]
A. Transaction Value [S. 15(1)]

1. The value of supply of goods and services shall be the
(a) Transaction value (b) MRP
(c) Market Value (d) None of above
(a) Transaction value (b) Retail sale price
(c) Wholesale price (d) None of above
3. When can the transaction value be rejected for computation of value of supply
(a) When the buyer and seller are related and price is not the sole consideration
(b) When the buyer and seller are related or price is not the sole consideration
(c) It can never be rejected
(d) When the goods are sold at very low margins
4. If the goods are supplied to related persons then how should the taxable person ascertain the
value of supplies?
(a) Seek the help of the GST officer
(b) Use the arm‟s length price as required under the Income Tax law
(c) Refer the Rules which prescribed for this purpose
5. Persons shall be deemed to be “related persons” if any person directly or indirectly owns, controls
or holds or more of the outstanding voting stock or shares of both of them;
(a) 25% (b) 26%
(c) 51% (d) 0%
6. Persons shall be deemed to be “related persons” if
(a) such persons are officers or directors of one another‟s businesses
(b) such persons are legally recognised partners in business
(c) such persons are employer and employee;
B. Inclusions [S. 15(2)]

7. The value of supply should include
(a) Any non-GST taxes, duties, cesses, fees charged by supplier separately
(b) Interest, late fee or penalty for delayed payment of any consideration for any supply of goods
or services
(c) Subsidies directly linked to the price except subsidies provided by the Central and State
Government
8. Which of the following shall not be included in value of supply?
(a) GST (b) Interest
(c) Late fee (d) Commission
9. The value of taxable supply should not include -
(a) Taxes levied under SGST Act, 2017
(b) Taxes levied under CGST Act, 2017
(c) Taxes levied under GST Compensation Cess Act, 2017
10. Interest or late fee or penalty for delayed payment of any consideration for any supply
(a) Shall be excluded from the value of taxable supply
(b) Shall be included from the value of taxable supply
(c) Shall require no adjustment
(d) Can be included or excluded from the value of the taxable supply
11. Subsidies provided by the Central / State Govt.
(a) Shall be excluded from the value of taxable supply
(b) Shall be included from the value of taxable supply
(c) Shall require no adjustment
(d) Can be included or excluded from the value of the taxable supply
12. The value of supply should include -
(a) Incidental expenses, including commission and packing, charged by the supplier to the
recipient of a supply
(b) Interest, late fee or penalty for delayed payment of any consideration for any supply
(c) Subsidies directly linked to the price except subsidies provided by the Central and State
Government
13. From the following information determine the value of taxable supply as per provisions of Section
15 of the CGST Act, 2017?
Contracted value of supply of goods (including GST @ 18%) 11,80,000
The contracted value of supply includes the following:
(1) Cost of primary packing 25,000
(2) Cost of protective packing at recipient‟s request for safe transportation 15,000
(a) 10,00,000 (b) 11,80,000
(c) 11,55,000 (d) 11,40,000
14. From the following information determine the value of taxable supply as per provisions of Section
15 of the CGST Act, 2017?
Price (including GST @18%) 11,00,000
Other information :
(i) Commission paid to agent by recipient on instruction
of supplier not included in Price 5,000
(ii) Freight and insurance charges paid by recipient on
behalf of supplier not included in Price 75,000
(a) 11,00,000 (b) 11,80,000
(c) 10,00,000 (d) 11,75,000
ANSWERS
1. (a) 4. (c) 7. (d) 10. (b) 13. (a)

2. (a) 5. (a) 8. (a) 11. (a) 14. (c)
3. (b) 6. (d) 9. (d) 12. (d)
CHAPTER - 10 : INPUT TAX CREDIT [S. 16, 18]

1. Whether definition of Inputs includes capital goods.
(a) Yes (b) No
(c) Certain capital goods only (d) None of the above
2. Is it mandatory to capitalize the capital goods in books of Accounts?
(a) Yes (b) No
(c) Optional (d) None of the above
3. Whether credit on capital goods can be taken immediately on receipt of the goods?
(a) Yes (b) No
(c) After usage of such capital goods (d) After capitalizing in books of Accounts
4. The term “used in the course or furtherance of business” means?
(a) It should be directly co-related to output supply
(b) It is planned to use in the course of business
(c) It is used or intended to be used in the course of business
(d) It is used in the course of business for making outward supply
5. Under section 16(2) of CGST Act how many conditions are to be fulfilled for the entitlement of
credit?
(a) All four conditions (b) Any two conditions
(c) Conditions not specified (d) None of the above
6. Whether credit on inputs should be availed based on receipt of documents or receipt of goods
(a) Receipt of goods (b) Receipt of Documents
(c) Both (d) Either receipt of documents or Receipt of goods
7. In case supplier has deposited the taxes but the receiver has not received the documents, is
receiver entitled to avail credit?
(a) Yes, it will be auto populated in recipient monthly returns
(b) No as one of the conditions of 16(2) is not fulfilled
(c) Yes, if the receiver can prove later that documents are received subsequently
8. Input tax credit on capital goods and Inputs can be availed in one installment or in multiple
installments?
(a) In thirty-six installments (b) In twelve installments
(c) In one installment (d) In six installments
9. The tax paying documents in section 16(2) is
(a) Bill of entry, Invoice raised on RCM supplies, etc.
(b) Acknowledged copy of tax paid to department
(c) Supply invoice by the recipient
(d) Any of the above
10. The time limit to pay the value of supply with taxes to avail the input tax credit?
(a) Three months (b) Six Months
(c) One hundred and eighty days (d) Till the date of filing of Annual Return
11. What is the time limit for taking input tax credit by a registered taxable person?
(a) No time limit
(b) 1 year from the date of invoice
(c) Due date of furnishing of the return under section 39 for the month of September following
the end of financial year to which such invoice or invoice relating to such debit note pertains
(d) Due date of furnishing of the return under section 39 for the month of September following
the end of financial year to which such invoice or invoice relating to such debit note pertains
or furnishing of the relevant annual return, whichever is earlier
12. Can the recipient avail the Input tax credit for the part payment of the amount to the supplier
within one hundred and eighty days?
(a) Yes, on full tax amount and partly value amount
(b) No, he can‟t until full amount is paid to supplier
(c) Yes, but proportionately to the extent of value and tax paid
13. Whether credit can be availed without actual receipt of goods where goods are transferred
through transfer of document of title before or during the movement of goods?
(a) Yes
(b) No
(c) Yes, in specific instances
(d) Can be availed only after transfer of document of title after movement of goods
14. Whether depreciation on tax component of capital goods and Plant and Machinery and whether
input tax credit is Permissible?
(a) Yes
(b) No
(c) Input tax credit is eligible if depreciation on tax component is not availed
15. What is the maximum time limit to claim the Input tax credit?
(a) Till the date of filing annual return
(b) Due date of September month which is following the financial year
(c) Earliest of (a) or (b)
(d) Later of (a) or (b)
1. (b) 5. (a) 9. (a) 13. (c)

2. (a) 6. (c) 10. (c) 14. (c)
3. (a) 7. (b) 11. (d) 15. (c)
4. (c) 8. (c) 12. (c)
CHAPTER - 11 : REGISTRATION UNDER
GST LAW [S. 22 - 30]

1. Whether all persons are mandatorily required to obtain registration?
(a) Yes
(b) Not required if he is an agriculturist or person exclusively engaged in supplying exempt
goods or services, if specified threshold limit does not exceed in a financial year.
(c) Not required if he is an agriculturist or person exclusively engaged in supplying exempt
goods or services.
(d) No, only if specified threshold exceeds in a financial year then only need to obtain.
(a) A person can‟t collect tax unless he is registered.
(b) Registered person not liable to collect tax till his aggregate turnover exceeds ` 20 lakhs /
` 10 Lakhs as the case may be.
(c) A person can collect the tax during the period of his provisional registration.
(d) Both (a) and (b) are correct.
3. Which of the following forms are used for registration?
(a) Form GSTR-1 (b) Form GSTAPL-01
(c) Form GST REG-01 (d) Form GST RFD-01
4. Within how many days a person should apply for registration?
(a) Within 60 days from the date he becomes liable for registration.
(b) Within 30 days from the date he becomes liable for registration.
(c) No Time Limit
(d) Within 90 days from the date he becomes liable for registration.
5. A person having business verticals in a State obtain a separate registration for
each business vertical.
(a) Single, shall (b) Multiple, shall
(c) Multiple, may (d) Single, May
6. Which one of following statements is correct?
(a) Voluntary registration is not possible under GST.
(b) Voluntarily registered person not liable to comply with all the provisions of the GST.
(c) A person may get himself registered voluntarily and shall comply with all the provisions of
GST.
(d) None of the above.
7. PAN issued under the Income Tax Act is mandatory for grant of registration.
(a) It is one of the documents listed.
(b) Yes, but non-resident taxable person may be granted registration on the basis of any other
document.
(c) No
(d) Yes, even for non-resident taxable persons
8. An E-commerce operator should get registered?
(a) Yes, irrespective of threshold limit
(b) No, required to register only if his aggregate turnover exceeds the threshold limit.
(c) Yes, if he is located in North-western states.
(d) He is required to register if he is liable to collect tax at source and /or his aggregate turnover
exceeds the threshold limit
9. What is the validity of the registration certificate?
(a) One year (b) No validity
(c) Valid till it is cancelled (d) Five years
10. What is the validity of the registration certificate issued to casual taxable person and non-resident
taxable person?
(a) 90 days from the effective date of registration
(b) Period specified in the application for registration
(c) Earliest of (a) or (b) above
(d) 180 days from the effective date of registration
11. When can a voluntarily registration be cancelled?
(a) If the person does not start business within six months from the date of registration.
(b) Business has been discontinued or transferred for any reason.
(c) Non-filing of returns for a continuous period of six months or for three consecutive tax period
in case of composite dealer.
12. What are the consequences of obtaining registration by misrepresentation?
(a) Liable to cancellation of registration by proper officer.
(b) Liable to a fine not exceeding ` 10,00,000/-
(c) Imprisonment for a period of 6 months to 3 years.
(d) Both (b) and (c)
13. Does cancellation of registration under CGST affect the liability under SGST/IGST for period
prior to cancellation of registration?
(a) Cancellation of registration will immune his liability under CGST only.
(b) Cancellation of registration will immune his liability under IGST only.
(c) Cancellation of registration will immune his liability under SGST and CGST but not under
IGST.
(d) Cancellation does not affect the liability of taxable person to pay tax and other dues under
CGST/SGST/IGST Act.
14. Within how many days an application for revocation of cancellation of registration can be made?
(a) Within 7 days from the date of service of the cancellation order.
(b) Within 15 days from the date of issue of the cancellation order.
(c) Within 45 days from the date of issue of the cancellation order.
(d) Within 30 days from the date of service of the cancellation order.
15. Which of the following statements are correct?
(i) Revocation of cancellation of registration under CGST/SGST Act shall be deemed to be a
revocation of cancellation of registration under SGST/CGST Act.
(ii) Cancellation of registration under CGST/SGST Act shall be deemed to be a cancellation of
registration under SGST/CGST Act.
(iii) Revocation of cancellation of registration under CGST/SGST Act shall not be deemed to be
a revocation of cancellation of registration under SGST/CGST Act.
(iv) Cancellation of registration under CGST/SGST Act shall not be deemed to be a cancellation
of registration under SGST/CGST Act.
(a) (i) and (ii) (b) (i) and (iv)
(c) (ii) and (iii) (d) (iii) and (iv)
16. Who can submit application for registration in Form GST REG-09?
(a) Non- Resident taxable person (b) Input service distributor
(c) Person deducting tax at source (d) Person collecting tax at source
17. Where the application for grant of registration has been approved, a certificate of registration in
shall be made available to the applicant on the
(a) FORM GST REG-06, Common Portal (b) FORM GST CER-06, Common Portal
(c) FORM GST CER-06, Jurisdictional office (d) FORM GST REG-10, Company portal
18. An Unique Identity Number will be allotted to the following persons upon submitting an application:
(a) All the taxable persons can apply.
(b) Only unregistered persons can apply.
(c) Specialized agency of the UNO or any multilateral financial institution or consulate or embassy
of foreign countries.
(d) No such concept under CGST/SGST Act.
19. Every registered taxable person shall display his certificate of registration in a prominent location
at his principal and at every other place of business also GSTIN shall be displayed on the name
board at the entry of such places.
(a) No, certificate of registration to be displayed only at a registered place of business and
GSTIN need not be displayed on the name board.
(b) Yes, above statement is correct.
(c) No, GSTIN to be displayed only on the invoices.
(d) Above statement is correct subject to certificate of registration to be displayed only at registered
place of business.
20. Under what circumstances physical verification of business premises is mandatory?
(a) Physical verification of business premises is a discretionary power of proper officer.
(b) If additional information for registration asked by the proper officer is not submitted within
specified time.
(c) If certificate of registration is obtained on misrepresentation of facts.
(d) If photograph of the business premise is not uploaded in the common portal within specified
time.
21. Business which has centralized registration under erstwhile Act
(a) Shall obtain a centralized registration under GST Law
(b) Shall obtain separate registration in each state from where it is making taxable supplies
(c) Shall obtain registration on temporary basis
(d) No need to apply for registration under GST
22. Every person registered under any of the existing laws, who is not liable to be registered under
the Act may, on or before , at his option, submit an application in FORM GST REG-29 for
the cancellation of registration granted to him
(a) September 30, 2018 (b) October 31, 2018
(c) November 30, 2018 (d) March 31, 2019
23. Who will take registration on services in relation to transportation of goods (including used
household for personal use) if, GTA avails ITC on supplies made by him
(a) GTA, forward charge (b) GTA, RCM
(c) Service receiver, forward charge (d) Service receiver, RCM
(a) A person can‟t collect tax unless he is registered.
(b) Registered person not liable to collect tax till his aggregate turnover exceeds ` 20 lakhs/ ` 10
lakhs as the case may be.
(c) A person can collect the tax during the period of his provisional registration.
25. An E-commerce operator should get registered irrespective of his threshold limit?
(a) Yes
(b) No, required to register only if his aggregate turnover exceeds the threshold limit.
(c) He is required to register if he is liable to collect tax at source and his aggregate turnover
exceeds the threshold limit.
26. Which of the following require compulsory registration, irrespective of threshold limit ?
(a) Casual taxable person (b) Non Resident taxable person
(c) Person liable to pay under Reverse Charge Mechanism
27. A person not required to obtain registration if he is required to pay tax under reverse charge and
there are no taxable supplies made by him.
(a) Incorrect, if person who are required to pay tax under reverse charge, irrespective of threshold
shall obtain registration.
(b) Incorrect, if person who are required to pay tax under reverse charge obtain registration only
if such value of supplies under reverse charge exceeds the threshold limit.
(c) Above statement is correct
(d) A person is required to obtain registration if he is required to pay tax under reverse charge
and also he is also making taxable supplies irrespective of the threshold limit.
28. Mr. A has started supply of goods and services in Delhi. He is required to obtain registration, if
his aggregate turnover exceeds during a financial year.
(a) ` 10 lakh (b) ` 20 lakh
(c) ` 30 lakh (d) ` 50 lakh
29. Aggregate turnover includes
(a) Taxable supplies (b) Exempt supplies
(c) Exports (d) All of the above
30. Which of the following persons are compulsorily required to obtain registration?
(a) Persons making any inter-State taxable supply
(b) Non-resident taxable persons making taxable supply
(c) Casual taxable persons making taxable supply
ANSWERS
1. (d) 8. (b) 15. (d) 22. (b) 29. (b)

2. (c) 9. (d) 16. (a) 23. (d) 30. (d)
3. (a) 10. (c) 17. (a) 24. (a) .
4. (c) 11. (c) 18. (a) 25. (a)
5. (b) 12. (d) 19. (c) 26. (a)
6. (c) 13. (a) 20. (b) 27. (d)
7. (c) 14. (d) 21. (a) 28. (a)
CHAPTER - 12 : PAYMENT OF TAX [S. 49]

1. Which of these registers/ledgers are maintained online?
(a) Tax liability register (b) Credit ledger
(c) Cash ledger (d) All of them
2. Payment made through challan will be credited to which registers/ledgers?
(a) Electronic Tax liability register (b) Electronic Credit ledger
(c) Electronic Cash ledger (d) All of them
3. What is deemed to be the date of deposit in the electronic cash ledger?
(a) Date on which amount gets debited in the account of the taxable person
(b) Date on which payment is initiated and approved by the taxable person
(c) Date of credit to the account of the appropriate Government
(d) Earliest of the above three dates
4. What gets debited to the electronic credit ledger?
(a) Matched input tax credit (b) Provisionally input tax credit
(c) Unmatched input tax credit (d) All of them
5. Balance in electronic credit ledger can be utilized against which liability?
(a) Output tax payable (b) Interest
(c) Penalty (d) All of them
6. Balance in electronic credit ledger under IGST can be used against which liability?
(a) IGST Liability only (b) IGST and CGST liability
(c) IGST, CGST and SGST liability (d) None of them
7. Balance in electronic credit ledger under CGST can be used against which liability?
(a) CGST Liability only (b) CGST and IGST liability
(c) CGST, IGST and SGST liability (d) None of them
8. Balance in electronic credit ledger under SGST can be used against which liability?
(a) SGST Liability only (b) SGST and IGST liability
(c) SGST, IGST and CGST liability (d) None of them
9. What should the taxable person do if he pay‟s the wrong tax i.e. IGST instead of CGST/SGST or
vice versa?
(a) Remit tax again and claim refund (b) It will be auto-adjusted
(c) It will be adjusted on application/request (d) None of the above
10. What should the taxable person do if he pay‟s tax under wrong GSTIN?
(a) Pay again under right GSTIN and claim refund
(b) Auto-adjustment
(c) Adjustment on application/request
(d) Raise ISD invoice and transfer
11. Taxable person made an online payment of tax. Due to technical snag CIN was not generated
but my bank account is debited. What should he do?
(a) Wait for 24 hours for re-credit (b) Approach bank
(c) File application with department (d) File return without challan
12. What is the due date for payment of tax?
(a) Last day of the month to which payment relates
(b) Within 10 days of the subsequent month
(c) Within 20 days of the subsequent month
(d) Within 15 days of the subsequent month
13. A Company has head office in Bangalore and 4 branches in different states, all registered under
GST and one ISD registered unit in Delhi. How many electronic cash ledgers will the company
have?
(a) 1 (b) 4
(c) 5 (d) 6
14. What is the validity of challan in FORM GST PMT-06?
(a) 1 day (b) 5 days
(c) 15 days (d) Forever
15. Input Tax credit as credited in Electronic Credit ledger can be utilized for
(a) Payment of Interest (b) Payment of penalty, fine
(c) Payment of late fees (d) Payment of Taxes
16. Deposits towards tax, penalty, interest, fee or any other amount are credited into the of
a taxable person.
(a) Electronic Credit Ledger (b) Electronic Tax Liability Ledger
(c) Electronic Cash Ledger (d) All of the above
17. The Input Tax Credit as self-assessed by a taxable person is credited into the
(a) Electronic Credit Ledger (b) Electronic Tax Liability Ledger
(c) Electronic Cash Ledger (d) All of the above
18. Cross-Utilization of credit of available IGST after utilization towards payment of IGST is done in
the following chronological order :
(a) CGST then SGST/UTGST (b) SGST/UTGST then CGST
(c) CGST, UTGST and SGST simultaneously (d) Only IGST
19. Which of the following Statements is true?
(a) ITC of CGST is first utilized for payment of CGST and the balance is utilized for payment of
SGST/UTGST
(b) ITC of SGST is first utilized for payment of SGST and the balance is utilized for payment of
CGST
(c) ITC of CGST is first utilized for payment of CGST and the balance is utilized for payment of
IGST
(d) All of the Above
20. A Company has head office in Bangalore and 4 branches in different states, all registered under
GST and one ISD registered unit in Delhi. How many electronic cash ledgers will the company
have?
(a) 1 (b) 2
(c) 5 (d) 6
1. (d) 8. (b) 15. (d)

2. (c) 9. (a) 16. (c)
3. (c) 10. (a) 17. (a)
4. (d) 11. (c) 18. (a)
5. (a) 12. (c) 19. (c)
6. (c) 13. (c) 20. (c)
7. (b) 14. (c) .
CHAPTER - 13 : COMPUTATION OF LIABILITY AND TAX
A. ICSI Inter, December 2017

1. A service would be called as “continuous supply of service”, if the service under a contract is
provided continuously or on recurrent basis exceeding:
(a) One year (b) 6 months
(c) 3 months (d) 1 month
2. Which law will govern the inter-state supply of goods or services?
(a) CGST (b) SGST
(c) UTGST (d) IGST
3. Which of the following has been kept out of the GST Levy?
(a) Generator (b) Computer
(c) Jewellery (d) Electricity
4. Threshold limit of turnover for levy of GST in the case of a person having business (supply of
goods and services) in Gujarat is
(a) ` 10 lakhs (b) ` 20 lakhs
(c) ` 30 lakhs (d) ` 40 lakhs
5. Abhijit Sen is engaged in running a textile showroom at Gangtok (Sikkim). In order to avail
composition scheme under GST law, his “aggregate turnover” in the preceding financial year
should not have exceeded:
(a) ` 10 lakhs (b) ` 20 lakhs
(c) ` 50 lakhs (d) ` 75 lakhs
6. When employer gifts goods to his employees, it will not be considered as taxable supply for the
purpose of GST if the value of supply to an employee does not exceed:
(a) ` 5,000 (b) ` 20,000
(c) ` 50,000 (d) ` 1,00,000
7. Which of the following incomes/activities is liable for GST?
(a) Salary (b) Salary and allowances of MPs
(c) Services by Court (d) Sale of jewellery
8. Which of the following represents composite supply?
(a) Doctor‟s service with medicines
(b) Package with fruits and chocolates
(c) Coaching centre with monthly excursions on trekking
(d) Supply of computer printer and laptop
9. Mr. Ram supplied goods to Mr. Laxman. The invoice is dated 30.7.2019. Payment was received
for the supply on 30.10.2019. The goods were dispatched on 5.8.2019. What is time of supply
under GGST Act?
(a) 5.8.2019 (b) 30.7.2019
(c) 30.10.2019 (d) None of the-above
10. Which of the following though shown in Bill will not be included in determining the value of
supply for the purpose of GST?
(a) Packing (b) Discount
(c) Interest for late payment (d) Installation charges
11. Madhan is located in Chennai. He has a branch office in Cochin. He wants to transfer goods. His
turnover was always below ` 10 lakhs. His registration under GST is
(a) Voluntary
(b) Compulsory
(c) Compulsory only when turnover exceeds 20 lakhs
(d) As and when deemed by the Revenue
12. A taxable person whose registration has been cancelled or surrendered must file the final return
of GST within
(a) 6 months of the cancellation
(b) 6 months after the end of the financial year
(c) 3 months after the end of the financial year
(d) 3 months after the date of cancellation
13. Refreshments were supplied on board in an aircraft proceeding from Chennai to Delhi. It had a
stop at Hyderabad. The refreshments were taken on board at Hyderabad. The place of supply is
(a) Delhi (b) Chennai
(c) Hyderabad (d) None of the above
14. For the purpose of calculating the compensation payable to the States under the Goods and
Service Tax (Compensation to States) Act, 2017 the base year for reckoning the Revenue is :
(a) 31.3.2014 (b) 31.3.2015
(c) 31.3.2016 (d) 31.3.2017
15. Which of the following GST model is adopted in India?
(a) Australian model (b) Bagchi-Poddar model
(c) Dual model (d) American model
16. For the purpose of deciding “aggregate turnover” in order to determine the GST payable under
composition scheme, which of the following is to be excluded?
(a) Exemption supply (b) Export of goods
(c) Inter-state branch transfer (d) CGST
17. Export of service does not include:
(a) the supplier of service located outside India
(b) the recipient of service located outside India
(c) the place of supply of service is outside India
(d) the supplier of service is located in India
ANSWERS
1. (c) 1 17(a)
2. (d) 7
.
3. (d)
4. (b)
5. (c)
6. (c)
7. (d)
8. (a)
9. (b)
10. (b)
11. (b)
12. (d)
13. (c)
14. (c)
15. (c)
16. (d)
T. Y. B. COM. SEMESTER VI DIRECT & INDIRECT TAXES (GST)
SAMPLE MULTIPLE CHOICE QUESTIONS SEPT 2020
1. Which of the following taxes will be levied on imports ?

a) CGST b) SGST
c) IGST d) None of the above
2. Which of the following activity is outside the scope of supply and not taxable under
GST ?
i. Services by an employee to the employer In the course of or in relation to
this employment.
ii. Services of funeral
iii. Actionable claims, other than lottery, betting and gambling.
iv. All of the above.
3. Renting of immovable property is __________

a) Supply of goods b) Supply of services
c) Neither as a supply of goods nor a supply of services.
d) Either as a supply of goods or a supply of services.
4. Works contract as defined in section 2 (119) shall be treated as _________

i. Supply of goods
ii. Supply of Services
iii. Neither as a supply of goods nor a supply of services.
iv. Either as a supply of goods or a supply of services.
5. Gifts not exceeding ______ in value in a financial year by an employer to an

employee shall not be treated as supply of goods or services or both.
a) 50,000 b) 1,00,000
c) 2,00,000 d) 2,50,000
6. The ________ shall be treated as supply even if made without consideration.

i. Supply of goods by a principal to his agent where the agent undertakes to
supply such goods on behalf of the principal.
ii. Supply of goods by an agent to his principal where the agent undertakes to
receive such goods on behalf of the principal.
iii. Permanent transfer or disposal of business assets where input tax credit has
been awaited. On such asserts.
iv. All of the above.
7. Which of the following is – the supply in which possession of the goods are
transferred but the title on the same will be transferred at the future date ?
a) Rent a car b) Hire Purchase
c) Normal sale of goods d) None of the above.
8. What would be the tax rate applicable in case of composite supply ?
i. Tax rate as applicable on principal supply
ii. Tax rate as applicable on ancillary supply
iii. Tax rate as applicable on respective supply
iv. None of the above
9. ________ means two or more individual supplies of goods or services, or any

combination thereof, made in conjunction with each other by a taxable person for a
single price where such supply does not constitute a composite supply.
a) Mixed supply b) Principal supply
c) Inward supply d) Exempt supply
10. What is the threshold limit of turnover in the preceding financial year for opting to
pay tax under composition scheme for states other than special category states ?
a) Rs. 20 lacs b) Rs. 10 lacs
c) Rs. 50 lacs d) Rs. 1.5 crore.
11. Can composition scheme be availed if the registered person effects inter-state
supplies ?
i. Yes
ii. No
iii. Yes, subject to prior approval of the Central Government.
iv. Yes, subject to prior approval of the concerned State Government.
12. Which of the following will be excluded from the computation of aggregate
turnover?
i. Value of taxable supplies
ii. Value of exempt supplies
iii. Non taxable supplies
iv. Value of inward supplies on which tax is paid on revere charge basis.
i. Person making any supply of goods which are not leviable to tax under this
act.
ii. Person making any inter-state outward supplies of goods.
iii. Person effecting supply of goods through an e-cxommerce operator iable to
collect tax at source.
iv. None of the above
14. Services to a single residential unit is, exempted if :

i. It is pure labour service only
ii. It is works contract only
iii. It is a part of residential complex only
iv. It is on ground floor without further super structure.
15. Services by educational institution is exempted if the services are to –
a) Any common man b) Its own student, faculty / staff
c) Both a & b d) None of the above
16. Transportation of passengers by ________ are exempt from GST

a) Railway in first class b) Railway in an air-conditioned coach
c) Metro d) All of the above.
17. What is time of supply of goods in case of forward charge ?

i. Date of issue of invoice
ii. Due date of issue of invoice
iii. Date of receipt of consideration by the supplier
iv. earlier of a & b
18. Mr. A sold goods to Mr. B. Determine the TOS in accordance with the provisions of
section 12 of the CGST Act, 2017 in case supply involves movement of goods.
i. Date of removal – 1st Oct 2019
ii. Date of invoice – 2nd Oct 2019
iii. Date when goods made available to the recipient – 3rd Oct 2019
iv. Date of receipt of payment – 15th Nov., 2019
a) 1st Oct, 2019 b) 2nd Oct 2019
c) 3rd Oct 2019 d) 15th Nov 2019
19. Tax invoice must be issued by ________ on supplies made by him.

a. Every supplier
b. Every taxable person
c. Every registered person not paying tax under composition scheme
d. All the above.
20. Where the goods being sent or taken on approval for sale or return are removed
before the supply takes place, the invoice shall be issued
a) before/at the time of supply b) 6 months from the date of removal
c) earlier of (a) & (b) d) none of the above.
21. What is time of supply of goods liable to tax under reversed charge mechanism ?
a. Date of receipt of goods
b. Date on which the payment is made
c. Date immediately following 30 days from the date of issue of invoice by the
supplier.
d. Earlier of (a) or (b) or (c)
22. What is date of receipt of payment ?

a. Date of entry in the books.
b. Date of payment credited into bank account
c. Date of deposit of cheque into bank account.
d. Earlier of (a) and (b)
23. Value of services rendered is Rs. 1,18,000. Date of issue of invoice is 5 th Sept, 2019.
Advance received is Rs. 20,000 on 20th August, 2018. Balance amount received on
7th Sept 2019. What is the TOS of service ?
a. 5th sept, 2019 – Rs. 1,18,000
b. 20th August, 2019 – Rs. 1,18,000
c. 20th August, 2019 – Rs. 20,000 and 5th Sept., 2019 – Rs. 98,000
d. 20th August, 2019 – R. 20,000 and 7th Sept., 2019 – Rs. 98,000
24. In case of taxable supply of services, invoice shall be issued within a period of
______ from the date of supply of serice.
a) 30 days b) 45 days
c) 60 days d) 90 days.
25. Continuous supply of services means a supply of services who provided, or agreed
to be provided, continuously or on recurrent basis, under a contract, for a period
exceeding ______ Months, with periodic payment obligations and includes supply of
such services as the Government may subject to such conditions, as I may, by
notification, specify
a) Three b) Four
c) Six d) Twelve
26. What is the time of supply of service in case of reverse charge mechanism ?
a. Date of payment as entered in the books of account of the recipient
b. Date of immediately following 60 days from the date of issue of invoice
c. Date of invoice
d. Earlier of (a) or (b).
27. There was increase in tax rate from 20% to 24% w.e.f. 01.09.2019. which of the
following rate is applicable when services are provided after change in rate of tax in
September, 2019 but invoice issued and payment received, both in August, 2019 :
a. 20% as it is lower of the two
b. 24% as it is higher of the two
c. 20% as invoice and payment were received prior to rate change.
d. 24% as the supply was completed after rate change.
e.
28. Which of the following is an inter-state supply ?

a. Supplier of goods located in Delhi and place of supply of goods I to an SEZ located
in Delhi.
b. Supplier of goods located in Delhi and place of supply of goods in Jaipur.
c. Supplier of goods loacated in Delhi and place of supply of goods is to an SEZ
located in Chandigarh.
d. All the above
29. _________ is levied on inter-state supply of goods and services.
a) CGST b) SGST
c) IGST d) Both (a) and (b)
30. IGST menas

a) Inter-state GST b) Integrated GST
c) Import GST d) International GST
31. Place of supply of goods, other than supply of goods imported into, or exported
from India, when supply involves movement of goods, is the
a. Location of the goods at the time at which the movement terminates for
delivery.
b. Location of the goods at the time at which the movement starts for delivery
c. Location of the principal place or business of the recipient
d. Location of the principal place of business of the supplier.
32. Where will be the place of supply when the goods are supplied on the direction of
the third party ?
a) Location of the supplier b) Location of the recipient
c) Location of the tghird party d) Any of the above.
33. Where will be the place of supply of goods supplied in a train which is heading
towards Delhi from Chennai, if the goods are tken on board at Coimbatore ?
a) Delhi b) Chennai
c) Coimbatore d) None of the above.
34. Real estate agent in Delhi charges brokerage fee to Company A located in
Chandigarh for assistance in getting a commercial property in Kolkata. Which is the
place of supply in this case ?
a) Delhi b) Chandigarh
c) Kolkata d) None of the above.
35. The default rule of place of supply of services made to a registered person shall be
the
a) Location of the registered person b) Location of the service provider
c) Location of the recipient d) Any of the above
36. The place of supply of services on board a conveyance, including a vessel, an

aircraft, a train or a motor vehicle shall be the
a) Location of the supplier of service
b) Place where the passenger embarks on the conveyance for a
continuous journey.
c) Location of the first scheduled point of departure of that conveyance
for the journey
d) Any of the above.
a) Transaction value b) MRP
c) Market Value d) None of above
38. The value of supply should include

a) Any non-GST taxes, duties, cesses, fees charged by supplier separately.
b) Interest, late fee or penalty for delayed payment of any consideration
for any supply of goods or services.
c) Subsidies directly linked to the price except subsidies provided by the
Central and State Government
39. Which of the following shall not be included in value of supply ?

a) GST b) Interest
c) Late fee d) Commission
40. Whether credit on inputs should be availed based on receipt of documents or

receipt of goods
a) Receipt of goods b) Receipt of Documents
c) Both d) Either receipt of documents orreceipt of goods.
41. The time limit to pay the value of supply with taxes to avail the input tax credit ?
a) Three months b) Six months
c) One hundred and eighty days d)Till the date of filling of Annual Return
42. Whether depreciation on tax component of capital goods and plant and Machinery
And whether input tax credit is permissible ?
a) Yes
b) No
c) Input tax credit is eligible if on tax component is not availed.
43. Can unutilized input tax credit be transferred in case of change in constitution of
business?
a. Not possible
b. No, it will be exhausted
c. Yes, it will be transferred only if there is provision for transfer of liabilities
d. It will be transferred only if it is shown in books of accounts of transferor
44. ITC can be claimed by a registered person for
a. Taxable supplies for business purpose
b. Exempted supplies
c. Non-taxable supplies
d. All of above
45. Whether all persons are mandatorily required to obtain registration ?

a. Yes
b. Not required if he is an agriculturist or person exclusively engaged in supplying
exempt goods or services, if specified threshold limit does not exceed in a
financial year.
c. Not required if he is an agriculturist person exclusively engaged in supplying
exempt goods or services
d. No, only if specified threshold is exceeded in a calendar year, only then liable for
registration.
46. Which one of following statements is correct ?
a) Voluntary registration is not possible under GST.
b) Voluntarily registered person not liable to comply with all the provisions of the
GST.
c) A person may get himself registered voluntarily and shall comply with all the
provisions of GST.
47. Which of the following require compulsory registration, irrespective of threshold

limit?
a) Casual taxable person
b) Non Resident taxable person
c) Person liable to pay under Reverse Charge Mechanism
48. Mr. A has started supply of goods and services in Delhi, He is required to obtain
registration of his aggregate turnover exceeds ______ during a financial year.
a) Rs. 10 lakh b) Rs. 20 lakh
c) Rs. 30 lakh d) Rs. 50 lakh
49. Aggregate turnover includes

a) Taxable supplies b) Exempt supplies
c) Exports d) All of the above
50. Which of these registers/ledgers are maintained online ?
a) Tax liability register b) Credit ledger
c) Cash ledger d) All of them
51. Balance in electronic credit ledger can be utilized against which liability ?
a) Output tax payable b) Interest
c) Penalty d) All of them
52. Balance in electronic credit ledger under IGST can be used against which liability ?
a) IGST liability only b) IGST and CGST liability
c) IGST, CGST and SGST liability d) None of them
53. Which of the following statements is true ?

a) ITC of CGST is first utilized for payment of CGST and the balance is utilized for
payment of SGST/UTGST
b) ITC of SGST is first utilized for payment of SGST and the balance is utilized for
payment of CGST
c) ITC of CGST is first utilized for payment of CGST and the balance is utilized for
payment of IGST
d) All of the above
Vibhav Galadagekar (SHETH NKTT COLLEGE)
TYBBI
SEM V
AUDITING
Multiple Choice Questions

a) Statutory and private.
b) Government and continuous audit.
c) Interim audit.
d) None of these
2. This kind of audit is conducted generally between two annual audits.

a) Internal audit.
b) Interim audit.
c) Final audit.
d) Continuous audit.
3. Voucher relates to ______.

a) Cash receipt.
b) Cash payment.
c) Credit transactions

b) A body corporate
d) A practicing-chartered accountant
5. When the auditor is an employee of the organization being audited, the audit is classified as
a) Internal
b) External
c) Compliance
d) Both A&B

a) Shareholders
d) State Government

b) Capital Reserve account
9. Internal auditor is appointed by______

a) Management
b) Shareholders
c) Government
d) Statutory body
10. ______ is the medium through which an auditor expresses his opinion on the state of affairs of
the client’s business.
a) Audit report
b) Audit certificate
c) Audit programme
d) Audit planning

c) Shareholders
12. The audit that is made compulsory under statute is called ________
a) Statutory audit
b) Partial audit
c) Complete audit
d) Continuous audit
13. Audit means _______.

a) Recording business transactions
b) Preparing final accounts
c) Examination of books, accounts or vouchers
d) Decision making
14. When a transaction has not been recorded in the books of account either wholly or partially such
errors are called _______.
a) Error of commission
b) Error of omission
c) Compensating error
15. The liabilities of an auditor can be ________.

a) Civil
b) Criminal
c) Civil & Criminal
d) Financial
16. Internal control includes ________.

a) Internal audit c) Both internal audit and internal check
b) Internal check d) Internal check and external audit

18. Auditor has no lien on

a) Audit note book
c) Books of accounts of clients

a) SEBI c) ASB
b) RBI d) ITA
20. Cost auditor submits reports to the:

a) Shareholder
b) Board of directors
c) Employees
d) Creditors
21. Bonus shares are issued to _______.

a) New members
b) Existing shareholders
c) Employees

a) Checking wastages
b) Under valuation of assets
c) Over valuation of assets
23. Internal check is suitable for _______.

a) Larger concerns
b) Smaller concerns
c) Petty-shop keepers
24. Remuneration of an internal auditor is fixed by ______.

a) Management
b) Shareholders
c) Government
d) Statutory body
25. The objective of the audit planning is ________

a) To give appropriate attention to all important areas of audit
b) To identify potential problems
c) To coordinate work with other auditors and experts
d) All of the above
26. Audit papers are the property of ______.
a) Client
b) Auditor
c) Both the client and the auditor
d) The audit committee
27. The term “Audit” originated from the Latin word

a) Audire
b) Adhere
c) Adihere
28. Sole proprietary concerns are ______ to get their financial statements audited by independent
financial auditors.
a) Legally required
b) Not legally required
c) Ethically required
d) Not ethically required
29. Balance sheet audit is also known as

a) Continues audit
b) Annual audit
c) Internal audit
d) Financial audit
30. ______ lays out the strategies to be followed to conduct an audit.

a) An action plans
b) An audit plans
c) An audit programme
d) All of the above
31. Auditor should determine the ______ and the timing of the audit report.
a) Nature
b) Actual
c) Nature & actual
d) Form
32. ______ followed by the enterprise affect the audit plan.

a) Accounting policies
b) Audit policies
c) Accounting and Audit policies
d) Management policies
33. An audit programme is a set of _______ which are to be followed for proper execution of audit.
a) Rules
b) Policies
c) Instructions
d) Actions
34. Audit programme provides instructions to the audit staff and reduces scope for
a) Understanding
b) Misunderstanding
c) Negligence
d) Liabilities
35. Audit programme helps in fixing the ______for the work done among the audit staff as work
done may be traced back to the individual staff members.
a) Remuneration
b) Liabilities
c) Negligence
d) Responsibility
36. On completion of an audit _______serves the purpose of audit record which may be useful for
future reference.
a) Audit programme
c) Audit plan
d) Audit notes
37. Audit programme is prepared by _____

a) The auditor
b) The client
c) The audit assistant
d) The auditor and his audit assistants
38. The auditor has to obtain _______ to substantiate his opinion on the financial statements.
a) Internal evidence
b) External evidence
c) Internal and external evidence
d) Sufficient and appropriate evidence
39. _______ are the documents prepared or obtained by the auditors in connection with the audit.
a) Audit notes
c) Audit report
d) All of the above
40. Working papers helps in proper _______ of audit.

a) Planning
b) Performance
c) Planning and performance
d) Execution
41. If no auditors are appointed or re-appointed at the annual general meeting, the ______ may
appoint a person to fill the vacancy. a) Board of directors b) Company in general meeting c) Central
Government d) Comptroller and Auditor General of India (C&AG)
42. Failure to give notice regarding filling of casual vacancy to the Central government is an offence
punishable with fine, who of the following are the persons on whom such fine can be imposed. a)
Directors b) Company c) Every officer of the company d) Company or every officer of the company
43. A statutory auditor-------- also as internal auditor of the company. a) Can act b) Cannot act c)
Though can act but ethically should not act d) None of the above
44. A person shall not be qualified to be appointed as an auditor of the company if he is in the
employment of ____ a) An officer of the company b) An employee of the company c) Both (a) and
(b) d) None of the above
45. In case of insolvency or unsound mind, a person will automatically be disqualified for
appointment as an auditor, because a) He is not a person of repute b) He cannot take decision
properly c) He is not wealthy d) He ceases to be a member of ICAI
46. The auditors have the right to attend a) Board meeting b) Annual general meeting c)
Extraordinary general meeting d) Any general meeting
47. The retiring auditor does not have a right to______ a) To make written representation b) Get his
representation circulated c) Be heard at the meeting d) Speak as a member of the company
48. In comparison to the independent auditor, an internal auditor is more likely to be concerned
with _______ a) Cost accounting system b) Internal control system c) Legal compliance d)
Accounting system
49. Whether the management can restrict the scope of work of an external auditor? a) Yes b) No c)
In some cases d) If shareholders permit
50. It is the duty of the auditor to ________ to the members of the company on the Accounts
examined by him. a) Give suggestions b) Comment c) Refer certain points d) Make a report
Prepared by – Asst. Prof Vibhav Galadagekar

TYBBI SEM V
Subject – Auditing
Direct And Indirect Taxes T.Y.B.Com.
For IDOL Students
Direct Tax (12 Marks)

Section-I
Q. No. 2 (a) Rewrite the following sentences by selecting the correct option: 06 Marks
April, 2010 (New Pattern)
(1) Rented house is sublet for a rent of Rs. 10,000 p.m. The income from such rent shall be taxable under the
head –
(a) Income from House Property
(b) Income from Business (c) Income from other sources
(2) If Gross total income is Rs. 90,000 and Life Insurance Premium paid is Rs. 95,000, the Net Taxable Income
would be –
(a) Rs. 90,000 (b) NIL (c) Rs. (-) 5,000
(3) Mr. Suhas, a practising chartered accountant is a full time Lecturer in S.N. College. He was appointed as
Internal Auditor of students’ Council of S.N. College and was paid Audit fees of Rs. 5,000. These fess are
taxable under the head –
(a) Income from Business and Profession
(b) Income from Other Sources (c) Income from Salary
(4) Remuneration received by a working partner of a firm is taxed under –

(a) Income from Salary
(b) Income from Other Sources (c) Income from Business and Profession
(5) There is a short term Capital Gain if equity shares sold were held for –
(a) Not more than 36 months
(b) Not more than 12 months (c) Not more than 10 months
(6) Voluntary Retirement Compensation received by retiring employee is exempt – u/s 10 (10C) to the
maximum extent of –
(a) Rs. 3,50,000 (b) Rs. 5,00,000 (c) Rs. 1,00,000
October, 2010
(1) Export intensives received by the assesse are taxed under –

(a) Income from business and Profession
(b) Income from Salary (c) Income from Other Sources
(2) Cost initiation Index is applicable when there is –

(a) Long term Capital Gain (b) Short term Capital Gain (c) Business Income
(3) The maximum deduction admissible against family pension received ⅓ or

(a) Rs. 15,000 whichever is more
(b) Rs. 15,000 whichever is less (c) Rs. 75,000 whichever is less
(4) Dividend received from Credit Co-Operative Society is –

(a) Fully Exempt u/s 10 (b) Fully Taxable (c) Partly Taxable
(5) Mr. Ashok paid to Balmohan Vidya Mandir for his school going son’s tuition fees Rs. 5,000 and school Bus
Fees Rs. 2,000. He is entitled to a deduction u/s. 80C equal to –
(a) Rs. 5,000 (b) Rs. 7,000 (c) Rs. 2,000
http://questionpaper-tybcom.blogspot.in Page 1 of 30
For IDOL Students
April, 2011
(1) Income which accrues or arise outside India and also received outside India is taxable in case of –
(a) Non Resident
(b) Resident and Ordinarily Resident
(c) Resident but Not Ordinarily Resident.
(2) Mr. Sirsat, an employee. of C Ltd. drawing salary of Rs. 10,000 p.m. took advance salary for April, 2010
along with salary of March, 2010 on 31/03/2010. The Gross Salary of Mr. Sirsat for A.Y 2010-11 is –
(a) Rs.1.20.000 (b) Rs.1,30,000 (c) Rs.1,10,000.
(3) Mr. Nikhil received a gift of Rs. 52,000 from his friend. The taxable amount of gift is –
(a) Rs. 2,000 (b) Rs. 52,000 (c) Nil
(4) Interest payable on loan from a Non-scheduled bank not paid before the due date of filing Income Tax
Return is –
(a) Fully allowed as expenditure
(b) Fully disallowed as expenditure
(c) Partly allowed as expenditure.
(5) On 10/03/2010, Mr. Ashwat paid interest on loan taken for construction of residential house. The
construction was completed on 10/04/2010. He can claim deduction of interest from Net Annual Value in
A.Y. 2010-11 equal to –
(a) NIL
(b) Full amount of Interest on Housing Loan up to Rs. 1.50.000
(c) 1/5th of Interest on Housing Loan.
(6) Smt. Vidya received family pension of Rs. 81,000 during the P.Y. 2009-10. She is eligible for standard
deduction of –
(a) Rs. 15,000 (b) Rs. 27,000 (c) NIL.
October, 2011
(1) Total Income of a person is determined on the basis of his –

(a) Citizenship (b) Residential Status (c) Marital Status
(2) Uncommuted pension received by a Govt. employee is –

(a) Exempt (b) Taxable (c) Partly taxable
(3) Salary received by Manager of Agricultural Farm is –

(a) Fully exempt (b) Fully Taxable (c) Partly Taxable
(4) Salary Received by partner from partnership firm is –

(a) Income from Salary (b) Income from Business (c) Income from Other Source
(5) Mr. Gurdeep has let out his ownership flat to Mr. Pradip. The Municipal Taxes due on 31-03-2010 were
paid by Mr. Dutta, a friend of Mr. Gurdeep on 28-03-2010, Mr. Gurdeep can –
(a) Claim the Municipal Taxes as the deduction from Gross Annual Value
(b) Not claim the Municipal taxes as the deduction from Gross Annual Value
(c) Claim 50% of the Municipal Taxes from Gross Annual Value
(6) Mr. Shivaprasad pays tuition fees of Rs. 10,000 for M.Com Part I for his wife. The amount deductible under
section 80C shall be :
(a) Rs. 10,000 (b) Rs. 5,000 (c) Nil
For IDOL Students
April 2012, (12 Marks)
(1) A new business was set up on 01-10-2010. It’s first previous year will end on –
(a) 31-03-2011 (b)30-09-2011 (c) 31-12-2010
(2) Pune University is assessed to Income Tax as –

(a) An Individual (b) An Artificial Juridical Person (c) A Local Authority
(3) Income earned and received outside India is taxable in the case of –
(a) Non Resident (b) Resident and Ordinarily Resident (c) None of the assesses
(4) Dividend received is exempt if it is received from –

(a) An Indian Company (b) A Co-Operative Bank (c) Any Company
(5) Capital Gain arises out of the transfer of –

(a) Capital Assets (b) Any Assets (c) Any Liability
(6) Gift received from Brother ₹ 1,00,000 is –

(a) Taxable (b) Exempt (c) Exempt up to ₹ 50,000.
(7) Mediclaim Premium paid by employer on behalf of employee is

(a) Taxable Perquisite (b) Tax Free Perquisite (c) Not a Perquisite
(8) Life Insurance Policy taken by Partnership Firm on the life of its main partner is called as
(a) Important Insurance Policy (b) Keyman Insurance Policy (c) Special Insurance Policy
(9) Rajiv has let out his residential house for commercial purpose. Rent received from such house is –
(a) Income from Business (b) Income from Other Sources (c) Income from Home Property
(10) Municipal Taxes paid by the owner is deducted from –

(a) Gross Annual Value (b) Net Annual Value (c) Net Income from House Property
(11) Salary received by a working partner from the partnership firm is –

(a) Income from Salary (b) Income from business (c) Income from Other Sources
(12) Family Pension received is –

(a) Income from Salary (b) Income from business (c) Income from Other Sources
October 2012
(1) A new business was set up on 01-01-2011. It’s first previous year will end on –
(a) 31-03-2011 (b) 30-12-20113 (c) 1-03-2012
(2) Mumbai University is assessed to Income Tax as –

(a) An Individual (b) An Artificial Juridical Person (c) A Local Authority
(3) Total Income of a person is determined on the basis of –

(a) Citizenship (b) Residential Status (c) Both Citizenship & Residential Status
(4) Uncommuted pension received by a Government Employee is –

(a) Taxable (b) Exempt (c) Partly Exempt
For IDOL Students
(5) Capital Assets for the purpose of Capital Gain does not include –
(a) Stock in Trade (b) Residential flat used for commercial purpose (c) Shares and Securities
(6) Standard deduction on Family Pension is limited to ₹ 15,000 or –

(a) 25% of such pension whichever is less (b) 33⅓% of such pension whichever is less
(c) 50% of such pension whichever is less
(7) Deduction on Account of Entertainment allowance is allowed to –

(a) Non-Government Employees (b) Government Employees
(c) Both Government and Non-Government Employees
(8) Mr. Vinay, employee in sales Department receives Commission on sales (in addition to salary) ₹ 1,00,000
from his employer. The commission received by him is –
(a) Income from Business (b) Income from Other Sources (c) Income from Salary
(9) Mr. Milind is the owner of two residential houses both of which are self-occupied. He can claim –
(a) Both the Houses as self-occupied properties (b) Both the Houses as deemed to be let out
properties (c) One as self-occupied and other as deemed to be let out properties
(10) Mr. Mangesh, a Chartered Accountant lets out his ownership office to another Chartered Accountant. Rent
received by him is –
(a) Income from Business (b) Income from House Property (c) Income from other sources
(11) Mr. Sunil, a businessman paid Professional fees of ₹ 20,000 by a bearer cheque. This is allowed as business
expenditure to the extent of –
(a) ₹ 20,000 (b) ₹ 25,000 (c) NIL
(12) Donation to Chief Minister’s Relief Fund is –

(a) Allowed as business expenditure (b) Not allowed as business expenditure
(c) Partly allowed as business expenditure
April, 2013
(1) Entertainment Allowance in case of Government employee is –

(a) Fully Exempt (b) Fully Taxable
(c) Deductible upto certain limits mentioned in sec. 16(ii)
(2) Nagpur University is assessable under the Income Tax as –

(a) A local authority (b) An Artificial Juridical Person (c) An Individual
(3) Maya limited is an Indian Company. The entire control and management of its affairs is situated outside
India; Maya Ltd. Shall be –
(a) Resident in India (b) Non Resident in India (c) Not ordinarily resident in India
(4) Which of the following Tax is disallowed while computing the business income –
(a) Sales Tax (b) Income Tax (c) Service Tax
(5) Capital Gain arises from the transfer of –

(a) Any asset (b) fixed asset (c) Any capital
(6) Share of Income received by a member of HUF is –

(a) Fully Exempt (b) Fully Taxable (c) 50% Taxable
For IDOL Students
October, 2013
(1) Gift received by Mr. Sharad from grandmother of his wife ₹ 1,00,000 is –
(a) Fully Taxable (b) Fully Exempt (c) Exempt upto ₹ 50,000 only
(2) Deduction u/s 80 DD in the case of dependent with severe disability (85%) shall be allowed –
(a) To the extent of actual expenditure
(b) ₹ 1,00,000 irrespective of actual expenditure (c) ₹ 50,000
(3) If the following loan is taken for repairs of self-occupied property, the interest on the loan is –
(a) Not deductible from Net Annual Value
(b) Deductible upto ₹ 30,000, from Net Annual Value
(c) Deductible in 5 equal instalments from the previous year of repairs from Net Annual Value
(4) Mr. Satish is a practising Chartered Accountant, and also a full time lecturer in college. He was appointed as
advisor of college in Income Tax matters and was paid ₹ 25,000 as professional fees. These fees would be
taxable under the head –
(a) Income from Business and Profession
(b) Income from Other Sources (c) Income from Salary
(5) If full office building used for business purpose is given on rental basis, the income arising therefrom is
taxable as –
(a) Business Income
(b) Income from Other Sources (c) Income from House Property
(6) Mr. Rajiv acting as an agent of Microsoft Ltd., USA, received ₹ 10,00,000 for termination of his agency from
Microsoft Ltd. This receipt is –
(a) Not taxable being capital receipt
(b) Fully taxable as business income
(c) Exempt upto ₹ 5,00,000 being retrenchment compensation
(7) Family pension received by widow of deceased employee is taxed as –
(a) Income from Salary
(b) Income from Business
(c) Income from Other Sources
(8) Deduction under section 80C for tuition fees shall be allowed if the same are paid –
(a) For full time education in school and college in India only
(b) Even for part time education in school and college in India
(c) Even for full / part time education in college abroad
April, 2014
(1) Deduction for bonus or commission of employee is allowed only on ___________ basis even if books of
account are maintained on the mercantile basis.
(2) Any gift received by an individual from his relative is fully _________.
(3) _________ means any profits or gains arising from the transfer of capital assets.
(4) A person by whom any tax is payable under the act is known as an ___________.
(5) Total deduction u/s 80CCC cannot exceed Rs. ________________.
(6) Deduction u/s 80DD in respect of maintenance of a handicapped is allowed to ____________ or

____________ only.
For IDOL Students
October, 2014
(1) Income earned by a minor on the investments made by his father is taxed in the hands of –
(a) A minor (b) his father (c) no person
(2) Commission on sales received in addition to salary by a salesman is income from –

(a) Business (b) Salary (c) Other Sources
(3) Mediclaim premium paid by employer on the medical health policy of the employee is –
(a) Taxable Perquisite (b) Tax free Perquisite (c) Not a Perquisite
(4) If the residential property held for 35 months is sold, the resultant capital gain will be –
(a) Long Term (b) Short Term (c) Medium Term
(5) Gift of ₹ 51,000 received from a friend is taxable to the extent of –

(a) ₹ 1,000 (b) ₹ 51,000 (c) 50,000
(6) Rent received from open plot is –

(a) Income from House Property
(b) Income from Business (c) Income from Other Sources
(7) The standard deduction on a family pension of ₹ 1,50,000 will be –

(a) ₹ 50,000 (b) ₹ 15,000 (c) Nil
(8) If an assessee pays Life insurance premium of ₹ 90,000, he is entitled to a deduction under section 80C of –
(a) ₹ 90,000 (b) ₹ 1,00,000 (c) Nil
(9) Mr. Anil is a person with a physical disability of 50%. He is entitled to a deduction under section 80U of –
(a) ₹ 50,000 (b) ₹ 1,00,000 (c) Nil
(10) Mr. Dinkar earns Saving Bank Interest of ₹ 90,000 during the Previous Year 2014-15. He is entitled to a
deduction under section 80TTA of –
(a) ₹ 90,000 (b) ₹ 10,000 (c) Nil
April, 2015
(1) Income Tax is a Tax on __________

(a) Profit (b) Income (c) Turnover
(2) An __________ Company is Always resident in India

(a) Industrial (b) Indian (c) Individual
(3) Total Income of a person is determined on the basis of __________

(a) Residential Status in India (b) Citizenship in India (c) None of the above
(4) Un-Commuted pension received by a Government employee is __________

(a) Taxable (b) Exempt (c) 1⁄3 Exempt
(5) Professional Tax deduction is allowed on __________

(a) Accrual Basis (b) Payment Basis (c) Both of the above
(6) Unadjusted loss from the house property can be carried forward and set-off in subsequent years subject
to limit of __________
(a) 7 Years (b) 8 Years (c) 9 Years
For IDOL Students
October, 2015
(1) Municipal Tax paid is allowed as a deduction for

(a) Self-Occupied Property only
(b) Let Out House Property only
(c) Let Out House Property and Deemed Let Out House Property
(2) Employer’s contribution to Statutory Provident Fund is

(a) Exempt up to 12% of Salary
(b) Exempt up to 9.5% of Salary
(c) Fully Exempt
(3) Residential Status is determined based on number of days stay in

(a) Previous Year
(b) Assessment Year
(c) Accounting Year
(4) Previous Year can be of __________ 12 Months

(a) Only (b) Less than (c) More than
(5) Gross tax liability is calculated on __________

(a) Gross Total Income (b) Net Taxable Income (c) Income
(6) Unrealised rent is a deduction from

(a) Net Annual Value (b) Municipal Value (c) Gross Annual Value
------------
For IDOL Students
Q. No. 2 (b) Match the following Columns and rewrite the sentences: 06 Marks
April, 2010
Column A A. Column B
1. Equity Shares of Indian Company held for 16 months A. Ordinarily Resident
2. An Indian Company B. Non Resident
3. Dividend from Indian Company C. 30%
4. Shivaji University D. 30 1⁄3 % or Rs. 15,000 whichever
is less
5. Maximum Deduction Under Chapter VI A
E. Gross Total Income
6. Standard Deduction on Family Pension F. Rs. 1,50,000
G. Short Term Capital Asset
H. Long Term Capital Assets
I. Artificial Juridical Person
J. Local Authority
K. Taxable
L. Exempt u/s 10
October, 2010
Column A Column B
1. Personal Car A. Income from Salary
2. MIG Cricket Club B. Business Income
3. Deduction for the handicapped assessee having C. Capital Assets
disability of more than 80% D. Not a Capital Asset
4. Entire office premises given on rent E. Income from House Property
5. Salary received by a partner from a firm where F. Income from Other Sources
G. Company
he is a partner
H. AOP
6. Bonus declared but not paid before the due date I. Rs. 80,000
filing return of Income Tax J. Rs. 75,000
K. Allowable business expenditure
L. Not allowable business expenditure
April, 2011
Column A Column B
1. An Indian Company A. Business Income
2. Expenditure incurred by Employer for medical B. Not a Business Income
treatment of dependent mother-in-law of employee C. Capital Asset
D. Not a Capital Asset
3. Standard Deduction from Net Annual Value
E. Ordinarily Resident
4. Arrears of Rent Received during the year F. Not Ordinarily Resident
5. Voluntary Gift from Customer G. Taxable Perquisite
6. Residential House H. Tax Free Perquisite
I. 30% of Net Annual Value
J. 30 1⁄3 % of Net Annual Value
K. Standard deduction allowed
L. No Standard deduction allowed
For IDOL Students
October, 2011
Column A Column B
1. Remittance in India A. Treated as income of the year

2. Value of rent free accommodation B. Not treated as income of the year
3. Net Annual Value C. Standard deduction allowed
4. Unrealised rent received during the year D. Standard deduction not allowed
5. Bad debt written off earlier recovered E. Taxable perquisite
during the year F. Tax free Perquisite
6. Agricultural land situated in Indonesia G. Not Taxable
H. Not Taxable for Non-Resident
I. Gross Annual Value Less Municipal
J. Capital Assets
K. Not a Capital Assets
L. Gross Annual Value Less Municipal Taxes
paid by the owner Taxes
April, 2013
Column A Column B
1. Dividend from domestic company A. Allowance U/s 80C
2. Depreciation B. Association of persons
3. Housing loan repayment C. Firm
4. Salary received from government by D. Allowance as business expenses
member of Legislative E. Exempt from Tax
5. Darjeeling sports club F. Taxable as other sources
6. Uncommuted pension G. Taxable as salary income
H. Allowance U/s 80 D
April, 2014
Column A Column B
1. Taxable gift to non-relatives B. Deduction from Salary

2. Depreciation of house property C. Exempt u/s 10(1)
3. Agricultural Income D. Income from house Property
4. Net Annual Value E. Exceeding Rs. 5,00,000
5. Dividend from domestic company F. Zero for one SOP
April, 2015
Column A Column B
1. Central Government A. Exempt U/s 10(16)

2. Artificial Judicial Person B. Cannot exceed Standard rent
3. Entertainment Allowance deduction C. Not a Capital asset
4. Scholarship D. Pune University
5. Reasonable letting value E. Levis tax on Income
6. Personal Car F. Government Employees only
For IDOL Students
October, 2015
Column A Column B
1. Interest on Fixed Deposit A. 30% of NAV
2. Dividend from foreign Company B. It is a Capital Asset
3. Key Man Insurance Policy C. Export Incentive received
4. Standard deduction U/s 24 D. Taxable
5. Business income E. Dividend Income is Taxable
6. Diamonds F. Profits in lieu of Salary
Section-III
Q. No. 11. Answer with reason in one sentence whether following statements are correct 8 to 10 Marks
April, 2010
(1) Mr. Avinash owns two houses both of which are not let out. Mr. Avinash treats the annual value of both
the houses as ‘NIL’ since the houses are self-occupied.
(2) Mr. Ajay sells his residential house for ₹ 2,00,000 on 28-2-2009 and claims the same as Long term Capital
Loss. He had purchased the house on 27-2-2008
for ₹ 3,50,000.
(3) Mr. Jadhav spends ₹ 25,000 on his medical treatment; he is physically handicapped and claims deduction of
₹ 50,000 U/s 80U.
(4) Mr. Ravi receives dividend of ₹ 15,000/- from StareTrek Ltd. An Indian company and claims it exempt U/s 10.
(5) The income of ₹ 10,000 earned in USA by a resident Indian is not taxable in India.
(6) Life Insurance premium paid in cash ₹ 5,000 is eligible for deduction U/s 80C.
(7) Dr. Vidyasagar who is full time employee of Jaslok Hospital receives consulting fees of ₹ 50,000 from Jaslok
Hospital over and above his salary and claims it to be income from Business or Profession.
(8) The residential property let out for commercial purpose is not taxable as income from House Property.
(9) Mr. Shishir Shinde invested ₹ 2,00,000/- in Bank Fixed Deposit in the name of his minor son on which an
interest of ₹ 20,000/- was received. He claims this as income of his minor son.
October, 2010
(1) Mr. Shishir Shinde is physically handicapped (45%) as certified by medical authorities. He claims a
deduction of ₹ 75,000 U/s 80U.
st th
(2) Mr. Shashank Desai purchased a residential flat on 1 January, 2007 and sold it on 30 December, 2008.
He claims the capital gain as long term.
(3) Mr. Arjun received ₹ 1,50,000 as a birthday gift from his father. Arjun claims ₹ 1,50,000 is not taxable in his hand.
(4) Mrs. Gokhale received a family pension of ₹ 60,000 during 2008-09. She claims a standard deduction to the
extent of ⅓rd of such pension.
(5) Shri Vinod Kamble pays ₹ 1,25,000 as premium on his Life Insurance policy and claims deduction of Rs.
1,25,000 U/s 80C.
(6) Mr. Pawan has two house properties. Both are self-occupied. He claims that annual value of both houses
shall be Nil.
(7) Mr. Pradip, Lecturer in M.Y. college, Mumbai received ₹ 8,000 as paper checking fees from University of
Mumbai. He claims it as income from other sources.
(8) Mr. Paresh Mehta working as a Manager of an Agricultural Estate received ₹ 1,20,000 as salary and claims it
as his Agricultural Income.
(9) Mr/Ravi receive dividend of ₹ 15,000 from Startek Ltd., an Indian Company and claims it exempt U/s 10.
For IDOL Students
April, 2011
(1) Mr. Shrirang who took voluntary retirement from M/s. Shalimar Industries Ltd. received a Voluntary
Retirement Compensation of ₹ 7,00,000/- under an approved VRS Scheme. He claims entire income as
exempt u/s 10. is his claim correct.
(2) Mr. Nandalal, a businessman, had an outstanding statutory Provident Fund liability of ₹ 1,50,000/- on 31st
March, 2010. He did not pay it till the due date of filing return. Can he claim it as Deduction?
(3) Mr. Kanhaiya, a practicing lawyer, received a Rolex watch Worth Rs. 40,000 from his client. Mr. Kanhaiya
Claims this gift as exempt from tax. Is his claim correct?
(4) Mr. Dwarakanath owns a house property in Mumbai. He uses it for his own business. He claims that income
from this house property is not chargeable to tax as ‘income from House Property’. is his claim correct?
(5) Mr. Shrinath owns an agricultural land in Nepal from which he receives agricultural income of ₹ 48,000/-
can he claim this income as exempt u/s 10?
April, 2012
(1) M/s Ajit Sujit and Balaji is a partnership firm whose control and management is situated in Delhi and
London. The partners want to treat this firm as Non-resident for Income Tax purpose. is their claim correct?
(2) Mr. Ashutosh received Voluntary retirement compensation of ₹ 8,00,000 under an approved voluntary
Retirement Scheme. He wants to claim the entire amount as exempt income. Is his claim correct?
(3) Mr. Sadashiv paid his Maharashtra Value Added Tax (MVAT) dues for March, 2011 in May,2011. He wants
to claim this amount as deduction from his Business Income for assessment year 2011-12. Is his claim
correct?
th
(4) Mr. Nagnath owns a house property in Mumbai, on 25 March, 2011 he receive ₹ 90,000 as arrears of rent
for January, 2009 to March, 2009 which was not taxed earlier. Is this receipt taxable in Assessment Year
2011-12?
(5) Mr. Shailesh sold ancestral jewellery for ₹ 7,00,000. He claims that since this jewellery is a personal asset it
is exempt from Capital Gains. Is his claim correct?
(6) Mr. Shankar is manager of agricultural farm in India. He claims that his salary is exempt from income tax as
it is agricultural income. Is his claim correct?
October, 2012
(1) Mr. Shambhunath is a Karta of his Hindu Undivided Family. The control and Management of which is
situated partly in India and partly in outside India. Mr. Sambhunath is non-resident for assessment year
2011-12. What is the residential status of the Hindu Undivided Family?
(2) Mr. Madhav receives ₹ 2,000 per month as transport allowance from his employers. He wants to claim the
entire amount as exempt from income tax. Is his claim correct?
(3) Mr. Mahesh, a businessman, paid ₹ 30,000 by cash for purchase of raw materials for his business. Is this
amount a deductible expenditure for income tax purposes?
(4) Mr. Neelkanth paid ₹ 1,50,000 as interest on borrowed capital for purchase of house property to a non-
resident without deduction of tax at source. Is this interest deductible for calculation of Income from house
property?
(5) Mr. Rudra, received ₹ 45,000 as dividend from a co-operative bank. He claims this income to be exempt
from income tax. Is his claim correct?
(6) What is the amount of exemption available under the provisions of Income Tax Act, when income of minor
child is clubbed with the parent’s income?
For IDOL Students
April, 2013
(1) Mr. Shreedhar paid ₹ 65,000 on Medical treatment of a handicapped dependent brother (50% disability).
He wants to claim a deduction of ₹ 65,000 from his income. Is his claim right?
(2) Miss Ketki received ₹ 60,000 as a salary from a firm in which she is a partner. She wants to treat the said
income under the head ‘salaries’. Is her claim right?
(3) Mr. Balwant received a compensation of ₹ 20 Lacs from State Government on compulsory acquisition of
his land. He claims that the said transaction is not a transfer for the purpose of Capital Gains. Is his claim right?
(4) Mr. Satish an Indian citizen, went out of India for the first time to visit his brother in USA on 1st August, 2011
and came back only on 2st March, 2012. He claims that he is non-resident during the year. Is his claim right?
(5) Mr. Kumar, a businessman, paid ₹ 24,000 in cash as labour charges in a single payment. He claims the
amount is deductible in compensation of business income. Is he correct?
(6) Mr. Amol sold motor car during the year, which was used by him in carrying on his business for last five
years. He wants to claim the asset as long term for computation of capital gains. Is his claim right?
April, 2014
(1) Mr. Satish received Dividend of ₹ 5000 from XYZ Ltd., and Indian Company.
Can he claim this dividend income as exempt U/s 10(34)?
(2) Mr. Ramdas retired from a Government Organisation. He received pension
@ ₹ 5000/- p.m. during the previous year 2012-13. He claims this pension as exempt being received from a
Government Organisation. Is his claim correct?
(7) Mr. Amogh (Member of Parliament) has received remuneration of ₹ 60,000. He claims this as his Income
from salary. Is he right?
(8) Mr. Manoj Shinde is physically handicapped (45%) as certified by medical authorities. He claims a deduction
of ₹ 1,00,000 U/s 80U. is he correct?
(9) Mr. Ambrish paid Life Insurance Premium of ₹ 10,000 on behalf of his wife who is dependent on him. He
claims deduction U/s 80C. is he right in claiming the deduction?
(10) Mr. Prakash has debited ₹ 20,000 as sales tax to his P&L A/c which is unpaid till the due date of filling of his
Income Tax return. Can he claim this as a allowable deduction?
April, 2015
(1) Mukesh has earned ₹ 95,000 from a Lottery Ticket and claims ₹ 500 as a deduction for purchase of lottery
ticket. Can he avail this deduction?
(2) Whether interest on housing loan paid out of India is allowed as deduction U/s 24.
(3) What is the amount of deduction on account of family pension U/s 57 of the Income Tax Act, 1961?
st st
(4) Mr. Manger Rege purchased a residential flat on 1 January, 2013 and sold it on 31 December, 2013. He
claims the Capital Gain as Long Term, is he correct?
(5) Omkar has minor child whose income is only ₹ 2,500. He wishes to treat the income as exempt income U/s
10(32). Is he right in doing so?
(6) Dr. Chafekar who is full time employee of Rajawadi Hospital receives professional fees of ₹ 70,000 from
Rajawadi Hospital and claims exempt U/s 10(34).
(7) Mr. Nandu spends ₹ 25,000 on medical treatment of his physically handicapped brother who is dependent
on him and claims deduction of ₹ 50,000 U/s 80U. Is he right in claiming the deduction?
For IDOL Students
October, 2015
(1) Miss Aruna has two flats, one at Saki Naka and other at Vashi Naka. She wants to treat both the flats as
self-occupied by her for the purpose of computation of Income From House Property, Can she do so?
(2) What is the amount of deduction on account of family pension U/s 57 of the Income Tax Act, 1961?
(3) Miss Puja received dividend of ₹ 15,000 from Indian company. She claims it as an exempt income. Is her
claim correct?
(4) Omkar has minor child whose income is only ₹ 2,500. He wishes to treat the income as exempt income U/s
10(32). Is he right in doing so?
(5) Dr. Velani who is full time employee of KEM Hospital receives professional fees of ₹ 50,000 from KEM
Hospital and claims exempt U/s 10(34).
(6) Miss Ishika received a gift of ₹ 51,000 from her father. She claims that ₹ 51,000 is not taxable in her hand. Is
her claim correct?
(7) Mr. Rao, Associate Professor in PG College, Mumbai, received ₹ 12,000, as paper setting fees from
University of Mumbai. He claims it as ‘Income from Other Sources’. Is he right?
For IDOL Students
Indirect Tax (20 Marks)

Q. No. 6. Answer the following: 10 Marks
April, 2015
(i) Mr. Saxena (who is not a Small Service Provider) provides a taxable service of the value of ₹
st
19,00,000 during the year ended 31 March, 2015. Compute the amount of (a) Basic Service Tax,
(b) Secondary Education cess and (c) Higher Secondary Education cess payable by him.
(ii) M Ltd. Rendered taxable services and raised bills for ₹ 15,00,000 on various companies that took
part in the exhibition. Compute the amount of (a) Basic Service Tax, (b) Secondary Education cess
and (c) Higher Secondary Education cess payable by it. (Ignore small service provider exemption)
th
(iii) Mr. Pravin has rendered taxable service on 10 October, 2014 and raised invoice for ₹ 2,00,000
st th
on 31 October, 2014 and received payment on 5 November, 2014. Compute the Point of
Taxation of Mr. Pravin.
th
(iv) Mr. Vipul has rendered taxable service for ₹ 1,00,000 on 15 February, 2015 and raised invoice on
st
1 March, 2015. Compute the Point of Taxation of Mr. Vipul.
st
(v) Mr. Dilip has agreed as per contract to provide taxable service of ₹ 5,00,000 on 1 February, 2015,
when he raised the invoice and received payment on 1-4-2015. If he actually completed the
service on 1-4-2015, what is the date of Point of Taxation of Mr. Dilip?
October, 2015
(i) Mr. Pathare has completed taxable service on 31/3/2014 of ₹ 10,00,000. He raised the invoice on
15/4/2014 and he received the payment on 25/4/2014. Compute the Point of Taxation of Mr.
Pathare.
(ii) D Ltd. Who is having a taxable value of services rendered ₹ 60 Lakhs, is required to pay service tax
of ₹ 1,00,000 on 5-2-2015 but D Ltd. Had paid the same only on 15-2-2015. Compute the amount
of interest on delayed payment.
(iii) Mr. Patel has rendered taxable services on 10-1-2015 for which payment was received on 15-2-
2015 after he raised invoice on 1-2-2015. What is the date of Point of Taxation of Mr. Patel?
(iv) On 1-1-2015 Mr. X has received advance payment of ₹ 1,00,000 for taxable service that he
st
provided on 1 February, 2015 for which he raised invoice on 28-2-2015. What is the date of Point
of Taxation of Mr. X?
(v) Mr. E was liable to file a service Tax return on 25 Oct., 2014 but due to some reasons he filled it on
th
20 Nov., 2014. Calculate the Penalty for delay in filling service tax return.
Q. No. 7 State with reasons whether the following activities would form a part of
Taxable Service or not: 10 Marks
April, 2010
(1) Sale of illegally imported ‘perfume’

(2) Hire Purchase transaction
(3) Transfer of Goods from Head office to Branch
(4) Organising of an ‘Event’ by an ‘Event Manager’
(5) Services rendered by a Chartered Accountant
October, 2010
(1) A commercial Coaching Centre imparting skill or knowledge in Srinagar (Jammu and Kashmir).
(2) A commission Agent working for the sale or purchase of ‘coffee’
(3) Contract for ‘waterproofing’ a Building Terrace.
(4) Professional Service of conducting ‘VAT Audit’ by a Chartered Accountant.
(5) The pavilion owner providing space for a ‘Trade Fair’ organised by All India Plastic Manufacturers
Association.
For IDOL Students
April, 2010
(1) A Commission Agent earning commission from the sale of sugarcane.
(2) A service of representing his client before an Appellate Authority, by a Chartered Accountant.
(3) Renting of a Building used solely for residential purposes.
(4) Coaching and Training services provided by typing and shorthand institutes.
(5) Contract of 'painting' of a Building.
October, 2011
(a) Service of Home Tuitions provided at the premises of the service recipient.
(b) Commission Agent working for the sale of the ‘Soyabean’.
(c) Art Galleries for exhibition.
(d) A Chartered Accountant providing service of Internal Audit for Reserve Bank of India.
(e) Service provided by ‘Millennium Club’ to their members by making the premises available on
payment of fees.
April, 2012
(a) Mr. Palshetkar provided coaching to IPCC students at his own residence.
(b) Mr. Dhalgude, requisitioned the services of a Chartered Accountant, based in London, for his
personal purpose.
(c) Renting of Land for educational purpose.
(d) M/s. Fire control Enterprises providing services for the fire proofing.
(e) Hiring out space/stall at India Travel Exhibition.
October, 2012
(a) Renting of its Hotel Room by Trident Hotels Ltd. solely for accommodation purposes.
(b) Service provided in relation to the execution of works contract within the port for repairs of docs,
jetties etc.
(c) SHO TA CAN a commercial training Institute, providing Karate Training.
(d) Providing Services as a commission agent.
(e) K. J. classes providing coaching to student of ICWA courses.
April, 2013
(f) Fees received by a practicing Chartered Accountant for providing valuation services to NABARD
(g) Job work done for cutting and polishing diamonds
(h) Fees charged by a commercial training institute for coaching in chess
(i) Renting of marriage hall for marriage function
(j) Works contract services for construction of a bridge
April, 2014
(a) Contract of “painting” of a building.

(b) Renting of Immovable Property to a religious Body.
(c) Shooting of Film in a rented studio premise
(d) Commercial Training centre imparting skill or knowledge to student.
(e) A Commission Agent working for the sale of groundnut.
For IDOL Students
Or
Q. No. 6. Choose the correct option and rewrite the statement:– 10 Marks
April, 2010
(1) Service Tax is applicable to –

(a) Whole of India
(b) Whole of India except Jammu & Kashmir
(c) Jammu & Kashmir only
(2) Where any Taxable Service is provided by a Non-resident, Service Tax

(a) Is not payable
(b) Is payable by the service recipient
(c) Is payable by service provider
(3) Return of Service Tax has to be filed –

(a) Monthly (b) Half Yearly (c) Yearly
(4) Due date of Payment of Service Tax, other than for the month of March, in case of a company is –
th
(a) 5 day of the month immediately following the calendar month
th
(b) 5 day of the month immediately following each quarter
(c) Last day of the month
(5) Renting of Immovable property includes –

(a) Letting (b) Leasing (c) Letting and leasing
(6) Business Auxiliary Service became Taxable w.e.f. –

(a) 1-7-2003 (b) 1-7-1997 (c) 1-6-1997
(7) If the charges of the Taxable Service have been received in advance before rendering of the services –
(a) No Service Tax is payable on Receipt of Advance
(b) The Service Tax is payable on Rendering of Service
(c) The Service Tax is payable on Receipt of Advance
(8) The Certificate of Registration under Service Tax is in –

(a) Form ST 1 (b) Form ST 2 (c) Form ST 3
(9) Service Tax Law is governed by –

(a) The Income Tax Act, 1961 (b)The Service Act (c)Chapter V of the Finance Act, 1994
(10) The Credit of the Service Tax paid on the input service is governed by –
(a) The Service Tax Act
(b) The CENVAT Credit Rules. 2004
(c) The Finance Act, 1994
For IDOL Students
October, 2010
(1) Rent received for a shop is Rs. 20,00,000 and the property Tax paid on the shop is Rs. 2,00,000, the total
Service Tax payable (inclusive Education Cess) would be –
(a) Rs. 2,06,000 (b) Rs. 1,85,400 (c) Rs. 1,80,000
(2) A Chartered Accountants’ Firm from Mumbai, provides professional services in Jammu and Kashmir for Rs.
1,00,000, the service Tax payable is –
(a) Rs. 10,300 (b) Rs. 10,000 (c) NIL
(3) The total number of taxable services under the service Tax Net as on 1-4-2009 are – (NA : outdated)
(a) 206 (b) 106 (c) 100
(4) The Service Tax is governed by –

(a) The Service Tax Act
(b) The Maharashtra Value Added Tax Act (c) Chapter V of the Finance Act, 1994
(5) In case of Insurance Auxiliary Services, related to General Insurance and Life Insurance Business, provided
by an Insurance Agent, Service Tax is to be paid by –
(a) The policy Holder
(b) The company which appointed the agent (c) The Insurance Agent
(6) Renting of Immovable Property became taxable w.e.f. –

(a) 1-06-2007 (b) 1-07-2003 (c) 1-07-1997
(7) M/s. Kinare & Co. Chartered Accountants have billed their clients for Rs. 50,000/- plus Service Tax of Rs.
st th
5,150/- on 1 March, 2009, but receives payment for the same on 6 July, 2009, the Service Tax ppayment
is due on –
th th st
(a) 5 August, 2009 (b) 5 October, 2009 (c) 31 March, 2010
(8) In the normal circumstances, Service Tax is payable by –

(a) The Service Provider
(b) The Service Recipient
(c) The service Provider and the Service Recipient equally
(9) The application for Registration under Service Tax has to be made in –
(10) Service Tax is applicable to –

(a) Whole of India except Jammu and Kashmir
(b) Whole of India
(c) Whole of India except Union Territories
For IDOL Students
April, 2011
(1) Practising Chartered Accountant service became taxable w.e.f.

(a) 16.10.1998 (b) 1.7.2003 (c) 1.6.2007
(2) M/s. Dhole & Co. Chartered Accountants have billed their clients for Rs. 75,000 plus service tax of Rs.
7,725/- on 1.8.2010, but receive the payment for the same on 1.11.2010, the service tax payment is due on
(a) 5/1/2011 (b) 5/11/2010 (c) 5/10/2010
(3) Services provided are exempt if provided to

(a) State Government
(b) United Nations Or International Organisation (c) Municipal Corporation
(4) In case of Goods Transport Agency, the service tax on freight is payable by
(a) the Consignor
(b) the Goods Transport Agency
(c) the Consigner/Consignee who is making payment towards freight
(5) If the service provider fails to furnish the ST 3 Return within the due date and files it 18 days later the
penalty will be
(a) Rs. 500 (b)Rs. 1000 (c) Rs. 1000 plus Rs. 100 for everyday, upto a Maximum of Rs. 2000/-
(6) Rent received for a shop is Rs. 12,00,000 and the Property Tax paid on the shop is Rs. 1,20,000, the total
Service Tax payable (including Education cess) would be
(a) Rs. 1,23,600 (b) Rs. 1,11,240 (c) Rs. 1,20,000
(7) A service provider under works contract opting fora composition scheme will be liable on the Gross
Amount at
(a) 4% (b) 10% (c) 12%
(8) The total number of taxable services under the Service Tax net as on 1.4.2010 are
(a) 206 (b) 106 (c) 109
(9) Services Tax was introduced in India in the year

(a) 1994 (b) 1993 (c) 1995
(10) Due date of payment of Service Tax for the month/quarter ending 31 st March, 2010 is
(a) 31st March, 2010 (b) 5th April, 2010 (c) None of the above
October, 2011
(1) Commercial training service became taxable w.e.f. : :

(a) 01-07-2003 (b) 01-06-2007 (c) 01-07-1997
(2) M/s. Dhobe and Associates Chartered Accountants have billed their clients for Rs. 60,000 plus Service Tax
of Rs. 6,180 on 1/09/2010 but received the payment for the same on 01/12/2010, the Service Tax payment
is due on :
(a) 05-01-2011 (b) 05-12-2010 (c) 05-10-2010
(3) Service Tax is not applicable to :

(a) Union Territories (b) Jammu and Kashmir (c) Kashmir
For IDOL Students
(4) In case of Business Auxiliary Service of distribution of Mutual Fund by a Mutual Fund distributor or an
Agent, Service Tax is payable by :
(a) The Mutual Fund or Asset Management Company
(b) The Investor, who has invested in Mutual Fund
(c) The Mutual Fund distributor or Agent
(5) If the service provider fails to furnish the ST 3 return within the due date and files it after 45 days, the
penalty will be :
(a) Rs. 500
(b) Rs. 1,000
st
(c) Rs. 1,000 plus Rs. 100 for every day, from 31 day upto a maximum of Rs. 2,000.
(6) Rent received for a shop is Rs. 18,00,000 and the property Tax paid on the shop is Rs. 1,80,000, the total
Service Tax payable (including Education Cess) would be :
(a) Rs. 1,80,000 (b) Rs. 1,66,86, (c) Rs. 1,85,400
(7) The rate of Service Tax for the year 2009-10 is :

(a) 12.36% (b) 4.12% (c) 10.3%
(8) The registration Certificate under Service Tax is in :

(9) Interest and penalty amount paid to Service Tax debt :

(a) Can be utilised for payment of Service Tax on output services
(b) Can be utilised for payment of Education Cess on output services
(c) Cannot be taken as CENVAT Credit
(10) Service Tax is not payable if the aggregate value of taxable service does not exceed
(a) Rs. 8,00,000 (b) Rs. 10,00,000 (c) Rs. 6,00,000
April, 2012 ( 5 Marks)
(1) Service Tax is governed by –

(a) The Income Tax Act
(b) The Service Tax Act
(c) The Excise Act
(d) Chap V of the Finance Act, 1994
(2) Service is taxable if it is provided by –

(a) A Chartered Accountant
(b) An Accountant
(c) A Practising Chartered Accountant
(d) An IPCC Passed Accountant
(3) An Assessee may submit a revised return within –

(a) 30 Days (b) 90 Days (c) 60 Days (d) 180 Day
(4) Fees received by water Department of Government of Maharashtra is –

(a) Not taxable
(b) Taxable
(c) Taxable upto 50% (d) None of these
(5) Jagruk classes have billed their students for Rs. 38,708 (Inclusive of service Tax and cess) the amount of
service tax payable would be –
(a) ₹ 3,708 (b) ₹ 4,368 (c) ₹ 4,090 (d) ₹ 4,908
For IDOL Students
October, 2012
(1) If registration is not granted, then it is deemed to be granted within –

(a) 15 days (b) 7 days (c) 10 days (d) 30 days
(2) A revised return can be submitted in form –

(a)Service Tax -1 (b)Service Tax -3A (c) Service Tax -3 (d) Service Tax -2
(3) A Mandap Keeper provides catering services, in addition to letting out Mandap. Service tax will be leviable
on –
(a) 60% of total Bill (b) 40 % of total bill (c) 100% of total bill (d) 10.2% of total bill
(4) An assessee furnishes the return 12 days after the due date, he shall be liable for penalty of –
(a) ₹ 500 (b) ₹ 1,000 (c) ₹ 2,000 (d)₹ 20,000
Mandap Keeper services became taxable w.e.f. –

(a) 16.10.1998 (b) 1.7.2003 (c) 1.6.2007 (d) 1.7.1997
April, 2013
(5) Service Tax is applicable to

(a) Whole of India
(b) Whole of India except Jammu and Kashmir (c) Maharashtra State Only
(6) For a service provider constituted as a partnership firm, payment of service tax has to be made
(a) Monthly Quarterly half yearly
(7) practising Chartered Accountant’s services became taxable w.e.f. –

(a) 1 July, 1994 1 July, 1997 16 Oct, 19
(8) Penalty for filing return of service tax late by 16 days is –

(a) ₹ 500 (b) ₹ 1,000 (c) ₹ 1,000 plus ₹ 100 per day upto maximum of ₹ 20,000
(9) Non-statutory services provided by the State Government are

(a) Fully Taxable (b) Partly Taxable (c) Fully exempt
April, 2014
(1) Service Tax is levied at the point of –

(a) Distribution (b) Consumption (c) Construction
(2) Business Auxiliary Services became taxable w.e.f. –

(a) 1-7-2003 (b) 16-10-1998 (c) 1-6-2007
(3) “Renting of Immovable Property” includes –

(a) Licensing (b) Leasing (d) Both of the above
(4) Return of service tax has to be filed by an Individual –

(a) Yearly (b) Half Yearly (c) Monthly
(5) Service Tax Law is governed by –

(a) The Service Tax Act (b) The Income Tax Act (c) Chapter V of the Finance Act, 1994
For IDOL Students
April, 2015
(1) Activities relating in __________ are included in definition of service.

(a) Use of Money (b) Conversion of Money (c) Both of them
(2) Point of Taxation means the point in time when a service shall be
deemed to have been __________
(a) Commended (b) Provided (c) Completed
(3) Transfer of Title means change in __________
(a) Possession (b) Ownership (c) Custody
(4) Service means any __________ carried by a person.

(a) Business (b) Activity (c) Survey
(5) Education cess is calculated on __________

(a) Turnover (b) Service tax (c) Value of service
October, 2015
(1) Effective rate of charge of service tax is

(a) 10% (b) 12.36% (c) 10.30%
(2) Services __________ RBI are covered within the Negative List.
(a) Provided to (b) Provided by (c) Both of them
(3) Fees taken by __________ is outside the coverage of service

(a) Government Institutes (b) Hospitals (c) Courts
(4) Service Tax is leviable only if there is __________

(a) Exchange of Services (b) Provision of Services (c) Sale of Goods
(5) Point of Taxation Rules was introduced with effect from __________
st st st
(a) 1 April, 2010 (b) 1 July, 2010 (c) 1 April, 2011
------------
Q. No. 6 (b) Match the following columns and rewrite the sentences : – 05 Marks
April, 2012
Column A Column B
1. Works Contract A. Exempt Partially
2. International Organisation or United Nations B. Exempt from Service Tax
3. Payment of Service Tax C. GAR – 7
4. Renting of Immovable Property for Commercial D. Service became Taxable
Training Centre w.e.f. 1-6-2007
5. Return filled after 18 days from due date E. Penalty of ₹ 1000/-
For IDOL Students
October, 2012
Column
1. A
Business Auxiliary Service Column
A. B
Service became taxable w.e.f. 1.6.2007
2. Return of Service Tax B. Central Bank of India
3. Renting of Immovable Property C. Reserve Bank of India
4. Exempt from service tax D. Service became taxable w.e.f. 1.7.2003
5. Works contract composition scheme E. Service Tax -3
F. Monthly
G. Rate of Service Tax 4.12%
H. Rate of Service Tax 10.3%
April, 2013
Column A Column B
6. Registration under services tax law A. Service Tax 1
7. Return of Service Tax B. Service Tax 3
8. Commission on sale of poultry C. Not taxable
9. Supply of food by mandap keeper D. Taxable
10. Re-insurance commission E. Abatement available
F. Abatement not available
G. Composition scheme
H. Turnover exceeds Rs. 10,00,000
April, 2014
Column A Column B
1. Free Services provided A. Taxable Service
2. Due date for filing Service Tax B. Jammu and Kashmir
Returns C. Not Taxable
th
3. Service Tax D. 25 of the month following the particular half
4. Mandap Keepar year
5. Service Tax is not applicable to E. Indirect Tax
F. Direct Tax
April, 2015
Column A Column B
1. Service Tax rate is A. Not Goods
2. Farm labour services B. Exempted service list
3. Outdoor catering C. 12.36%
4. Telecom Services D. Non-taxable service list
5. Transaction in money E. Declared Service
October, 2015
Column A Column B
1. Negative List A. Service Tax
2. Transfer in Title B. On Hybrid Basis
3. Service Tax is C. Not Taxable Services
4. Completion of Services D. Indirect Tax
5. Finance Act 1994 E. Change in Ownership
------------
For IDOL Students
Q. No. 8. Choose the correct option and rewrite the statement : – 10 Marks
April, 2010
(1) ‘Sale Price’ as defined under MVAT Act, 2002 includes –

(a) Cost of Insurance in Transit
(b) Deposit in connection with Sale of Goods
(c) Cost of Installation
(2) Export Sales are: –

(a) Sale of tax free goods
(b) Exempt sales
(c) Sale of goods specified in Schedule A
(3) Taxable Sales for the purpose of registration exclude –

(a) Sales under Schedule A
(b) Sales under Schedule B (c) Exports
(4) As per composition scheme for Retailers, 8% Tax is Payable on –

(a) Sales – Purchase (b) Sales – (Purchase + Opening Stock – Closing Stock)
(c) Sales – (Purchase + Opening Stock)
(5) Composition Scheme under section 42 can be availed by –

(a) Wholesaler (b) Importer (c) Retailer
(6) M/s Kedar Associates Purchases Goods for Rs. 40,000 and sells them for Rs. 50,000 (Both excluding Tax),
the Goods being classified under Schedule E, the Net Tax payable will be –
(a) Rs. 1,250 (b) Rs. 6,250 (c) Rs. 5,000
(7) Aniket of Nashik purchased Goods for Rs. 12,240 (Inclusive of CST Rs. 240/-) from Sanket of Satna (M.P.).
He sold these goods to Milind of Mumbai for Rs. 15,750/- (Inclusive of 12.5% VAT). The VAT payable is –
(a) Rs. 1,750 (b) Rs. 1,510 (c) Rs. 240
(8) The set off can be adjusted for : –

(a) Against the VAT payable as per the return
(b) Against the CST payable for that period
(c) Against VAT payable as per the return & CST payable for that period
(9) VAT at 12.5% is under –

(a) Schedule B (b) Schedule D (c) Schedule E
(10) The percentage of Turnover the retailer is required to sell, under section 42 of MVAT Act 2002, to a non-
dealer is –
(a) 90% of sales (b) 60% of sales (c) 80% of sales
October, 2010
(1) Tax Rate of 20% is applicable to –

(a) Schedule B (b) Schedule E (c) Schedule D
(2) The cost of goods is Rs. 75,000, the Excise Duty Rs. 7,500, the installation charges Rs. 10,000, the transit
insurance Rs. 5,000, Octroi Rs. 2,000, the sale price chargeable to VAT under MVAT Act, 2002 is –
(a) Rs. 82,500 (b) Rs. 99,500 (c) Rs. 97,500
(3) Sale returns that can be deducted from the gross turnover of sales, has to be maximum –
For IDOL Students
(a) within one month of the sale (b) within six months of the sale (c) within three months of the sale
(4) VAT is charged –

(a) Only by the first dealer who sells to another dealer
(b) By all dealers (c) Only the last dealer who sells to the final consumer
(5) ‘Goods” are defined under MVAT Act, 2002 include –

(a) Immovable Property (b) Actionable claims (c) Growing crops
(6) Me. Jadhav, a dealer, purchased goods for Rs. 60,000 and sells them for Rs. 80,000 (both excluding tax) the
goods being classified under Schedule E, the tax payable will be –
(a) Rs. 10,000 (b) Rs. 2,500 (c) Rs. 7,500
(7) Mr. Shinde of Solapur, purchased goods for Rs. 36,720/- (inclusive of CST Rs. 720/-) from Mr. Shah of Rajkot
(Gujrat). He sold these goods to Mr. Pawar of Nashik for Rs. 45,000 (inclusive of 12.5% VAT), the VAT
payable I –
(a) Rs. 4,280 (b) Rs. 5,000 (c) Rs. 720
(8) Schedule D goods include –

(a) Declared goods (b) Gold, Silver, Precious stones (c) Petroleum products
(9) A retailer has opted for composition scheme, his sales are Rs. 15,00,000 and purchases from registered
dealers are Rs. 10,00,000 and purchases from unregistered dealers are Rs. 2,00,000/-; the composition tax
payable is –
(a) Rs. 40,000 (b) Rs. 24,000 (c) Rs. 25,000
(10) The set off can be adjusted –
(a) Against the VAT payable during that period
(b) Against CST payable during that period
(c) Against the VAT and CST payable during that period
April, 2011
(1) M/s. Darshan & Co. Solapur, purchased Goods for Rs. 15,300/- (inclusive of CST Rs. 300/-) from M/s.
Siddhesh & Co. Gandhidham. He sold these Goods to Shravan & Co. Yavatmal for Rs. 22,500 (Inclusive of
VAT @ 12.5%). The VAT payable is –
(i) Rs. 2,200 (ii) Rs. 2,500 (iii) Rs. 300.
(2) VAT at 12.5% is under –

(i) Schedule A (ii) Schedule E (iii) Schedule D.
(3) M/s. Deepak Sane & Co. purchases Goods for Rs. 90,000 and sells them for Rs. 1,20,000 (Both excluding
tax), the Goods being classified under Schedule 'D'; the Net Tax payable will be
(i) Rs. 24,000 (ii) Rs. 18,000 (iii) Rs. 6.000.
(4) Schedule 'C' Goods include –

(i) Gold, Silver, Precious metals (ii) All declared Goods
(iii) Basic Goods such as agricultural Tools, Books, Vegetables.
(5) Under a composition scheme under Section 42, rate of 5% is applicable to –

(i) Works contract other than construction contracts (ii) Construction contracts (iii) Mandap keeper.
(6) 'Goods' as defined under MVAT Act, 2002 do not include –

(i) trees (ii) livestock (iii) a lottery tickets.
For IDOL Students
(7) A retailer has opted for composition scheme, his sales are Rs. 25,00,000 and purchases from unregistered
dealers Rs. 4,00,000 & purchases from registered dealers are Rs. 15,00,000, the Composition Tax payable is
(i) Rs. 80,000 (ii) Rs. 48,000 (iii) Rs. 1.68.000.
(8) A product is sold @ Rs. 150 per unit. The Octroi is Rs. 6 per unit and the Excise duty Rs. 10/- per unit, the
packing charges were Rs. 14/- per unit, the sale price liable for MVAT is –
(i) Rs. 166 (ii) Rs. 180 (iii) Rs. 160.
(9) A Tax Invoice is to be issued –

(i) only by importer (ii) only by consultant (iii) only by registered dealer.
(10) Taxable purchases for the purpose of registration include –

(i) purchases under Schedule A
(ii)local purchases taxable under MVAT (iii) purchases from other states.
October, 2011
(1) M/s Pradeep & Co. Nanded, purchased goods for Rs. 16,320 (inclusive of CST Rs. 320) from M/s. Shipli &
Co., Panji. He sold these goods to Dinesh & Co. Parbhani for Rs. 24,750 (inclusive of VAT @ 12.5%) VAT
payable is :
(a) Rs. 320 (b) Rs. 2430 (c) Rs. 2750
(2) VAT at 1% is under :

(a) Schedule A (b) Schedule B (c) Schedule C
(3) M/s. Ramdas & Co. purchased goods for Rs. 72,000 and sold them for Rs. 90,000 (Both excluding Tax). The
goods being classified under schedule ‘B’ the net VAT payable will be :
(a) Rs. 1,800 (b) Rs. 180 (c) Rs. 900
(4) Schedule ‘A’ goods include :

(a) Gold, Silver, precious Metals
(b) All declared goods
(c) Basic goods such as agricultural Tools, Books, Vegetable etc.
(5) Under a composition scheme under Section 42, rate of 8% is applicable to :

(a) Works contract other than Construction Contracts
(b) Construction Contracts
(c) Mandap Keeper
(6) ‘Goods’ as defined under MVAT Act, 2002 include :

(a) Immovable Property
(b) Growing Crops
(c) Newspaper
(7) A retailer has opted for composition scheme, his sales are Rs. 10,00,000 and purchases from unregistered
dealers Rs. 1,00,000 and purchases from registered dealers are Rs. 40,00,000, the Composition Tax Payable
is :
(a) Rs. 48,000 (b) Rs. 40,000 (c) Rs. 72,000
(8) A product sold @ Rs. 250 per unit. The Octroi is Rs. 10 per unit and the Excise Duty is Rs. 20 per unit, the
packing charges were rs10 per unit, the sale price liable for VAT is :
(a) Rs 290 (b) Rs. 270 (c) Rs. 280
For IDOL Students
(9) The rate of VAT depends upon :

(a) The Goods (b) The person (c) The turnover
(10) An auctioneer is liable to pay tax when he crosses the turnover limits even if :
(a) The principal is not a registered dealer
(b) The principal is not disclosed (c) Both the above
April, 2012
(1) The term ‘Goods’ includes –

(a) Immovable Property (b) Growing Crops (c) Equity Shares
(2) P and Co. of Pune purchased goods for ₹ 10,200 (inclusive of CST ₹ 200) from S and Co. of Surat. They sold
these goods to T and Co. of Thane for ₹ 22,500 (inclusive of VAT at 12.50%). The VAT payable is –
(a) ₹ 200 (b) ₹ 2,300 (c) ₹ 2,500
(3) The term ‘Importer’ means a dealer who brings goods into the state from –
(a) Outside the State (b) Outside the City (c) Outside the Country
(4) Under a Composition scheme under section 42, the tax rate for works contract other than construction
contract is –
(a) 4% (b) 5% (c) 8%
(5) R and Co. purchases goods from a registered dealer for ₹ 1,00,000 and sells them for ₹ 1,50,000 (both
excluding VAT), the goods being classified under Schedule C (tax rate 4%). The net tax payable will be –
(a) ₹ 2,000 (b) ₹ 4,000 (c) ₹ 6,000
(6) The sale price of a product ‘X’ is ₹ 200 per unit. The excise duty thereon is ₹ 20 per unit and the packing
charges is ₹ 30 per unit. The sale price liable for MVAT is –
(a) ₹ 220 (b) ₹ 250 (c) ₹ 230
(7) A second hand car dealer buys a vehicle for ₹ 2,00,000 and sells the same for
₹ 3,00,000. The composition tax payable is –
(a) ₹ 12,500 (b) ₹ 37,500 (c) ₹ 5,625
(8) A retailer has opted for composition scheme. His sales are ₹ 15,00,000 and purchase from unregistered
dealer is 2,00,000 and from registered dealer is
₹ 10,00,000. The composition tax payable is –
(a) ₹ 40,000 (b) ₹ 24,000 (c) ₹ 1,04,000
(9) A Tax Invoice is issued by –

(a) An exporter (b) A Service Provider (c) A registered dealer
(10) Rate of tax for a unit located in a notified Special Economic Zone is –
(a) NIL (b) 2% (c) 12.50%
For IDOL Students
October, 2012
(1) The term ‘Sale Price’ includes –

(a) Cost of transit insurance (b) Deposit in connection with sale of goods
(c) Cost of Installation
(2) Composition Scheme under section 42 can be availed by –

(a) Manufacturer (b) Wholesaler (c) Service Provider
(3) Under a composition scheme under section 42, the tax rate for Mandap Keeper is –
(a) 1.5% (b) 5% (c) 8%
(4) The sale price of a machinery is ₹ 1,00,000. The Excise Duty thereon is ₹ 10,000; packing charges is ₹ 5,000;
Transport charges is ₹ 10,000. The sale price liable for MVAT is –
(a) ₹ 1,25,000 (b) ₹ 1,10,000 (c) 1,15,000
(5) A & Co. purchases goods from registered dealer for ₹ 2,00,000 and sells them for
₹ 3,00,000 (both excluding VAT) the goods being classified under schedule C
(tax rate 4%). The net tax payable will be –
(a) ₹ 12,000 (b) ₹ 4,000 (c) 8,000
(6) Schedule ‘B; Goods include –

(b)Gold, Silver Precious Metals (b) All declared goods
(c) Basic goods such as agricultural tools, books, vegetables
(7) A notified retailer has opted for composition scheme, his sales are ₹ 3,00,000 and purchases from
unregistered dealer ₹ 2,00,000. The composition tax payable is –
(a) ₹ 24,000 (b) ₹ 8,000 (c) ₹ 16,000
(8) Export Sales are –

(a) Sale of Tax Free Goods (b) Exempt Sales (c) Sale of goods specified in Schedule A
(9) The term ‘Business’ excludes –

(a) Activity of raising of manmade forest (b) Activity of rearing of seedlings
(c) Legal Advice by a Lawyer
April, 2013
(1) A dealer sells machine manufactured by him at ₹ 10,000 per unit. He charges excise duty of ₹ 1,000;
delivery charges ₹ 500 and installation charges of ₹ 300. The sale price under MVAT is –
(a) ₹ 11,800 (b) ₹ 11,500 (c) ₹ 11,000
(2) A rate of VAT depends upon –

(a) type of goods (b) type of dealer the turnover of sales of the dealer
(3) Set off or refund is allowed in respect of purchases made –

(a) both from outside as well as inside the state
(b) only within state (c) none of the above
(4) Stock transfer of schedule E goods from the state to outside state is liable for tax under MVAT as –
(a) 12.5% (b) 2% (c) Nil %
(5) A retailer who opted for composition scheme has sales of ₹ 10,00,000 and purchase from unregistered
dealer ₹ 7,00,000. The tax payable under composition is –
(a) ₹ 80,000 (b) ₹ 24,000 (c) ₹ Nil
For IDOL Students
(6) Taxable sales for the purpose of registration includes –

(a) Sale of schedule A goods (b) Exports of schedule E goods c) None of the above
(7) A dealer is considered to be in business of retail sale, if his turnover of sales consists of sale made to the
person who are not dealers to the extent –
th th
(a) 9/10 of turnover of sales (b) 3/4 of turnover of sales (c) None of the above
(8) A Machinery is sold at ₹ 10,000 per unit and packing and forwarding charges of ₹ 2,000 and installation
charges of ₹ 5,000 are charged separately. The sale price under MVAT is –
(a) ₹ 10,000 (b) ₹ 12,000 (c) ₹ 17,000
(9) Dealer under MVAT includes –

(a) State Government (b) Mumbai Gymkhana – the club (c) Both of the above
(10) In respect of following purchase of goods set off is not available –

(a) Purchase of trade mark (b) Purchase of import licence (c) Software package for dealer in software
April, 2014
(1) _____________ is a component of sale price.

(a) Freight (b) Forwarding Charges (c) Sales Commission (d) Both (a) & (b) above
(2) Manufacturing Cost = Rs. 6,00,000, Excise Duty = Rs. 1,60,000, Installation Charges = Rs. 35,000,
Cost of Transport = Rs. 40,000, Octroi = Rs. 45,000, Packing Charges = Rs. 40,000.
The sale price assuming that sale is at Ex. Factory is ____________
(a) Rs. 7,60,000 (b) Rs. 8,85,000 (c) Rs. 8,00,000 (d) Rs. 9,20,000
(3) As per composition scheme for retailers, 8% tax is payable on

(a) Sales – Purchase
(b) Sales – (Purchase + Opening Stock – Closing Stock)
(c) Sales – (Purchase + Opening Stock)
(d) Sales - (Purchase – Closing Stock)
(4) Taxable Purchases mean only ________________ purchase taxable under MVAT.
(a) Inter-State (b Local
(c) Import (d) All of the above
(5) Taxable Sales includes _______________

(a) Local Sales (b) Interstate Sales (c) Exports (d) All of the above
(6) Tax at 1% _______________

(a) Schedule A (b) Schedule B (c) Schedule C (d) Exports
(7) In case if taxable goods are used as fuel, reduction in set off is _______________
(a) 2% (b) 5% (c) 3% (d) 36%
(8) Set off is an ______________ of tax paid on Purchase of goods and which can be adjusted against the
tax payable on sales.
(a) Deduction (b) Exemption (c) Provision (d) Allowance
(9) E Schedule goods are taxable @ _________
(a) 1% (b) 5% (c) 12.5%5 (d) 20%
(10) ____________________ cannot opt for the scheme of composition.
(a) Manufacturer (b) Retailer (c) Works Contractor (d) Mandap Keeper
For IDOL Students
Q. No. 8 State whether the following transactions are ‘Sale’ or ‘not a sale’ under the provisions of
the Maharashtra Value Added Act, 2002.:– 10 Marks
April, 2015
(1) Sales of Scrap (2) Pledge of goods (3) Free sample distribution of goods
(4) Sales of goods by barter system (5) Sales of shares (6) Service charges received
(7) Branch transfer of goods (8) Labour charges received
(9) Supply of food in side canteen (10) Sale of car by dealer
Q. No. 8 Explain whether the following items are ‘Goods’ or ‘not a goods’ as per the provisions of the
Maharashtra Value Added Act, 2002.:– 10 Marks
October, 2010
(1) Malai Paneer (2) Lottery Tickets (3) Equity Shares of TCS Ltd.
(4) Import Licence (5) Jackfruit Trees
October, 2012
(a) Coconut Trees (b) Farm Land at Alibaug (c) Washing Machine
(d) Debentures of TATA Power Ltd. (e) Accounting Software ‘TALLY’
April, 2014
(a) News Paper (b) Mango Tree (c) Equity Shares of Siemens Ltd.
(d) Residential Flat used for business (e) Malai-Kulfi
April, 2015
(a) Money (b) Gold (c) Shares (d) Land (e) Motor Car
(f) Machinery (g) News Paper (h) Mobile Handset (i) Mango Tree (j) Radio Set
Q. No. 8. Explain with reasons whether the following activities are ‘manufacturing’ activities or
not as per the provisions of the Maharashtra Value Added Tax Act 2002. 10 Marks
April, 2010
(a) Re-trading of Old Tyres (b) Cutting wooden sheets into smaller ones
(c) Baking of pizza in a large oven (d) Repairing of a mobile phone
(e) Assembling computer for the customer’s household use
October, 2010
(a) Assembling T.V. set from various parts (b) Reconditioning of machinery
(c) Cutting steel sheets into smaller sheets (d) Polishing of Old Gold Ornaments
(e) Rethreading of old tyres.
April, 2012
(a) Polishing of Silver Utensils (b) Assembly of Computer from various parts
(c) Sewing of cloth into Garments (d) Coating of fragrances on agarbattis
(e) Cutting of paper from rolls into reams
For IDOL Students
Q. No. 8 Explain whether the following dealers are eligible for ‘Composition Scheme’ under the
provisions of the Maharashtra Value Added Act, 2002. 10 Marks
April, 2015
(a) An artist (b) An Insurance Company (c) An Air transport company

(d) An Advertising agency (e) An auctioneer
October, 2015
(a) Retailer (b) Manufacturer (c) Mandap Keeper (d) Clearing and forwarding agent
(e) Importer (f) Exporter (g) Hotelier (h) Backery Owner
(i) Builder (j) Liquor Dealer
Q. No. 8. State with reasons whether the following are ‘Dealer’ as per the provisions of
Maharashtra Value Added Tax Act 2002 : – 10 Marks
October, 2010
(a) Mrs. Khandilkar purchasing ‘Chivda’ for home consumption

(b) M/s. Rambua & Co. auctioning old machines on behalf of M/s. Khandekar & Co.
(c) Mumbai Municipal Corporation selling unclaimed goods.
(d) Cooper Hospital, selling old Sonography Machines.
(e) M/s. Rajabhau & Co. Company Secretaries.
April, 2011
(1) M/s. Exotic Tours, arranging Tours to Europe.
(2) MIG Club, selling food stuff to its members.
(3) Konkan Railway Corporation Limited, selling by auction the damaged bogies (rakes).
(4) M/s. PDK & Co. Chartered Accountants.
(5) Lilavati Hospital selling old machines.
October, 2015
(a) Mrs. Khandilkar purchasing ‘Chivda’ for home consumption

(b) M/s. Rambua & Co. auctioning old machines on behalf of M/s. Khandekar & Co.
(c) Mumbai Municipal Corporation selling unclaimed goods.
(d) Cooper Hospital, selling old Sonography Machines.
(e) M/s. Rajabhau & Co. Company Secretaries.
------------
Q. No. 7. State with reasons whether the following are ‘Business Activities’ as per the
provisions of Maharashtra Value Added Tax Act 2002 : – 10 Marks
October, 2010
(a) Running of a playgroup (school)

(b) Purchase of Computer for personal use
(c) Export of ‘Parathas’
(d) Sale of machines by a machinery manufacturer
(e) Planting of saplings for beautification around the office.

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Dr.G.R.Damodaran College of Science

III B.COM ECOMMERCE[2015-2018]

1. An employee cannot be an auditor of the company because __________.

2. Which of the following are not objectives of auditing?

3. An audit which is compulsory by the law is __________.

4. Instruction of audit issued by controller and auditor general of India ________.

5. Audit done by the employees of the business undertaking is called _______.

7. Management audit otherwise called as _______.

10. A Voucher is a _______.

11. Voucher relates to _________.

12. Internal check is meant for ___________.

13. Internal auditor is appointed by ________.

14. Auditing begins where ______ ends.

16. For which of the following, Audit is optional?

18. The receipt of goods must be entered in _________.

20. Confirmation of the court is necessary for __________.

21. Profit prior to incorporation may be utilized to ___________.

23. Audit means ___________.

24. Audit programme is prepared ______________.

25. Auditor shall report on the accounts examined by him __________.

26. Purchase of machinery is a ____________.

27. Sale of land is a __________.

28. Shares are forfeited on the non-payment of ____________.

29. Secret reserve can be created by _______________.

30. General reserve is __________.

36. Treating revenue expenditure as capital expenditure is a case of _________.

38. Stock in trade is valued _________.

40. Preliminary expenses are the best example for _________.

42. Errors of principle are due to ___________.

43. Periodical audit is also called as _________.

44. An audit programme is ___________.

45. The auditor of a government company shall be appointed by ________.

A. to verify the assets and liabilities

49. Capital reserves are created out of profits of __________.

52. The owners of the company are called __________.

53. Verification is __________.

54. Depreciation is _________.

55. The main objects of investigation is _________.

56. Internal controls and internal check are ____________.

57. Share may be issued _____________.

58. Special audit is necessary for _________.

59. The first auditors appointed by headd office ____________.

60. Audit of Joint stock company account is _____________.

61. The company's auditor is expected to give _____________.

62. Auditors of a joint stock company are appointed by ______________.

63. A company auditor can be removed by _________________.

64. A vacancy caused by resignation of an auditor is filled by _________.

66. Duties of a company auditor are defined by __________.

D. agreement between company and the auditor

67. When at an annual general meeting of a company no auditor is appointed or reappointed. In

68. Audit in depth means __________.

74. Audit of banks is an example of __________.

75. Concurrent audit is a part of ______________.

76. In India, balance sheet audit is synonymous to _______________.

B. Effective internal control system provides reliable audit evidence

80. Audit Programme is prepared by ___________.

88. A statutory auditor has a right of access at all times to ___________.

91. General Controls will be ineffective when EDP Department ___________.