Chapter 9: Company Audit — Online MCQ Test
AUDITING · CLASS 12th · Tamil Nadu State Board
Practice Chapter 9: Company Audit with a free chapter-wise online MCQ test.
This chapter covers: This chapter examines corporate audit procedures and reporting standards. Students study audit report types share capital audits new share issues cash considerations non-cash consi....
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Chapter 9: Company Audit — Important Questions & Answers
What is the main objective of a company audit?
- A. To verify the correctness of the company’s financial statements and compliance
- B. To increase the company’s sales
- C. To prepare tax returns for all shareholders
- D. To manage day-to-day business operations
Answer: A. To verify the correctness of the company’s financial statements and compliance
A company audit is conducted to examine the financial statements and ensure they present a true and fair view, along with compliance with legal requirements.
A company audit is conducted to examine the financial statements and ensure they present a true and fair view, along with compliance with legal requirements.
An audit report expresses the auditor’s opinion on the company’s financial statements. Which of the following is the most common type?
- A. Qualified report
- B. Adverse report
- C. Unqualified report
- D. Disclaimer report
Answer: C. Unqualified report
An unqualified report is the standard form of audit report when the auditor is satisfied that the statements are true and fair.
An unqualified report is the standard form of audit report when the auditor is satisfied that the statements are true and fair.
When shares are issued for cash, the auditor should ensure that:
- A. The company has only one shareholder
- B. The amount received is properly recorded in the bank account
- C. No prospectus is issued
- D. Dividend is declared immediately
Answer: B. The amount received is properly recorded in the bank account
For cash issues, the auditor verifies that the share application and allotment money have been duly received and recorded.
For cash issues, the auditor verifies that the share application and allotment money have been duly received and recorded.
If shares are issued for a machine, what should the auditor primarily verify?
- A. Whether the machine was received and valued properly
- B. Whether the company declared bonus shares
- C. Whether cash was deposited in the bank
- D. Whether the company paid interest on shares
Answer: A. Whether the machine was received and valued properly
For non-cash issue, the auditor checks whether the asset received is genuine, properly valued, and duly recorded.
For non-cash issue, the auditor checks whether the asset received is genuine, properly valued, and duly recorded.
Which of the following is the correct order of audit attention in a share issue transaction?
- A. Receipt of money, allotment, authorization, issue of certificates
- B. Authorization, receipt of money, allotment, proper accounting entries
- C. Allotment, receipt of money, authorization, issue of certificates
- D. Issue of certificates, allotment, receipt of money, authorization
Answer: B. Authorization, receipt of money, allotment, proper accounting entries
The auditor should first see whether the issue is properly authorized, then whether money is received, allotment is made correctly, and the accounting entries are proper.
The auditor should first see whether the issue is properly authorized, then whether money is received, allotment is made correctly, and the accounting entries are proper.