Page 137 - CA Inter MCQ Book

CA RAVI TAORI CA INTER AUDIT MCQs
(a). create provision
(b). create revenue reserve
(c). create capital reserve
(d). to be disclosed as contingent liability
III. “What is the action which Aksham Ltd is supposed to take with regard to treatment of dividend
declared while preparing and finalizing financial statements for year ending 31st March,2021?
(a). recognise dividends as a liability
(b). disclose the amount of dividend
(c). both a and b
(d). none of the above.
IV. “State the disclosures Aksham Ltd is required to make with respect to the long-term borrowings
taken from Saksham Bank.
I. Secured loan from Saksham Bank.
II. The fixed assets are secured against the loan
III. The loan of ` 65 lakhs is guaranteed by director.
IV. Repayment terms of the loan

(a). I, II, III and IV
(b). I, II
(c). I, II, III
(d). II, III
V. “State which of the following statement is true with respect to recording an intangible in the
books of the company.
(a). Intangible is correctly booked by the company.
(b). Intangible is wrongly booked by the company as an intangible cannot be booked as per the
accounting standard of India.
(c). Intangible is wrongly booked by the company as an intangible cannot be booked as per the
auditing standards of India.
(d). Intangible is wrongly booked by the company as an intangible cannot be booked as per the
Companies Act, 2013.

50 (N21R)
Best Tea House is a Co-operative society formed as per the provisions of the Co-operative Societies Act,
1912. It runs a chain of restaurants serving mainly tea and snacks in Delhi. RAS & Associates, a Chartered
Accountant firm, has been appointed to conduct the statutory audit of the society. None of the partners
of the firm, CA R, CA A and CA S have ever conducted a Co-operative Society audit before and so
familiarise themselves with the provisions of the particular Act governing the society before starting the
audit.

During the audit, Best Tea House informs the auditors that they have been in operation for the last five
years, and no audit was required earlier since their turnover had not exceeded the prescribed limit.

While examining the books of account of Best Tea House, RAS & Associates notice that as stated under
section 43(h) of the Central Act, certain rules were framed prescribing the books and accounts to be
kept by Best Tea House.

The auditors also understand that according to section 5 of the Central Act, in the case of a society where
the liability of a member of the society is limited, no member of a society other than a registered society
can hold such portion of the share capital of the society as would exceed a maximum of a certain
percentage of the total number of shares or of the value of shareholding to a specified amount. RAS &
Associates were concerned with this provision so as to watch any breach relating to holding of shares.

While examining the loans of Best Tea House, the auditors notice that the society has given a loan to a
relative named Mr. P, of a member of the society, Mr. T, of an amount not exceeding ` 1000.
RAS & Associates examined the overdue debts and checked its classification which they are required to
report.
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