Page 166 - CA Inter MCQ Book

CA RAVI TAORI CA INTER AUDIT MCQs
of bank is still subsisting on MCA portal beyond statutory period due to non-registration of charge
satisfaction.

He had read about assertions pertaining to balance sheet and income statement. However, he was not
sure about nomenclatures assigned to assertions pertaining to balance sheet and income statement.

The team had also attended physical inventory count of the company as at year end in accordance with
SA 501.

Besides, company’s trade receivables have increased from ₹ 25000 in year 2021-22 to ₹ 60000 in year
2022-23 (both figs in ‘000s). His understanding is that increase in company’s trade receivables as
compared to last year signifies longer time taken by company’s customers to make their payments.

Considering substantial rise in revenue from operations of the company in the year under audit, team
wants to ensure that revenues of company are not overstated.
VI. Keeping in view description regarding full payment of term loan in April 22 taken from a bank in
past and non-registration of satisfaction of charge, which of following statements is correct?
a. The above fact may be disclosed by the company’s management in its financial statements at
its discretion along with reasons as such disclosure would bring transparency.
b. The above fact along with reasons is required to be disclosed by the company in its financial
statements in accordance with requirements of Standards on Auditing.
c. The above fact along with reasons is required to be disclosed by the company in its financial
statements in accordance with requirements of Schedule III of Companies Act, 2013.
d. The above fact is not required to be disclosed as term loan has already been repaid in full and
there are no outstanding long term borrowings.
VII. The company’s short-term borrowings have increased during the year 2022-23 as compared to
last year. One of following assertions is not relevant to verification of short term borrowings.
Which odd one you would suggest to Kartik in this regard?

a. Existence
b. Occurrence
c. Completeness
d. Valuation

VIII. As regards team’s attendance at physical inventory count process of company’s inventories in
accordance with SA 501 is concerned, which of following is not a relevant audit procedure?
a. Inspection of inventories
b. Checking appropriateness of method employed for valuation of inventories
c. Evaluating management’s instructions for recording results of physical inventory count
d. Performing test counts
IX. The company’s trade receivables have increased during year 2022-23 as compared to last year.
Which of following statements is most appropriate regrading understanding of Kartik on this
issue?
a. The view of Kartik is correct and it has led to increased audit risk pertaining to valuation of
trade receivables. Therefore, team needs to go through trade receivables ageing schedule to
confirm it.
b. The view of Kartik is incorrect.
c. The view of Kartik is correct and it has led to increased audit risk pertaining to valuation of
trade receivables. Therefore, team needs to perform direct confirmation procedures to
confirm it.
d. The view of Kartik is correct and it has led to increased audit risk pertaining to valuation of
trade receivables. Therefore, team needs to perform cut-off procedures to confirm it
X. The team wants to ensure that revenues of company are not overstated. Which of following is
not likely to be a relevant audit procedure in this regard?
(a) Obtaining confirmations from customers

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