Page 92 - CA Inter MCQ Book

CA RAVI TAORI CA INTER AUDIT MCQs
(a). Subtracted from Rent Expenses of business of UV Private Limited
(b). Remain Added to Rent Expenses of business of UV Private Limited
(c). Again Added to Rent Expenses of business of UV Private Limited
(d). Subtracted twice from Rent Expenses of business of UV Private Limited"
III. "As per point number (3) mentioned above in the case, the Repair and Maintenance Expenses
outstanding for the months of February 2019 and March 2019 must be shown under liability side
of balance sheet of UV Private Limited as on 31 March 2019 as:
(a). Prepaid Repair and Maintenance Expenses
(b). Repair and Maintenance Expenses
(c). Repair and Maintenance Expenses paid in advance
(d). Repair and Maintenance Expenses Payable"
IV. "As per point number (4) mentioned in the case above, the auditor Mr. H asked the appropriate
authority for reasons of huge differences in the amount of two financial years of repair and
maintenance expenses. By appropriate authority Mr. H was referring to:
(a). All employees of UV Private Limited
(b). Management of UV Private Limited
(c). Members of UV Private Limited
(d). Any one director of UV Private Limited"
V. " As per point number (5) mentioned in the case above, in verifying insurance expenses the
insurance policies would provide auditor Mr. H as:
(a). Invalid Supporting
(b). No Supporting
(c). Lack of proper Supporting
(d). Valid Supporting"

7 (N20M)
"Mr Laxman is appointed as statutory auditor of Best Limited for the Financial Year ended 31st March
2020. During the course of audit, it was found that few doubtful transactions had been committed by
finance manager who retired in March 2020.

The fraud was going on since last 4-5 years and the total amount misappropriated is approximately ₹ 75
lacs. Balance sheet of Best Ltd. reflected a cash balance of ` 7 crores. The company has taken a loan of `
2 crores from the bank despite of the huge cash balance with the company. Also, Companies Act bestows
some duties on auditors to report matters to Central Government in case of fraud.

On the basis of above facts answer below questions in relation to Mr Laxman’s role and duties while
conducting statutory audit of Best Limited."
I. " Mr Laxman shall obtain ____________________ that the financial statements are free from
fraud and misstatement.
(a). Absolute assurance
(b). Reasonable assurance
(c). Management’s assurance
(d). Chief Financial Officer assurance"
II. " Mr Laxman suspects that cash payments were inflated. Out of the below which could be
probable reason for such inflated cash payments.
(a). Not accounting for cash sales completely
(b). Making payments against purchase vouchers
(c). Making payments against inflated vouchers
(d). Teeming and Lading"
III. " As per Section 143 (12) of Companies Act, 2013 & Rule 13 of CAAR, 2014; Mr Laxman shall

(a). report the matter to the audit committee constituted under section 177 or to the Board in other
cases within such time and in such manner as prescribed.

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