IC46 - General Insurance A_c Preparation Mock Test 13
This set covers key concepts in auditing, accounting, financial statements, taxation-related controls, depreciation, inventory valuation, employee benefits, and insurance accounting. It includes internal audit requirements and the role of internal audit in strengthening financial controls and preventing wastage or misappropriation. Depreciation under the written-down value method and changes in depreciation methods are examined through practical calculations. Inventory estimation using gross profit ratios is also included. The questions cover Employee Stock Option Schemes, determination of profitability in general insurance business, preparation of final accounts, and the distinction between capital and revenue expenditure. Corporate Social Responsibility provisions and cash discounts received are also addressed.
1. Which of the following options contain the parameters set by The Companies (Auditor's Report) Order, 2015 notified by MCA on 10-4-2015 that make it mandatory for entities to have the internal audit system as a part of the internal control system?
i) Listed companies
ii) Trusts
iii) Companies having a paid-up capital of Rs. 50 lakhs
iv) Companies having a paid-up capital of Rs. 40 lakhs
v) Companies having an average annual turnover in excess of Rs. 5 crores for a period of three consecutive financial years immediately preceding the financial year concerned
vi) Companies having an average annual turnover in excess of Rs. 4 crores for a period of five consecutive financial years immediately preceding the financial year concerned.
A. (i) or (ii) or (iv) or (vi)
B. (i) or (iii) or (v)
C. (i) or (iii) or (vi)
D. (i) or (iv) or (vi)
2. Internal audit is aimed at reassuring the management that:
A. All financial transactions are taking place according to the corporate policy, rules and directives
B. All transactions are being recorded in accordance with accounting principles, accounting standards and accounting policies
C. The system of accounting provides adequate safeguards to check the wastage of revenue and misappropriation of property of the organisation
D. All of the above
3. A firm purchased on 01.04.2004 certain machinery X for Rs. 1,16,400 and spent Rs. 3,600 on its erection. On 01.10.2004, new machinery costing Rs. 40,000 was purchased. On 1st October 2006, the machinery purchased on 01.04.2004 having become obsolete was auctioned for Rs. 57,200 and on the same date, fresh machinery was purchased at a cost of Rs. 80,000.
Depreciation was provided annually on 31st March every year @ 10% p.a. on WDV. In 2007-08, however, the firm changed this method of providing depreciation and adopted the method of providing 5% depreciation p.a. on the original cost of the machinery.
What is profit/loss incurred while selling machinery X?
A. Profit of Rs. 35,140
B. Loss of Rs. 35,140
C. Profit of Rs. 45,140
D. Loss of Rs. 35,140
4. ABC Ltd is a trading company, which sells goods on retail basis. Its GP Ratio is 20% on net sales. From the following figures for the year-end 2013-14, complete the estimated cost of the inventory on the closing date:
Opening Stock: Rs. 5,00,000
Purchases: Rs. 3,60,000
Purchase Returns: Rs. 1,00,000
Freight Inwards: Rs. 1,00,000
Gross Sales: Rs. 45,00,000
Sales Returns: Rs. 1,12,500
Carriage Outwards: Rs. 50,000
A. Rs. 3,50,000
B. Rs. 4,80,000
C. Rs. 5,90,000
D. Rs. 6,95,000
5. Under which scheme a permanent employee, whether working in India or out of India, and a director, whether a whole-time or not, are eligible to participate in this scheme, but employees who are promoters or who belong to the promoter group are not entitled to participate in the scheme?
A. Employee Stock Option Plan (ESOP)
B. Employee Stock Option Scheme (ESOS)
C. Bonus Shares
D. Preferential Issue of Shares
6. In general insurance business, financial results (profitability) are determined by the __________.
A. Profit and Loss Account
B. Revenue Accounts
C. Income and Expenditure Account
D. Receipts and Payments Account
7. The last stage of final accounts is the balance sheet. Say whether True or False.
A. True
B. False
8. What can give rise to an expense?
A. Capital expenditure
B. Capital receipt
C. Revenue expenditure
D. Revenue receipt
9. Which Section of the Act provides that the Board's report under sub-section (3) of Section 134 shall disclose the composition of the Corporate Social Responsibility Committee, which shall be constituted as per Section 135(1) of the Act 2013?
A. Section 92(3)
B. Section 134(1)
C. Section 135(2)
D. Section 177(8)
10. What is related to cash payment to creditors and when it is received on making payment to creditors the net payment is shown in the Cash Column and the discount amount is shown in the Discount Column?
A. Cash Discount Allowed
B. Cash Discount Received
