Multiple Choice Questions (MCQ) on Auditing
1- Labour time variance arises due to
A:- Unscheduled Overtime
B:- Lack of proper supervision
C:- Both (1) and (2)
D:- None of the above
2- Which of the following is not considered as carrying cost?
A:- Cost of handling materials
B:- Cost of insurance
C:- Cost of deterioration
D:- Cost of receiving goods
3- In which of the following methods, inventory is valued at the latest prices prevailing in the market?
A:- FIFO method
B:- LIFO method
C:- Weighted Average method
D:- Simple Average method
4- Which one of the following is not correct?
A:-P/V ratio = Contribution per unit/Selling price per unit * 100
B:-Breakeven point = Fixed cost / P/V ratio
C:-P/V ratio = Change in profit/change in sales * 100
D:-Sales for desired profit = Desired profit / Contribution per unit
5- Which one of the following is not an assumption of Marginal costing?
A:- Total fixed cost will remain constant at all volumes of output
B:- Selling price per unit will vary with regard to changes in the volume of sales
C:- Total variable cost will change only due to a change in the volume of sales
D:- Sales mix will remain constant
6- Which one of the following statements is not correct relating to the Time wage system?
A:- It requires more supervision
B:- Its emphasis is on the quality of the product
C:- Income through wages is uncertain and there is no job security
D:- It is favored by trade unions as it does not divide workers
7- The going concern concept is the underlying basis for
A:- Depreciating fixed assets over their useful lives
B:- Disclosing the market value of securities
C:- Consolidating the accounts of the subsidiary companies with those of the parent company
D:- Disclosing the sales and other operating information in the Income statement
8- Which one of the following is correct?
A:- Gross profit + Sales + Direct Expenses + Purchases + Closing Stock = Opening Stock
B:- Gross profit + Direct Expenses + Purchases + Closing Stock – Opening Stock = Sales
C:- Gross profit + Direct Expenses + Purchases + Opening Stock – Closing Stock = Sales
D:- None of the above
9- In the case of Companies enjoying a stable growth rate and stable rate of dividend which of the following dividend approaches is more suitable to use?
A:- Dividend Price approach
B:- Dividend Price plus growth approach
C:- E/P ratio approach
D:- Realized yield approach
10- When a firm uses more short-term financing, than that required to finance the temporary or variable current assets the firm is said to follow :
A:- An aggressive approach to financing
B:- A conservative approach to financing
C:- Hedging approach of financing
D:- Matching approach to financing
11- Relay Assembly Room Experiment is connected with ________.
A:- System School
B:- Human Relation School
C:- Contingency School
D:- Functional School
ANSWERS:
1-(B), 2-(D), 3-(A), 4-(D), 5-(B), 6-(C), 7-(A), 8-(C), 9-(D), 10-(A), 11-(B)