CA Intermediate Paper 5

Audit of Items of Financial Statements MCQ

Chapter 5 • 19 Questions from ICAI Study Material

Questions

19

Est. Time

29 min

Source

ICAI Book

Sample Questions: Audit of Items of Financial Statements

Preview 4 of 19 questions from Chapter 5

1. An auditor is verifying purchases to ensure their genuineness. Consequently, he is also trying to verify that no fake “trade payables” are present in financial statements. Which assertions concerning purchase transactions and trade payables respectively are being verified by auditor?

A) Occurrence; Existence ✓
B) Occurrence; Completeness
C) Existence; Occurrence
D) Completeness; Occurrence

2. Which of the following statement is most appropriate as regards to disclosure of goods in transit in financial statements of a company?

A) No separate disclosure of goods in transit is required.
B) Disclosure of total goods in transit under head of inventories is required.
C) Disclosure of goods in transit under each sub-head of inventories is required. ✓
D) Disclosure of goods in transit for raw material and finished goods is required.

3. Sweat Equity shares are issued by a company at a discount or for consideration other than cash to its:-

A) Directors only ✓
B) Clients only
C) Directors or employees
D) Auditors only
Correct/Incorrect

4. Employee benefits expenses represent the sum an entity pays to its employees for their labour/ efforts only.

Correct
Incorrect ✓

Explanation: Employee benefits expenses, commonly called payroll expenses, represent the aggregate sum an entity pays to its employees for their labour/ efforts, as well as associated expenses such as perquisites/ benefits, post- employment benefits like gratuity, superannuation, leave encashment, provident fund contribution etc. as well as towards their hiring, their welfare and training.