Audit Taxation MCQs and Notes

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📊 Audit Taxation
Q. The Central Government has notified Income computation and disclosure standards for computing income under the head Profits and Gains of Business and Profession - .
  • (A) 2
  • (B) 5
  • (C) 8
  • (D) 10
💬 Discuss
✅ Correct Answer: (D) 10
📊 Audit Taxation
Q. The term of the auditor ship of first auditor would be from the date of appointment till………………………….
  • (A) the conclusion of statutory meeting.
  • (B) the conclusion of first annual general meeting.
  • (C) the conclusion of next annual general meeting.
  • (D) the date of removal.
💬 Discuss
✅ Correct Answer: (B) the conclusion of first annual general meeting.
📊 Audit Taxation
Q. The board of directors shall appoint first auditor of a company.
  • (A) With in one month of completion of capital subscription state of the company.
  • (B) With in one month of the promotion of the company.
  • (C) With in one month of the commencement of the business of the company.
  • (D) With in one month of incorporation of the company.
💬 Discuss
✅ Correct Answer: (D) With in one month of incorporation of the company.
📊 Audit Taxation
Q. As per the requirements of section 226(3) and 226(4) a person is disqualified from being appointed as a statutory auditor if he holds………………
  • (A) Equity shares or debentures of the company.
  • (B) Equity shares carrying voting of the company.
  • (C) Shares carrying voting rights of the company.
  • (D) Security carrying voting rights of the company.
💬 Discuss
✅ Correct Answer: (D) Security carrying voting rights of the company.
📊 Audit Taxation
Q. Which of the following statement is not true?
  • (A) A partnership firm can be appointed as a statutory auditor of limited company.
  • (B) Appointment can be made in the name of the firm.
  • (C) Majority of the partners should be practicing in India.
  • (D) All partners should be chartered accountants.
💬 Discuss
✅ Correct Answer: (C) Majority of the partners should be practicing in India.
📊 Audit Taxation
Q. Which of the following sections deal with qualifications of the auditor ?
  • (A) Section 226 (1) and section 226(2).
  • (B) Section 224 (1) and section 224 (2).
  • (C) Section 226 (3) and section 226(4).
  • (D) Section 224(3) & Sec.224.
💬 Discuss
✅ Correct Answer: (A) Section 226 (1) and section 226(2).
📊 Audit Taxation
Q. Who is responsible for the appointment of statutory auditor of a limited company ?
  • (A) Directors of the company.
  • (B) Members of the company.
  • (C) The Central Government.
  • (D) All of the above.
💬 Discuss
✅ Correct Answer: (B) Members of the company.
📊 Audit Taxation
Q. For what minimum period should audit working papers be retained by audit firm?
  • (A) For the time period the entity remains a client of the audit firm.
  • (B) For a period of ten years
  • (C) For a period auditor opines them to be useful in servicing the client
  • (D) For the period the audit firm is in existence.
💬 Discuss
✅ Correct Answer: (C) For a period auditor opines them to be useful in servicing the client
📊 Audit Taxation
Q. When is evidential matter, generally, considered sufficient?
  • (A) When it constitutes entire population
  • (B) When it is enough to provide a basis for giving reasonable assurance regarding truthfulness
  • (C) When it is objective and relevant
  • (D) When auditor collects and evaluates it independently.
💬 Discuss
✅ Correct Answer: (B) When it is enough to provide a basis for giving reasonable assurance regarding truthfulness
📊 Audit Taxation
Q. Which of the following statements is, generally, correct about the reliability of audit evidence?
  • (A) To be reliable, evidence should conclusive rather than persuasive
  • (B) Effective internal control system provides reliable audit evidence
  • (C) Evidence obtained from outside sources routed through the client
  • (D) All of the Above.
💬 Discuss
✅ Correct Answer: (C) Evidence obtained from outside sources routed through the client

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